Bloomberg Businessweek Weekend-July 11, 2020

cases jumping the most in a few months. We talked about school reopening, school athletic programs not so fast, and I do feel like the world is gearing up to find out what's going to happen in the second half, because second quarter earning season just around the corner. Well, I think that's exactly right, And I want to pick up on something you just said. It feels like if there was a theme for the week, it was not

so fast. You know that that basically this reopening that we've all been so focused on and looking forward to, certainly here in the Tri State area, where as you say, we've been locked down at home for seventeen weeks the rest of the country, it feels like has dealt with this in a different way, and I think we're really seeing evidence of that, and that is playing out, whether you look at the IVY League canceling fall sports, whether you look at restaurants not opening for indoor dining the

way that they had planned to, a lot of things now just slowing down a little bit. Yeah, exactly right. And we've felt this before. I feel like over the last month or so, where we make some progress, but then we have to kind of slow down and really assess what the reality is of our situation. So a lot to talk about over the next couple of hours. And let's not forget this week. It's our annual heist issue.

It's still on news stands, it's on the Bloomberg and Bloomberg dot com and Jason, we know there's some really cool stories about stolen Super Bowl rings and also the most famous art heist in modern history. Great summer reads. And here on the show this week, we're gonna have a conversation later on this hour with chef and restaurant tour Daniel blue Back with us Carol. He talked about the early days of the pandemic now he's adapting to

the new reality every day. We tried to really bring a little bit more improvement and also a little bit more hope to our businesses. Restaurants, Jason, we now have had a really tough time, so too has retail, and there were a lot of headlines on the retail world this week alone. We caught up with Alan Ellinger. He is co founder senior managing partner of the investment bank MMG Advisors. He has been consulting on deals looking at some of those distressed assets, so a great conversation with him.

A lot of distress. Also add Facebook of a different kind, Carol, dealing with issues of social justice and a massive boycott. We caught up with Amber Atherton. She's the CEO of Ziper. She had some pretty strong words to say about where Facebook is. But first, imagine taking five antibody tests just to get results you could believe in. That's what Bloomberg's senior writer at Stephanie Baker did. Let's start with that interview.

A couple of months ago. I took four antibody tests of finger prick antibody tests that were on the market at the time and that many people had questioned their reliability UM, and I got conflicting results. I got two positives and two negatives and sort of gave up, even though I had cross checked them with various other doctors and nurses who had tested positive for COVID. So has

left a bit confused about my status. When some of the newer tests came out that are based on an intravenous blood draw, they appear to be more accurate and more sensitive. H So I finally got around to taking one of these tests, the Abbot tests, which is does have some pretty good data behind it, and I wasn't depositive, and I was somewhat relieved that I figured I have three positives versus two negatives, and one of the positives seems to be more reliable and has some pretty hard

science behind it. Having studied this, Stephanie, I have to ask you, why is this so hard? I I agree it shouldn't be this hard, and I think it's hard because we are still learning so much about this virus UM. You know, I think some of the tests were trying to figure out what is the best way to go about UM, you know, finding the most effective antibodies, you know, is it against the spike protein or is against the nucleo capsid, which is another kind of antibody that the

COVID nineteen generates. UM And I think there was a lot of time wasted on these finger proc tests, which some of them can be good and reliable, but they're just not as sensitive as the intravenous blood draw. The blood draw is a hard thing to roll out on a mass scale. It's more expensive, it's more time consuming, um, you know, but the data seems to indicate that this is the better approach. We still don't know what it means to have antibodies, and I think that's the biggest problem.

There's indications that it does provide some protection, we don't know how long that lasts UM And I think that's the real question mark over these tests. What is it What does it really mean to be positive. That's such a good point because I think Stephanie, when we first started talking about the antibody tests, were like, Okay, this is the holy grail. We're going to find out if you had it and then you're okay, and then you've got some immunity and go back out into the world.

And now we're realizing it's not so easy, And I do wonder how did it kind of change your psyche in terms of Okay, you know or you think you know right, because you've done five tests and the majority of saying one thing. I mean, how has it impacted your world in terms of how you go back and re enter. I think it has made me more relaxed about the risk of contracting it. For sure. Um, you know, I'm I'm still being cautious because I think that's the

responsible thing to do. UM. But I do look at my risks of say, contracting it by going into a store or um even a restaurant as less than it would have been otherwise. But I think, I think I do have a responsibility to be careful because we just don't have those long term studies showing what it means. We don't know how long it lasts. I you know,

my antibodies might fade. We don't know. And until those studies are done, I need to be the sort of responsible pandemic citizen and and be careful and cautious around social distancing. And that's Bloomberg Stephanie Baker Carroll, and usually she's literally chasing after financial criminals. In this case, she was trying to chase down a good result for a test. Yeah,

and what's interesting is her reporting. I love this story because she reminds us that these antibody tests, which we thought were going to be the holy grail and a game changer, well they are imperfect and they're not as reliable in terms of what it means to have had the virus, to have antibodies, and what does it mean as you kind of re enter the world. So love her reporting in her firsthand experiences. You're listening to Bloomberg Business Week. Coming up, Retail no stranger to the effects

of the pandemic. This, Jason, we know is an industry that has been hit so hard. We're going to talk with Alan Ellinger MMG co founder. They are working in the retail industry taking a look at those distressed assets. So his perspective in just a moment. He's been in the business a long time, He's seen a lot of cycles.

This one is different. And this is Bloomberg. This is Bloomberg Business Week with Carol Masser and Jason Kelly from Bloomberg Radio, and today we're bringing some the most important and informative conversations we had on our daily Bloomberg Business Week radio show across the week, Carol and Jason, you know, we'd like to remind everybody that we're doing these interviews as news is happening and crossing the Bloomberg terminal kind

of fast and furiously. And that was true for the retail industry, Brooks Brothers and so La Tabla filing bankruptcy, bed Bath and Beyond announcing plans to cut about its stores. So it's been very tough on the retail front just this week alone. Alan Ellinger is someone who has worked within the retail industry for some forty years. He is co founder senior managing partner of the investment bank MMG Advisors, and he says this time is unlike any other. As

a firm, we've been working remotely. Um. Our office closed on March twelve, um and other than our office manage, nobody's been backed um. But we've managed to be in touch with every one of our clients um um. Right now we're handling three bankruptcies. As a matter of fact, when the mission three bankruptcies, So our world continues, but just continue remotely and quite busy. I my did, yeah, and so so busy. It sounds like on sort of

bankruptcy restructuring side. But presumably, and you know, this is what I hear and I'm sure Carol, here is from investors that we know. I mean, these are the times when maybe there's some values to be had from a partnering up perspective, from an acquisition perspective. What are you seeing or is it too early to tell? What? It's a very it's a really good question what we're seeing

and what we're experiencing. Or in an enormous amount of inbound phone calls from opportunistic buyers, people who know that there's going to be bargains out there, um, and they're just you know, they've got a lot of dry powder. These are both These are both strategics as well as private equity um, who are sitting on their sitting on those sidelines right now, just waiting to pounce on the right opportunities. I just wrote to a to a commercial banker this morning, um and and the word that they

used was that the other shoe hasn't dropped yet. What we're saying, what, while there are a lot of bankruptcies in the process of the moment um, there are a lot of companies who really haven't UM acknowledge the fact that they're going to have to make some pretty hard decision in the next couple of months. The PPP money

has has enabled companies to last a little longer. Um. You know, people wanted to see company owners who want to see what would happen when retail reopened and what the if there would be a positive impact on their business or not. But you know, we're living through a period of time at the moment where for the first time ever, both the supply side and the demand side have been impacted simultaneously. We've never seen anything like that before.

On top of which, on top of which, when this happened, it happened suddenly, you know, all of a sudden, doors were locked and people could not shop in stores, and consequently cash flow just dried up. We've never experienced that, you know, in the past. When when when companies um or skating, I use the words, are skating on thin ice UM and they're considering a bankruptcy, you plan it.

You plan up for sometimes week, sometimes months in advance, and you're able to come up with with with a plan of volume and because you kind of know what you're what you're prior to your sales were in the similar dates and you could come up with a with a with a financial plan. All that swalled apart because there's been there's been no traffic. So UM, you know, models filed to chapter eleven on March I think it

was March eleven. They couldn't they couldn't even run and going out of business sale because the stores are locked and they're just not reopening. So we've we've definitely we've never experienced anything like this. We've also experienced the volume of bankruptcys that we're that we're living right now. And I gotta tell you, I think it's just beginning. You know, we're gonna see a lot more bankruptcy this time, but

during the balance of this year, maybe it's early next year. UM. But I will also tell you that we are overstored as a country, We're over invented. Were also over inventory as a country. So the fact that UM retail organizations, as an example, are using I'm using the term the cover of COVID. You know, they're they're they're using they're using this period of time to clean up their balance sheets, UM,

to get out of unproductive leases. You look at like copanies like J. C. Penny or who have more stores across America, and you know a lot of those stores are unproductive there in C and D malls, so you know they don't those are not money making stores. This gives them an opportunity to clean up their balance sheet, get get out of unproductive leases. And because it's under the under the cover of COVID, they won't have the stigma once they come out of it and they were

able to rebuild their business. It's kind of like fruiting a treat, you know, your fruity treat to make it healthier. That's exactly what's happening with those retail organizations who have the ability to get into bankruptcy and have the financing them to come out of it with a successful plan. So what are the longer term implications of all of this on this industry. Well, there a couple of things. One is, we've all been living at home and have had a great respect now for D t C companies,

those those companies that we can buy part online. So we're going to see a lot of growth in D two C, continuing growth in D two C. I believe that we're also going to see a number of heritage companies, companies have been around for a long time who have been unsuccessful in building their own DWOC companies buying or attempting to buy DTOC companies now that they can see them act and and there'll be some values out there

the um, so we'll see consolidation in that area. UM. We're we're also going to see is a great deal promotion coming up over the next couple of months. UM. As as companies try to clear their inventories, they're being an enormous amount of inventory in the stores on the water. Uh, you know, it's it's it's just it's built up over a period of time. That inventory has to be moved,

it has to be liquefied into cash. Now, there are some companies who are packing and holding their goods right meaning if if it's not highly if it's not high fashion, they're going to just put it away and stay those goods until next year. So Alan, what does the second half look like, Well, else gonna be highly promotional. UM. I think you know, the customer will benefit from the uncertainty of inventory to have in the marketplace. Right now, UM, we're going to see a lot more bankruptcies, um, and

I will you'll start to see deals happening. That's Alan Ellen. You're a co founder and senior managing partner of the investment bank and G Advisors. And he says, you know, Jason, a lot more bankruptcies and retail to come. He does think j C. Pennies and Macy's will make it through.

But you know, he talks about something we've heard from so many other folks were an overstored country well, and we heard that throughout the week, and certainly one of the threads we were pulling on that we will continue to pull on, is this over retailed world changing consumer habits in many ways, what effect that may have. Folks are still shopping for the moment. I think, to the surprise of many those second quarter earnings results, those are going to give us a window into what people were

spending and where they were spending it. But the I'll look it isn't great. So definitely an area to keep an eye on because that consumer economy, we know it makes everything run. You're listening to Bloomberg Business Week coming up, Facebook under pressure again, why brands of consumers are losing trust in the social media Giant our conversation with Zyper CEO Amber Atherton. When we return this is Bloomberg. This is Bloomberg Business Week with Carol Masser and Jason Kelly

from Bloomberg Radio. We're bringing some of the most important and informative conversations we had on our daily radio show throughout the week. Jason was Week seventeen. A lot of stuff going on, even though it was coming after a long holiday weekend. And in the news this week was Facebook, their chief operating officer Cheryl Sandberg and CEO Mark Zuckerberg. They met up with civil rights organizations. They are critical of the company for not taking seriously their demands to

better police its service from hate speech and misinformation. All of this has led to some big name companies, Starbucks and Pepsi among them, boycotting the social network. Well, and that's what it comes down to, right, This isn't just a social justice issue, this is an economic issue. Now. We went to one of our trusted voices on all things social media, that is ziper CEO Amber Atherton. She was back with us to help us break it all down.

They ultimately failed to appease the organizers of the ad ad boycott. So I mean what we're seeing from brands is and and consumers who are leaving the platform is that people who are no longer on Facebook are off the platform because they simply do not trust it with their personal info and they do not agree with how the company conducts business. So I think what we're seeing from advertisers is, you know, they want to be where their consumers are, and this is more about advertisers stance

on hate speech and not wanting to support that. However, this is temporary, so um, it's going to be interesting to see if brands in this temporary boycott are able to find new channels for growth. And if that's the case, then I think it's going to be interesting to see

where Facebook is left well and and Emperor. It feels like such a catalytic moment to some extent for a lot of brands, because given the social unrest that's out there, it feels like consume sumers are demanding more of brands, demanding more transparency, demanding answers, demanding them to some extent to take a stand. Do you agree with that? I mean, do you see sort of a different do you see in here and sort of feel a different tone around

brands right now, Yeah, for sure. I mean I can tell you at Ziper our customers who are looking to build community with their customers. At least ten of our customers have joined this Facebook ad boycott. That's Duncan free to La. You know, these are big companies who want to support what their consumers views are, which is not to fun hate speech. So I think that this is an exciting time for brands to really challenge themselves to

innovate on new ways to collaborate with their consumers. And we know that this new generation of gen Z, you know they thirty six percent of gen Z consumers would like to collaborate with the brands that they love. So I think this all plays into this theme that we've been talking about since January, which is the decentralization as they book and how you know, the leading DTC brands who are really on the forefront of innovation are democratizing how they build brands, and it's it's no longer the

kind of status quo of traditional Facebook advertising. And so every when you say they want to collaborate, they want to engage it. What does that look like? Give us an example there? Yeah, I think it's probably worth referencing that.

You know, this month we signed a big deal with General Mills where we'll be helping a lot of their brands across the near to be identifying their everyday consumers to be the genuine fans of the brands that don't have a lot of interaction directly with the brand, and we're able to bring them into this closed chat based environment to collaborate with their consumers on product innovation, kind

of like a focus group. Two point oh and and really just proved that customers who become part of a community with a brand, they are ten times more likely to repeat rates than somebody who was acquired through a Facebook at So I think there's some really compelling evidence that if you in where your customers are and invest in spending time building a relationship in a community setting,

then that does pay off in terms of LTV. And I think what we're seeing more brands interested and how can they increase LTV, which will ultimately allow them to spend more an acquisition and than they are focused on getting cheap acquisition because let's face it, Facebook has become

more expensive to a quiet customer. Well, this is what I wanted to ask you, Amber, because I do feel like a lot of brands still need Facebook and even though they may be doing a temporary boycott, as you said, let's see if it will be temporary, because I do wonder if brands kind of ultimately still need that social

media platform of Facebook. But as there are more alternatives, might people turn away and it's just a case of they're just you know, kind of waiting it out until there are other alternatives to you know, successfully um market on social media. Yeah. Absolutely, And I think this is I mean, we can't deny the fact that you know, in the first quarter there was a gain of around a hundred million monthly active users on Facebook, so you know,

two point six billion, record high. So you know that is there is a huge reach that brands want to play with. But I think this is more about the values of the platform and the fact is TikTok is rising. You know, more customers are saying to us than ever that they can acquire users more cheaply and more effectively through TikTok. And that's cyper ceo. Amber Atherton really one of our trusted voices when it comes to Silicon Valley

and social media. Carol because Facebook and all of social media find themselves in the midst of all of these crises that we're facing, whether it be the pandemic, whether it be social justice. And also, by the way, we've got a huge election coming up exactly, and people are concerned also about that kind of content right on the platform. You're listening to Bloomberg business Week coming up chef and restaurant tour Danielle Blulu, how he's adapting like many in

his industry and finding his way back. This is Bloomberg. This is Bloomberg Business Week with Carol Masser and Jason Kelly from Bloomberg Radio and to big we're bringing some of the most important, we hope informative conversations. Carol and I had on our daily Bloomberg Business Week radio show throughout the week and loved catching up with this famous chef. I have to say, he is just so lovely. We caught up with him initially in early April. It's just

Jason as he was shutting down his restaurants. He like many are pivoting in the industry, finding their way back, and just this week he was offering up Danielle Blulu kitchen in a terrorist setting in front of his famed restaurant bearing his own name, Danielle, of course, and we actually caught up with him on the night he was introducing it. We are putting a sidebook cafe at restaurant Danielle,

which restaurant Danielle is twenty eight years old. When he was on seventy six Street, he used to have a sidebook cafe. When I moved to sixty five and never really put a sidebook cafe. We had enough room whenn inside. And and we are doing um because I've started the business of delivery and to go daniel Bully Kitchen, so we are serving the menu of daniel Bully Kitchen on

the terrace of Danielle. So more casual and more approachable, but fun and and and and really it's an opportunity because I think we have a beautiful, uh facade, We have a beautiful space, and that's the only place we can really serve our guests. And we felt that it would be good to bring more staff and to bring new to bring guests back. I have to imagine, Danielle, that your clientele, many of whom are our listeners, uh so well known across Manhattan and the world. They must

have been clamoring for this, right. I mean, have you been getting a lot of calls to people saying, I want to come back in some former fashion, come cook for me the absolutely, So we do that. We have the come cook for me by by sending them meal home, of course, and we also do package for destination the Emptons or other places. People drive miles from the frid state to come and pick up a box with all

kinds of meals prepared for them to take home. But I mean having them at the restaurant and being able to again welcome, serve them, pamper them and offer them something we feel, uh, it makes us very happy and

I think it will make them very happy. Our guest. Yes, Well, you know it's interesting, Danielle, like we have been talking to a lot of folks, especially within your industry, that you've got to figure out how to pivot here, right because it's not like you can flip a switch and go back to the way it was pre COVID, And so it sounds like that's what you guys are doing. Yeah, very much. And we also opened the West Side. I

have a restaurant at sixty four Broadway. Babu and episode Blue open yesterday or this morning actually this morning we opened a Pie three Bullie, so it's a retail store where it's opened all day from breakfast to early evening and people can have salads and sandwiches and things who are old, home baked and homemade, and then we babu as a huge There are some sixty four Broadway, so

that's very very convenient as well. And we took Cafe Bullou up in the Berkshire and we did a pop up there in a wonderful vale shateau called the bland Hire. So it really we find I mean, it's all this opportunity to try to bring back staff. I mean we were more than seven hundred and fifty staff and we went down to seven people and now we're back up two hundred and twenty total around the different businesses we have reopened and we are pushing up and bringing more people.

So wow, that's big moves. And in terms of capacity, danielle Um, what is the I mean, what can you do at at what you're opening tonight versus what you would be able to do inside. I think I think that tell us is only I will say for right now, it's and and because you know, if it's if it's beautiful,

whether we might be able to extend more tables. But if it's a little bit greasily like tonight, we want to stander the canopy and we have a limitation of about thirty five to fourty seats, but that's pretty good. And then if it's nice, whether we might be able to double that size. But that's nothing compared to the size on the inside, where normally we have private dining rooms. We have the barn nouns, we have the dining room, which could almost bring hundred and eighty seats or more.

So it's a very different business model, and it's definitely not um a profitable model, but it's very It motivates us so much to do something with the whole concept of outdoor dining. I'm sure you've knew about it before, but you've probably learned more than you ever thought you would about outdoor dining, given that that's how we're all

eating out these days. How do you view it? What have you learned about it in terms of what you can and can't do, and maybe what the future is given that we're going to be in this for some time. I know and and and thanks God. I mean, we're in it in the summer right now, and the fall

should be mellow until at least November. But the the Mayor of New York has really opened up and I think many cities all over the country, I've opened up the opportunity for restaurate or to be able to put table outside in places we would have never been authorized before.

And they are really helpful, um meaningful I mean mindful of of course the security for the guests, but also um, really give the chance for the restaurator to have a meaningful business outdoor for the time being, for the time being, let's say. And of course the fine dining restaurant is more complicated, but not too many restaurants as outdoors there. For cafe the small Beast Row, we have like four or five tables outside. I've seen them taking half a

block and going around the block with tables. So it seems like they have more tables outside and inside now. But but it's good, thank God. Yeah, exactly, and that there is that opportunity to do it. You know, Um,

we were talking without Kate Crater, who covers um. I think, as you know, we love we love talking with Kate, and you know we were wondering, you know, you were going I thought to talk to Lincoln Center about doing maybe big screens for events like the US Open, so that maybe diners could watch from barbarous Are you doing that? Are you moving ahead with that? Well, I am all convinced that we can do something, and I am looking

at sponsor. It's it's all about trying to find sponsoring, to be able to create something for the moment, a little bit of a spontaneous things and for a short lived but at least we can do things to entertain guests. But I think, um, it is important that because the Open is happening, that we are able to show it all over town and it's uh, it will be fantastic. I mean, I would love to be able to show it.

That Danielle is needed. But at Lincoln Center there is the huge esplanade where I'm sure people don't have to crowd, and they have the entire war of the buildings where they could project the games and put some speakers. So I hope there will be you know, interested to do that. Of course. So Danielle, you know, the last time we talked to you, um, you know the the pandemic was very much on in the city. Unfortunately a very different time, um.

But obviously not much, not too much has changed, although you know, little baby steps for it that we're taking in terms of outdoor dining. I do wonder for you because at the time you were rightly concerned. I'm sure you remain concerned about the future of your business and maybe more importantly, the future of fine dining all across the country. Where do we stand now? What do you think about now when it comes to the future of

fine dining. Well, for a while, it would have to be slightly recliber I mean slightly or strongly recliber uh In in his um ambition of offering, I would say, in his size, uh. You know, we find dining. When we think of fine dining, that means we're going to reopen our restaurant inside and um in its price. Maybe maybe more option to be able to have choice of

not having to go for a tasting manum me. But maybe some sampler option, maybe some hours of operation or maybe shrunk down a little bit because of the cost of doing business, and so you know, less less days of operation will mean more control in in the cost of doing business and slowly get back to where it belonged, because I think fine dining will not go away. But I'm hoping that restaurant Danielle I can do a pop up for the months to come where I create something

very casual, very disrupting, and very different than Uh. I'm basically covering the skin of fine dining and putting a skin of a casual place. That's chef and restaurateur Danielle Bulue. Check out our full conversation it's in our extra podcast, Jason. But you know, man, just to hear him talk about how many workers they had, how many they had to let go, how many they've been able to bring back. I mean, it has been so tough for anyone in

this industry. Well, and look, this is a guy owing to the success of his signature restaurant in New York City, but also a lot of the projects he has in other parts of New York City and beyond. People are looking to him for leadership, and I think he feels a real responsibility to other chefs coming up behind him and his peers to really make a difference and really chart a course to find dining in the future. Yeah, and bottom line, he says future fine Dining. You asked

him about that. More options when it comes to pricing, menus and hours of operations. So yeah, things are going to change, they are. Well. That wraps up the first hour the weekend edition to Bloomberg Business Week from Bloomberg Radio. I'm Jason Kelly and I'm Carol mass are plenty coming up in our next hour, including a conversation with Trinity College President Joanne Berger Sweeney how her school is planning to reopen in the full, what it's doing. Also when

it comes to diversity and inclusion. Right, we're talking about a woman. She is the first one and the first African American to run that college. It's a prestigious school there in Hartford, Connecticut. So she is living all of these crises at once. Plus the return of Broadway, well it's going to be delayed once again. We caught up with Broadway League President Charlotte Saint Martin. Yeah, we're all gonna have to be a patient just a little bit longer.

This is Bloomberg. This is Bloomberg Business Week with Carol Masser and Jason Kelly from Bloomberg Radio. Hello, I'm Carol Masser and I'm Jason Kelly plenty ahead for you in this hour. The weekend edition of Bloomberg Business Week, including the relationship between Washington and Silicon Valley, continues to be fraught,

maybe only getting more fraud. We have a bit of a theme developing here in the second hour, because we're gonna talk now about an M I T study that looks at racism and diversity through the lens of economic opportunity. It's a new report from M I T that finds blackmail college grads have suffered the most disconcerting law uses. Bloomberg Week Economics editor Peter Coy and Bloomberg Week editor

Joel Webber broke it down. It's a study called the Faltering Escalator of Urban Opportunities by David Autour, a prominent economists M I T. Who I really love. He does such excellent work. This is part of a task force that he co chairs called the Task Force and the Work of the Future. So the conventional wisdom is that cities are good places for opportunity because there are things, there are kinds of jobs that are available in cities that simply aren't available in suburbs or rural areas. And

for one while that was true. If you move to the city, you were likely to get a better job, earn more money, and be on an escalator towards higher pay um. But what he's found is that is going back as far as that started to become less true, and it's become less and less true as time has gone by, and uh so there's more of a barbell now. There are some great jobs for upper income people, and there are some plentiful jobs for people at the bottom,

whether they are security guards or the food preparation types. Uh, you know, service jobs like that, but it's kind of a middle paying job. There are far fewer of them than they were in past decades. Well. Also with US is Business Week editor Joel Wepper joining us from Massachusetts. So Joel put this story in context. I mean, we love a good Peter Ki story. I know you're never want to turn it down to either, but frame this for us in in the sort of broader uh theme

of the magazine and what you're trying to do. UM. Funny enough, it relates to a conversation Peter and I were actually just having kind of earlier in the day, and I think it helps inform some of UM coverage that you'll probably continue to be seeing from us because you know, cities have really been this UM, this engine of economic activity. And that is has been true for you know, us being sort of in New York City properly most of the time and in the before times UM.

But if you think about it at large, especially for the American economy, that has been the story of UM sort of the the economic in gine of America has been sort of like the movement towards cities, the economic activity that they survived, that they provide. And now that the pandemic UM, as Peter kind of said, it actually is almost sort of like excellent accelerated some trends and some of those were pre existing trends and others were

were things that were sort of unexpected UM. And I think it puts the burden on cities in a in a way that UM it doesn't for a lot of

other economic models. And I think that that is going to be UM just an ongoing conversation of like, you know, you take New York City for instance, As Peter and I were talking about earlier, it was like, so what does this mean for the m t A. Right Like in d A, all of these things that this city, the city needs people in order to to fuel the city itself, and the moment that you sort of remove the people from that equation, it starts to actually become

somewhat of the downward spiral. So what does that mean, Peter, I mean, like play this out for us, you know, based on the folks you talk to and your own research and expertise. I mean, we're talking about, as Joel just mentioned, basic infrastructure. I mean, just sort of the way that cities live and breathe and grow and uh and operate. Yeah. Well, New York City is unique in the United States and its density, particularly in Manhattan. It's

not the norm for US cities. You hear a lot of people talking about edge cities, which are far less dense and in some ways more sustainable. Problem with like New York is that the subway needs a lot of riders too, you know, to pay a budget. You take away all the riders and you still run the trains and you're running massive debt. Is that's just unsustainable. So you can't get away with less density in New York.

But I just want to quickly go back to the topic of mail um college grads, which Carol mentioned in her intro is that that's a special problem because in general, the middle paying jobs were held by people maybe without college degrees. Uh, And so it was the people without college degrees in general who suffered the most from this hollowing out. But for black male college grads, they have

been dragged down as well. And that was one of the big surprises for all Tour in his research, that they their share of middle paying jobs went down and their share of low paying jobs went up from So there's a compounding all the other problems we've been talking about, and that Sloomberg business Week Economics editor Peter Coy and Bloomberg business Week editor Joel Weber joining us this study,

I think Carol really stopped as short. Well, what's interesting is when you think about economics, you know, conventional wisdom is that cities provide so much opportunities for everyone, right, that you won't get in suburbs or out in the country.

And yet what the m I T researchers found that that's not really the case, right, that cities are just not very desirable to workers in middle paying occupations, and that's especially the case for blackmail college grad So this study really stood out for me this week, And if you want to hear a little bit more about what that study is about and Peter's reporting, check it out online at Bloomberg dot com. You're listening to Bloomberg basically

coming up. Author of the Code Silicon Valley and the Remaking of America, she's back with US University Washington professor Margaret O'Mara talking to us about racism and diversity or a lack thereof in Silicon Valley. This is Bloomberg. This is Bloomberg Business Week with Carol Masser and Jason Kelly from Bloomberg Radio. We're bringing some of the most important and informative conversations. We had a lot this week happening on our daily radio show, and we'd like to remind everybody.

Jason right, there was so much news going on around us when it came to the economic outlook, what's going on with companies, and of course what's going on with the virus. But one of those topics that stayed front and center as well is concerns about racism throughout the country. Absolutely, and nowhere is it feeling more important and maybe more surprising than Silicon Valley. It's a bastion. We think of it as liberalism and progressive thinking. And yet we caught

up with Margaret O'Meara back with us. She's the author of a really great book called The Code, Silicon Valley and the Remaking of America. It's out in paperback now, and she shared with us her thoughts on the history and the current eight of the valley, Silicon Valley, and particularly it's biggest companies and and I you know, obviously three three that are based in the valley, and so that are based in my town of Seattle, UM are facing kind of a number of stressors by created by

this moment. Look, they're they're all doing great. Um. The the economy, you know that the Covide economy has has created a greater need for what they provide. So the so earnings are are you know, some things are down, but they're doing pretty well all considered. But they've got you know, I think that their problems now both as employers UM, there's been a conversation about the lack of diversity at the top of Silicon Valley, particularly in engine

bring teams. That's been going on for a long time. And look, the needle has not loosed very much. There's still not enough, there's not enough diversity in the c suite,

not to mention in these key worlds. And I think there's the other bigger problem of what, you know, how their products the platforms are feeding into um pull arization, the questions around hate speech and three speech, the questions of where these platforms, you know, what role are they playing in this moment and where can they help make

positive change? All right, So let's split those into two and start with the first one, which is the employee base and this relationship and lack of diversity, because you know, Silicon Valley has long held it itself up as you know, this is a meritocracy and so anyone who's qualified should be able to be successful. What has hampered that from actually happening or is the whole idea of it being

a meritocracy um false? Well, you know, I think the idea of meritocracy goes back deep, and I think what it reflects is at the very beginning, and I'm talking about the fifties and sixties when electronics was starting to cluster in the Bay Area and in the in the Valley in particular. These fol thesefol guys, and they were all guys, and they were all white guys because they're engineers, and there's the fifties, so let's keep them keep that

in mind. But they were from pretty modest, middle class backgrounds. They didn't have family connections, they didn't have money. Um, a number of them did very well for themselves. But when you think about these iconic founders, people like Bill Hewlett and Dave Packard and Bob Noyce and Gordon Moore, you know, HP Intel, they all came from small town backgrounds, didn't have they you know, they didn't have family connections,

their money, and so there. It is true that this has been a pathway for epic mobility, but that is

not true now. And funnily enough, one of the things that makes the valley so successful is the network between you know, across people, people who work together, people who fund someone that they know, drawing on you know that these these networks of connection has been absolutely critical in enabling the industry to generate one generation of company after another, and it also closes you out to other possibilities to

think about, Well, let's press someone of a different engineering program. Well, let's look at someone who doesn't look at all like I don't have a background that's all at all like the other people replended, But let's take a risk. You know, venture investing is a really risky business, right you know, there are only a few a small number of your

investments that make all your money. And so I think that there's sort of a conservatism in choosing trying to head your backs as much as you can by choosing people who are kind of known quantities, and often that means someone who knows someone you know, and and that I think is why the diversity problem is so hard to entangle. What what will it take for Silicon Valley to be more inclusive? Mm hmm, Well, I think it's going to take sort of It's a similar question that's

posted all of Quirkort America. But I think Silicon Valley has a particular pressure on it because these are companies that have presented themselves as different kinds of corporations. Um, you know that that's not evil and and have and and and definitely the talents that they are able to recruit, your pain is their key ingredients. There's key competitive advantage.

And so I think presenting really I think looking seriously and taking diversity more seriously UM, and that is going to involve I think a real shift in the way that you recruit and retain people UM, thinking about sort of casting a broader net and UM building a pipeline for people who are coming into companies large and small UM. And then I think there's also recognizing the great advantages that come from having a diverse team in the room.

That's developing products, that's marketing products. But thinking about UM different markets, their whole bottle markets, delicate these have not tapped into in part because we have been really really at building curtainly in the last twenty years. So that are really awesome for upper middle class people in the

United States. UM, it's like them, and you know, think about all these other parties that lie out there when you're skiing well gadly and so Margaret, you know, this was a week where Mark Zuckerberg and Cheryl Sandberg had a meeting that by all accounts, didn't go great with with a lot of activists when it comes to social justice.

You know a lot of criticisms being leveled there at Facebook, and from an economic perspective, boycott's underway from really big advertisers, brand name companies that have relied on Facebook as a means to advertise to literally billions of people. What's the next step of that and what do you make of this moment for Facebook and some of the other social media companies in terms of where they go next, specifically

around answering questions of social justice. Yeah, well, I think for the companies Facebook and Google in particular, that you know, that's sort of boycotts, that's hitting them right now, wall right, shooting them right there. That's Margaret o'mera, University of Washington, professor of history and author of The Code, Silicon Valley and the Remaking of America. That book now out in paperback. We talked to her a year ago when it came

out for the first time in hardcover. What's interesting, Jason. Her conversation reminded me of that recent story on the Bloomberg about what it's like to be a black CEO and Silicon Valley, and one takeaway of that story talked about how you needed to have a lot of humiliation to do business if you're a black CEO and Silicon Valley. So I thought, you know, it was great to get her perspective on what's going on. Yeah, I totally agree. I think this is an area that maybe we've overlooked

because of Silicon Valley's reputation. But when you pair this with what amberra Atherton was saying earlier about the struggles of Facebook and social media, Silicon Valley is very, very complicated. You're listening to Bloomberg. We're coming up. We're going to continue our conversations on systemic racism, diversity, and some of the challenges across the nation's biggest and most important institutions.

Trinity College President Joann Burger Sweeney with us. She says, it's a time of hope, but also a time of change. It's a great conversation. This is Bloomberg. This is Bloomberg Business Week with Carol Masser and Jason Kelly from Bloomberg Radio. Today we're using the most important and we hope in formative conversations we've had recently on our daily Bloomberg Business Week radio show, and Jason one of those conversations was with Joanne Berger Sweeney. She is in her sixth year

as president of Trinity College. You know what's interesting is she was at um Tufts University and there she created the Center for Race and Democracy, UH and what's interesting is I feel like diversity and inclusion, well, I don't feel like it truly has been a common threat of her academic and professional career, and she's now thinking about that big time. As head of Trinity, we are planning for a robust experience for our students, taking into consideration

health and safety as a priority. Our students will be meeting regularly and have safe interaction ends with their professors, we think, with coaches and staff. We are also ready to pivot if we need to again to have remote learning. So we are preparing to engage our students in new and interesting ways, even if that needs to be remote. UM. We're planning to support them because they need help in

figuring out how to navigate this new normal. And then you know, on a practical basis, of course, we are planning to have face coverings, physical distancing, reminders of hand washing, self monitoring of symptoms, and mandatory public health education for when they come back to campus. But you're going to be on campus. It is certainly our plan to be on campus. UM. We were very fortunate to Terman that

we had seventeen hundred individual beds behind doors. Now sometimes it's off of a suite, but we had seventeen hundred UM individual bed spaces here at Trinity, and generally we have two thousand students, so that will allow our students to come back and UM also have UM private or

individual rooms. And we thought, with those circumstances, and with the guidance that we've been provided by the State of Connecticut, that we are planning for a reopening, you know, recognizing of course that if conditions are such that we cannot open UM, you know, will have to then pivot to remote learning. And so, what are you hearing from students, especially incoming students sort of news of the first year students?

I would imagine I have to think they're the most both apprehensive but also maybe the most eager at the same time, Joanta, what are the conversations like there with them and their parents? Right, It's it's amazing how eager they are to come to college. UM. We had one of our largest classes, more than six hundred students who accepted Trinity College, which we thought was surprising given the pandemic. But I think that people really want to come back.

We did a survey of students and even before we had given them, you know what health and safety measures were going to look like, it's just what's your likelihood of coming back? And eighty five of our students and parents said they were either very likely or likely to come back. And then there was another, you know, almost ten percent that said, well, we're waiting to see you know what health and safety measures you have so people want to come back? Um. And I'll share with you

that I'm the parent of a college age student. He wants to go back, and I want him to go back already. So are our students to go back? Aren't we? Joan? As you know, Jason has two teenagers um and also a little one, but two teenagers. He and I both have um kids who are going to be seniors in high school. And I gotta tell you, I cannot. I love my daughter, I cannot wait for her to kind of be back within school and she misses it a lot.

So we totally get it. Absolutely. You know. When I talked to parents, they all get it and they laugh when I say, oh no, no, no, everybody one. Yeah, you're right there with him for sure. All right, So you're the first black and as female president of Trinity College, I'm sure you're getting questions like this all the time. What do we do to make this more than a moment? I think already it is more than a moment, And somehow people are listening to each other in a different manner,

and that's strategy. College President Joanne Burger Sweeney. I love that conversation because she really does sit at the nexus of so many the most important social issues that we're facing, one of which Carol is getting kids back to school, but also big institutions dealing with some of the most important issues of our time. You can hear that whole

conversation on our podcast feed. It's a great conversation and it came Jason in a week where we kept getting a lot of headlines from colleges and universities, including one from the IVY League right canceling sports competition for the upcoming semester because of health and safety concerns about the coronavirus pandemic. So a lot going on, certainly in that world. You're listening to Bloomberg Business Week coming up Broadway Dark for the rest of the year, We're going to check

in with Broadway League President Charlotte st. Martin. This is Bloomberg, This is Bloomberg Business Week with Carol Masser and Jason Kelly from Bloomberg Radio on some of the most important, we hope informative conversations we've had recently on our daily Bloomberg Business Week Radio show. Carol, that's true, and a recent conversation had to do with New York City's famed Broadway.

It's still dark, Jason. We know because of the pandemic, theaters staying closed for the rest of the year at least. But we caught up once again with the president of the Broadway League, Charlotte st. Martin, to find out what the outlook is. We either hire or are responsible for nine thousand jobs. That's the local restaurants, that's the retail stores in the area. That's the hotels, it's the museums and the vicinity, the parking garages, and they don't go

back to work until Broadway goes back to work. So, uh, it's not just Broadway that's hurting, it's everybody that depends

on Broadway. Yeah, I am curious some of the questions, you know, the conversations you guys are having, because it's you know, this comes in a week where we did talk to, you know, someone who manages a family owned hotel down in downtown New York, and you know what they're doing and I think Jason they said something like twenty or capacity, you know, and how they're doing things differently, and it is a very different experience in terms of

shoes being cleaned and everything sanitized. There is there is just no way to do Broadway physically or financially right on a smaller scale of not really making the goal always filling as many seats as possible. That's correct. The We are a heavy, heavily unionized business, and we have the best theatrical employees in the world, but they're also

the most expensive. And the costs of Broadway continue to skyrocket because the world exp access to deliver the best of everything, the best sets, the best digital technology, as well as the best actors, and it's it's an expensive business to run the The history has shown that in the best years, one out of four shows recoups on its investment, and for the long run it's one out of five shows recoup on their investments. So, uh, significantly reduced audience just doesn't work. If if we open and

have audiences of or less, Broadway won't work. So we have to make sure that when we open, we have ticket sales to help keep the shows open, because it would be a disaster to have the shows open and then have to close three weeks later. Right, So, Charlotte, I wonder, because I know you're talking to producers and playwrights and all the folks who are on the aative

side as well. I mean, what does this do for shows that were, you know, maybe not quite ready to go, but we're teed up to open in the second half of the year, or maybe some shows that that we're scheduled to open at the beginning of next year. Does everything get pushed? How many things just don't happen. What's your sense of how this sort of ripples through what we see when hopefully we are able to return to

Broadway early next year. Well, I mean, fortunately, um, we have only had two shows that were too open right after we closed Broadway on March twelve, and one long running show, uh decide not to come back and that was frozen. And then there were the two that aren't going to be performing. But that leaves about thirty five

shows that could be coming back when we reopen. And what happens is if they all come back, there won't be enough theater for the shows that we're coming in because many of the shows on Broadway are what you call limited runs. They say we're going to be running for twelve weeks or sixteen weeks. And if those shows do in fact come back, and we hope they do, then everything that was scheduled for January or the spring will be pushed back a bit. And we sure hope

that all of those shows get to come back. Those people work four to six years, sometimes more to bring their show to Broadway, so we want them to have their day. I have to say I was kind of looking forward to it. I think it was going to be a limited run. Sara Disca Parker and Matthew broaderick Right, they were just about to open, weren't they They were, But they are scheduled to come back in the spring. Okay, that's good to hear local residents making good on their profits. Right, Yeah,

exactly what happens? You know, I love you coming on because you do explain kind of the economics, um and you know of how Broadway works. What happens to all of the as workers. You say it's heavily unionized. Do they have they been getting payments of some sort or are they getting money from the government, Like, how does

it work? What happens to those workers? Well, when we shuttered, we've paid the workers for two and a half weeks, and then healthcare was covered for longer than that, and many of the unions are getting healthcare coverage still, and many are getting unemployment insurance. But there's no question everyone on Broadway, producers, the people that work in the producer's office, the people that work in theaters, everyone is UH is

experiencing difficulty. I mean most people think Broadway wow big business, big big corporations. Broadway is made up of hundreds of small little businesses that put everything they have to bring their show to Broadway. I mean, yes, you have Disney and a couple of other big shows that UH big companies that bring their shows to Broadway, but most are small entrepreneurial businesses and they're all suffering as well as the actors and stage hands and designers. There's nothing good

about this shutdown. And Charlotte, you know, one of the things we talked about the last time you were with us was, you know, obviously you have UH a window into this through the touring companies as well. I mean, this is a national epidemic and we're seeing it really flare up in a lot of different places. I know, I believe if I remember, you hail from Dallas, so you understand all different parts of the of the country. How is the touring business looking amid all of this?

Is it completely shut down as well? Are you seeing any movement there? Broadway tours are in two hundred and forty two cities around our country, and they're all shuttered. The one s glimmer of hope is many of the other markets where the Broadway shows two or two we're not as heavily hit by the virus. So there is some thought that some some of the cities can open up before the end of the year. And most of our cities are not as dependent on tourism as New

York City is. They have subscribers, and subscribers are very loyal to their theater. I mean, I didn't miss a show at the Dallas Summer Musicals for as long as I could remember, because that's where I learned to love Broadway, and that's that's the way people are in many of the markets across the country. So hopefully we will get some of those people back to work before the end

of the year. Do you see it as it's not until we get a vaccine or at least treatment modalities that can treat people who ultimately get the virus to keep you know, so that they they may get the virus, but they can take something that mitigates the symptoms and

the outcomes. Is that is that what will ultimately open up Broadway Charlotte, Well, we do not believe that we have to have the vaccine to open It will be great to have it, but the medical professionals that we're working with say that many other protocols that are coming

close to being real would allow us to come back. Certainly, the most critical thing for the cast and crew is the instant testing, because there is no way that these performers can and stage hands and the people that work backstage can come back and we not be assured every single day that they're healthy. Because if you've never been in backstage of a Broadway theater, these are historic buildings that are spectacular, but they're not the biggest backstage areas

you've ever seen. So uh, we have to have the testing that is reliable and we're getting good indications that

those will be available to us. Plus, there are protocols being developed all around the world that we're obviously watching and paying attention to at theaters of Global Community, and Broadway travels around the world, and the world travels to Broadway, so we're all sharing information, and our medical experts are telling us that they have cautious optimism that we can come back after the first of the year, not telling us exactly what, but after the first and uh, and

we're hoping for that to be the case. As we all know, we find out new things about this virus. Seems like every week. Sometimes it's positive and sometimes it's not. So we're very dependent on the good news. That's President of the Broadway League, Charlotte st. Martin, and you know, since she often reminds us that it's not just about the folks up on stage are behind the curtain, but it's a whole industry restaurants, right, and everything in New

York City that supports the theater industry. So it really has a big impact on the city economy and really the national economy. Yeah, the national economy as well. I mean, don't forget you know, they're touring shows that are you know, coming to theaters near you usually uh, and that whole business is largely shut down. We hope Broadway is back soon. Well, that wraps up the weekend addition to Bloomberg Business Week from Bloomberg Radio. Thank you so much for joining us.

I'm Jason Kelly and I'm Carol Master. Be sure to tune into Bloomberg Business Week Radio Live Monday through Friday starting at two pm Wall Street Time. And if you can't catch us live, find us on your podcast feed. Subscribe to Bloomberg Business Week wherever you get your podcasts. You can get the full conversations like the ones we

had with Charlotte Saint Martin, Joanne Burger Sweeney. You can also hear the in depth conversations we have on our daily show with some of our best experts like Craig Gordon are Washington Bureau chief and Kate Crater, our food editor at Bloomberg Business Week. And check out our extra podcast. Jason, we caught up a chef and restaurant toward Danielle Blue talked with us about offering up Danielle Blue Kitchen. He likes so many in the restaurant industry, pivoting to bring

back customers, and don't forget. Also, you can watch the show live on YouTube. Just search for Bloomberg Global News. We'll be back right here next week at the same time. This is Bloomberg