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Okay, so we are definitely a watch in AI conversations, the narrative the market moves related to such like this year's mega app performance by end video though pulling back a little bit today and keeping with that earlier on Bloomberg TV, I think overnight actually Kathy Wood talking about what will be the next to ride on the artificial intelligence frenzy driven by Nvidia.
We think this is a very large market, and we believe right now the hardware side of it is probably in the thirty forty billion dollar range, So multiply that by eight we see the software side going to eight times that. But over the next between now and twenty thirty, we think artificial intelligence is going to add more value than any of our other technology platforms.
Are that of course, as Kathy Wood of ARC invest really defending because she's been under a lot of criticism Matt for her selling of Nvidia back in January, which we know who has been on a tear this year.
It's basically tripled since then. So yeah, she continues to say like valuations were too high and trying to kind of justify the sale. I think she should just say, we screwed up, you know, Maya Kalpa. We would have preferred to make money with that stock. We didn't win some, you lose some. Let's move on. Well, the software part of the story is really interesting, I think great. The only problem is her track record for exaggerating with her forecasts.
She's like the boy who cried ten thousand wolves, you know. I mean she says Tesla's going to be worth two thousand. By the way, Tesla's trading at the same piece four p as in video. So okay.
The thing I will say is she was out early when it comes to Tesla, a name that nobody wanted to back, and she wasn't wrong about that. And so maybe her numbers or her peaks, maybe you don't exactly mesh with the reality. But a lot of the.
Trends that you go on, like one point three million, I think jour there's.
A lot of plays that have and there are other companies that have mimicked her in terms of the innovation play. I'm just going to put that out.
We'll just take a look at the other side, the performance of the fund. Okay, Okay, it's very bad.
But take it back to the beginning. Okay, all right, we're going to continue this. In the meantime, we want to do want to talk about one of the most read stories on the Bloomberg Yes, folks, we're going to get to a point here because it's about Hedge Fund, specifically deploying chept to handle all of the gruntwork. So it's got this AI play, no doubt about it. So let's get into this story with Bloomberg News Managing Editor of Technology and Global Cybersecurity, Linda Wan. She's here in
our Bloomberg Interactive Broker studio. I hope we didn't freak you out with her.
No, I'm highly used you and I'm so.
Glad that I'm not here talking about in video because I've been talking in video for the last week and I'm done with it for now. All right, she's reaching the trillion dollar mark and now now it's done for now.
Well, what's the wait?
What is the narrative around that is it that it's just too much too right now at this point.
I think that everyone's freaked out over the past week, right, I mean, you've seen it means huge gains. You got to like take a pause and question whether it deserves that, and then Kathy would right. I mean she's got some valid points. There's going to be more competition in this space. There already is. It's only a matter of time before you see more and more people pile into this like AI market and try to stake their own claim to it.
So it's absolutely true. I mean the thing about in video not to bring it up, sorry Lennon, is that for a while time, I feel like if you called up your broker and said I need an on AI right now, she probably was like, there's a stock for you. It checks every box, as Kathy Wood said, and VideA is it and that was the only stock. You know, everybody else, even in AI wasn't doing nearly as well
as in Nvidia. But at least the good thing about Kathy woods interview on Bloomberg TV is that she points out there's gonna be a lot of other beneficiaries if it's really true, if this is the next wave of innovation. It's not just about the people who make chips, right, there's so much more stroader.
I mean, think about the entire AI supply chain. It goes from like the foss fuels that generate the electricity that power the data centers that use the chips. There's an entire chain to make money off of, not just one company.
Right, So bring in tie in Wall Street because you know, the one thing we need to talk about is AI is not a new thing, and we keep bringing in like whoa, look at this new you know, Shania object, but it's been around for a long time. Generative machine learning, though, does take this all to a different dimension. Talk to us about Wall Street and they're embracing of AI and where we are today.
Yeah, so let's talk specifically about generative AI because that is where we are at right now. That is what's new, right, And when it comes to generative AI, I'm talking about like the AI tools like Chatcheep and Dolly where you can give it a prompt like, you know, show me a picture of a rooster that's pink sitting on a brown couch and it'll be able to do that. So it can like create content on the fly. They're basically using these kinds of generative AI tools for back office work.
I mean you said it, well, grunt work, right, So these are the kinds of tasks that you might assign to interns or entry level workers or admins. Some examples that we gave in our story today were summarizing fun performance assessing, like vast amounts of market research to distill it, writing basic code like these are the very mundane tasks that real junior workers of Wall Street are used to doing.
And they've been doing this for a while. Are now is this new?
This the generitive AI part is the new part, right, So Wall Street has been using machine learning for years. I mean these hedge funds are just as much software companies as they are traders and investors at this point. They employ a ton of engineers that just do quant research, just build algorithms. I mean that's where like quant trading comes from. So really AI is not new to the space. Generative AI is new to the space. I mean it's
new to everybody. It's new to the world. Chat GPT like changed everything and now suddenly everyone can program, everyone can use large language models, everyone can write essays.
But Carol as you point out it's just one more tool that Microsoft is offering people in the back office. Right when I first started out as an intern at Tucker Anthony, you know, twenty five years ago, Paul Matt Miller, I had my introduction to Excel, Right, I was using other Microsoft tools. I was, you know, printing out mailers.
But there are tools, and there are tools Matt that change.
Yeah, but this is not a lot. But I think, Lynn, what you're saying is right now Wall Street is using this just as far as the intern sending out Christmas cards, right you Excel, right, that's right. It's not picking stocks for anybody yet, correct, But it could.
Because they because and we've talked about this, Matt.
Right, well they wrote about it.
It gets smarter and smarter and smarter.
That's right.
I mean, it potentially could, and I think that that is the hope of these hedge funds. But the technology isn't perfect. You know, you might have read the stories, but chat GPT it lies like it makes stuff up, literally, and it spits out a lot of really inconsistent responses, and nobody really knows why, even the people who built these systems. So there's the issue of inconsistency and the fact that it can make up things. But there's also the issue of data leaks, which financial companies are.
Very You know, this weekend, I was using chat GPT to try and determine the best strategy to get my three of a kind in Yatzi, and it told me one thing, and I questioned the model, and then it told me another. It said, oh, I'm sorry, you're right.
I'll have a moment of map playing Yazi. Okay, go ahead.
My part is it makes mistakes. On the other hand, in your story that that you know that we're kind of focused on right now, Lynn, which is Justina Lee and Segel Kishan wrote hedge funds are deploying chat gpt to hand all the grunt work. They point out that the FED found open AI's chat gpt does better than Google's burt and determining whether or not sentences are hawkish or dubvish. So it does have real value in terms of investiation.
It could have very real value, and Justina and Sagel laid it out very well. I think that they are still trying to figure out where that value lies. I think a part of it isn't even just concerns about the factualness of these tools as much as it is how do we make it work? How do we use it so that it makes money? So there's that too.
I think the quandary is, like we talk about, it gets smarter and smarter than more data that gets put into it. But at the same point, does that mean you have to open it up to everybody? And that means everybody has your information?
And that is like, right, the open source nature of some of these tools really freaks out Wall Street. They're trying to like build their own in house tools. Everybody is looking at that. But that's the that's the big concern, right You just don't know where that information is being stored when you put information. I don't know where your yachtzi information is being stored in chat Gypt.
Right now, here's the thing to be open to everybody else. You're three of a kind new roll twos? Do you pick up the other three dice and roll them or do you pick up all five? Because your chances of rolling three of a kind are like forty two per d.
No is this holiday season when you get that card? Happy Holidays. Matthew Miller from ABC Brokerage House it might have been Shatchy Sha che Te. Great stuff. We're all learning as we go in this Lynn, thanks so much. This is just fun. Linda Want She's managing editor of Technology and Global Cybersecurity at Bloomberg News. Here in our Bloomberg Interactive Broker studio, do you play Scrabble two?
Well, we do play Scrabble, but was an international crew so we felt it would be unfair and we chose Yachtzi instead. Oh my gosh.
To be continued.
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All right, right now, though, we want to talk about stuff going on outside of the United States, specifically what's going on between Russia and Ukraine. The US and European allies urging caution on whether Ukraine should have the right to strike inside Russia that amid concerns that a potential escalation could drag them into a broader war. Meantime, you've got President Putin demanding that Russia strength and air defenses around Moscow after the biggest drone attack on the capital
since you ordered the invasion of Ukraine. So let's get the latest and some really thoughtful thinking about what's going on, at least the latest incidents. A valued voice for US on the war is Angela's stamp. She's senior fellow at the Brookings Institution, a former National intelligence officer for Russia and Eurasia at the National Intelligence Council. Also served in the Office of Policy Planning at the US Department of State, and her twenty nineteen book Putin's World, Russia Against the
West and with the Rest. She joins us once again on the phone from Washington, DC. Angela, good to check in with you once again. We've been wanting to since those headlines about the drone attack in Moscow. Specifically, what do you think about what's going on right now, this war that's been going on for more than a year. What do you think is going on inside the mind of President Putin right now?
So President Putin knows that the Ukrainians have said that they're going to launch a counter offensive anytime soon. They've been saying that for some time. But we believe they will do that, and so he's clearly very concerned about that. Then you had a few weeks ago a lone drone attack right inside the Crumlin walls, and then yesterday you had these drones that attacked the very posh suburb of Moscow, where all the wealthy people live and where Putin himself
has one of his official residences. So he must be wondering what the Ukrainians or their supporters have up their sleeves next. I mean, the Ukrainians have said that they didn't launch the drones yesterday, we do know that they're also saboteurs inside Russia. And just a few days ago and it's going on now, we have a group of people who identify themselves as anti Putin Russians march over the border to Belgaroon, and today the Russians are evacuating
children from that border town. So it's really to give the Russians a dose of their own medicine and make them uneasy and not know what's coming in the future.
But it must make.
Putin very angry about this. This remember was supposed to be a three day war.
So before we go any further with the drawing attacks on the Kremlin. I've got to ask you, Angela about what everyone says when I talk about this, and that is, well, who did the Nordstream pipeline pipeline attack?
Right?
It doesn't make any sense that the Russians would have sabotaged their own pipeline. But also the US doesn't typically operate that way. It wasn't a fantastic job. So who do you think was behind that?
I mean, who knows? There's so much mystery surrounding all of this. I've seen reports in the press here that some governs think that it was a group of Ukrainians or pro pro Ukrainians, not government sponsored. But if you like they were free lancing that they did that, I don't know whether we'll ever know who did it. But
I don't really have any good theories. I mean, if you say, if you think the Russians did it, the only reason would be to raise you know, oil and natural gas prices, but that seems a rather roundabout way of doing it. So I think we don't know. Now.
As you said, we thought this was going to be a three day war. Here we are, you know, one year in counting.
So base thought it was going to be a three year war.
Yeah, to be that's right exactly, And I think the world thought that this was going to come to an end much more quickly. Having said that, how do you figure out or how do you think about when this might come to an end and what might ultimately bring it to an end.
Well, at the moment, there really does seem to be no end in sight. I think Putin definitely believes that he can outlast the West that eventually, you know, will have elections in the US next year, there are other European countries will have elections, and in the end people will say, you know, we can't go on supporting Ukraine like this. We're dealing with inflation and so we should really think rethink that. So that's what he's waiting for.
He's waiting for the West to give up on Ukraine, if you like, and then the Ukrainians won't have all those weapons and so eventually they won't have any choice but to negotiate with Russia on Russia's trumps. Now, so far we haven't seen that happening. The West is still pretty united fifteen months into it.
Yeah, I mean, Angela, we're starting to see, especially on the far right grumblings about why are we funding this war or at least why are we funding the defense of this democratic nation. Do you think that's going to go further? Does it seem like those in you know, the Freedom Caucus are going to try and take funding away?
Oh, I'm sure that they will.
I mean, so far, I think we have very robust congressional support for Ukraine mostly, but the people in the Freedom Caucus, the people the supporters of Donald Trump, think that we shouldn't be supporting Ukraine. Some of those people even think that Russia should be our ally, not Ukraine.
And I'm sure as we get into the election season for next year, those voices are going to get louder and the people who still believe in supporting Ukraine are going to have to come up with very convincing arguments.
What about the people of Russia? More broadly, are they still behind him? We know that there are factions right of folks that don't support it, but I'm just curious more broadly, especially if you now see the attack, the drone attack on Moscow, is that changing sentiment internally?
Well, I think for those people who believe in the government narrative, then you know, the drones just shows that it's the aggressive West. So the majority of Russians still appear at least to support this war passively because they have been fed this diet of propaganda that the Western the US is out to get them. Then there are groups in Russia who think that Putin isn't being strict enough with this war, that the Russia should be more extreme in the way that it's treating Ukraine. So he
gets criticism from the right as well. But so far there does not seem to be any kind of a ground swell movement in Russia that's anti war. Don't forget a million people have already left Russia, many of who left because they opposed the war.
All right, So in terms of the war on the ground in Ukraine, what are the chances that the Ukrainians can actually make some headway and push the Russians out? Is that even in the cards or do they need jets and a lot more from the West to do it? Well.
I think people believe that they may be able to push the Russians out of some of the occupied areas in this counter offensive, But this is only going to be one of what apparently will be a number of different counter offenses. I don't think anybody thinks for this particular one that will happen soon, that they going to push the Russians out of everything that they occupied, particularly the territories that they already occupied after twenty fourteen.
So how do you think about this? I mean, I think I've talked with you before, you know, writing another book, and how you're thinking about you know, putin going forward in Russia. I'm not wrong, but so like, how are you thinking about this?
Well, I'm still thinking looking into what I think will be a very long war. This could go on for a long time, as long again, as long as Ukraine gets weapons from the West, because the Russians will get what they need, even if the army has performed certainly
below par. At some point the Russians might be persuaded that it's in their interest to have a cease fire, but so far they've said that they will only do that if Ukraine accepts all their conditions, and as long as Ukraine is fighting back and as long as it's led by Voladimir Zelenski, they're not going to do that.
Hey, Angela, who watches this the most closely? China Taiwan. I'm just curious North Korea. Who you think is watching this, especially in terms of how the West reacts with Moscow.
Well, clearly China is watching very carefully because it does affect its own view of maybe the timing on what it does to Taiwan. And then I think probably countries like North Korea are watching this too, just to see how this plays out. But I think China is the one for whom this probably has the most resonance.
North Korea they're watching it on like an old black and white set with ars.
It's all right, they're watching, and they're watching. Angela always appreciate you weighing in on this. Be well, good to check in with Angela Stent, Senior Fellow at the Brookings Institution. Check out Our World and her book that's on Putin's World,
Russia against the West and with the Rest. As we said, you know, has served within the US Department of State and the National Intelligence Councils there really has some great vantage point on Putin himself, but just more broadly when it comes to global policy.
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Well, if you check out the Bloomberg original series The Future with Hannah Fry, you may have come across an episode that looked into how a scientific revolution has begun, one that may bring the fantasy of immortality a little closer to reality, at least by a few decades. Anyway, researchers the world over are closing in on discoveries that may help humans live longer, perhaps well into their one hundreds. So we have lots of conversations and lots of questions
about wellness and living longer and lifespans in general. In the meantime, investors, including Primetime Partners, are finding ways to bet on the world's aging population. So with us in our studio is Abby Miller Levey. She's co founder marging partner of the early stage venture capital firm focused on
the trillion dollar global aging sector. There's a lot going on, is Primetime Partners, co founded, by the way, with longtime venture capitalist Alan Patrick ofv Welcome, Thank you so much coming a little bit so we can hear you because we want to make sure it's absolutely. Talk to us a little bit about the aging space and how you guys think about it as investors, because there is a
lot going on. But it could be you know, housing for people aging, it could be healthcare, So how do you think about it?
Absolutely, there are so many parts of how we think about the longevity sector. And if you think about it this way, if you ask ARP for example, they do surveys all the time of older adults and they say,
what do you care about? And they care about their health, they care about financial independence, and they care about having meaningful experiences, and so that means basically, in my mind, gravity means all of healthcare, all of retirement and wealth management, all of consumer and media, and as well as housing and real estate, and so it's quite a broad industry.
As investors, we're focused on the early stage and we age tech as it's now called, had about two point three trillion dollars of investments, sorry, billion dollars of investments just in twenty one and twenty two. It's really an emerging space. I liken it to where climate tech was twenty years ago. Everybody understood that climate change was not
everyone there was a widespread there was a lot of data. Yes, there was a lot of data that said climate change is happening and we need to address it as a society. This seismic shift in our age demographic that this is not new information. The fact that twenty five percent of the US population will be over the age of sixty five by twenty fifty thirty percent in Japan, this is not new information. The question is how do we adapt to it, the same way that the climate tech industry
has had to adapt to this new reality. So that's how we really think about it. There's a lot of opportunity, but we have to in some ways prompt and nudge and push on the urgency of the top.
Well, there are a lot of problems then to be solved, right because especially if people are retiring at sixty five seventy and they've on the financial side of it, they're ready for maybe another twenty years, possibly thirty, But what the data is showing is that they could go for another fifty years, right, So absolutely, I guess there are problems that need to be solved in terms of how
they finance it. The healthcare bill is going to be off the charts, right, and then for meaningful experiences where they going to do absolutely well.
You know, one of the most pressing problems is that fifty percent of Americans don't have retirement savings.
That's what I think about. How if you're living longer, yay, yes, If you don't have the money to support yourself, not so great.
Well.
I think there's a few things. One is, you know, our individual choices. You know, average retirement age right now is sixty two. That hasn't changed much in the.
Past few years.
We are going to need to work longer, but that's incredibly young exactly. Then you have forty more years of basically acid DQ emulation versus a cumulation, and so that is a major choice we have to make. And are also given ageism in the workplace and things like that. We need to really work on workforce longevity, but also real changes in forcing retirement savings and so really excited that the government do that.
Well. A couple of things.
The Secure Act two point zero was the first time that by twenty twenty five, employers who offer four oh one ks are going to have auto enrollment. In other words, instead of saying to someone at twenty, hey, would you like to save now?
Just do it?
And there have been studies done by Bank of America that show basically that increases participation by five x. And so what Oftentimes in my role as an investor in the space, friends and family always ask me, you know, Abby, what's the secret to longevity? As if I know some secret pill. And by the way, there's a huge biotech
industry focus on this. I always say, and they're very kind of it's not as sexy an answer, but I say, max out your four o one k that's the secret to longevity, because if you don't have financial longevity, you will not have a lesser chance of having a decent health span. And we are starting to see that people in their twenty and thirties right now are investing at higher rates in their four to one k's than before. And in fact, one of our portfolio companies is called Penelope.
What they do is they allow solopreneurs and micro business owners to offer four oh one k's at reasonable prices, because as a small business owner or even a gig economy worker, you should be able to have your own four to oh one k and as a self employed person. So we really see that as an opportunity in terms of retirement savings to think about that. The other interesting part of the industry is really going to be around acid dcumulation. Most of our financial services sector is focused
on accumulation. If you think about decumulation, this is everything from now that you have these four to one k's most people they're sitting in. First of all, most people have an average of seven retirement accounts. If you have retirement accounts, because every time you move employers or out of work and do a roth IRA or an IRA, then you have all these accounts and they are these small sums
of money sitting typically in passive investment accounts. So another business we really like is a business call retireable that basically allows you to put them all together and then look at, actually, how do we invest or think about even drawing a paycheck from our retirement saving so you're really thinking about it differently. And also home, of course,
home equity. You know, the majority of older adults eighty seven percent own they have home equity, and so how do you think about that as a bank account and really without the punitive products that may have existed or this, you know, sense of it is it has only emergency funding. How do you really think about it actively as funding? You do say early stage that you guys go into. Where are you seeing the most kind of company creation? Is it in the financial products? Is it in how
we live? Is it how we experience? Is it healthcare? It's absolutely in healthcare.
Yah.
So two thirds of our investing is in healthcare, and healthcare, you know, is still the largest, you know, one of the largest contributors of our society. And older adults consume two thirds of all health care spent. So there's really incentives on everybody side. The government that pays for sixty five percent older Americans healthcare, the health plans, insures and pharmac everybody is incentive to figure out how we take better care of older adults.
So what do you invest in? I'm curious the kind of companies that are come up on your radar and you say, okay, this is something of interest.
Absolutely Honestly, you follow the money and where the money is is basically in figuring out how to reduce the cost of care and how to make care more accessible. If I had to bucket it into two buckets, again, we don't do pharm our biotech, So that's something that's not in our purview, but within our purview, it's reducing cost of care. So, for example, anything that would prevent an older adult from hospitalization. A hospitalization can cost a
health plan anywhere from fifteen to twenty thousand dollars. So reducing hospitalizations might be nutrition, might be, medication adherents might be fall prevention might be even things such as updating your home to make sure that there's safety within the home. So we've invested in several solutions that set into health plans to say, hey, let's prevent these hospitalizations that have clinical results and data to show we can prevent hospitalizations.
So that's one example on the accessibility front. I mean, I'm sure most of the listeners here recognize that COVID changed everything in terms of telemedicine.
Right.
Telemedicine wasn't a was very infrequently a reimbursable experience before COVID, but it was basically built into our healthcare system now as a way to deliver care. So we've invested in many businesses that frankly make telemedicine more accessible from an infrastructure layer company called open Loop, and then about a third of our investments use telemedicine as a delivery and accessibility mechanism.
And we're looking at.
Other businesses, you know, and I know everyone's very focused on AI, you know, within healthcare. What's really interesting is you think about the word care. Healthcare, particularly for older adults, has always been a service business. There's a human involved, and where does AI do a wonderful job? It does a wonderful job of making human interactions faster, easier, and more personalized.
We talk about this. I don't know if this is where you're going. And forgive me if I'm like off off in a crazy way, but just this whole idea of older people who are who are lonely, this idea of creating a robot or something that can I know, Matt, you're looking at me like I'm crazy, but I've seen it firsthand and it's devastating. And whether there can be in interactions. I know you think.
I don't think that's crazy. I did a story on that like twenty years ago. My thing is, I wonder how high valuations are right now, because I'm sure a lot of people want to get into this space. It's an incredible demographic right.
Sure, Well, I just got about twenty seconds important.
So robots we're less excited about.
We're excited about.
Technology enabling meetups, live, you know, experiences. It's really human to human. But on valuations, just like everybody else, valuations have come down back to i'd say, you know, twenty nineteen levels on many companies. But because we invest early stage, early stage has largely been protected from the valuation perspective. I think the one thing that has changed is people are focused on profitability and making their money last.
We have to run, come back soon. We'll do all right, Abby Miller Levey. She's co founder managing partner at Primetime Partners. Here in studio, you're.
Listening to the Bloomberg Business Week Podcast. Catch us live weekdays from two to five pm Easter on Bloomberg Radio, the Bloomberg Business App, and you too. You can also listen live to our flagship New York station, Just Say Alexa, Play Bloomberg, e Love and thirty.
Well.
In our last segment, we talked about the one trillion dollar global aging sector and how investors are tapping into it. One new eldercare benefit company in that group, though, is called Papa It's essentially a gig economy version of home assistance, a family on demand task rabbit for seniors that's being offered by some well known health plans and is embroiled
in assault allegations. Bloomberg News Technology and venture capital reporter Priya Annan and the editor of Bloomberg BusinessWeek, Joel Webber, joined me and Matt Miller with more.
The company is venture backed, it's a handful of years old. It's been valued by investors including soft Bank and Tiger Global at one point four billion dollars. Their model is essentially bring the gig economy to eldercare. So they have a network of independent contractors who can sign up within minutes, go through a background check process, and get onboarded, and then those folks are sent to the homes of elderly clients who are members of health plans that the company
contracts with. The company does a lot of business with Medicare advantage plans. Some of the country's biggest insurers are customers and clients of PAPA, and working with Medicare Advantage, they're essentially taxpayer subsidized.
Well, the thing is, even before I read your story, Eldercare and childcare is the last place I want the gig economy to be. Is everybody for this, it's such a bad idea.
Well, what we found in our investigation where I reviewed more than one thousand incident records of complaints that have been filed with the company by members, by its own workforce, the independent contractors who who are the pals that they send. That's the term they've given their workers. You send a
pal to the home of an elderly member. The company's whole thing is they remove the nursing element from homemade and so you know, they send independent contractors with very little training a short video that they watch for training into homes and the way they were able to sell us to insurers is there's a huge shortage of caregivers
in this country. But at the same time, in reviewing the more than thousand records of complaints that have been filed, it's clear that their contractors are sent into situations that they're unprepared for, and it does lead to some questions around is the gig economy the right model for a company of this sort right?
And part of the reason why.
This has been something that insurance companies have signed on board for is there is this severe shortage of caregivers in the US. The Surgeon General has talked about this. You know, people have written extensively about just the lack of caregiver services in America. In this case, the population that this company is serving Medicare advantage plans. Oftentimes folks are very vulnerable in that population, and cost is also
an issue. So when this company pop up partners with a health insurance plan, oftentimes the insurance plan will make it available as a service to its members for you know, X amount of hours a week that they can use this thing for free. Right, they don't have any other form of help. They don't have family members who can be caregivers for them, and family members who can help them get to the store, to the bank, to do laundry,
things like that. The idea is that they would then turn to these contractors through this app right exactly on demand. They call it.
We want to bring in the editor of Bloomberg Business Week, magazine, jail Web or he's here in our studio as well. I do feel like this is the kind of story you guys do so well. It's like very specific and really gets into the details, and it sounds like there's still a lot to figure out about kind of either how to make it work better or where it all went from.
Yeah, all Priya and her excellent reporting on this one, you know, to Madge to your point there of like who thinks this is a good idea?
Well, you know the company, and you know the company also put the name Papa. It is a terrible idea. It's solved.
You talk about marketing and that the CEO and founder actually had some personal experience with and so scaling. That is totally where this came from. Of course, we are in this massive shortage of workers everywhere, and.
Who needs to spend time with people?
Like literally people need to spend time with people. In theory, this sounds great. It's just sort of one of those realities where the gig economy meets up with something that hasn't totally been kind of proofed in the real world.
Read pre an Nouns full story online er on the Bloomberg Terminal for more details on some of the allegations facing pop Up.
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I can't believe you can hear this, Stree.
No, are you not wearing an earpiece? He's not wearing headphones or an earpiece, so you can't hear but Stree. Stree has always hated Alice Cooper?
Do you hate Alice Cooper? School's out forever? Okay? Anyway, Moyle Today, Now in the rear view mirror, many parents are getting ready to send their kids off to summer camp, and our BusinessWeek team out this week with a special digital series on the what is it like three to four billion dollar market for such programs that served twenty six million Americans each year and many years ago. Matt Miller.
So let's get into it because occupying a small but pricey corner in that space is a name very familiar to our audience. We're talking about the head of Goldman Sachs. So let's get into it. Bloomberg News Senior Finance reporter Street Atarajen is here in our interactive broker studio along
with the editor of Bloomberg Business Week, jol Weber. As we said both in studio, the story is as we mentioned digital online at Bloomberg dot com, slash BUSINESSWEEKND on the Bloomberg terminal, till can we start the big picture? Because it is one of several stories that you guys have online.
Yeah, I would look at summer and a thing that you know, it's got some nostalgia vibes to it, but it turns out to be this massive industry that you know, it's sort of quiet and nobody really knows about it
is summer camp. And when we started to think about what the summer camp machine looks like, we started to kind of like spool up some stories and then it just got really fun and we kept kind of digging around, and then Sri and Max Abelson were like, did you know that the Goldman Saxio owns a summer camp And we're like, no, uh.
No, I did not know that.
Actually, Like thanks for sharing that and like tell me more, and they're like, well, actually, we think he might have maybe bought into more than one. And then it turns out that Matt Miller grew up going to summer Camp and he had recommendations which did not inform the package, but we find out things about our colleagues after the fact that you know, I'm hoping to learn more.
Wait, did you not go to summer camp?
No, it's not a I grew up an Oregon. Oregon's not known for you know, sleep away camps. Oregon is summer. It is summer camp.
Yeah, that's right, Monday, It's just summer all year long.
So we were just mesmerized by how many cool ideas there were. And Rayhan Harmanci on our team led this effort. It turned out to just be really fun. And but we couldn't have done it without David Solomon, I think right. And three, this guy went to summer camp, not unlike Matt. And which summer camp.
Did he go to?
Well, he went to Camp robin Hood in the lovely town of Freedom, New Hampshire, and it certainly helped grow into the human being that he's today, made him very successful. He's now the Sea of Goldman Sax but was also the place where he was frequently known as Saul. And when David Solomon became a DJ the first time around, he went with the moniker DJ D Saul. Unfortunately that was too kitchie for who he is now, so he rebranded.
He's now DJ David Solomon, way more boring, but DJ Desol does trace its roots back to Freedom, New Hampshire.
Ah, so he.
Got that name at summer Camp. That's pretty cool till.
The sole part of it, the DJ came much later.
I mean, it's pretty clear from Solomon. How you get that?
Yeah, I know.
Any Yeah, he wasn't the first person in his family to go to that camp either, right.
Right, His father, his uncle were there before him, then he went there, then his daughters went there. So clearly there is a lot of sentimental value to Camp Robin Hood. And this was back in two thousand and four when he became a co owner of that camp. This was well known when he became the CEO of Goldman Sacks in twenty eighteen. But what was not well known hopefully much more well known now the story is out, is last year he expanded his portfolio of summer camp ownership.
He bought into another camp which has one for boys one for girls in Kent, Connecticut with a as part of a consortium of investors. So technically he kind of has a stake in three different camps.
Now, what's up with that? What's his interest. I mean, I get it. The first one, nostalgia, sentimental value investment.
We spoke to the.
Managing partner at the latest Summer Camp and he says it has been incredibly successful in the last year that they've owned it. Remember, this business has had its challenges, had some struggles through COVID, but perhaps in the post COVID era, where the outdoors are far more cherished, you can see why potential investors would be interested in something like this. And as they liked to tout, it's a very, very very big industry.
One of the reasons that I thought it was a great idea you do this package of stories was post COVID. It's like, you know what, you you don't want your kids to look at screens anymore. You know where you can go get outside, and you know who's ready to capitalize on that.
Titans of Wall Street.
It's great, it's naughty. It's crazy. Are there other like folks on Wall Street that are really into it?
You know, not that we've heard of all. By the way, guys, I don't think it's as crazy as the fact that the three of you didn't go to summer camp is a lot weirder and the fact that look, as the story says, twenty six million Americans go to summer camp and it is typically like a legacy thing. The camp. I want to camp kwani in well made. My dad went there, my uncles went there, my nephews go there. Like it's a normal thing for generations of family members to go to. And it's also normal for it to
be a boys camp or a girls camp. I went to a boys camp. There was a girls camp on the other side of the lake. We would sneak over there. Sometimes that was like a funk. You never know. I just think it's a pretty normal That's why you have these American like comedies that are about.
What's the one on American summer? American Summer, and then ten years later they have the reunion.
Yeah, so what was your nickname? I didn't have a nickname. I don't think for the air. I remember that we had the lodges. I stayed in Deer Lodge the first year, and the second year I stayed at Beaver Lodge, and we would do like this was our insignia, you know. And when I went back and when my nephew went there, the kids were doing the same thing. I went and saw where I had written my name on the wall in the lodge, you know, thirty years earlier. Like it was a really cool traditional experience.
Wait, you go there for a few weeks and then week you go back twenty thirty years later for reunion event.
Yes, we had our centennial reunion last year, which was really cool.
That's actually normal.
I think like the people who go to Camp chairshit, did you notice? You know what they're willing to do. So if you had a chance to buy into that camp, would you do it?
One hundred percent? I would definitely. I would even donate money. I was looking at the website today and they have a place where you can do that. I thought about it.
Sponsor a camper, maybe sponsor a camper for sure.
To try has been around for one hundred years.
Yeah, and so has the one that David Solomon invests. Nope, ninety nine years, nine years okay, okay, so we got them beat Camp Kawane.
So does he ever talk about it? Solomon?
He suddenly talked a lot about Camp Robinhood, and he did. He has spoken publicly about what impact it had while he was growing up. He cuttainly is very attached to that. I certainly don't know of him talking about his little expansion of his portfolio.
Yeah, the expansion part was what was really interesting, because if you've done it once, you're just like you know, you know, and then you you know what you want to know? How many more summer camps can I come out?
I will say the prices have gone up, I think pretty substantially. So that about what does it cost for a year. About five years ago or six years ago, I wrote a check to sponsor a camper at my camp at Camp Kwani, and back then it was I think five one hundred dollars. And so today because of.
This story pre inflation.
Yeah, so today, because of this story, I looked at the website again and now it's nine six hundred dollars only five or six years later to make the price is almost doubled.
David Solomon's Robin Hood fourteen nine hundred dollars for the summer, the one in Connecticut about fifty two hundred for three weeks.
What do you get within your camper?
Though?
For that waffles, go karting and in DJ go karting seems luxurious, that's extreme.
What did you get?
We had water skiing, which was awesome, full range we did. I was a junior main guide, so I went out in the woods for three days without any help and survived at junior giant games of Capture the Flag that could last days. It was really really fun. But what days days? I mean it was a huge camp and you were either on one side or that you were either in the maroon or the grays, and so you would compete with the others all summer.
And then you would like hide it for multiple days and they wouldn't be able to find it.
Kind of thing.
Wow, all right.
I didn't go, but my daughter did a little bit of camp, but it was like a farm and she was like out in the woods. It was kind of rough. I mean, are these camps posh or how are they?
Look?
I've been in this country for ten years and I still have to say I find America endlessly fascinating.
Well, Matt was your place posh?
No? No, it wasn't at all. You brought You brought sleeping a locker and all of your stuff was in the locker. Before camp. Every year, my mom would take me to the Army Navy surplus store where we would get like a canteen and a compass and a pocket knife and yeah you uh yeah, no more crappy clothes because you're going on mountain hikes. It wasn't because fourteen sounds expensive expensive.
But to be clear, if you were in a camp in Maine, which is a camp in New England, and any camp in New England will be called an idyllic summer camp, and anything that's called ilic summer camp is automatically put.
I'm sorry. Well, we did have the king. Well when I went there, Prince Philip was with me in camp, and so were Julio and Enrique Iglesias. And now Prince Philip is the King of Spain.
But we're more fun.
They were not in my age group, so I didn't hang out with them directly, but we had for some reason, kids from Ohio, New Jersey and Spain.
For a second, wasn't Prince Philip Queen Elizabeth's husband.
As well, No, the King of Spain, King King Philippe. He was at the time, he was just a prince obviously.
So one of the things that we tried to do in this package that is, like, Matt, what you're talking about is this nostalgic American pastime sleep away camp, and that had been a very popular thing, especially in New England. But there's another thing that sort of happened, and we tried to talk about this in the package, which is that style of camp has largely writ large been kind of displaced by more like day camps or thematic camps like coding.
We talked about the space.
Camp, camp whatever. So there has been this shift and along with that has become this nightmare for parents because if you're going to put your kid in camp, all these little thematic camps that are out there, you know
when they start filling up like January December. So for you to be planning for your July and August, which is basically when you know you don't have school, which maybe don't have childcare, you got to be putting down thousands of dollars and reserving those spots months in advance. And so summer camp, as it's gone away from this model that you talk about, as that price tag gets higher, it's also just added to this anxiety for parents about like where am I putting my kid? What am I
supposed to do? And so we have some really great stories in here about just this hot mess that summer camp has become for parents.
You hear it big time in New York. Right, It's like what am I doing with my kid? And like people are talking about it, You're right months ago because it's so competitive.
That's interesting because most of the reaction I expected was panic about enrolling their kids into some a camp. Instead, I got a lot of the reaction was regret, clearly over the amount that they had to pay to enroll their kids into summer campaign.
Right, and with on the other side of COVID now, I think it's like you want you want to add a thousand dollars to that fee.
It's like, you know, we.
Know that this is a thing that I think parents are craving for their kids and get them away from thost screens.
So you're saying Goldman Sachs made the right investment call.
I mean, well made the right This is his own Perhaps I am not surprised that he would double down on a space that he knew.
Do you think on the next earnings call you're sure you could just slide it in a little question?
Nope, thank you.
Bo Okay, there's some other ones that I just want to mention here. There's a ketamine camp where you can go.
That's not for the kids though, that's for that's for you.
You know, you can go.
Camp better little micro doves to focus on, you know, empowering your and becoming a better you.
Uh.
And there's some other adult only summer camp. So if you want to go live the youth that you you miss, we have all of that carved out, and.
I think that would be too awesome. I dig that if I were single, look at this.
For the nostalgia camper that might be you.
Yeah, Matt Miller doesn't need a better U version.
He already know he is.
Amazing, you know, the big surprise here, big number three point five billion dollar industry, and it's cabin's, canoes and counselors and everything else. So have fun with it and enjoy.
All right, really good stuff and great story. In terms of Davaoball, who would have thought Meetball Camp.
No, that was the movie with like Bill Murray at summer Camp the Balls.
Yeah, Oh, Matt, you never know where you're going to go. Jill Webber, thank you so much. Editor oft Bloomberg Business Week has not been to camp yet. Shrinata Rajen, Senior Finance reporter, at Bloomberg News has not been to camp. Matt Miller, of course has been, and we'll probably go back.
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You Love Them thirty.
A lot of businesses making changes. In the aftermath of the murder of George Floyd. We all had a lot of conversations with business leaders about what needed to be done more broadly in recognizing and really leveling the playing field when it comes to the black community overall and specifically, I know certainly on Bloomberg we talked a lot about black owned businesses, which brings us to our next guest, LaToya Williams. Belford is executive director at fifteen Percent Pledge,
joining us on zoom in New York City. LaToya, great to have you here with Matt and myself, your founder a Roora James. After George Floyd took to Instagram and said,
and I take this from your website. Okay, here's one thing you can do for us tagging the world's largest retail brands and asking them for fair Black representation on their shelves and talking about the Black community fifteen percent of the population and that as a result that we need to represent fifteen percent of the shelf space the black community. Tell us a little bit more about the organization and the inroads post pandemic and post as Lloyd.
Yeah, thanks for having me, Matt and Carrol. We've been doing a lot of work over the last three years. You know, as we approach the three year anniversary of mister Floyd's unfortunate death. At the pledge, at the fifteen percent pledge, we work with the coalition of retailers. We have twenty nine major retailers who sign multi year contractual agreements to diversify their shelves and their assortments to the
tune of fifteen percent and support of black entrepreneurs. We have moved over fourteen billion dollars and opportunity for black businesses as we work to close the racial wealth gap, and we've placed over six hundred and twenty five black businesses onto the shelves of the retailers like Macy's and Sophora all to Beauty Norstrum and the work that we've been doing so really working to create a more equitable landscape for black entrepreneurs as we kind of look to
write many of the societal wrongs that we all were talking about in twenty twenty and thinking about how we use corporate partnerships in support of black businesses, you know, overall thinking about the most equitable economy for us all because we know that that is beneficial to our society in general. So equitable access.
LaToya, I mean Macy's and Nordstrums. These are big nationwide stores. Fifteen percent of that shelf space is huge. Are they meeting their commitments?
Well, Listen, it's a multi year proposition, right, and that's why we signed. No contracts with partners are less than four years. And when you look at a Norstrum, because of the size and the breath and the depth of their business, they have a ten year contract with the fifteen percent pledge to get to fifteen percent in the most sustainable way. So it's really a marathon and not
a sprint. And it's really about a long term systems change towards a more equitable and inclusive you know business marketplace.
Part of this process post George Floyd has been an education for all of us. I know, I've had a lot of conversations with black colleagues and their experience in this world, and we all thought we were just so much more advanced, and we found out we got a lot of problems out there. Having said that, I am curious as you tap into black owned businesses specifically, how
big is the pool? And I asked that because we at Bloomberg have done a ton of stories about the lack of funding an investment that goes into you know, businesses started by black entrepreneurs, or they don't have the access to the financial system and the financial infrastructure that so many other white entrepreneurs have. So give me a little education, if you will, or what you have experienced when it comes to that.
So the pool of black businesses is vast. So in twenty nineteen, black businesses represented three percent of the entrepreneurial landscape, and in twenty twenty two we now represent nine percent
of the entrepreneurial landscape. At the Pledge, we work with over five thousand businesses very closely to help them to have equitable access program development, access to capital and ultimately to be business ready to scale into the ecosystems of those twenty nine corporate partners and retailers that take the pledge. So five thousand businesses are you know, working directly with the Pledge, but a nine percent overall representation, and that number continues to grow.
So you mentioned a few of the companies that are involved. What about the biggest retailers in the nation. What about getting like a Walmart on board. Well, that's where we're heading. We're hopeful to be heading that way, Matt.
When we think about closing the racial wealth gap, and we think about our goal organizationally is one point for trillion dollars generated through our work by twenty thirty. We need the partnerships of a Walmart of a target, you know, to really kind of maximize opportunity and always for black business owners.
And what I also will add is that you.
Know, at the Pledge, in addition to the twenty nine partners that sign the multi year contracts as Pledge takers, we have some very robust strategic partnerships with Google, with City Bank. When we think about all the ways and all the collaboration that it's going to take to really see a long term system change to drive a more economic, a more inclusive economic landscape.
There's all. There's also, LaToya, you know, in a capitalism sense, a real purpose to this because if everyone works together in the way that you've laid out, we increase the for all of us.
Absolutely, And Matt, that is a fantastic point because at the core of our business and the DNA of what our founders started three years ago is definitely economic justice. It's definitely diversity, equity and inclusion. But what we know is that when we support black entrepreneurs who have been historically excluded and systemically excluded, and we really look at their product innovation and their universal appeal. Right, products made
by black founders are not just for black consumers. There's a whole universal marketplace there for retailers to be able to drive revenue. And ultimately, when we invest in black businesses, when they have equal and equitable access to partnership, it is a good business strategy. Equity is good business, is what we know after doing this work for three years.
And I just want to say, LaToya, I mean no offense, I agree with you, but that research has been out there for at least a decade, right, Mackenzie others have said the importance of diversity on boards and in corporations.
Well, but it's just like Marcus Shaw says, you need to let greed overcome your bias.
But so if you do, then you would see a lot more going on. What is it when you go to a Walmart or perhaps an Amazon, if you really want to start moving the needle, right, why haven't they joined.
On because there just hasn't been understanding leadership investment. The data is there, but the proof of concept has been lacking for many reasons. Right, Black businesses need support and development and cultivation to be able to show up business ready. So it's not enough to just say we're going to move forward, we're going to flood our shelves, we're going
to find black businesses because they won't be successful. Right, So there's a whole kind of ecosystem that needs to be in play for this proof of concept that we are proving at the Pledge. The data shows it fourteen billion dollars in three years that when black businesses are supported in the right ways and when retailers and corporations really understand the journey, the need, the trajectory of black businesses because they have been historically and systemically excluded, so
they show up needing additional support. And when those two things come together and partnership is when you're able to see the magic and the proof of concept for the data that we all know to be true, but the actual proof of concept is proven.
All right, well, certainly great to check in with you, and it's great to hear the progress that you guys are making. LaToya Williams Belforti's executive director of fifteen Percent Pledge. Joining us via zoom in New York.
City, you're listening to the Bloomberg Business Week podcast. Catch us live weekdays from two to five pm Eastern on Bloomberg Radio, the Bloomberg Business app, and you too. You can also listen live to our flagship New York station, Just say Alexa play Bloomberg eleven thirty.
Hey listen. We want to get little bit more on the property mark it and especially when it comes to working from home. We're trying to figure this out the demise of the office. John Saxon is chief of staff at the real estate development and management firm, and they really specialize in mixed use properties. We're talking about Howard Hughes and he joins us on Zoom from New Orleans. John,
good to have you here with us broadly. You know, there's been so much nervousness about office and office properties coming off the pandemic. Do you think that nervousness is well founded?
I mean, I think that it depends where you're looking at.
So what we're seeing today is the performance of office is really bifurcated. You have the doom and gloom and everything that you're seeing in the news headlines about office, as you just pointed out, but a lot of that's concentrated into some of these coastal states like California. But what we're seeing in our portfolio at the Howard Hughes Corporation, where we have communities concentrated in Houston and Las Vegas, as we're seeing incredible lease in activity, especially for those
high quality Class A assets. You know, we've seen this out of state migration of residents and people leaving those coastal states and they're coming around the Sunbelt, and again that's where we have our communities, and so as we see people moving into our communities, tenants are following these these corporate relocations of offices are heading into our communities because they need to.
Follow that talent pool.
And you know, even in summer land outside of Las Vegas, where you know, we're we're building more office just to meet that demand.
Tell us about your community's John, because you've got a fascinating business. The name Howard Hughes, I think often throws people off a little bit because they think of the you know, billionaire recluse in Las Vegas exactly. But you have some really cool communities. Explain them to our listeners.
Yeah, it's it's a really unique company. And so so Howard Hughes.
We're a developer of master planned communities, and so we fit in this bucket of a real estate developer. But really the way we think of ourselves as community builders. And so we take these large loss of land, think, you know, ten twenty thousand acres, twice the size of Manhattan, and we break it out between residential land and commercial and so we sell land to homebuilders, and those homebuilders
sell homes and that brings residence into the community. And we use the proceeds from the land that we sell to homebuilders as the equity contribution for our commercial development, So I think office and retail, multifamily, you name it. And as we build that, it attracts more residents to come into our community and raises the value of our land, and it creates what we call this virtuous cycle of value creation. And our communities span you know, one hundred thousand,
two hundred thousand residents. And in order to build something out on this size and the scale at ten decades, and so we lay out this mastered plan where we decide where the roads and where the roads go, and where the residential and where the commercial goes to really create this cohesive environment.
So when it comes to working from home or working in the office, if you had to make a bet, where would you put your money?
Again, I think it depends where you're looking at.
If you're in California, work from home probably more likely where we're at in Houston. Let's take the Woodlands for example, which is our community just north of the Woodland, just north of Houston. We're seeing a lot of people coming back into the office and we're headquarters here in the Woodlands. We have a six hundred thousand square foot office building and I can tell you just by looking in the parking garage. Every day there's more cars heading in, and
I think part of that is to commute time. So the average community and across the US is right under an hour, and the Woodlands it's seven minutes. So people want to get out and they want to go to the office. At least that's what we're seeing because you're having that collaboration, and you know, when you leave a meeting in that in office, you have those one off conversations on a zoom call, you don't really get that.
So I think where you're positioned, if you're positioned in a high quality area with with those assets and where people want to be, I think, you know, over the long term, you'll start seeing more and more people head back into the office.
You know, always think about the leftreck family, right who their history of building these these developments where you live, work, play schools, you name it. What do you think is kind of the special source of making them really really work because some of them can can feel a little bit either overproduced, if you will, and some of them just feel like a normal natural development and a natural progression. What do you think is key to making them work well?
So at the end of the day, what you will be doing in order to be successful as a master plan developer is creating a place where people can have that better quality of life and feel like they have the walkability to go from the restaurant to the office to their home all.
In one very quick place.
And you can do it in a you know, in a relatively short amount of time, and that creates that that quality of life. So the way we think about it is it's a little bit science, right, so you know, thinking about developing the office and selling the land, but there's also an art piece of it.
So it's a balancing act.
So you're thinking about where that next park is going to go, where that next trail system is going to go, and reserving enough open green space and even thinking about incorporating education, health care facilities so that people can live this, live, work, play in one master playing community and they don't ever have to leave. So if you can do that and prove that you can do it over a long period of time, we think that, you know, you'll be successful
in doing that. And that's what we've done here, you know, for for decades and decades, and we still have communities that are in their infancy and we'll incorporate those best practices to get the same result.
Speaking of decades and decades or being in your infancy, John, I want to ask about you and in your career as well as the chief of staff role there. You're only twenty nine years old, but you already are extremely successful after a stint at Goldman Sachs and now chief of staff at the Howard Hughes Corporation. What would you say to people starting out in their career who want to get a foothold in finance or in real estate.
And as I understand that real estate wasn't you know, your your first job, so this is something something of an evolution for you.
Yeah, So I would say the advice, or at least it's worked for me, is to just have this this unrelenting work ethic and having focus and having.
That drive of what you want to do long term.
And so when I, you know, I get asked a question if I'm talking to one of the students and my alma mater, who you know, is nearing graduation and looking for advice, I mean.
It's it's the secret sauce that's really not so secret.
But I think to give a little bit more context, it's it's also going outside of just the job description, going above and beyond and doing things like creating a tool or a dashboard or improving a process at a company that makes your boss's life easier. That's been pretty successful. I've been able to do that at every company.
That's what Matt does all the time. He makes his bosses lives easier.
Not really, well, I heard it, you know, David Strim said you're one of the best hires he's ever made. So I get that. What about the chief of staff role? That's the kind of thing that we typically hear, you know, in Washington. So what does the chief of staff do at a real estate development company?
Yeah? I get it a lot. Are you political focus?
Is it hr?
Is it legal?
You know?
What do you do?
And my response is yes, it's none of that, none of the above, you know. But I like to think of my role as is kind of being a Swiss army knife and being that that versatile player to work with our CEO and our entire leadership team to go out and help ways and really push the strategic initiative
of the company forward. And so at Howard Hughes, we have eight different regions We're involved in a lot of different segments and industries, and so at the end of the day, we have one mission driven purpose right to maybe people's lives better and to you know, enhance community life. And so working strategically and looking at large data sets and creating a compell narrative that I can go to our CEO and have a message on you know, that that's what drives the value.
We have to jump in because you're run out of time ten seconds. Anything that you're seeing on the horizon that says recession to you very quickly, I have to go back to business.
No.
Surprisingly, I think we're yeah, we're seeing we're seeing a lot of improvement across the board, and we're pretty positive heading out to the rest of twenty twenty three.
All right, cool stuff.
Seck in with you.
John Sackson, chief of Staff at Howard Hughes Corporation. Joining us via zoom from New Orleans.
You're listening to the Bloomberg Business Week podcast. Catch us live weekdays from two to five pm Easter on Bloomberg Radio, the Bloomberg Business app, and you too. You can also listen live to our flagship New York station Just say Alexa Play Bloomberg eleven thirty, Bloomberg News.
Reporting earlier this year how the fitness sector has roared back after being devastated by the pandemic. Cost pressures though, and a possible recession could possibly pose a threat. So we thought we'd take a look man at the industry, and we've got someone who's actually spent more than twenty years managing, owning, and franchising health clubs. Chuck Runyon, his co founder and CEO at Anytime Fitness, a franchiser of Gym's,
joining us on Zoom from Woodbury, Minnesota. Check also the CEO and co founder of Self Esteem Brands, which is the owner of Anytime Fitness and also the Bar Method and more so, he's certainly well versed in this space. Hey, Chuck, nice to have you here with Matt and myself. Talk to a little bit more about Anytime Fitness, how it all works, and the type of growth you've seen, particularly post pandemic.
Yes, Carol, Matt, thank you for having me from this beautiful day in Minnesota.
Excited to be here.
My partner and I started Anytime Fitness just over twenty years ago.
We started in Minnesota, but.
Today we serve over fifty five hundred communities in forty countries around the world. And our goal has always been to make fitness more affordable, more accessible, and more effective, and we utilize technology to do that so members could work out on their schedule, not the gym schedule. That technology is still in place today and when you buy membership at your local club, say in Minnesota, you get to use every club.
In the network.
So we are still infused with technology. And now recently we've just launched our coaching suite, which is providing people with education motivation anytime anywhere. So whether they're in one of our gyms or studios or wherever in the world they live, we can now reach them, help them be healthier, help them eat better, coach them to a better lifestyle. And so we're very excited and you know, tremendous growth ahead. We are on a pathway to have ten thousand units by twenty thirty.
So do you have you know a lot of people, myself included, have joined gyms and then like they'll go a few times and then never go again, and every you know, a couple of years, I'll join another one and do it again, do it all over again, but I wish I could stick with it. How do you motivate someone like that?
It's a great question and something that has been going on in our industry since day one, and you know, it comes down to a handful of things.
First of all, personalization.
You know, it really helps with understanding our members where they're at in their life journey and where they want to get to. And once we do that, we can now not only give them the workout necessary, but give them the coaching, give them the motivation, give them the education that matters to them, and serve them up the type of content that they want to see. And so we're just in this for a series of small wins. If we can help our members just achieve some small wins,
some progress along the way. Right, When members see progress and experience it, they stick with their membership longer and they reach their fitness goals. When, like you said before, if they don't get that extra help but they don't feel that level of personalization, they start to drift away. They leave the industry, maybe to come back a few years later. So everything we do is about how do
we help our members achieve progress? Right, our members' health is at the center of everything we build here.
You guys though, believe that basically the government right should be what mandating fitness giveness.
Yeah, let's get to that. That would be good.
Let's get a little bit into how you're thinking about this.
Yeah, well, well let's zoom out again from our industry.
And you know, right now, globally we spend a trillion dollars a year on healthcare, and seventy percent of that spend is preventable based on something we call lifestyle medicine.
Lifestyle medicine is.
Proper eating, regular exercise, and better sleep and recovery. And so who better to deliver that than gym's or studios located in communities around the country. And so we were so disappointed that during COVID, health experts and policymakers around the world forced studios and gyms to shut down, which is the exact opposite message we should have, especially as as we saw that COVID attacked people with underlying health conditions, they had it the worst.
And so now, to be.
Fair, to be fair, we didn't quite know how COVID was transmitted or how infectious it was. Right, so as we found our way, like it just made sense to shut it down initially.
Well, well, I would argue there that there is empirical evidence. There is empirical evidence linking physical activity towards mental health and social well being.
And guess what.
Our industry was working with lawmakers to say, we can social distance people inside of our clubs and studios, we can only allow a certain amount of people in at
certain times. We were trying to work with them to say, look, fitness is essential, and if it's outside the club or inside a club studio, the message should be let's keep people moving, let's keep them healthy during COVID Because now what's accelerated is we have issues of mental health, we have issues where people been inactive, we have we have issues of loneliness, right we have issues of weight gain and right now cardiovascer disease and type two diabetes and
obesity are the number one killing globally.
We have a big message with them, so hold on.
None of us are disputing these numbers, and no doubt about it. But this whole idea of government mandating fitness and wellness, I'm not saying.
I just it's not that they're mandate. He's not saying they should mandate fitness wellness. He's saying they should consider it essential so that they wouldn't close it down in case of a pandemic.
And I would not use the word mandating, but think about this, what health health expert to be heard like really say get behind, move more, eat better, sleep better. It was all about like avoiding a virus, but our real virus is inactivity. Right at the end of the day, we have we lose hundreds of thousands of people a year to preventable diseases that if they were just live healthier lifestyles, right, we could not only save money, but save lives. And so that should be the message coming
out of how do we get people healthier? And there's no better industry to deliver that than our gyms and studios, And so we're trying to educate policymakers and lawmakers to help with that.
I mean, hopefully we'll never get back to a pandemic where we shut down. I think I hope the government has learned lessons about these draconian procedures. But one thing we can do, Chuck, is encourage kids to be more active. When I was a child, and I'm Carol, I'm sure as well, we have a president exactly President Eisenhower Climate and it was like a big deal when I was a kid, and I think the kids today for some reason in this like snowflake generation, they're allowed to skip
gym class because it hurts their feelings. Like don't we have to change that?
We do?
In fact, if you look at most school budgets around the country, fy, it is being cut and so there's less and less activity in our kids' lives. And technology is also playing a role to have our kids be more sedentary. So we absolutely, with both adults and children, need to create awareness and infectives and policies to shape the health of this country and shape the health of global don't.
You think technology though, ultimately with our with an Apple Watch and different things that are kind of getting us to a point where we're more aware of our fitness or lack thereof, And just cut about twenty five seconds real quick.
I think that the opportunity is there.
We absolutely can enable technology for more activity, but it's also like having us be sedentary right where we're sitting and having too much screen time.
So it's both a strength.
No what I'm saying, like I've I got to watch Matt's gonna watch like you count your steps. These things are potentially good. We'll continue this conversation at another day. Tell with you, Chuck No, I'm all for wellness and fitness. You know that co found or CEO of Anytime Fitness. Joining us from Minnesota. This is Bloomberg.
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