Bloomberg Businessweek Weekend - January 4th, 2020

its founding principles, plus conversations on luxury. We hear from the CEOs of Zenith Watches as well as Ducati North America. But first, by the end of the century, check this out, Jason. A third of the world's population and a greater fraction of its young people will be African. It's why many investors are eyeing the market not just for its size and potential, but also for its growing tech ecosystem. Back with us to talk about just that is Jake Bride.

He's tech Crunch contributor. He's also author of The Next Africa, an emerging continent becomes a global powerhouse. He joins us back in her Bloomberg Interactive Broker Student, New York. Nice to be back with us. Great to be back. You know, we do talk a lot about investment, and we talk about specifically the raw materials or raw minerals, uh and kind of staking your claims to what's to come from Africa. You're taking a look specifically at the tech ecosystem. Are

you talking about kind of the tech community overall? I'm assuming it's a growing one in Africa. Yeah, Africa has had a boom in UM tech startup growth, VC investment. The time span has really been about five to seven years, so this is relatively new. It's not shaping up everywhere, but there are some tech hubs that are becoming notable UM mostly Nigeria and West Africa. These are places are becoming centers of startup formation, of entrepreneurs going home of

VC investments. So it's Nigeria the top hobbs in Nigeria, South Africa, Kenya primarily, with some others on the side, Ethiopia, Ghana, UM and you know what types of kind of startups and you know, I know like I feel like the financial industry finds a different way of you know, tackling the emerging markets and you can find some interesting things in that arena. Well, the big spending has gone on in in fintech and e commerce and internet services. But what you have right now is is you have these

formalizing economies in these in these hubs. And even though fintech, in e commerce and some obvious UM startups sectors have got a lot of money, you basically have this new class of young African entrepreneurs that are descending into every possible sector you can imagine UM from ride hailing to education to multiplying you know, health services on mobile platforms. So UM, it's all wide open in every sector is open right now in Africa. And so where does the

funding come from? Where they finding willing venture capitalists? Well, this is what's UM. You know. News over the last week is that UM primarily a lot of funding has come from European and US investors with some African angels. But over the last quarter I've tracked this, China has come in to invest nearly a quarter of a billion dollars a VC in African fintech, almost all entirely in companies that are based in Nigeria with outward growth strategies

from there. And why this is notable is that UM that's roughly one fourth of all the venture capital that went to startups. And previous to this, China has had an elevated engagement with Africa, but it's been mostly related to trade in trade, finance and building things and bricks and mortar stuff. We've been waiting for China to go all in on African digital in full. UH. And these last several investment rounds in fintech UM kind of indicate

that that's happened or happening. Why? Why is this? Is it of concern? Is it of interest? How would you describe it? Well, it runs a gamut. I should say a little bit more about their rounds. So you have um On, a group of Africa Chinese investors who the biggest round is just recently into Opera, the internet company UM.

They've started to launch services startups in Nigeria. So they have a payment startup called Opae, which a group of Chinese investors Sequoia China UM source Code Capital invested a D twenty million in Opera's o pay Um just in this last month. UM. And what's happening is is you're seeing UM this start to expand into other areas. It's creating different dynamics with competition on the continent with existing players including Opera is gonna expand opay into Kenya, which

has been Africa's capital for mobile money. When it comes to I mean, when it comes to what what's the look at here? UM One, there's more competition. Two, there's more investment for African startups overall, and that all sounds good. That all sounds good, but then it enters this complicated part of Africa's involvement in um our. China's involved in Africa,

which has been somewhat controversial. To be objective, UM the conversation around China and Africa runs kind of the The extreme would be that it's neo colonialism and that China is taking over Africa. UM. On the positive end, Africans will often tell you that China is actually meeting us where we want to be. They're offering us money, we need infrastructure, they're building stuff. They're helping us with bridges, and a lot of people bring lecture, but they don't

bring the funds. But there's concerns about data privacy. We've just got about five seconds. This pivot to digital creates a whole new topic in China and Africa. When you get to the concerns with Huawei. When you get the Chinese investors having major stakes and big consumer platforms that run a lot of data and and fintech information. Um, I think the continent is still getting its hands around that now after just grasping the amount of investment and

who's doing what and where. And that's Tech Crunch contributor Jake Bright. If you think about those that have been an advocate for better governance and accountability in the private sector and in government, this individual definitely comes to mind, and not in Maddy's professor of Finance and Economics at Stanford Graduate School of Business based in Paladato, California, back in our Bloomberg Interactive Broker studio, and you're nice to

have you back with us. Thank you. So I have to ask you, you're we're looking at Jason I reading your latest post. You seem to be calling at your

own profession academia. What's going on? Well, you know, I look around, and you know there are a lot of problems in this world, and so we have an emphasis like you had just now about the private sector, uh for profit private private sector being e s G and doing good and doing well and all this stuff and I'm asking what's the role of my tribe of the academics in making a system work, capitalism, democracy, you name it. We say, we're very privileged in academia. Let me tell you.

I mean, we don't make the money that some people who come on your show do make. But uh, but we're okay, and we have tenure and so, and we have expertise. So the question I have, what is it that you want? I want academics. So I I live in that bubble, and I've lived in that bubble for a long time until I came down from that eightie

floor of the Ivory Tower down to the ground. And what I've seen, you know, it was pretty sobering about the realities of the kinds of assumptions, especially in my tribe of economists make, and so we you know, we became the field economics in particular of making assumption that every other academic silo of different departments is kind of living big gaps between them, and so you've got a bunch of siloed academics. Universities basically allow us all you know,

free market of ideas to do what we want. And somehow the assumption is that when all of that the invisible hand of that happens the market for ideas for publications. However it works in academia that all of that produces kind of the best outcome of the world where nonprofit institution well, I think I think it does, but I think it can do better. I think that in the areas that I know about, in particular in business schools

and in economics and in other areas including tech. I was recently involved in you know, even HBO Silicon Valley series to kind of as a medium to get through to the public we can do better both to uh to kind of make sure that you know, powerful people are accountable, including in governments, help the government, you know the words, the whole idea of private sector doing good. As I described last time I was here, we discussed my Harvard Business Review piece on on that was that

governments can't do stuff. And I'm saying, if government can't do stuff, then why is that? And did you contribute to that in other ways? Did you steal their people? Did you know? Did you are you? Are we not paying them enough? In other wads? Why is it that the governments are failing? I want that problem to be

more of our collective problem, including in particular academics. Well, and I do feel like the last time you were here, we were talking about the business roundtable, which came up at our last segment as well, and this notion that companies are having a moment where they're starting to think more holistically about their responsibility to society. And I guess what I would ask you is is it just a moment or is this a secular change? And and if

we don't know yet, when will we Now? I think there's plenty to do for everybody, So I think it's all like welcome and find as far as it can go. But you know, we have a society in which we don't leave it to people to decide how fast to drive on the road. We have speed limited policemen and all of that. So my question is what are the rules?

And you know, just last weekend over Thanksgiving weekends supposed to be a happy weekend, butt I happened to go watch Dark Waters, what a movie about DuPont and the lawyers. So and these are unregulated uh chemicals, And so the whole problem, the legal problem with DuPont was that it misled people sort of to back go style about the

harm from those chemicals and people got sick. And this one lawyer you know over in this left twenty years and they're still here, and the actor producer now Ruffalo are are going around, you know, advocating that people should

be aware of that. Then just to read something very comforting, I read a book called Bottle of Lies and Bottle of Lines is about the generic manufacturers that are I know, I was really like, why am I not reading something more cheerful, But it's like, who's going to solve that problem? Who's going to make sure that the drugs we take that come from India are inspected properly? I thought f F and then and then you're reading about Boeing. Okay, so f A, F d A, these are the regulations

that we're supposed to be on. It's interesting is we have an administration Medista in the Bloomberg that talked about there's a lot more loveyist within the administration exactly. So okay,

So what fifth risk of Michael lewis right? So what role does acadeb A play and kind of bringing to light some of this because what's interesting is, and I've worked at a business school, you know, you often have a lot of professors working with the business community consulting, and so there's not a very black and white or strong division exactly. So I'm here actually very related to this writing, and I just you know, got added in later. Uh for this week is in a conference and academic

clabbing at Colombia tomorrow and Friday. That's why what brought me to this city. So this is what needs to be done. What I'll tell you what needs to be done. The incentives of the academics are not right because their incentives coming from the private sector expert witnesses, uh, consulting. Now we have a story about Google funding research in

Wall Street Journal recently, etcetera, etcetera. So the private sector, you know, funds pharmaceutical research and you know, you just you I was promoting Coca Cola for great e s G. But it's it's a sugar, you know, manufacturers that distorted nutritional research back then, and that was again academics, uh for for sale, uh doing that, but lobbying for the public, which is really where the political problem is, where the

thin political markets is where only conflicted academic conflicted experts in general, not academic necessarily are involved in writing accounting rules or whatever you know, is the underbelly of the of the whole thing. Why don't we as academics do not have incentives to do that sort of pro bono work, you know, the kind of thing I've been running around doing and I'm reflecting and so alone and schools need to kind of set encourage that, encourage that to be

involved with our conflict. R So is it up to the university is then to set different rules? Well, we we we when we evaluate people for tenure or you know, the people who do well in that profession, in the academic profession, they publish papers and they teach, uh And then what they else they do is usually you know, consult If they do that or whatever, they can choose a cause, they can become involved in you know, school board or whatever else like everybody else on the side.

But profess, what I think and what I've seen gaps, huge gaps in the understanding of policy makers of issues that we know about that we have a lot of knowledge. And it's our duty, I think, and and responsibility to help them and to hold him accountable. And that's a not at Muddy, Professor of Finance and Economics, at Stanford's Graduate School of Business, the number one business school according

to Business Week. Let's see, Yeah, let's see what's going to happen in twenty when it comes to venture capital investing because I feel like Jason, we work, it's failed, I p O and it's a ray of governance issues and really impacted the conversation around startups private markets, and that includes of course venture capital. Let's talk about the VC world. David springs with us. He's founder and CEO at Runway Growth, based in San Francisco, in our Bloomberg

Interactive Broker studio here in New York. Nice to see you again. You too great to be here, So tell us. I do wonder about the last to impact of we work on the VC world. Has it changed things dramatically? Yeah, it has changed things. I'm not sure how long that's gonna last, but it has definitely shifted from you know, growth at any cost to like path to profitability. You know, that's a that's a big thing. But I do think that you know, vcs really build companies so that they

can be exited. So they're building a company so that it will please the buyers, and whether the buyers are institutions buying on an I p O which is very very rare by the way, that gets all the attention from the media. But on average there's only like a d I p O s a year for the last five years, so it's nothing um. But then on the M and A side, they're bought by corporate buyers or more and more PE firms are the buyers, and they

do not want to pick up a big burn. So you know, you really that path the profitability thing I think is, you know, is here to stay, but there will be a growth at a measured or intelligent um you know spend if you David Wooden, thing that a venture capitalists said to me in the wake of We Work was this notion that it has changed and made much more sophisticated, maybe much more intense conversations between vcs and entrepreneurs around governance that essentially they're now able to

walk in and say, oh, you don't want to do that, you don't want an independent board, you don't want to do this. Do you want to end up being we work? You know that it's become really almost weaponized to some extent in this conversation. Have you seen that, have you seen more talk about governance at this point. So, first of all, the governance extremes that we saw at we work, you know, and they are present in a few other really high profile deals that you know, we all know about.

Those are not the norm in Silicon Valley. So and it never has been. You know, it's only the you know, the hottest of hot companies with the most aggressive CEO is that even ask for those things. So and you know, really where I operate is in the you know, the sung heroes, you know. And one of the things that I want to talk to you guys about is like this imbalance in the world of venture capital where there's so few exits. We talked about I p o s.

There's only eighty. There's less than a thousand M and A exits, and new companies come into the system every year. So we're building up this giant mass and now it's up to about twenty five thousand companies that are you know, venture backed. They're not exiting and in a lot of cases they're outliving the ability of their venture firms to support them. And you know, dealing with how to fund those companies that for lack of a better word or good but not great. Uh, that's what we're all about.

And to get your point, Jason, those people have never asked for these crazy, interesting, crazy governance uh you know, uh, abnormal requests. So among those you said, was it about twenty companies, did you say the true back companies in existence today? How many of them will ultimately exist in five to ten years from now? Because I do feel like in the VC world, certainly in the early startup world, whether it's angel investing, people throw a lot of money

at things that never come to fruition. So I do wonder if those twenty five thousand that might be struggling to get capital that I love capitalism, maybe some of them shouldn't be able to exist going forward. I mean, that's the system working correct, definitely, So this you know, law of nature and survival of the fittest and all

of that, it definitely works. I'm more talking about the people that deserve to survive and are not getting the attention because the venture capital business is so geared towards hitting home runs, not even home runs Grand Slam. Even with all that money that's lashing around, Jason, I constantly have conversation about whether it's private equity money, whether it's family wealth offices, whether it's you know, institutional money. There's so much money that's looking to go in that area.

You're saying it's not it's not very all want to get into the unicorns, you know, the people that you guys talk about, that's where they want to invest. And there is a ton of money trying to fight their way into those deals, but not the guys that are doing our twenty or thirty or forty million that deserve to survive, but they're never going to be an I

p O. How do you solve that imbalance? Well, I think we're going to have a new class called distressed venture where people will raise venture funds to come in and capitalize on the opportunity to build these companies and take advantage of the weakness of or inability of existing investors to continue to support those companies. And then people like us that do venture debt, where we lend money as an alternative or supplement to equity, we we can

help those companies. It does seem like we're in for some sort of reckoning is probably too strong of a word, but across the entire private capital spectrum totally agree and

that's David Spraying, the CEO of Runway Growth. Don't you want to So what if our next guest picked this song, We'll get into I about being evil, Um, and it speaks to a bigger, broader theme this year, and it's been a theme this year, and it's no dabt going to be a theme in big tech, the regulation of it, what big tech stands for, what they're all about, how

they're impacting our world. Let's get into it because Vinnie Calano is back with us, the chief market strategists at Stuyvesant Capital Management, global investment strategists at Dafoux Redmount uh And also with us is CNN global economic analyst Rona Faruhar. She is also author of the book Don't Be Evil, Hence the Evil, How Big Tech betrayed its founding principles and all of us. They're both in our Bloomberg Interactive Broker Studio. Nice to have you both with us, Um,

Jason and I talked about this all the time. First of all, talk to us a little bit about the premise for your book. Well, Um, you know I cover the markets and you just look at the numbers and you see that basically about eight percent of corporate value is living in ten percent of firms and other firms that have the most data the most intellectual property. So this is sort of a massive shift. That's really the industrial revolution of our time. So the economic story is there.

The political story, I mean, we've been living this now for two years. The fact that the model of a Google or Facebook in particular is highly targeted advertising. It's about targeting us down to the individual. But that split society. I mean, it comes with side effects. It comes with a lot of great value, but it comes with side effects. Then there's the brain science, the social issues, and you know, to be honest, I got into this topic in some

ways for a personal reason. I came home one day, I was looking at a credit card bill and there were all these tiny charges dollar ninety three dollars and I thought, my god, I've been hacked. And then I realized my ten year old son has my passwords. Turns out he had racked up nine dollars in a supposedly free online soccer game that was tracking him and selling

him in app purchases. And I thought, you know, as a mother, I was horrified, but as a as a business journalist, I thought, I want to know everything about this, So Benny, come on in here, because, as Ronna so wisely noted at the top, I mean, there's a business story front and center, and for investors, what's not to love about tech? I mean, Carol just went through the numbers at the close of how well these big tech stocks have done. Investors have made a ton of money here.

Fair missing out too if you don't chep on the on the investment training here. Sure, absolutely, I think I think the listeners investors should know that there is an investment paradigm here, uh, that they need to dig a little bit deeper into and understand. Ronna talks about it with the the targeted ads and the revenue streams that are coming from from this surveillance capitalism system that is

going on. Uh. And it's interesting when Ronna mentions about that she was hacked, she thought she might have been hacked, And as I began to explore this area thanks to Rna, that I realized that, yeah, we're being hacked, but we're not being hacked in the manner of you know, you would ordinarily think about it the drill down into our behavior. Yeah, well, so you really need to understand that it on on

a whole range of level. Well, we talked about the business we cover this week about Google and the generals at Google. Right. You know, for a long time, Silicon Valley wars a badge of honor, kind of Washington hating them, and now all of a sudden that their middle age. A lot of these big tech companies, especially something like a Google, you know, they want to be involved in those big government contracts and and they're doing so, but they've got a lot of their employees not happy about it.

This whole idea of you know, not doing evil like this was something that they held as part of their corporate culture and now things are changing. Yeah, and it was always baked into the business model. Frankly, I mean evil was was part of the business model. If you think the term day one. From day one, I mean you go back to the very first paper that Larry

Page and Serge Brand, founders of Google, wrote. Um. It had a section at the bottom that said, if you monetize a big search engine with targeted advertising, the interests of the users and those of the advertisers are going to come into conflict at some point. And so they actually advocated for an open search engine, maybe something in the academic sphere. But you know, it's interesting that he's making a fascinating point because this disruption is not just

about the four or five Silicon Valley giants. It's coming to every business model. So one of the things that I find so fascinating you just look at the insurance industry. For example, you can now have sensors in your house, in your car that will give you a discount if you know, if you're taking care of your plumbing um or you're stopping quickly, but you might get a black mark if your kid is smoking weed in the bedroom. What does that do? That disrupts the entire insurance business

model of pulled risk. Think about that, that's coming to every industry. That the implications are really profound. And so we've only got about a minute left in this first segment. We're gonna keep you around for another what's the biggest surprise to you writing this book? What jumped out? You know, in some ways the fact that it would always there was hiding in plain sight. You know that that paper

And frankly, this goes to my point. I mean, one of the side and one of the social side effects of this high speed media landscape that we're in is that people don't read as much. And I gotta think that nobody read the initial paper because we kind of would have known where we were going to be. And we want to continue our conversation. Still with us, as Vinny Catalano, chief market strategist of it, stuff Isn't Capital

Management Global investment strategies to faux Red Mount. And also still with us is ron book is Don't Be Evil, how Big Tech betrayed its founding principles and all of us. This is great for your stocking stuffers this holiday season because that's okay, there's like this is like a must read because it does um it is the story of O and it impact no matter what industry you said before the break. You know, one of the things we need to get into is China's role in all of this.

Tell us a little bit about that where you see how that plays in right Well, this is the story, the the economy story right now, tech trade wars. This is really about China and the US going different ways in terms of how the Internet is going to be governed in terms of strategic technologies. I keep hearing from a lot of Chinese investors that they believe they're going to have their own ecosystem. They've already got their own

big tech players Ali Baba Tencent. But I do all those, but that they are going to actually have their their own supply chains, their own consumer brands. I mean, a company like show Me is already doing better in some in some areas than Apple in China. So this is a big split coming, and it's really interesting. It's provoking

some fascinating, um uh, strange bedfellows in the US. You know, you see a company like Google saying, well, you know, maybe we should be a national champion here, um, you know, teaming up with a defense department, uh, thinking about how to kind of ring fence the the ecosystem in the US saying again with Amazon, they've tried to ring fence

government purchasing. My worry is the overall ecosystem, though. I worry that you're you're gonna end up with a scenario where four or five big players have the entire pie, and that doesn't work. We've got to make room for other other companies. Really, so four or five players sort

of con notes that there would be a monopoly. Yeah, and yet we seem to need a new definition for monopoly, right, because monopoly pertains to price increases generally as a rule in an industrial economy, but in this kind of surveillance,

capitalistic information economy, that's really not the case. Yeah, and you know that the point about price is so profound because you're absolutely right that the whole Chicago school, you know, as long as prices are going down, everything's fine, doesn't fit when you're you're not doing a transaction in dollars, You're doing it in data. It's a barter transaction. So that's not a that that's a very opaque market, and that's why you have this asymmetry and this kind of

superstar effect with an Amazon or Google. They've got all the information. You don't have any information. So I think we are going to need some regulatory ships to deal with that. So as you sort of finished reporting and writing this, and as you go out and talk to people, I mean, as we've been saying, we're not just saying it because you're I mean, it is the story of our time. It's in credibly timely. Are you more optimistic less optimistic? Have you changed your own sort of behavior

or your thoughts about this through the process. Well, I I absolutely have. I mean I've done a digital detox. It was kind of actually by force that I Um, last Christmas, I dropped my cell phone on Christmas Eve was a company issued phone, and I couldn't get a replacement, and it was like, you know, going off cigarettes or something. For forty eight hours, I was twitchy. I kept reaching in my pocket. So, um, I do that regularly now.

And I've actually cut down the amount of times that I check email, which, by the way, it takes you five minutes to reset every time you interrupt. So your productivity, I mean, that's a whole another topic. Lost product The productivity conundrum probably has something to do with technology and

the effects of these firsts. No, I think that's a really good point, and you see more and more advising you know, check your email certainly you know a certain amount of times to day not constantly letting it kind of interrupt your workflow. I do wonder though, in terms of regulatory oversight, where it's all headache. Yeah, Well, there's there's two big schools of OOT. I mean, one is that, look, we can work within the existing system and just make

some small tweaks. The other thought, and this is more of how the Europeans are going is we're going to need a really profound reshaping. I mean, the Europeans are talking about public data banks, you know, where you would be the public sector would own this this data. But on the other hand, you've got California coming in saying, hey, maybe we need a digital Sovereign Wealth Fund, because at the end of the day, if data is the new oil,

you have to make sure that that value can be shared. Well, you can I just date something that run a set earlier in regards to uh, the the capture of information and the and the anticipation of what is about to occur and you know, dropping the phone things of that. So one of the concerns that's been expressed has been whether or not the machine learning will have accomplished so much that it knows what you're going to do and anticipation of and therefore it isn't you have free will

you don't? It really does come down to that, it really has It has a definitely Yeah that's correct as a matrix feel to it, for sure. Yeah, that's a whole other level, and that's Benny Catalano, chief market strategist at Stuyvesant Capital Management and see ann global economic analyst Rana Faruhar, some Peking building, and perhaps some conversations we've had as of late around this table in our Blueberg

and Director Broker studio. UM. I want to get to our next guest, because he has noted how dangerously disconnected the public is from our financial system. It is the subject of his new book. Joining us on the phone is Chris Farrell as he's co founder of Riverwood Capital his book How Money Became Dangerous, The Inside Story of our Turbulent Relationship with Modern Finance. He joins us on the phone from Menlo Park, California. Hey, Chris, nice to

have you here with Jason and myself. UM, tell us a little bit about I mean, you have an interesting background. You understand the financial world. Yeah, Hi, Carol, thanks thanks

for having me on. You has been thirty five years in the industry and has traversed many of the sectors within the finance the world commercial banking, sales and trading, investment banking, m and a private equity and uh, yeah, I've had a long, long career and been fortunate to work on some of the more interesting transactions in Wall

Street history. What's changed about maybe when you started on Wall Street and kind of where the financial community financial system is today, Well, so much has changed, you know, in just one generation. I like to say, my parents only cared about two numbers, right, They cared and they were both years. They cared about the year they paid off their mortgage, in the year they qualified for their pension.

And since then, you know, so much has happened. The complexity of the of the financial system has ground dramatically and so many different ways as we pushed for scale, scope and a see at the expense of the you know, the personal, of the interaction of the of the knowing, the person, of of knowing who we're interacting with, even having a person on the other side of that, and the complexity of this of the system has grown so much, while our understanding of it really has gone in many

cases down. I think a lot of people have said, you know, I can't possibly understand this, so I'm just going to step back and sort of you know, disingage me completely well. And I do wonder what the financial crisis did to either reinforce that or to maybe change the direction. What what impact ultimately did the crisis have on consumers and on behavior. Yeah, you know, it's a great question, um, And we think about this a lot. So it initially inspired this sort of rage, right the

Occupy Wallstreet movement. What people are like, this is not acceptable, we can't have this. We need to do something. But because people couldn't articulate challenge and the problem, and therefore if you can't particulate the challenge, you're not gonna come up with solutions. And then it's sort of stated as most you know, typically financial crisis do, and then you

sort of said, Okay, I'm just gonna walk away. And in a sense it almost turned people more off and more distant from it because I said, oh, this is just one of those scary things I just don't want to like, tankle with. And now we see, we see that in all kinds of behaviors, you know, we see you know, we see millennials wanting to trade off an algorithm when you know, not even deal with people because the trust level is so low they'd rather trust an

algorithm than than a person. And you know that the manifests itself in so many ways. I have to say, I think about the market all the time that how much of it is now, you know, driven by computers, and what that means for the retail investor. UM. You know, sometimes good when everything is going up, but you know, I do wonder when we get to a downturn, which ultimately we will at some point, but I do wonder

about the impact on it. What are your biggest concerns here? Well, my biggest cerns are we have a we have a sort of antiquated system. You know, at all levels we're talking about how money has managed um and then we have um, you know, people and complexity that that aren't keeping the systems can't manage and we most do that, I think in the in the pension system for example.

So we have this, you know, we've have debt being raised to fund you know, two fund pension deficits or any actions that are taken, and the system is focused on this, okay, this annual budget challenge of how do I pay employees? And you know, look, let's see, like I can't meet my cash shortfall, I can't give them

a race. So you know, let's let's sort of promise more more benefits in the future that I won't have to worry about because it's beyond my term of office and so as a result, we have you know, people disconnected where they're like, who's holding that system accountable for a mismatch and send the system where I can sort of make promises that I'm not going to have to be responsible for being you know, being there when it happens.

But I think that's one Another example is you know, I think we have the twenty anniversary of the e T S, which a wonderful mechanism to democratize access to market returns on a very efficient cost based system. And you know, that's been a wonderful development and a positive.

But when you have fifty plus percent of the market who's completely you know, passively involved and doesn't doesn't actually engage or care really you know what's going on in that system, you know, that does create the potential for you know what happens when liquidity drives up and you know no one's really that invested in any particular ownerships there. You know that there's there's it's pervasive throughout the system,

this challenge and that's that's the direction we're going. We're going towards this efficiency scale, passive, this connective combination that you know that that just creates challenges histomic challenges that we haven't seen. And that's Chris Pharrell as he is the co founder of Riverwood Capital. So, Carol, couple of stats for you that really surprised me. The worldwide market

size for type two diabetes seven billion dollars. One in eight healthcare dollars just blew me away are spent on diabetes. That's unbelievable. It's a problem. It's a huge problem, and a lot of people, smart people trying to attack it in terms of treatments and medicines and whatnot. Nadav K drone is here with us. He is one of those people. He's the CEO of or Med Pharmaceuticals based here in New York City. Great to see you, Thank you to be here. All right, this feels like a big deal.

This feels like a big breakthrough. We're talking about a new treatment for type two diabetes. Tell us about it. Absolutely, from two thousand and five to today, there was no

major breakthrough in the way we treat diabetes. Now. What we do in Aura Med is we take the insulin which currently can only be administered as an injection, and we have a technology to deliver it orally so imagine that the diabetics population can take insulin orally, which is better from compliance and just physiologically a much better way to do it. So is it as effective? Where are

you in that process? So we just finished a phase to be so basically with successful safe and efficacy was great and we're now moving into phase three and then register it as a drug on the FDA. So what have you seen though so far? Is it apples to apples in terms of injections. So it's a little bit

of a different way of looking at it. The idea is that with oral insulin, the patients are going to start the administration of the oral insulin much earlier on and by doing so, you'll have the much better control of the diabetes. So if you're putting me much earlier, you mean in terms of having the disease, that they'll they'll start on insulin earlier, so they'll start with the

oral insult. Let's look how it works today. Okay, So today you go to your doctor and tells you listen, I'm sorry to tell you your sugar level is too high. You start with diet and exercise. I'm talking about type two diet and exercise. Then you move into different oral agents that are not insulin, and eventually the last resort is that you need to inject. We're going to change the whole thing. We're gonna come and say, okay, forget it. Start with a diet and exercise for sure, best drug ever.

But then take Orment's oral insulin. Okay, and then you're gonna be in a much better control for so many more years and you will benefit. And how do we know that because I've known a fair amount of people have had diabetes, and I mean, yeah, the insulin is not nobody looks forward to that. That's kind of considered the last step of having to do that. So if you can manage it up to that point. So my concern is if you start with insulin early, how is

that a good thing? So even today would be a good thing, but many people are afraid of the needle. The reason that it's a good thing is because if you think about it, how our body works. Let's go back to our biology class from third grade. We have the pancreas making the insultly into the liver. The liver takes it into the blood stream. When we give it orally, it goes into the liver, so we mimic the physiological way that the body works, unlike the injection that goes

directly into the blood stream. That's why it's much more ad pretentious for us to use the oral insulin versus the injection in most cases. So you mentioned that there has been no big breakthrough and almost fifteen years why did this takes a Well, welcome to the world of the f d A. So even us that ornament that we're making, we're taking the same insulin that was discovered almost a hundred years ago, and we just have a

safe technology to deliver it. Orally, we still have to go through phase one, phase two, phase three, almost as long as developing a new drug. And so why, I guess I'll ask the same question in a slightly different way, why did someone come up with this sooner? Because I mean, like Carol and on a lot people had good friends in college, you know who as teenagers you know, had to inject themselves with insulin. It's really a very difficult

thing to do. Uh, why didn't this breakthrough happen decades ago? So you should ask yourself. There's so many injections currently that we take as an injection wouldn't you rather take them as appeal. So the answer is that many times when you take a small peptide, which is a protein, if you're gonna swallow, If I will take the insultin now without uraments technology and I will try to swallow,

it will just break down. So we have a technology that knows how to protect it and how to come of the issue of the size of of the got wall in order to deliver it into the into the liver. This is a delivery that you're you're essentially solving the delivery problem exactly. And I can use it for many other things. I can use it for insulin, for flu vaccine, for many other things. But instutent is the holy grade.

You need the same dosage because I know some of the concerns have been that if it's going to some extent through your digestive system, that you kind of pull out some of the insulin so that you're gon ultimately need to to take more for it to be effective. So where are we on that? So we absolutely need

to take more than an injection. But the most fascinating thing that we see over this the recent crown that we did less is more, meaning when we gave less insulin, it was even more effective than when we gave more insulin. How is that? So? How do you explain that? We believe that what happens is the liver does an amazing job. It regulates the secretion of the insulin and regulates the secretion of the glucos. By getting insulin directly into the liver,

we signal to the liver, hey, here is insulin. So it stops the excessive production of glucos by the lever. Hence the magic that with a small amount of insulin orally, you can reduce the glucose level drastically. So we talk a lot about sort of the health and well being, especially here in the United States, and you know obesity rates going up and and diabetes obviously is always tied into the sort of broader health and you alluded to

this earlier. What else is being done? Do you feel like sort of more holistically literally and figuratively to combat diabetes at this point? So let me start with the negative. I think we're just not doing enough to have a holistic picture and to see how is the society We're spending almost a trillion dollars a year on diabetes okay, but it's easier for the payers to get their money, it's easier for for for the doctors to subscribe rade drugs.

What do we do as a society to look at the holistic picture and to make sure that we can have more healthier and a little bit less cost for hans to keep ourselves as a healthy society. So let me follow up on that, because it's it's a really important point. I feel like we talked about it a lot. Uh. Is this just that the economics are, for lack of better terms, sort of perverted across the healthcare spectrum that it's easier to essentially get everything paid for when it's

a treatment rather than if it's preventative. So I think it's a few things. I think number one, it's it's each one looks. It's a don't perspective it. So if you were the insurance company, you want to make your money the way you make it, and that's it. If you were the doctor and you were the patient, and each one looks at his own way, the government doesn't come. Nobody comes and say, wait, wait, wait a second, the

whole thing doesn't make sense. I'll give you what one quick example from South Africa a few years ago, and I think it's coming to America as well. A guy who started an insurance company in South Africa and you basically said, if you can exercise, which is the best drug ever invented in the world, you know your insurance coasts are going to cost less. So simple things like that will encourage people to keep them myself in a

much healthier position. So realistically, when do you anticipate that this would actually be approved and on the market next year? Early next year, we're going to meet with the f D a start the phase three. Phase three should take two years or so, another year of registration and then we should have it in the market. Here, I should say that we already have the partner in China and it's probably gonna get registered in China before the United States.

The oral instulent we reached China first, and that's Nadav kid Drawn. He is the CEO of Uramed Pharmaceuticals. Talk a little Startups BC and interestingly, king off something we talked about earlier, healthcare and what maybe underneath some of the startups that we're seeing on the scene. Vanessa lu is here with us. She's vice president at SAP and the head of SAP Startup Accelerator. You may know it as SAP dot io. She's here with the Snart Bloomberger

Inactive Broker Studio. A native New Yorker, native New York City, I believe as well. So tell us what is going on out there? You guys hosted UH an event with some startups that are in the healthcare space. What are you seeing out there? Yeah, that's right. So we just had a demo day where we profiled seven companies we've

been working with. These are healthcare startups that are late seed to serious c that we chose out of a field of over a hundred and fifty companies, and they're all in the space of health care, being able to work with healthcare providers to change the innovation that they're doing, and also working with corporates on employee health and wellness.

Why health care And I'm curious that this is an acknowledgement that this is one of the industries that has yet to really be disrupted if you look at everything else that's going on, and this is an opportunity essentially for SAP to maybe have some significance, say in that disruption that's exactly right. That's exactly why we did this.

This is an industry that is right for disruption. There are so many unfortunately inefficiencies right now, especially in the US market, So that means that pay especially US versus other developed markets or other markets that have single payer structures, for instance, where then that becomes much more of a government um controlled type of industry. And so over here. Because there's a lot of fragmentation, that means that there

are many different pockets where analytics are being done. If you think about how electronic medical records really first started, it was because there had to be systems in place to track what people were doing. But because there's so many disparate players in it, it's now so all over the place. And that's why this whole entire idea of trying to create some type of centralized repository for data

is really interesting. So half of the startups that we were working with over the last twelve weeks have been focused on that, using AI machine learning, thinking about ways where you can really just identify the unstructured text and finding the insights from that. So we've been talking a lot lately when we've been talking to folks in the entrepreneurial and the venture communities, specifically about diversity or lack thereof in the founder class, in the investor class as well.

You have a lot of power in that world in your selections and essentially you're championing there. What do you feel like you guys are doing and how do you make a meaningful difference in that part of the equation and having candidly a much more diverse set of founders, we have a commitment where the founders we either fund or we accelerate through our accelerators have to be founders that are underrepresented here in New York. Our programs are

a percent focused on that. The reason why we're doing this is because when we're saying we're going to make technology better, technology for whom, how are you going to be making that technology better exactly? And being stewards of technology, we think that we have a critical role to play to say these are the types of companies we're going to work with. Startups come in so many different forms, so many different types of innovations that are happening a

lot of the times. What we're finding is that underrepresentative founders just haven't been provided the access to the right networks to surface. What they're doing is not because they don't have the great idea, because they do. So you said globally, why not just go in I want to make it fifty percent. I think it's just kind of interesting because I think, you know the research that's been

out there. You know, the more diverse and I'm not just talking men and women, but the more diverse you have a group of people, whether it's creating companies or discussing certain problems that are out there, that you're more likely to have a smarter solution. That's right, smarter solution, it's going to also vial and more viable. It'll just grow that much faster, better cultures. What is it in the healthcare that you think is very interesting and innovative

that's happening right now. Is it just about kind of getting the data to make sense and and organize it, or is there something else that's happening that that that would be like, wow, I didn't know that was going on. So one of the things that we focus on the other half of the cohort were actually corporates that are not going to be every day linked to healthcare, but

they have an important role to play. If you think about the Fortune five companies out there, the number of employees that they employ, what can you do if you can tap into what they do with employees. So if you think about mental health and wellness, you think about how one in four people nowadays are battling some type of mental health condition. But yet if you look in the workplace, about sixty of people don't talk about it. They don't even talk about the fact that they are

struggling with something. Employers can have a very critical role to play because they are there with them. And so that is a shift that we see. It's not just about providers, it's not just about payers, but it's also the role that companies can play. We think that that's a really really big innovation, really big area. That is what we're going to see a lot happening there in the next few years. And that's Vanessa Leeu, vice president

of SAP dot Io. All Right, So Jason ma hade a pretty cool conversation with the folks over at Zeneth watches the companies a hundred and fifty years old. They continues to innovate and think about how to attract customers, especially younger customers who increasingly have more and more choices. So we caught up with the CEO of Zedeth, Julian Tournaure, and check out what you have to say. Watches are pardon the pun, sort of having a moment in a way.

People are rediscovering the sort of artisan nature in many ways, the craftsmanship that Carol was alluding to. What do you think that is? Why are people sort of pivoting back and maybe away from the smart watch? Well, you know, first of all, you don't have so many objects like a watch, and I think today we live in such a fast world. I mean between the Internet, between the social media, and don't forget that to watch, a mechanical watch is one of the few objects that will last forever.

Right if in one thousand years you have a watch and you have a watchmaker able to put some oil, it's still going to work. How many object in this room we'll still work in one thousand years. So when you buy a cell phone, when you buy a smart watch, you know the minute you buy it, it's already obsolete. So I think sometimes people need to attach themselves to

something that will that will last forever. I do wonder about and I think about the conversations we keep having about fast fashion and the pushback this kind of disposable society that we've become where we used to old something or our dad would fix something that got broken. And I do wonder if we're kind of channeling back to that. And what are you seeing in terms of your consumer, especially the younger consumer, because you talk about you've got

to invent to bring in a younger generation. What do they want? And watch I think they want. They buy history, they buy authenticity. That's what they want. Also because today also we are bombarded by marketing, communication, publicity everywhere, and they want to buy something with substance, with content, So they often ask us questions about how it's made, how long does it take, basically, what's behind the brand and what's behind the price? What do I pay when I

get a watch? So we have to to show them the savoi fare and how many hours of watchmaker is working on a watch. So that's super important. But also we need to show them creativity and innovation. Let's not forget that when that watch was made in the sixties. These gentlemen that I met, actually they're all in their mid eighties. They were so innovative passionate, creative, already having a startup spirit. So that's what we need to continue to do to build the legendary watch of tomorrow, so

that it's really connecting tradition to the future. Well, and you're not alone and identifying this opportunity. In many ways, it's a very competitive space. There's even some acquisitions obviously

going on. You're very familiar with that. How does that change the landscape from a business perspective, From a competitive perspective, I think it's a competition is pretty healthy, and I think we are pushing each other, you know, whether it's inside our group, inside the VMH, or outside the group. The more we create, the more we push the limits, the more we will go further. And I think it's very healthy. You know, it's very competitive, but in the

watch industry, it's it's quite friendly competition. You know, we do trade shows together, we share things, we discussed a lot. It's a pretty friendly one, you know. It's a bit of the Swiss way, you know, compromise with I do wonder about the benefits of being part of a conglomerate where there's a bunch of brands versus being on your own and when you're in a conglomerate, um, you know, how do you keep and maintain your identity. We talked to a little bit about that. Yes, of course that's

that's a very important point. And I would say I'm lucky to to run a brand that's part of LVMH because LVMAGE culture is to leave independence to each brand, very vertical. So we share things, we work together on some projects, but each band is very independent in its own development. And I think that's very healthy because you know, clients are not buying the conglomerate, the group product, they are buying brand by brand. So if we want the client to remain loyal to a to a brand, you

need to keep its identity and that's super important. Let's talk markets in terms of you know, emerging markets. We know Asia, Hong Kong, these are important markets. What have you seen specifically in Hong Kong, because we've talked a lot about the high end luxury market certainly impacted by the protest there. I moved back to Europe two years ago after seven years in Hong Kong, so I know Hong Kong quite well. And of course it had been such a hub for Asia and mostly for Chinese clients.

It became to a certain extent that was quite quite unbelievable. I would say now with the recent events, of course the whole industry is suffering, but I think it's also rebalancing because Hong Kong now is not alone anymore. You know, there is a tough competition. Plenty of cities, whether in China and the rest of Asia Pacific, dat are basically as a shopping destination as Hong Kong and Hong Kong used to be a hub. Now it's just another destination

among others. So I think it will rebalance, and hopefully these events will we'll go away and we can resume normal business. But to that exact point, just to put you a little bit, we've heard a lot about the rise of Singapore as an alternate. As an alternative, I should say, what do you make of that? Yeah, I mean you're totally right. Singapore is for me the Hong Kong or Southeast Asia. But you have also sold in South Korea. You have a Japan that's really developing very

fast for us. And then inside channel also people talk often about Shanga and Beijing, but if you go to hang Jo, if you go to shenz and if you go to Guangzho, these are cities that are developing in such a fast way. And when I was there in twenty eleven, you didn't feel like doing shopping there. You go Now it's the best shopping all in the world. So it's it's it's really catching up on Hong Kong. Well, And I do wonder about because I think everybody has

been covering mainland China as well. I mean, what are the big growth markets for your the big growth cities right now? Definitely Greater Channel we remain and when I say greater include Hong Kong and then Taiwan to a certain extent, we remained the growth engine because of its population. You know, still to the only four percent of the

people that have a passport they travel. And definitely I believe for social um, for social peace, social developments, there will be a development of the of the middle class in China. So we have we have a huge growth engine upcoming. But I'm in countries like Indonesia are developing very fast. In luxury Vietnam also we have more and more clients coming from Vietnam buying in Singapore. So I would say this region will remain the growth engine for sure,

and and America as well. So a hundred and fifty five years and this brand is what happens over the next say ten That's difficult to say, but I think again we will remain a Swiss watch brand in a very small city in Switzerland, which gives us the authenticity I referred to before the long history. But we should not sleep in the past, and that had been a bit the tent tendency of Swiss watchmaking brand new to repeat the past. We want to build the future. That's

super important. If we want to keep again young generation interested into mechanical watchmaking, we need to be very dynamic and that's the mission of the brandan Jilian, Does that conclude more watches for Zenith breaking auction records? Because you just did right, Yes, we just did it. Was it was a great thing and we we had with Philip's Philips auction House. We did that correct in Geneva and it's fantastic. I mean, we'll continue to do that. How

much did you come? Forty dollars? Wow? All right, that was Julianne Turner just slightly above what I'm looking for when I'm shopping for a watch. But beautiful watches. I have to say, check out the video of that once it's supposed to we'll tweet it out because he does a nice job showing off to watch. It's two very different watches. Love that he came in with. But he

did say he normally does not wear to watches. No, no, he doesn't, um but it was really fascinating and I think the insight that he had here here was somebody who lived in Hong Kong is watching what's going on and really has a global perspective terms of certainly the luxury consumer. What's going on? All right, So let's talk a little motorcycles. We have got just the man to do it. Jason Chinok is here. He is CEO of

Ducati North America. And can I just start by saying we're gonna talk about new bikes and stuff like that, But can I just say, this must be like the coolest job in the world. Unquestionably, it's definitely one of the coolest. Your motorcycle guy, I mean you actually started working behind the counter at a like doing motorcycle parts, right, Yes, I did. In fact, it was something that years ago. I was following a different career path and I made

the decision. I said, Okay, this is clearly not working out for me this other way I was going, And so I decided, I'm going to follow another passion in life. And I started doing my homework, research, informational interviews with executives in the motorcycling industry. And then I realized, I said, the way for me to really learn this is just to cut my teeth at the at the beginning, at the very bottom. And so I started it off as

a parts guy at a motorcycle dealership. Men. I had an education, and I was way overqualified for like what I was doing, but I said, this is where I gotta learn. And I learned customers, I learned the product. I learned how to work with manufacturers. I mean, like that was those those four years were probably the most formative years of my career, uh, in terms of setting me for my future. What's changed about the industry since you've started, Uh, The industry is actually it's become a

little bit smaller than back then. I mean back then, obviously, back in the early nineties or late nineties, credit was a little looser, uh, and so a lot of people were getting finance from motorcycles that maybe weren't really in the position where they should be financing motorcycles, and so as a result, what we saw is we saw a bit of shrinking in the industry when the recession hitting.

Credit dried up. But the good thing is is for brands like Ducati and where we're at, we really weren't affected by that because we always sold in the premium and we never had predatory lending or questionable credit practices, and so as a result, we gained a tremendous amount of market share when the recession hit. Now, volumes did affect, we're effected a little bit as well, but and then as the market came back, not to the same degree

as it was before. As it came back, we retained our share, increased our volumes, and so it's been quite positive for us in that regard. All right, so let's talk about this new lineup. What's different? What can people be looking for. Well, one of the flagship motorcycle that a lot of people are getting really excited about is a new motorcycle that we have called the street Fighter.

And this know that it is and and it comes from the idea of somebody taking a sport motorcycle like what you would see on the racetrack, removing the farings off of it, the body work and putting on a really cool headlight in the handlebar, and that basically takes a very aggressive sport bike. It makes it accessible for the street except for we've taken it and redone a completely beautiful redesign and it's built off of the V four platform and chassis which is UH which which is

a number one seller last year for us. So there's that product and that that's on one end, and on the other end we find ourselves into the e bike world as well. Well, that's no curious about tell us how aggressively you guys are pursuing, I mean, how much your customer wants this. Well, this is something they launched in Europe last year as a pilot project, and then when I saw it come out on myself, being a mountain biker, was like, I want that product, even if

it's just to have one for myself. UH. And then we took the last year in taking feedback from our customer base, from our dealer network and just really to understand and research what that markets like. And it's incredible. It's a very fast growing segment. In North America. In Europe, it had actually been going for quite years. But our customer base is our first audience for this product because

it's branded Ducatti. But there's also really unique technologies and the partnership that we have with the company that's making the bikes with us, and that's Jason Chinek, the CEO of Dukati North America. Well, that wraps up the weekend edition of Bloomberg Business Week from Bloomberg Radio. Thanks so much for joining us. I'm Jason Kelly. Be sure to tune into Bloomberg Business Week Radio Live Monday through Friday

starting at two pm Wall Street Time. And if you get catch us live, get our daily podcast for the at home wherever you download your podcast. We'll be back right here next week at the same time. This is Whoober mmmmmmmmmmmmmmmm