Bloomberg Businessweek Weekend - January 27th, 2023

the Bloomberg Terminal. The story Tim taps into how traditional economic indicators, well they can't predict the timing of a downturn, and then some of the newer forecasting methods they're just kind of untested. Yeah, this is why I calling us recession is trickier than ever before, especially with all the mixed signals that we're getting. It is just not easy. We hear over and over again, it's not easy from CFOs,

it's tough. Here with the story we got Bloomberg News US econom reporter Katya Dmitrieva on zoom VI in the ninety nine one studio and Bloomberg Bureau in Washington, d C. Along with the editor of Business Week Joe Webber, he's here in the bloom Berk Interactive Broker's studio. Come on, Joel. I thought this was easy. I thought all you had to do was be the national view of economic research and you just you know, say, look in your crystal ball.

And I thought that tells you exactly when the recession may or may not know. Yeah, and on top of that that no pressure for economists here because they've had some noteworthy misses. Uh, you know, there's an inflation thing and some GDP. Yeah. So so really, what's what's happened here is this, Uh, there's been a proliferation of data. Everybody's got an opinion now, right, gad you And and what is the best we can come up with with

how to figure out how to call a recession? Yeah, there's a lot of data, you know, in addition to the traditional indicators, you also have all of the new ones. You know, everything from the open table restaurant reservations to where people are flying and if they're flying, if they're coming back into the office, and then even things like plastic surgery. Some economists like to look at that as a gauge of so of how much people are spending

on things that are completely discretionary of the time. So you have a lot of stuff to look at. Um, and unfortunately, you know, unfortunately it's no easier this time around with this data than it was, for example, during the last recession or pre COVID I should say, twenty nineteen, when everyone was thinking, okay, we're due for a recession before times the PC pre COVID times. Um, you know, I think right now, Uh, there is some indication of stress. Um,

there is some indication that things are slowing down. But the tricky thing is trying to figure out when you're piecing together all these different pieces of the economy, Um, is the image that you get that we're entering a recession or is it simply a renormalization and kind of a slowing down to something we might have seen. So that's what's proving very difficult for for a lot of it. Ponymous right now, I'm so glad we're talking to you

right now. We we just spoke with Mario Cordero, who runs the Port of Long Beach, and he was saying that, um, you know, we kind of like tried to hold his feet to the fire and get him to say whether or not we're in a recession, whether or not he sees one coming. I mean, this is the guy who can look out his window and see the economic activity. You know, how many ships are lined up in the

economic activity that's taking part. And he wouldn't. He was like, I'm on team soft landing, but he wasn't comfortable making a call. We said like yes or no, and he wouldn't do it. Yeah, he wouldn't do it, right, Yeah, you know, I mean that's the exact same experience that you're going to get with a lot of other economists right now. I mean even Claudia Sam you know, she created the some rule. Uh, this is sort of when you talk about art versus science and economy. This is

pretty much as science as you can get. You know. It's a line on a chart attracts the unemployment rate over time compared to the sort of past twelve months unemployment rate, and it is very accurate in terms of predicting at a certain point. Okay, we've entered a recession. And yet even when I was chatting with her, she was saying, you know, I hope that it's wrong this time around, and there's a chance that it might be wrong.

This time around, because the consumer outlook is still pretty strong and we haven't seen a lot of kind of impact negative impact in the labor market yet. Um. And again, I mean, we could enter a situation where consumer spending

managers to hold up. Right. So we saw the retail sales figures for the past few months pretty dismal, but we're coming off of that high, right, So, um, we could enter a situation where companies have a bit more room to cut prices now, um, now that the FED is kind of done its job and we're seeing inflation

slow down a bit. Um, And then we could have consumers saying, Okay, I'm going to keep spending, maybe not like I did two years ago or a year ago, but you know, I'm going to keep this economy going. Everyone's going to keep doing their part. Uh. So it's just still a big question mark words later, you know, twenty economists interviews later, and it's still to be do

my part. Um, So what about the yield curve Because that's then as you write a tried and true recession indicator, does it still hold as much weight as we've always thought or is it sort of slightly maybe less? And these other things kind of take into account, like what what's the new uh, you know, the new thinking on inverted yield curves. Yeah, the yield curve is a funny one people people love it and it's a great Um.

It's a great indicator of what investors are thinking and whether they see kind of a recession down the road. And it's pretty straightforward. Um when sort of the short versus long term the curve inverts, like it's a it's a signal. It's one signal of many signals. Um, But how does it compare with a drop in sales of men's underwear? Yeah? Yeah, I know Alan Green's fans favorite or used to be his favorite indicator. Um. You know, it's it's more accurate than a lot of other indicators. Thing.

The thing with the yield curban version, though, is that there could be a false positive. So we have in the nineteen sixties where the yield curve inverted and we didn't have a recession immediately afterwards. And we also had the yield curve inverting twice at least twice last year, and we're you know, I mean you could talk to some economists they'd argue we're already in a recession. But we don't see, um, the traditional signs of a recession right this very second. So you could maybe even call

call that a false positive. So with a lot of these indicators, like you really have to take them all together, so yield curve plus the so rule plus you know, for example, the Conference Boards Leading Indicator index, which is weakening and flashing rent. And it's gonna wait for a year when everybody says, oh, guess what we were in

It already happened. Hey, listen, how does though there's a great sound bite in your in your story are a great quote about how this is the most traditional of traditional recessions in a couple of decades, right the last two we know, right, we had the financial meltdown, the housing crisis, that's one, and then you had a pandemic that shut down the economy thirty seconds left her. It being traditional makes it easier or harder to call. It

makes it just as hard to call. I mean, we're lucky this time and that right now we don't have a black Swan event at least not yet fingers crossed like we did for the last two, especially the last pandemic recession. Um. But it doesn't make it any easier. In fact, I would argue it makes it harder because you're seeing uh, you know, kind of a slowdown of demand, but you're also seeing these mixed signals of like positive things happening in the economy. So I would say it's

it's just as hard as it was before. That was Katia Dmitrieva. She's a US economy reporter for Bloomberg News. Business Week editor Joel Webber. We'll be back with us just a bit later. Really relevant story, right, especially with that FED meeting coming this week. It's tricky for the FED. It's tricky for calling a US recession and envy those jobs, Caroll, No, not at all all right. Well, one of the confounding

metrics that Katia wrote about was jobs data. Since the start, we've seen mass layoffs from the likes of Microsoft, Amazon, Alphabet, Ford, also three M, Spotify, and IBM. Just this past week, but we had another weekly jobtless claims number that showed the labor market still tight. Yeah, government jobs data still depicting a rather tight labor market here in the US. For a closer look at some key job trends, we caught up with Dr Mona Moore, sed she's the founder

and CEO at Generation. It's an independent nonprofit that was founded by mackenzie to help prepare people for the workforce. We've got with us this afternoon. Dr Mona Moore set founder and CEO at Generation. This is an independent nonprofit. It was founded a few years ago by McKenzie to help prepare people for jobs. She joins s via zoom from Washington, d C. Dr Morshed, good to have you with us this afternoon. I want to talk more about

Generation just a second. But first of all, I want to get your thoughts on on what we're seeing in terms of layoffs. And I want to look at this in the context of, you know, we're still in a jobs market that's you know, really really tired. I mean unemployment rate it's historically low still absolutely so, there are a number of things happening right now. Um. Obviously, we're all waking up to headlines every day where there are slews of job cuts which are being announced. Um. That

has a couple of ramifications. Um. First of all, obviously it means adversity for those individuals and those families. But what we're also saying is that there's a slowdown in new higher vacancies as well, UM in addition to the job cuts, and so there are two forces happening at the moment um. For those individuals who are spending a slowdown in new higher vacancies, what does that mean? So for postings for new hires, there's a slowdown in those.

So there's both cuts as well as a slowdown and hiring. So it affects two populations, those currently in jobs who are losing them and those who are applying a fresh to new jobs. And so we're are starting to see day, at least in the US of UM it taking three to six months for people to find jobs in certain pockets. Now that's a certain picture. Now important to recognize the headlines that we see in the US do not apply

equally across the world. So we're also seeing other geographies where there's been no slowdown at all in terms of hiring. And we're also seeing that UM although for tech jobs in particular, you might find slowdowns in tech companies, but there are other companies and other sectors. So it might be in the financial sector, it might be in manufacturing who are looking to hire for tech roles, and so that's another area of opportunity. Well, right, I mean, does

this remind you at all of another job cycle? H two thousand and eight? Seriously? Seriously? Well, hopefully we don't reach that. I mean, so look, I think that what's what's important is to recognize this is all cyclical, right, and this cycle will take about two years to work itself out if if history is any indicator, um, so we're seeing a crunch and then again slow hiring, um,

but then it will open up again. And and very importantly for job seekers is looking for those pockets where there is continued hiring and and that may not be in the tech sector, so it could be tech roles

in other sectors. So is it safe to say, and just to kind of a little bit of a conclusion here, when we look at the data points that come from the government and elsewhere on the on the job market, which continue to show strength in the job market, are you saying it's really not the true picture or the full picture. It's a partial picture, right, you know, So again there is a partial when you look at which

sectors are hiring versus where is there a slowdown. It's partial in terms of is it a global phenomena or is it a us phenomena UM. And then there is also a question I would say of demographics UM, because one thing that I will emphasize is that age matters when it comes to hiring. UM. We've done research and others have done research as well when you look at what happens when when you are aged forty plus it

becomes much harder to find a job. That is why the majority of the long term unemployed six months or more are age forty plus. And that's across the O, E, C. D. So age matters here too and will impact unfortunately due to pervasive agism that we consistently see across employers and across geographies of how fast can you get yourself back into a job. So what's the focus for you at generation in terms of the types of the people who

find themselves without jobs placing them age range? Yeah, So at generation we support adults of all a is UM so from eighteen years old to plus UM, and our learners are typically so first, they typically have a secondary

school degree background UM. Over half our female the majority have dependence UM and they we are either placing them into their first job or we are supporting those who are age forty five plus and who may, for example, have been spending the last ten years working in retail or in logistics, and supporting to put them into green jobs or into tech jobs or whatever it might be. UM. So what we do is train and place learners into

careers that otherwise would have been inaccessible. So I want to go back to something that you said earlier about this being reminding you of of two thousand eight. And you know, if we go back to two thousand and eight, the unemployment rate was right now it's at three point six percent. So what else about the environment right now that you're seeing out there tells you that this is

similar to back then. I'm just not seeing it. There's UM an element of what I'll just call copycat behavior UM, which is when employers start to see that some companies are doing layoffs, it starts to make everyone much more conservative. UM. And that is and that is with regards to new hires. And so the question for us is because we are often placing people into entry level roles irrespective of which profession it's in, and so you start to see it

taking longer to get people into rolls. So it's not that they will not make it, but you know it. Whereas before we could support someone within three months, it might now take six months, um and so, and we're seeing this also in the reticence of employers to also commit to saying, you know, these are the vacancies which we're going to have this month or that month. Everyone

is watching and waiting to see what happens. In addition, the I m F recently came out to say that you know, a third of the world's economies are going to go into recess in this year, which is a big deal. Um. So twenty three is very much a watch and wait and observed. You know, mona earlier you said the government date, it's a partial picture of what's

going on in the US labor market. So having said that, based on what you're saying, it sounds to me that very soon we might see some of this show up. Is that your expectations. The expectation is absolutely that over the coming months we're going to see not just for the U. S economy, but for the world how resilient is the hiring going to be. And it will obviously nothing will ever be true across the entire world, but it will be in pockets. Um. So you'll find some sectors.

You know, clearly the tech sector is heavily affected right now, um, but you may not see that same trend in green jobs or in healthcare. And so this is why it's so important to look at the picture sector by sector and not just economy wide. Older workers. Do we need them? Absolutely? We need them? Um. You know, I think the age forty plus population is a remarkable asset that should be

much more employed than is the case. You have a bunch of people around the news room and our kids who are listening to the like when did forty five become old? Because when you look at the when, when you look at government stats, the majority of the long term unemployed or age forty five plus? What it? As soon as you know, I say this to you as a fifty one year old. I recently had a birthday, um,

and so thank you. It's interesting because you know, we talk about aging demographics and the impact it can have on a country's economy. Right. We've talked about it, certainly with Japan, We've talked about it with the US. Increasingly we've talked about it even with China, who's seeing an aging population in the costs that that has in in so many different ways. UM, I don't know. I'm not pretty sure what the smart I mean. Should we be putting these people to work? Isn't that better for the

global economy? Or tim? What do you think? Well? Have one question for him on a ten seconds Okay, if somebody really young is listening right now thinking about what they're studying in college or studying in trade school, what should it be? Uh? I get this question frequently now, so look, I'm going to give a practice to answer, which very quickly. It's about how quickly you learn. It is often not about what you learn, it's how quickly

you learned. I like that interesting. Alright, some really thoughts in terms of today's labor market. Dr Monamore said, founder and CEO of Generation, via Zoom from Washington, d C. You're listening to the Bloomberg Business Week podcast. Catch us live week days from two to five pm Eastern on Bloomberg Radio, the Bloomberg Business Band You Two. You can also listen live to our flagship New York station, Just

Say Alexa, Play Bloomberg, E Love and Verdi. A wind turbine taller than the Statue of Liberty collapse last June in UH Aims ninety miles northwest of Oklahoma City, and a few days later another one tim collapsed in Colorado. The instances are part of a rash of recent wind turbine malfunctions across the US and Europe, ranging from failures of key components to full collapses. Writing about it in the new issue of Bloomberg Business Week is Ryan Bean,

industrials reporter for Bloomberg News. He joins us along with the editor of the magazine, Joel Webber. Both are in our Bloomberg Interactive Broker's Studio. This story, by the way, it's in the new issue of Business Week. It's out on news stands later this week. You can already read the story online at Bloomberg dot com, slash business Week and of course always on the Bloomberg terminal. Joel, I want to start with you, how how bad is this? I mean, do we do we? You know? Are these

things like falling all over the place? Hard? Hard to know? No, But the bigger story here is that uh as sustainable source of energy have become so much more cost effective. Everybody's been scaling up, so turbines have gotten bigger, bigger, bigger. It's like just imagine and steroids and these things have gotten massive, and at the same time, maybe the same quality control has been going into these products as that

they've gotten bigger. So so, Ryan, what does this mean for the companies and for the rest of us who at the you know, live with turbines that might snap and be flailing around in the wild. Sure? Well, first of all, I don't think most people who live near or or or have these turbines in their community need to be super super worried all the time. But uh, right now, it means the companies are just paying a

lot of money to address these quality issues. I mean, just a few days before we published the story, uh seem As Gamesa, one of the largest winterbine manufacturers in the world, announced you know, a pretty significant charge totaling hundreds of millions of euros related to you know, premature component failures in their turbines that were already installed. I mean, g E has taken you know, similar charges for to fix you know issues with their fleet of installed turbines.

And I think you know, one thing that's important for for listeners to understand it is like this industry is still kind of in its I guess call it an adolescence, if you will. I mean, we've seen, you know, just not only turbines themselves get bigger, but projects get bigger and volume going up, and these companies have had a sort of race to develop a supply chain and rEFInd

their manufacturing practices to go along with that growth. So I think that a lot of this is sort of growing pains to degree And what do we know about the factors? Are they external factors that are coming to bear on the turbines or is it the turbines it's themselves that seem to be faulty. It can be It's

tough to say. It's a little bit of both, right, I mean, in one of these instances, you know that you mentioned at the beginning of the show, uh, some officials from the operator of the wind farm told you know, the local county commissioners that it was due to a blade flaw and that you know, four other turbines had experienced the same blade flaw that caused you know, similar failures.

And then you know, over the course of our reporting, and you know, some of the other publicly reported uh, you know collapses, you know, some of them have been linked to construction issues. Uh, some of them have been looked to defects with with componentry. Uh, you know, so it's it's it's a variety of things. It's nobody. I don't know if nobody has been hurt, but but none of the instances that we reported on had any injuries involved.

Now what's interesting is it's not just land turbines. This also happened, at least in one instance, to an offshore wind turbine. As that's describing your in your story. And I'm wondering, Ryan, I I see stories like this and I think about the politics of of wind because it's

very political. You know, if we think back to what happened in Texas a couple of years ago during the deep freeze when some wind turbines stopped working and generating power there, and then you have all these offshore wind projects in communities around the country that are creating a lot of tension in communities. Um, is a story like

this just ammunition for opponents of wind power. I'm sure that opponents of wind power are going to look at this and point to this as as evidence of say, we can't keep rushing to push these things out all

the time. But uh, then again, you know, as you point out, wind has always had its detractors, right, I mean from you know, local community residents up opposing an offshore wind farm because it will disrupt their beautiful coastal views, or you know, concerned you know, fishermen who are worried

about an offshore wind farm will disrupt their livelihoods. Um. You know, wind has a variety of you know of groups and folks who are opposed to this, and I think there's always going to be a contingent out there that will, you know, look for reasons to slow down this technology. You know. Um, I'm curious Ryan if you're if what in your reporting that as a result of what's happening. And I highly recommend everybody check out the

story either online or in the magazine later. And I don't know if we have pictures to put up on our YouTube and Bloomberg cricktakee um streaming service, because to see like the blades bent, it's just like it is like crazy, it's carnage came through here. And yeah, you're so used to just seeing them slowly turning the majestic machines when they go wrong, And I mean when large I mean large infrastructure can sometimes fail, right, and that's

sort of by its nature. When it does fail, it can be really really dramatic, and you know, frankly, that's sort of what got me interested in this, you know, early on, when you know, over a year ago, when we would see a couple of reports of a turbine failing in Europe or a turbine failing in the US.

So just you know, recently after after General Electric, which is one of the main companies that I covered on an ongoing basis, when they took a big charge in the third quarter last year, I decided to really start sort of dig in to figure out what what's really going on here and how much of an issue is

this really let's stay with it. How did see a lyric characterize that those expenses when when these things come up, you know, yeah, I mean what he said was that, you know that charges about a five million dollar charge to basically reflect that, uh, the amount of money that they were going to need to set aside for warranty coverage and for repair camp paints was about twice as much. Who knew there was a warranty on these parts? Oh,

everything has a warranty, concluding wind turbines. You take the serial number, you write it down just this, you attack on the front. Where is the serial number on this? Where do I find this? I mean, these things are huge. And the reason I know they're so big is, you know, just driving in the desert in California years ago, but that was those are tiny compared to what you see

these days. They are I've been on the highway before and you see like parts of these things being taken to places and you're like, wait a second, that is just like one turbine. How big are these? I mean the largest blades that are coming out now for offshore machines to be installed in the not too distant future. They're they're as long or longer than a football field

in some case for a blade. For a blade, so imagine that, Just imagine that for a moment, and there's three of them, and and I'm glad you mentioned the transportation issues. I mean, some of the factors that are going to limit how big a turbine can be in any given space is not necessarily related to what's physically possible with the technology. It's like, can you get a blade to a farm on a piece of land in the middle of rural Nebraska or or what have you.

Can you fit them on the roads? I mean, how do you how do you maneuver a truck carrying a blade of that length, you know, around a corner. Um, it's it's, it's it's a fascinating industry. And um the scale of stuff is sort of all inspiring. And of course the insurance premiums will go well, of course they will. Of course they will incredible read and like we said, check out the pictures. We threw them up there for streaming and for YouTube, but check it out online and

on the Bloomberg and of course in the magazine. Bryan, thank you so much. Interesting story, Ryan Bean, Industrials reporter at Bloomberg News here in our interactive Broker studio along with the editor of Bloomberg business Week magazine, Joe Webber. You're listening to the Bloomberg Business Week podcast. Catch us live weekdays from two to five pm Eastern on Bloomberg Radio The Bloomberg ausness a band you Doo. You can also listen live to our flagship New York station, Just

Say Alexa Play Bloomberg e Love and Didy. We dealt with the integrated oil companies because we know that they're going to be reporting earnings with that in mind. As well as a big development last month, you know, when scientists in California made that key breakthrough in nuclear fusion. UM, we wanted to talk a little bit more about what's

going on in this space. You were reaching out again to an organization that blew our minds away when we did our remote broadcast from the New Jersey Institute of Technology last year. Very pleased to add with us Stephen Cowley, laboratory director at Princeton Plasma Physics Lab here in our Bloomberg Interactive Broker's studio. We've also got a special guest with us joining us this afternoon, Will Wade, as Bloomberg

Power and Renewable Energy Editor. He's joining us today as well for this conversation, so we're excited to have Will with us as well. So Steven, let's start with you first of all. So great to have you here with us. I know that there's been all of a sudden a lot of attention. Tell us and remind us about the significance of what happened in that California lab and how

you guys think about it at your own lab. Well, the big thing that happened was that they produced an experiment in which the fusion energy that came out of the capsule was more than the energy they had to put in, which they hadn't been able to do before first ever, Right, a magnificent achievement. They got three mega jewels out. One mega jewel is the power of a hand grenade, so they got a power of three hand

grenades coming out of this experiment. That's pretty pretty significant from an object that was about the size of a peppercorn. So how do you harness this energy and replicate this piece of kick? Now we can just go off done in a lab. But but but how do you do

it to power our hearts? Well, ultimately, fusion is going to be a very sophisticated steam engine because you're using the energy that powers the stars, which fusion joining of small nuclei together to make bigger ones, in this case two kinds of hydrogen to make helium um and you're using it to make heat, and then you're using that heat in the very conventional way to power turbine and

make electricity. And that's the goal, right, And we're now seeing tremendous excitement about taking these kinds of scientific results and turning them into something that's commercial and that's going to be hard. Do you, Carol, do you have you know, Christopher Lloyd and Michael J. Fox in your head from the future. This is actually happening. All right, let's bring it. Will Await, as we mentioned Power Renewable Energy editor Bloomberg News.

We love talking with Will, so we'll come on. And you have been reporting in the space, join our conversation, and you've talked with Stephen before I have. And what is it that you know you think about in covering this space and what you want to know when you pick the brain of somebody like Stephen H Well, I guess the key question is how long it's going to take?

And the answer always seems to be quite a long time. Still, were many many years out of decades probably, but we should not discount the achievement that they had in California last month that really was amazing when used it when all right, So why is it decades to even help us through this? Um, It's it's decades because at this point we have just lit the fire. We have to make a furnace, and we have to make a furnace

that operates twenty four seven. We have to make a furnace that then, you know, integrates a number of technologies that haven't actually yet been tried. Um. Inside a fusion reactor, you have to make part of your fuel, and so you use part of your of your fusion power to actually make one of the fuels that you then put into your fusion system. Never done that part right, So there's a hard work to do, right. I always say to people, I think we know we can do it.

The question now is can we do it at a price you want to pay for your electricity? Well? Can we? I think we can? I hope in my lifetime, but you know, I'm getting old. Is it safe? Fusion has this nice quantity if it's really hard. You said grenade earlier. That got me a little. Yeah. It's a bad analogy, isn't it. Yeah, So so that one of the good things about fusion is that it's very easy to turn off. Right.

It goes out unless you sustain it. So it can't you can't run away like things like you know, ricocheting off and all of a sudden you think of a meltown. Yeah, you cannot get a meltdown in a fusion reactor UM and the so the safety prognosis, and we've done analysis of what future fusion reactors might look like, is that fusion reactors could be put next to cities. Fusion reactors

could be placed where we now have coal fired power stations. UM. They could replace in all aspects are current generating capability, and they have these very favorable safety prognosis. Yeah, the safety about fusion is actually one of the things I think is really cool about it. You mentioned meltdown. That's what we think about when you think of a typical

nuclear power plant, which uses fission. So the thing with a fission plant is it's it's relatively easy to start that type of nuclear reaction, but it's harder to turn it off. That's why they have the cooling pools and all sorts of other things to try and control that. With a fusion reaction, it's much harder to get it going. But if somehow you lost control of it. The thing that's fun about it is that it shuts itself down like super instantly fractions of a second. So safety is

not the biggest concern. You know, I'm thinking well about where we are as a society, and in what we've seen over the last year in terms of energy transition, the world is so reliant on fossil fuels. We're going to talk with you about nuclear energy in just a few minutes. But where do governments come in when they're supporting technology like this, Because wouldn't it make sense if everybody just got together and said, hey, we're going all

in on on fusion. You got to show me the money and then something earlier like this, it always has to come from government, some sind of subsidized loan or grant programs. Things like this cost a lot of money, and in the early days, it's hard to get you know, commercial investment in something that's so risky, so you always have to start with government money. What's been interesting in the last four or five years is that venture capital

to come into the business. And in the last year, I think in the last actual calendar year, we had about two point seven billion of investment into into fusion startups. So that's the private money, private money generating a set new ideas and new energy into the business, and this may propel things forward a lot faster than we're currently going. But there's some fundamental problems to solve, and I was saying the most important thing to happen is is smart people.

We need smart people because this problem is solvable, but it needs some innevaction. Well, I feel like you're time we go to NJ I T, which is where we talked with a colleague of yours from the lab, like this whole idea of STEM education and how important My dad was an engineer, worked on the space program, but that was it was a cool thing for people to

be engineers. And I just feel like, I don't know if there's that same momentum for people to do that you talked about having first of all the skill set and the people we need to do all this because there's still a lot to be done to make fusion I guess a reality on a grand scale. I mean, do we have the talent out there to do it? Do we have kids getting the right education to make sure we can carry through to the finish line if

you want. I think young people are very motivated by climate change in a way that my generation probably weren't as strongly, And we're getting huge numbers of applications to grad school to undergraduates. One need to work in the space, particularly fusion energy. I mean, who wouldn't want to work on an energy source that powers the stars? You know? It feels like kind of the next a moon shot, although we took a big step closer right in December. Is the is the ultimate goal of this, Dr Cowley,

that we have fusion power power plants? Oh? Sure? And it's sort of the perfect it it's the perfect energy source to to marry with renewables because you could turn it on, you can turn it off, and when the sun doesn't shine and the wind doesn't blow, you have a you have a source of energy. It's got this one problem, you know, to actually make fusion happen, you have to recreate the conditions in the middle of a star, and that's very hot, like two million degrees um, and

hold that together while you make the reactions happen. So it's it's also rather cool. Well that's what I think about, like the level of heat intensity, right, and then having the materials I'm assuming right to make it safe as you do that is that not such a problem. So that in my laboratory we deal with that is that we hold the fuel in a cage of magnetic field and you just hold it suspended so it doesn't touch anything, because if it touched anything, it would just get cold. Um,

and you know, heats up. And we've taken things up to five million degrees. Okay, that sounds pretty hot. It's awesome. Welcome ahead. This is one of the reasons why we wanted Will Wade to continue to join our conversation. He's renewables reporter for Bloomberg News and he's got a big take out today along with Jonathan Tyrone, all about nuclear power.

So we go from fusion to fishing. And the idea here Will is that where at a time when the world wants to decrease its reliance on fossil fuels, and here in the US, about fifty years ago we and around the world, we built a lot of nuclear power plants. The problem is is now these nuclear power plants they're approaching middle age, or beyond middle age or beyond you know,

they're definitely getting old. The thing is, in the last year, year and a half or so, I've really seen in the industry a big shift in views on nuclear energy. There used to be a lot of people have sort of just a gut level negative reaction to nuclear just sort of a fear of the risk. Well, they lived through Chernobyl, they did Three Mile Island, Fukushima. All of those are real things. And there's still a lot of people that are just vehemently opposed to the risk from

nuclear energy. But a lot of those same people are now starting to realize that the potential risk from nuclear accidents is outweighed by the very real risk of what we're seeing from climate change, and now we're realizing we need that carbon free nuclear energy to achieve our climate goals. Say Steve, you understand both fusion and fission, so and

nuclear power. I mean, is it time for us to continue with some nuclear power because we have to because of the climate, or is it or should we not be? I mean you understand the space, the radioactive waste that doesn't go away as we wait for fusion to be a right reality on a grand scale. How do you see it? I think we've got to do fishing until we have fusion. You do, because I think the enemy right now is climate change, and it's accelerating. We see

all the impact that it's going to have. And again, the thing, the big surprise the last few years is how renewables have come down in price, and they're doing a terrific job in that sector of the market. But you've always got to back that up with something that's there when the wind doesn't blow in, the sun doesn't shine, and fishing can do that. We know how to do the technology, we have to do it more efficiently than we've been doing. What does that mean more efficiently? Well?

Building nuclear power stations is a very expensive business, and the cost overruns on every project that I've ever seen a phenomenal um. And it's about managing. It's about managing those projects in a better, more efficient way, um and delivering fishing at the costs that we really want to pay. Part of the problem is that we have not been building nuclear power plants, so we've kind of lost that skill set. We don't have a veteran workforce that knows

what they're doing. All the ones that are happening now are kind of one off projects, which is exactly why they're taking much longer and costing so much more. The only US nuclear power plants under construction is in Georgia. It's Vogel. It's been under it's like seven years behind schedule, and the budget has doubled to thirty billion dollars, but

it's supposed to be finished this year. Do you know you talked about a younger generation caring about climate change, so they want jobs and fusion younger generation that cares about climate change. If you're saying that fission nuclear is also part of the equation, do they want to work at a nuclear power plant at younger generation? I'm just curious.

I think that's a harder sell. But I think we I think we should be working on that, frankly, because I think, you know, this is the way to get to net zero, and if you look at any of those plans like the one we have from Princeton ends up net zero American plan, right, that plan basically relies on either carbon capture and storage or fission to fill in the gaps these Carbon capture will something that is skeptical. Yeah. Yeah, I mean I think the technology can work, but can

we make it work cost effectively? I think that's the question. I have a lot of questions about carbon capture. It's literally what it sounds like, something on the smoke stack of a coal or gas power plant. You trap the carbon and then you injected underground and send that carbon back to where it's from go ahead. I think of those two technologies as being transition technologies. Neither one do you want to do for decade after decade because you're

gonna have to bury the carbon dioxide somewhere. Um and the only and again with fishing, you do have a long term waste issue and you don't want to do it for decade after decades because they laun term really long term. Yes, so I mean this is which is why you want fusion to replace deadly for thousands of years. Well, having visited a nuclear power plant, looked at the pools with their rods, like, it's pretty startling and pretty like

a reality. Renewables, wind solar, how do you what percentage do you think that they will ultimately be long term or is or is it something that ultimately will In a lot of these plans, they're producing sixty seventy of the net. It's just the gaps that become their problem. Um. And you know, if we have fusion that might change that that environment a lot. What about battery technology improving faster than fusion. I think that the challenge with battery

technology is long duration storage. Batteries are good at short duration, but for instance, in Britain we have we have Decembers in which there is no win and of course no sun because it's Britain um and um, and you have to store up all the energy to power the country for the whole of December. That is enormously challenging with with with batteries. Now you live in the northeast where you know the sun shines three that speaks of California.

Just got about thirty seconds left here. So what's the next thing when it comes to fusion that we should keep on our radar that you think we might see in the next year. Well, expect the Kniff results to get better over the year. Their next test is in February. Hopefully they'll replicate what they did or even do better. They're on the edge of a cliff of what we call gain, and you know they have a gain. They put in two mega jewels, they got out three mega jewels.

I could see them going up to ten, maybe fifteen possibly over this next year. That would be phenomenal. Okay, I'm googling Mega job. What's a mega job? Mega jewel? Mega jewel units of energy and it's the unit of energy. It's about the energy of a hand grenade or a candy ball. That's right, that's right hand and hey candy bar, Oh my gosh, please come back, both of you, because that was just kind of what we were hoping to

do and just share that with our audience. Steve Calli, Dr Steve Calli, Laboratory Director of Princeton Plasma Physics Lab, and of course our own Will Wade here's Power and Renewable Energy editor here at Bloomberg News. Thank you to both of you. Really appreciate it. Thank you. You're listening to the Bloomberg Business Week podcast. Catch us live week days from two to five pm Easter on Bloomberg Radio,

the Bloomberg Business app band you too. You can also listen live to our flagship New York station, Just Say Alexa Play Bloomberg e Love and Verdi Well. I have to say shocker today on the global stage, as the news came out that New Zealand Prime Minister just Sinda Ardern announcing she's stepping back in a shock resignation ahead of a general election leader this year. You know, keep in mind she was the world's um youngest female leader when she led her Labor Party to power in seventeen.

She's basically saying, and she told reporters, I don't know the energy or inspiration to seek re election. So stepping back, yes, she told reporters, as you mentioned, that she doesn't have the energy or inspiration to seek re election, which I was pretty surprised if she can't do it, Carol, what what hope is they're out there for female leaders more generally,

and with that, we want to bring on our next guest. Yeah, I Hope Dimachowski a senior executive VP and chief financial Officer at the more than thirteen billion dollar market camp First Horizon Bank based in Memphis. She joins us via zoom from Memphis, Tennesseee Hope, nice to have you here with Tim and myself a lot we want to talk

to you about. But when you see a headline like that or somebody else in the c suite that's a woman that steps down or you know, resigns or whatever and then isn't replaced by another woman, Like, how do you think about it? Because are you seeing you're in the c suite, your CFO at First Horizon, do you feel like women are really making in roads when it comes to the c suite? Unfortunately, I agree with your

introductory comments. Is absolutely when one person leaves like um that we've had, and it's actually the second one for us because we also lost the English Prime Minister earlier this year after a very short time and with such a few women representation in certain industries and fields, when one leaves unexpectedly, it definitely has a big impact on all of us. We feel that you know each one of us when you we want to go up in number, if you want to have more representation, whether it's a

C suite or in top layers of government. So it absolutely hits us all each time we see one of these senior women step back from any type of role in a area which is a significantly underrepresented. Based on your experience, how do we get from underrepresented to accurately represented? Great question. Yeah, I think it really comes with a conscious effort. But I think the data has shown in

Harvard Business study. The great study on this last year is diverse companies that have high diversity at the top, it just continues through the company. So the more that we get diversity in the c suite of women, people of color, the more that you see your companies start to change. People want to work where they can see

themselves in that role. I do a lot of on campus recruiting through a couple of different companies that I've worked for in recent years, and the number one thing I hear from diverse talent, both women and minorities, is what does your c suite look like? And I can't see myself getting there if I don't see people like me there. So I think representation matters. It speaks to

you go after top talent. It speaks of belonging right like if you don't see it, like, how can you feel like you you belong there or you know it's a good fit. How tough was it for you to work your way up? That's a hard question to say, how tough. We each have our own journey, but there's definitely a different path, you know. I started my career in investment banking in New York City. When I started with Deutsche Bank, they had a hundred leadership development graduates

in the US and they had three women. So I was the diversity candidate. Uh, you know, twenty years ago. I think the hardest thing has been trying to find mentors and trying to find people that can help you along your route. Just got asked on a panel this morning here in Memphis. You know, do I have a problem finding male mentors the answers, No, I've had lots

of great male mentors and allies. I have a harder time finding women that have been in the c suite or have been at big companies that can mentor me and work through those situations with us. What about the pipeline, as you know, not necessarily c suite executives yet, but those who are in their career maybe you know, midway through their careers. How do we how do we make that more equitable because that's what gets you, that's what

gets you to the c suite. Yeah, there's a broken wrong, especially in banking, but a lot of industries when it comes to women and minorities, and it has to be constantly having ally ship, constantly having mentorship, and having purposeful recruiting at all levels. Uh, sales Force such a great job. Two years ago, I think it was might be three.

Kind of lose track of time with COVID, but they had a equity study, made sure they had equal pay at all levels, and really made a conscious effort even out and two years later they found out they went backwards. So the unconscious bias it's there, and so you if you're not tracking it, you're not measuring, if you're not making a conscious effort for not making the progress or we need to make um. You know, it's interesting too.

I mean, did you ever feel like at some point though you're like, it's just really really it sounds like you've had a pretty good trajectory um and good people behind you helping your way. What was the most difficult time though in your journey? As you say, everybody's journey is different, but was there a point where it was tough?

Multiple times, I can't tell you how many times I've sat down with my husband and said, I'm not sure this is for me, you know, being a wife and being a mother of three, when your work and a job situation or a I've had dealt with a lot of bias in my career. Unfortunately, when that takes away your ability to feel good about yourself, it impacts you in your other areas. And so so many times I've

had my career impacted with changes I've had. Um, you know, somebody make a comment to me that was very sexist or inappropriate, and every single time it made me question, is this is what I want to do? Is this then environment I want to work in? And it's why I'm so passionate now that I have made it to the C suite and lucky to be one of the women doing and doing mentorship and doing conversations like this and sitting on panels so that other women can know

it's not easy and it's okay to be hard. It's okay to question yourself. Someday you need to, each one of us just figure out what was the right thing

for you. And each one of those times I came back and said, Okay, I'm going to continue harm and continue with this company, and I'm gonna be the one that makes the change that other women don't experience this Now, it's some really good points that you're making and and important to see individuals like yourself so that a younger generation UM and other women coming into the finance space where the banking space can see somebody in the spot and aspire to that. UM. Since we have you, we'd

be crazy not to ask. And what's an uncertain volatile market environment, economic environment, recession and no recession? How are things looking every day? Is the new look? At the market right now. You know, we are an unprecedented financial times in the US and across the world, with COVID, the changes that we've had, the issues we've had with supply chain, to the fastest rising rate environment that anybody

that's currently in business has ever seen. And so I think we just have to continue to look forward and look at where we can make progresses in small areas. But we have a bumpy couple of years ahead of us coming out of where we've been, and whether we're going to see a recession or not, there's a lot of different opinions on it, but I think you know the latest and receive Do you think recession likely this year?

I do. I think we're gonna have my personal opinions, I do think we're going to head into a small recession this year. Hopefully it'll it'll be uh, not too strong and not too long. But we disinflation issue UM is just really stifling us and it has taken too long to get it under control just in the last thirty seconds that we have. How how small of a recession? What would tell you, like what would be the worst

of it? You know, I actually don't have an answer for that I tried to be the best case scenario person, so I don't know what the worst cases. I try not to go there, although you know we have to for running a bank and modeling. But I don't think we're going to see a worst case. I think the FED has taken a lot of very aggressive action with interest rates to make um the bring the inflation under control, and they have signaled as well said they're willing to

take a larger action if needed. So I don't believe that we'll have a larger session that doing everything they can to prevent that. All right, I really appreciate your time. Hopemachowski, chief financial Officer at First Horizon Bank. Joining us via zoom you're listening to the Bloomberg Business Week podcast. Catch us live weekdays from two to five pm Eastern on

Bloomberg Radio, The Bloomberg Business and and You too. You can also listen live to our flagship New York station, Just Say Alexa play Roomberg Dirty a story about how startups are getting created, are creating what they are doing, They're getting creative, I should say, when they are in the hunt for crash and for cash. Catch by that it's Wednesday that these things happening. It's some day just like they're getting creative. I'm getting creative. Um, but some

of that creativity is raising eyebrows. Well, we got a great voice with us. He's quoted in this story, Ken Smith. He's from Next Round Capital Partners. He helped start up startups obtained financing. He's with us right now in the Bloomberg Interactive Broker's studio. Ken, good to have you with us. You know, as as we heard Um Charlie going through the markets, you were telling us a little bit about you know, your impressions of Elon Musk and you know

how he paid overpaid for tests for Twitter. Excuse me ahead of Tesla earnings this afternoon. Um, the environment has shifted so much just in the past year. What are you seeing in the work that you're doing when you're out there helping startups raise money? First, thank you for having me. It's pleasure to be here. Um. Yeah, we're seeing an environment which is drastically shifted in the last

twelve months. Particularly, I think UH investors obviously are kind of coming off a very very rosy scenario which was two thousand twenty one where multiples were sky high and people were paying for growth at any cost, and now we're back to fundamentals, as they say, and investors are really focused on when companies are gonna be profitable, when they're gonna be cash break even, and and particularly what multiples are they paying now for that future growth given

interest rate headwinds, the FED and a potential recession. So a smarter market today in terms of focusing on fundamentals. Where it got a little stupid when there was so much cheap money, they got super crazy. Uh, some firms and I won't name names, we're doing you know, ten deals a week, right, How can you keep that pace and and really be doing serious diligence um on these companies?

So what we're seeing now is really kind of a very much a pullback, very much focus on what's going to work not only now but in several years from now, and durable business models. What I want to ask you, Kenny, is that in a market like this, does it create companies that will ultimately be your Google's, your Facebook's there, I say Twitter, you know, the companies that actually have longer legs and sustainability going forward because of the focus

on fundamentals. Absolutely, you're going to see companies that really were sort of cash burning machines that need a venture capital to continue growing, right, they could continue to feed losses. And a lot of the consumer models if you look back at Casper Mattresses, if you look back at Lime at Bird, these were ideas that just consumed massive amounts of money. The vcs had to continue funding at ever raising rounds and ever raising prices. And when that's working

and money is cheap, it's great. You can run a business like that all day long. But when the month, when the tide goes out, as Warren Buffett says, you know, look out below, right, investors are just not willing to fund those losses indefinitely. So what's the environment that exists right now in the context of the new companies that

are out there being created. Are we in a more normalized world of you know, I don't know, the nineteen nineties perhaps where we see interest rates not at zero right, So now we're I believe we're in the sort of two thousand nine period called two thousand twenty to two thousand eight for the venture capital I p O market where everything ground to a halt, and two thousand seven

was two thousand one. But but what came after that, It was like the best time ever to be a venture right, And a lot of the venture capitalists hadn't seen a two thousand twenty two yet. Remember a lot of these firms got started in two thousand and ten, two thousand eleven, two thousand twelve. All they knew was

a bowl market. If you were an employee started working for a startup, you got all these options and all you saw them is go straight up, straight up, straight up, and you never sold a share, and you were the smartest person in the world because then if you had the I p O the lock up and you were rich, and that's all you had to do is just keep doing that over and over again. Now venture capitalists are

starting to have to think like hedgephone managers altho. They have to say, you know, Chime was a twenty five billion a year ago, and that was it a hundred times multiple, and now Chime is trading at ten billion, and potentially if it was public down to six billion, should I have sold a lot a year ago? Do

I need to start actually managing a portfolio? Because this whole buy and hold thing in the VC world isn't gonna work in every environment kind they got lucky and it worked for a while, but it's just not gonna work in time. One of those startup you know, so called neo banks. That's right. So what does this mean for startups who do need cash? I mean, Hmma Palmer who wrote this story, she's our hedge fund reporter here

at Bloomberg News. She talked about how startups are having to be creative in terms of the hunt for cash. So what are they doing, what does that mean? And what do they have to promise or what they have to do? I think early stage startups, and we defined the world by early stage, mid stage companies series C, Series D, and then late stage post series E, when you really have a business going on. I think a lot of what I was talking about in the article

was companies that have already raised money. They have significant business, is going on hundred million, two hundred million, three hundred million revenues, but are still burning cash, right, and so they have a certain amount of cash and kind of two thousand two was sort of a freebee, But there's southing twenty two sorry, was a freebee. You raise a lot of money in twenty one. You had plenty of

cash to get through twenty two. Now your whole when as a CFO you wake up and this all goes away, right, because you don't want to go out and raise money at a discount or a fifty percent discount to what you did, Hence the down round. Right. Not only that, but you've got employees and executives to keep happy, right, and if you wipe out their equity, guess what, you've got a lot of upset people walking around the office saying, hey,

what did you do? So this is gonna be the interesting part two thousand twenty three and mid part this year into two thousand, Rubber is going to meet the road. Every CFO is gonna have to say, what's this? Where are we going with this? Do I keep growing my business or do I dilute my investors and wipe out my equity of my employees? Right? And that's gonna be the big dilemma. So you see companies like Sneak that just did a down round, they got a major free

pass only down right from their previous round. If you can do that, you should do that all day long. But I think companies, but Sneak is in a sas software high margin business so they can probably get away with it. But if your instac cart trying to raise money now or go puff, good luck. Yeah, we've seen I mean, we've written about the challenge that those companies

are facing quite a bit in Business Week. So I guess my question is about the types of businesses that are going to come of age during this period of higher rates and you know where the money isn't free anymore, that's right. M Are these gonna be just better businesses? Are you optimistic? Or is are you? Are you kind

of very optimistic? You're not almost glad this has happened because it's making CFOs and companies actually have to be aware of cost, be aware of how much money they're burning, of investors money to grow these businesses, thoughtful about hiring and hiring and right sizing your organization and not just throwing money at problems, because that's what everyone got, punched drunk on free money. So if you're just punched drunk on free money, you're gonna hire as many people as

you want. You're going to invest as much money into sales and marketing, so you're gonna go after bad product ideas and they may or may not work, But what do you care there's a VC standing by and wanting to give you more money. What are the opportunities? Then, the opportunities are in virtual reality. Companies like Andrew the opportunities. Although I think it's the defense, the defense try. I think companies like company. He's the guy who created oculusts

sold it to Facebook. Now he's trying to take that. And Rill is one of our top requested names obviously, and start talk about open ai. But open aiy is kind of the new Uh, let's just say darling of the private world. Um, and we're going to see a shakeout in that world. I think I can that world to when Yahoo was the leader in search and then Google came in along and actually made it a business, right, And so that's what we're kind of seeing with AI

is who can actually make it into a workable business model. Um. We're seeing a lot in logistics and transportation companies like flex Sport, and then we're also seeing a lot of the sas businesses which do cloud data storage, AI, machine learning, data bricks, data robot companies that actually are helping businesses be more efficient with very high profit margins in the In the interim, he it. Does it also mean that companies will go to public sooner rather than later. I

don't think so. I think we're in a very interesting period where investors are willing to pay a certain multiple. If you look at public company multiples that are comparable, and if you're a private company CFO, you might say, you know what, it's probably better to stay private for right now. I agree, But because it's a different environment, there isn't so much cheap money, it's not going to force some companies to have to tap the public markets.

Do you think there'll be enough out there? I think that when companies do start raising money again in the private market, if if the appetite is there and they can do it at the right price, they're going to try to stay private until the market recovers and then you can go public at a higher multiple. Remember businesses in software that are growing at selling for five times multiple the public market. You know a lot of these

private businesses times more plus. So that trend continues. Because it's something that Tim and I talk a lot about. It just kind of floors us when we go to different conferences. We were at Milk and it was all about the private markets that trend continues that the private markets are going to continue to fund so much out there. Just got about thirty seconds. That's right. Look, that doesn't change a lot of the best ideas are the early

stage ideas vcs. If you're a VC that caught open a I, really you're sitting on a hundred times your money. That is where the real money is made. You got to catch them early enough, though, you know many times once they get too late, just like Uberhood raised so many financing rounds by the time of one public at one down. So you know, you just got to catch the timing right. But this is innovation. We're gonna pay

for it. There's gonna be a bull market again, and you know, stay positive and look at fund the medals. All right, we certainly will. Ken SMI thank you so much. Next round. Capital Partners founder joining us in our Bloomberg Interactive studio. Check out him a parm Our Our hedge fund reporter at Bloomberg News. Her story talks about exactly

what can just lay it out for us. You're listening to the Bloomberg Business Week podcast, catches live week days from two to five pm East here on Bloomberg Radio. The Bloomberg Business a band you too. You can also listen live to our flagship New York station, Just Say Alexa play Bloomberg elve and Dirty. So Elon Musk also the subject of this week's cover story, which notes that if he has a tragic flaw, isn't his temper or

his treatment of underlings, or is refused to follow securities laws? Nope, it's that. It's he's extremely and painfully unfunny, which is kind of funny. That is kind of funny, all right, So let's get to it with us. Is Bloomberg Business Week colmunist Max Jeffet and Bloomberg News Technology put her down a hall. They wrote the story the cover story of Business Week. Max is here in our Bloomberg Interactive Broker studio. Dana on the phone from San Francisco. Nice timing, guys.

This is what we are all leaning in on, Danna. I'm going to start with you because you know, Ellen, I always feel like you know that he for a long time could do no wrong to some extent, and everybody was all in and then things changed. What happened? Yeah, I mean two was sort of a remarkable year for him and for you know, and for all of us in a lot of ways. But I mean this is a guy who was Time and the f t S Man of the Year or Person of the Year one um.

And then you know, and then in two he bought Twitter, and in order to buy Twitter, he sold billions of dollars worth of Tesla shares. And then once he took the reins at Twitter, he fired everybody and started to interact with a pretty like sort of rogues gallery of characters, you know, right wing folks, anti Semitic folks, conspiracy theorists, and you know, for a long time old school early adopters of the Tesla brand, this was very, very alarming.

And I think what you saw was that because Tesla and Ellen are so intertwined, I mean, there is like the brands are the same. Basically, there was a real erosion of of the Tesla brand, and you know, in marketing surveys and just conversations with former employees, in conversations with potential Evie buyers, and that was really something that Max and I wanted to explore at this kind of

pivotal moment for the company. A Max, come on in here, because I was, you know, I was having this conversation with a friend recently who has thought too Tesla's and he was I was saying, what do you think of all the stuff that Elon Musk does? And he was like, you know what, I don't care what he's got and musta He's like, I don't care. You know the CEO

of Disney does. I don't care what the CEO of you know these other companies that I said, you know what though, But the thing is with Tesla and Musk, like the two are inextricably bound to one another. Yeah. I mean when we talk about Tesla's brand, it's it's different from talking about Fords brand or or Chrysler's brand or something like that. As as Danna was saying, that's that's there are two reasons for that. One is this

kind of Musk as the centerpiece. You know, for years we talked about how amazing it was that, you know, Tesla didn't spend money on advertising, and it's been a huge part of the way this company finds people. And then the second thing is it's it's still a very strong brand. It's you know, Musk is is doing things that are hurting a company um and that that sort of as Danna said, like longtime investors, some um, longtime fans have found uncomfortable. But it's not like there aren't fans.

And you know, yesterday while we're listening to the earnings, right, Tesla put the numbers out there sort of okay, there was a sort of beat on revenue and it's kind of a mixed bag, and the markets weren't doing anything. And then Musk gets up during the call and says, you know, we might we we said we're gonna make one point eight million cars, but we just might make two million cars, you know, And the stock went berserk at that point. Um. And that's and that's where it

had this huge jump. And so the thing is when Musk still does kind of like the Musk thing um, which is, you know, talk about how great testas and how many cars are gonna make and make these like wild problem. The investors like that and they're still going for it. It's when he starts talking to Cat turn to pick on one of his um, you know, interloculars

on Twitter that people start to feel uncomfortable. So it's it's not like there's it's not I can't walk back from It's not like he can't come back from some of this damage. But but there has been a shift and and it's reflected in the stock price. Even though it's gone up um today, it's still you know, half of what it was, more than worse than half what it was, you know, before this Twitter uh stuff started, Danna.

You know, it is kind of remarkable some of the things that he does and some of the investigations that are happening. He was up on you know, this whole week, right on the witness stand um talking this is not typically what you want of a CEO of a publicly health company, you know, does he not get it? Like? What is it about Ellen? Like he's got to be seeing the headlines, the news, He's got to see the stock drop, Like does he not understand that some of these things he does is not so good? I mean,

Elon reads everything about himself. I mean I think he you know, he's sort of noticed it, probably gets notifications for himself on Twitter. He read our story, he read our cover story. But but I think that he's gotten a late whatever his stick is, he has gotten away with it for a very long time and it works for him in the way, you know, in the way that it works for President Trump. I mean, like him or hate him, people see him as an unvarnished authentic character.

I mean, he says what he thinks. Sometimes he's rude, you know, He's called people he called like the public county health officials fascists. On earnings calls, he told analysts that their questions were boring and bone headed. Um, he thinks that Joe Biden is a damp sock puck that I mean, and he he says when he thinks, and people like that. They like that authenticity. They respond to that um and it keeps him in the news, and

it keeps him in the conversation. And even if he's in the conversation for a bad reason, he's still in the conversation. I mean, I think if you interviewed a bunch of people on the streets in Manhattan and asked him who's the current CEO of gm Ford, Chrysler or BMW, Like, I don't know if they would know who who was, but like people know who Elon Musk is and that helps,

you know, ultimately, I think it helps him. He max um to that to that end, and what Dana was talking about, it doesn't always go well for elon Musk what happened at Dave Chappelle show recently? Oh yeah, this was the way we opened the story. And and it was I think Danna's idea just because it was such a contrast from kind of the the response that Musk normally gets when he's in front of a crowd. You know, he gets up there. Dave Chappelle uh performance in San

Francisco sold out crowd, giant arena show. You know, Dave Chappelle, of course is a controversial comedian. You know a lot of his act is about, you know, railing on you know, the dangers of woke culture and things like that. You know. In other words, these are people who you would think would be fans of Musk's kind of right wing, transgressive

Twitter stuff, and they weren't. They were booing him. And just seeing that kind of turn, I mean, that's that's where we got kind of got the idea to to write the story because just like seeing that turn was pretty dramatic and and and it really and yeah, like Musk has a big fan base. Um, they love him, just as Dana is saying. On the other hand, Uh, it's not clear how much more growth. Tesla has that they need to grow to be so much bigger, so

much bigger to justify the current valuation. Uh, Danny, you did say he read the story. Did he respond to you guys? Right, Well, I'll let more, I'll let ahead

white a response. I mean, it wasn't like a direct response, but he like someone quote tweeted it and then go ahead, Musk and I was talking about the story with like a handful of like doge coin influencers, dogecoin being his favorite cryptocurrency, and they were kind of saying like, no, you really are funny, Ellen, and he was responding like thank you, so so not exactly a direct response, but

but certainly talking about it. And then on the earnings called, there was a very interesting moment where an investor asked, you know, what you know about the sort of potential brand damage, citing a poll that we cited by you gov, which is a you know, scientific pollster, and Musk essentially said, you know, you gov, schmoogov I got a hundred and

twenty seven million Twitter followers and um. And it was a really interesting moment because, first of all, a little bit of a window into what his strategy is or you know, if you're trying to find a strategy with Twitter. It's like, hey, I'm out there, I'm in the news. Just like Danna said, people are talking about it, so

it must be good. Um. It also was a bit of a turn about from the way Musk was talking about Twitter, you know several months ago, when it was just like, oh, these followers are fake, it can't trust him and so on. So super interesting moment. And I read that also has a response to to the story, Well, it's an incredible story, run out of time. We can talk forever on it. It does make me wonder, God, if he didn't buy Twitter, would we still be? I don't know where would we be? But who knows? Um, guys,

we gotta run cover story of Bloomberg Business. Wee gets a killer Bloomberg Business Week calumnist Max Chaffman and Bloomberg News Technology for Danna Hall. They wrote it. So check it out the new issue on newstands, online and on the Bloomberg You're listening to the Bloomberg Business Week podcast. Catch us live weekdays from two to five pm Easter on Bloomberg Radio, the Bloomberg Business app, and and you too. You can also listen live to our flagship New York station,

just say Alexa, play Bloomberg Elvenerdi. When you think about the best watches in the world, you probably think of brands such as Rolex and Patech, Philippe some others as well. There is, though, a group of indie watchmakers that are taking the luxury market by storm, thanks in part to

a supply crunch affecting some of those top brands. That is the subject of the opening story in the Pursuit section of the magazine this week, and much of this section is actually dedicated to so called time pieces, as we call them here at Bloomberg. Pursuits we do we have with us are in house expert in a super fan on the subject, Pursues editor Chris Rouser, he knows a thing or two about watches. Also joining us as Bloomberg News reporter Andy Hoffman, he covers retail and the consumer.

He's based in Geneva. So, Chris, is it you know? I think of you as the Bloomberg watch guy, But is it possible that Andy actually knows more about watches than you do? It's I I almost hate to admit it if I wasn't so proud of him. But Andy actually is the really the true watch industry expert. UM. You know, he's based in Geneva and he covers the

Swiss watchmaking industry. There's a lot going on and it's been a very fascinating beat in the past five years because this industry has really exploded, which is why we're doing this story now. As you said, all of these major watch brands are having supply chain issues. They're not increasing production as demand has increased, and so people are turning to other, less famous brands and they're learning a

lot more. And you know, you almost don't want to put it in the context of it being hard to get a role X or a Ptex, so you're looking at the others brands because these other brands are actually very interesting on their own and they're very accomplished UM, and we love highlighting them. Yeah. And it's funny because when I first started, Oh, I'm like, oh, they're gonna be less expensive but really cool and sorry, you know, I kind of kidded at the earlier with him. I'm like,

we could even afford them. He's like, no, we can. There are something that you can all right, Andy Kamani in on this UM, you know, you and Chris were talking about this coverage. Tell us about these what we're calling indie brands. Yeah, well, I mean Chris is absolutely right.

I mean what we've seen, you know, during the pandemic, you know, consumers in particular US consumers sort of fell back in love with mechanical watches, most of which are Swiss, and UM that created great demand for you know, the classics, the well known brands like Rolex or the marpige uh protect Phi, Leap and into you know in those brands, and they just don't make a lot and and the demand for role X is so high even though they make a million watches a year that these independent brands

have been able to sort of jump in and fill that void. And also people were spending more time online, they were doing their research much better, um, and they became more exposed to these brands, and so brands like Ming, which is a very interesting brand. It's only you know horology Ming, it's only uh five years old. It's actually

based in Kuala Lumpour. The watches are Swiss made and they're making these really interesting sort of groundbreaking watches that use you know, luminescence and light and design and sort of very interesting ways. They only sell them on their website, but you know, these watches are being sold at auction here in Geneva, you know, alongside protect for leaps, Odomarpige's and Rolex. Now I'm really intrigued by this thirty six

year old Ming teen. You know, you think he's you know, a watch guy, but then you write that he's not just that. He's a photographer, he's a designer and a private equity guy. Who is he? Yeah, yeah, he was. He worked in private equity for a couple of the big firms. Uh, worked for some Asian money managers. Um graduated from Oxford, you know, in his teens. And obviously he's a really bright guy. Um and also you know,

artistically gifted. I mean he's a great photographer and has always been a watch collector, is what he's told us. And you know, at a certain point, Um, he was collecting all these watches and he said, you know, and it is only you know, five or six years ago, and and and he said, you know, I'm going to give us a try. And so uh he and and a few colleagues and fellow collectors started Harold jer Ming

and and um They've done extraordinarily well. I mean they started, I think their first watch was selling for around nine hundred Swiss francs. Now most of their watches self for around five thousand francs. Um, some felt self for ten thousand, and and they're even making watches that sell on their site at retail for twenty thousand, sixty thousand francs. Very rare. Chris start with you know what you guys called, you know, the one that's like a blue chip short thing, um,

and I think this is is it? F P Jorn? Yeah? Andy, do you want to talk about I've loved to Strand for a while. Yeah, I mean f P Jorn is sort of the big heavy hitter, blue chip independent watchmaker based here in Geneva, French born. Um, you know, just makes extraordinarily complicated, exquisitely finished UH watches, which now you know he's the brand was founded in the nineties. He started producing watches under the Fijn brand and I think

ninety nine. Now these watches sell alongside PTech UH and odom RP Gay at the auctions well over you know, into well into the millions. Um. I mean they're just you know, he is an extraordinary watchmaker. He has an extreme talent, and you know, the watchworld has slowly but early woken up to this. And now he's, you know, at this sort of pinnacle of the game. I want to talk about this time piece. It looks like two

watch faces are conjoined, or a logical machine number one. Indeed, that's that's Max Booster, who is all on his own in terms of of the way that you know him and his company which is called MB and F. Max Booster and friends have decided to approach watchmaking. We got to spend some time with him. Max Booster is clearly an artist, and he surrounds himself with artists and and they are making what they feel as art um for

your wrist um. And so you know, he makes watches that look like panda bears, He makes watches that look like frogs. He makes watches that look like spaceships, and you know inside them is extraordinary horology. Uh. And yet you know, the designs that case shapes are like nothing anyone has ever seen. He's watches are self for well over a hundred thousand francs um, you know, but he also makes some watches that are slightly more traditional, although

nothing that Max Booster does as traditional. But last year he uh he and a fellow watchmaker who's you know, one of the friends, a guy named Stephen McDonald from from from Northern Ireland who designed the movement and the complication, made a what's called a sequential chronograph, which is basically two chronographs on the same watch, um running you know, through the through the same movement, and it allows you to do all these things with one chronograph on your

risk that you you know, just wasn't possible before. I mean, they're really you know, pushing the bounds, doing new things, and they're being awarded by the industry with um the Grand Prix, the Horology, the Genev g PhD Awards. The Max Boosters is the you know, a prime example of the wider watch public waking up to these independent makers and it used to be just for the watch geeks and the freak and now everybody knows about a chronograph is a timer by the way, so that you can

do a lot of different things with that watch. I remember when I started reporting on watches almost ten years ago, uh, and we learned about that. I learned about this brand and it was not like and he said it was not something that people knew about. Only only watch geeks knew about it. And now now these things are much more in the mainstream and lots and lots more people are lining up to buy them. Andy, we can't see you right now, but Chris is wearing an Apple watch

because you're in Switzerland. Okay, what are you wearing on your wrist? And what do you think of Chris's Apple Watch? First of all, Apple, Apple watches a very interesting and and and and clearly carefully designed watch them. I'm wearing a Swiss brand called North Caine UH, their g M T watch. I think we actually wrote about it UM in December um uh and I just actually visited them today.

Very interesting and that's another independent brand and UM nor Caine what they are is basically making pretty classic watches, but they're making you know, and they're an independent brand, UM.

But they're well, they have great distribution. They're about five years old and their watches are now available in the US, Switzerland, Japan and they're in that three you know that two thousand to five thousand UM frank or dollar range, which is actually UM used to be quite crowded, and now you know that The trend in the industry is for everybody you know like Omega and everybody in you know brands like ours, another independent brand to move up in price,

and so there's a vacuum or avoid there um for reasonably priced watches. That's Bloomberg seatsator Chris Rouser, along with Bloomberg News reporter Andy Hoffman joining us from Geneva. You're listening to the Bloomberg Business Week podcast. Catch us live week days from two to five pm Eastern on Bloomberg Radio, the Bloomberg Business sam Band you two. You can also listen live to our flagship New York station, Just Say

Alexa play Bloomberg E Love and Dirty. Well. The companies that we talk about each and every day, you know, they begin as ideas, maybe in a garage and Silicon Valley, or perhaps in a rented office space in Alburquerque. But from that idea to an actual functioning business can be

a rocky road. Tim. Yeah, you gotta beg investors for money, You've got to manage your growing workforce, you gotta figure out how to scale, and ultimately, if you're lucky, you'll get to a successful exit, whether it's an I P O or an acquisition. But it is a tough slog. If only there were a handbook for entrepreneurs, there actually are. Next guest says, he has written one, Ory Levine. He

knows a thing or two about building a company. Co founder of Ways, which, as you know, sold to Google for one and one point fifteen billion back in he was an investor, and move It, which Intel bought for one billion back in. Tim He's got a brand new book out. It's called fall in Love with the Problem Not the Lotion, a handbook for entrepreneurs, he joins us on the phone from New York City. Or how are you good? Good to have you with us. Thank you,

I'm excellent in yourself. We're doing well. Thanks, We're very pleased. Congratulations on the book as well. All right, um, I'm wondering about, you know, starting starting this idea in terms of, like you know, thinking about not just this handbook, but about your own journey as an entrepreneur. What does it

mean to to fall in love with a problem. So essentially, you know, when you fall in love with the problem, the problem remains your north star of your journey, right, and when you have a north start, then at the end to stay, you're less likely to do deviations from it and more likely to actually get to your destination. But there is a matter major part of it, right because the story that you're going to tell when he's associated with the problem is way better than the story

that he's associated with this solution. If we will be here in two thousand and seven, I would tell you that I'm going to build an AI based groutsource navigation system. Then you would say, yeah, right, but you don't really care, well, what was the problem. What was the problem though that you were trying to solve in two thousand seven, I'm going to help you to avoid traffic gims? All right, that's it worked, and then you do care you know every time, and I am an all in fan on it,

and you know, um, I will say. My husband's like kind of laughs at me because when it's like there's a car on the road, I'm like, I hit it, and I you know, could you read it? You've got in the world to buy in and help you in this process process. Is there something that in society, um or that you think though has changed. We talked so

much about the sharing economy, the sharing society. Is there something different that enabled ways to be created that could have been created maybe years ago, beyond the technology component of it. You know, I think that in general people are um like to help each other, right, and so we are. In general people are good and if you create them the opportunity, then they will be happy to share.

They will behaving to great value for others. And the magic of ways is that we the drivers are helping the rest of the drivers to avoid traffic chams and to know what's going on on the road. And essentially it's sort of a social network of drivers that we are helping the rest of the drivers. What's a problem in today's world that needs to be solved? Besides that my puppy needs to be trained, I wish there's probably

an act for that. At the end of the day, there are a lot of problems because we when we think of different issues. And by the way, when we started ways, you know, traffic jams today are more severe than they were when we started ways and we actually were scheduled or we our mission was to help drivers to avoid traffic. Terms of traffic chances, they are a bit more severe, right, and so we have done we are not done with addressing mobility and movies actually did

a better job in addressing mobility by making public transportation easier. Um, but we're still not done. And you know, one of my startups is trying to address parking because it's some major issues. And many of my startups, which one of them, is trying to address a different problem. I am curious how you look at some of the companies that were once startups but are now behemous in the technology space but are having a tough time a k, Facebook, now Meta, Tesla, Twitter, Like,

how do you look at them? Because just because your startup in it and people can be excited and you can do well for a while, it doesn't necessarily mean you have legs. But how do you look at some of these companies somebody who's created companies and companies with legs. So so let me ask you the following, right, and and this is very league, Um, how fast the world

is changing? Right? Google and Amazon and Netflix are about twenty something years old, right, and then Testla and Facebook and in Twitter and high Airbnb are less than many years old. They were amazing entrepreneurs at the beginning that had a mission to change the world, and in their

journey they have made the world a way better place. Right, just imagine that we will have a time machine and I will send you back fifteen years into two thousands and seven and two thousand, name right, just before we started with And that means that I'm going to take away your iPhone in ways and Uber and Netflix and and pretty much everything that you're using every day. It's unclear that we will survive. So when we create a solution to a real problem, it's guaranteed that we are

creating value. And when we create value, we are likely to become successful. Now, whether or not we are looking at the valuations that were year in the last couple of years or the valuations today, it doesn't really make the difference in the value that those companies have created

and in the goodness that they have created. You know, there was the saying that companies oftentimes, like in you know, before the pandemic, you'd see startups get ridiculous funding rounds and they were in search of a problem to solve. What's what's one company that you saw a startup that you saw that you passed funding on because you said, wait a second, this is not they're solving a problem.

So so most of my startups are actually self made. Right, so I was looking at the specific problem and then find the right team, or or maybe the team came to me very early phase, right, so way before they even started, which a problem that they would like to solve, and I basically say, this is a problem worth solving. And so my recommendation will be, think of a problem that is worth solving, a big problem, something that the world will become a better place if you acquested, and

then ask yourself who has this problem? Now, if you happen to be the only person on the planet with this problem, then I would say, you know what Goat was shrinking, It's gonna be a page and fast then building a startup. But if a lot of people actually have this problem, that what you really want to do next is go and speak with those people. Yeah, you can understand their perception of the problem, and only then

go and build a solution. Now, even if you follow this pass in your solution works, right, it's actually guaranteed that you're creating value. Well, in the essence of all of all startups is to figure out what is the value that we are creating? Got it? Or we have to leave it there? Or Levine co founder Ways his new book, fall in Love with the Problem, Not the Solution, a handbook for entrepreneur something he knows a lot about.

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