Bloomberg Businessweek Weekend - June 4th, 2021

the cover story featuring the Gospel. According to Kathy Wood, the issue is still on news stands and available online at Bloomberg dot com and of course on the Bloomberg terminal. So this week, Tim, we're gonna take everyone inside Apple's battle, well kind of against everything. Plus we speak with Anthony Nodo, the CEO of Sophie. They just went public this week with the help of a blank check company better known

as a spack. I've heard of them. They're back. They are not a new idea, but nonetheless there's quite a mania when it comes to those blank check companies. Also, we're going to hear from the beer and wine industry about how a pandemic has changed the way Americans consume alcohol. All of that to come. We begin, though, with a reminder that this week mark the anniversary of the race

massacre in Tulsa, Oklahoma, the community known as Black Wall Street. Today, dozens of attorneys and activists are involved in a lawsuit

against the City of Tulsa. Attorneys representing survivors and their descendants are calling for, in part, reparations, they also want justice and more accountability from government officials well tom Back in April, the U. S House of Representatives agreed to discuss the possibility of establishing a commission to study reparations, more than thirty years after the proposal was first introduced.

President Biden called the plan a good idea. As for full reparations from the federal government, it probably won't come anytime soon. That said, the city of Evanston, Illinois, is already getting started. Joining us with an article in It's a feature in the current issue of Bloomberg Business Week, magazine,

available on news stands and at Bloomberg dot com. Slash business Week is Joel Weber, editor at Bloomberg News, and Susan Burfield, Projects and invest Agations reporter at Bloomberg business Week. They join us from Brooklyn joel Um, I'm I'm wondering about this because reparations are, at least how Evanston is defining, reparations are a lot more complicated than just giving people money,

that's right. And and I just thought this story Um, that Susan and her colleague, our colleague Jordan Holman worked on for the magazine was amazing and perfectly timed. And and I think the reparation story is one that it has been, you know, one of the most interesting to watch. Evanston is Illinois is particularly interesting because this is the first US city to really promise that that they would take this stuff on and and boy, that's not easy.

It turns out, even even then, the word reparations can be controversial. So so Susan, can you can you help us understand what Evanston is going through and where it might go from here. So, you know, as you said, there's some kind of two efforts underway throughout the country. There's an effort at the national level, at least to begin talking about a federal reparations program that would probably come to trillions of dollars um for every eligible African American.

And then there are cities like Evanston that are looking at what UM the local cases for reparations for you know, injustice discrimination against black residents that the cities themselves are responsible for and that they can pay within their budget. So that's usually programs of millions of dollars, in the case of Evanston ten million dollars and Susan, they're doing this through the lens of real estate. Explain why that is.

You know, for a city like Evanston, UM, it's not going to attempt UM to make restitutions for something as huge as the years of slavery. But what the city why to take responsibility for and is holding itself account accountable for, is for housing discrimination UM that black residents faced in Evanston for several decades. UM that contributes, as we know everywhere to UM a racial income gap of

almost seven times between black and white families. And you know, in Evanston, UM, it's pretty well documented the ways in which black residents UM at one point lived all over the city and then over the course of about two decades, we're all steered toward one neighborhood in Evanston now known as the Fifth Ward. And Susan can you know rewind the clock because this goes back actually decades and Evingston

what happened? Yeah, so you know, um, Evanston can document kind of the first arrival of black residents to the late UM, eighteen fifties and sixties. Uh. And over the years, you know, there were increased none were of black residents, especially the Great Migration UM of the nineteen twenties. And as more black residents settled in Evanston, Uh, there began kind of official and unofficial codes and restrictions on where they could live. And then there came redlining, which was

a national policy but also took place in Evanston. UM that further made it difficult for black residents who now we're all living in this one fairly concentrated area um to get a fair mortgage. And that policy plus under investment by the city, the results in a neighborhood where the property values are lower than elsewhere in Evanston, the

homes are worth less and families were lost wealth. UM. In one of the stories that we highlight UM of Carlos Sutton, his home, his grandfather's home was actually moved from one part of Evanston to the fifth ward and the home had it been um remained where it was, I'm sorry, would today be worth maybe five dred thousand dollars. Where it is now it's worth about a hundred and fifty thousand dollars. That was Business Week Projects and Investigations

reporters Susan Burfield and Business Week editor Joel Weber. The Evanson story is one will be keeping an eye on for months and years to come. Yeah, it sounds like it's been thought about for years already, but let's see if it actually moves forward. Coming up, one of our biggest interviews of the week, we're talking about so FI CEO Anthony Nodo. He joined us to talk about his company's first day of trading on the NASDAC and why a blank check company was its best option for gone public.

You're listening to Bloomberg Business Week. This is Bloomberg. This is Bloomberg Business Week with Carol Masser in Bloomberg Quick Takes Tim Spinovin from Bloomberg Radio. It went public via aspack this week, and it was a spack back by venture capital investor and what many have called the pied piper of the blank check world. We're talking about Tom Polyopatia, we're talking about the fintech firm Social Finance, better known too many people. As so far the company raised almost

two and a half billion dollars to fuel growth. To find out more so far, CEO Anthony Nodo joined us, and his name is probably pretty familiar because he of course was the former CEO and CFO over at Twitter, former Goldman Sachs partner, and now his current company among the latest to capitalize on this popular investment vehicle. I think each company has to evaluate the different ways to go public based on their facts and circumstances, and for us this was a great option. We had a few

things to consider. First, um, we we wanted to convert our capital structure where that was largely preferred shares to common shares. That wasn't necessity for two reasons. One, order to file with the Battle Reserve for a bank charter, we needed a comment act that could become a public company. We also needed to make that conversion. We also had

two capital needs. First, um, we had bought Galileo in March of two thousand and twenty UM and with that came a seller note, and that note was going to be doing March at two thousand one, So that was

one capital need. A second capital need was to finance the bank if and when we were able to achieve a charter UM And so we were raising private money at the time, and we got approached by a number investors that wanted to put even more capital into the company and also considered UM supporting us in and going public. And so what we ended up doing was choosing a private round with zero price who invested three in seventy five million dollars. Then we closed that UM on or

about December. We launched the pipe confidential pipe process on the UH and we're able to complete that by the thirty one and then announced the combination of those two and the third leg of the store, which was a spact merger with Social Capital Head of Sophia five UM

on January four. And the combination of those three pieces made it a unique approach trust to raise capital and go public at the same time, and it was the right outcome for us versus a regular way I p O or well, no shortage of spacts out there, So why Social Capital Head of Sophia founded by we're approached by a number of different um UM spacts and UM we were confident that we're ready to become a public company.

We knew we would have to go through a pretty detailed, more detailed process from a diligence standpoint than going public as it's a merger UM, and we thought that Chamath's team brought one first and foremost a strategic UM perspective to the table for us and that we could partner

on different strategic opportunities over time. Number Two, UM they had great experience in conducting the type of diligence of a company like US, as they've done with other companies, to make sure they brought the credibility to Pipe investors when they made when they made the announcement and brought us to Pipe investors. Uh. Three, they had great experience and executing spects and so the combination of strategic value UM the diligence process that we knew would bring incremental

credibility to the Pipe investors. And then three UM expertise and having done this before were the three factors and why we chose Social It was a tough decision. We brought three options to the board that came down to the wire, and the board chose Social Capital. So you guys are all in their student loans. There's personal loans, there's home loans or insurance, small bies financing, UM investing. There's a lot on your platform. Will crypto be part

of it at some point? We do offer within invest the ability to buy single stocks without commissions, fractional shares which we pioneered, robe advisory accounts which we've created ourselves. UM. We also have UM five so far ETFs UM, and we do offer cryptocurrency. We offer eighteen different coins UM. We do it in a very appropriate it way and that we disclosed to the volatility of that asset class and the risk that you could lose all your money every time you put in a bye order. That is

disclosed before you hit the hit the buy button. UM. It is an asset class that our members one, and you want to provide cercified selection for them. Because you have an array of services that you can offer folks on the platform. What do you think is going to be the best growth opportunity, provide the best margins for you? Where is going to be the big business in your view?

You know, we design each one of the businesses to be best in class from a consumer value proposition, but also best in class unit economics, and so we design them all to be attractive on their own. Um. We do get incremental benefits when people take the second, third, or fourth product with us, but they have to stand on their own, both from a value probably to the

consumer and the unit economic standpoint for us financially. Uh. And the reason why we do that is we want to meet the member where they are with what they want, what we make money. So you so you're saying all of it's going to be lucrative. There isn't one of the things that you said, Okay, this is going to be our bread and butter. Yeah, they're all. They're all architecturally the long term to be standalone, viable, attractive businesses by themselves. And many companies are in just one of

the product categories. Many are just in mortgage, justin student loans, are justin brokerage, or justin checking or savings. I want to talk a little bit about profitability and so Fi's path to profitability. You currently lose money more than two million dollars in nineteen twenty each year. What is the

path to profitability and when do you get there? Well, we achieved positive ebada um in the fourth quarter of two thousand twenty is our first quarter of positive EBADA since we embarked on such an ambitious strategy to become a one stop shop and comprehensive suite financial services products on on one app UM SO we made a smith amount of investment in two thousand nine, eighteen and nineteen and started to bear fruit of that investment two thousand

and twenty, hitting positive EBADA in the fourth quarter of twenty UM and again in UH the first quarter of two thousand and twenty one UM and on a trailing told month basis UM we as you'll see in our financial disclosures, we've we've also achieved positive BADA so from a profitability standpoint, as it relates to non gap metric of IBADAD, which we think is the best measure for cash flow, we've gotten to that point now. Each one of our businesses is not profitable or our learning business

is very profitable. It's a it's a you know, very very well growing business UM. You can see the growth rates for the business in our filings, but it's a it's a high grower but also very profitable. Our technology platform is a high even higher grower business UM with great profitability. As well with about thirty margins. And then our financial services business which consists of so FI Invest,

so Fi Money and so By credit card um. That's an acquisition business where we recoup the customer opposition costs we make in year one over the you know, year and a half the two years after we acquire them. So on a per account basis, we may be hitting profitability, but because we're acquiring more customers than we cur we have that are profitable, it shows a loss in that in that business, which has also seen in our financials.

But we focus on unit economics, return of our business and prolo and economics to make sure that overall these businesses can be great unit economic businesses individually and in total. And so we're balancing both growth at a high rate

with profitability in the overall mix. That's so FI CEO and former CEO and CFO at Twitter Anthony no No to explain to us why the company chose to go this spack round versus a traditional I p O, though I think it is part of a broader conversation Carol about why some companies choose to forego the traditional I p O process. The road show what's referred to as

that s one filing and do this back instead. All rights still ahead on Bloomberg Business Week, finding that work life balance in the wake of zoom meetings and online learning. I don't know about you, Tim, but I'm still trying to figure it out. Yeah, I think we all are.

This is Bloomberg broadcasting from the financial capital of the world, Bloomberg Live the Free in New York to Washington, d C. Bloomberg to Boston, Bloomberg one oh six one does San Francisco, Bloomberg nine sixty to the country Sirius XM Chado one nineteen and around the globe the Bloomberg Business app and Bloomberg Radio dot Com. This is Bloomberg Business Week having it all, doing it all well. Not easy being a

working parent. We know that, especially hard during the pandemic when so many were working or worried about keeping their jobs while at the same time taking care of and often schooling their kids at home because of the pandemic, or even taking care of elderly family members. Yeah. Someone who knows a lot about that is Daisy Dowling, founder and CEO of Work Parents. It's an executive coaching and

training firm She's out with a new book. It's called A Work Parent, The Complete Guide to Succeeding on the job, staying true to yourself and raising happy kids. And Tim we started by asking about how and why she created this resource for working mothers and fathers. So when I started writing this book, I wanted it to be the book that I myself needed to read, both as an

executive coach and as a mom. So for years I worked with hard working men and women who are trying to get ahead on the job and fulfill their ambitions and earn a living, build their careers, all while at the same time being the present loving parents they wanted to beat. And I could advise them professionally, but I didn't have such great advice or tips or a single resource I could point them to they would help them

do both of those things at the same time. And then when I became a mom nine years ago, I got you know, the problem came home with me and I saw it for you know firsthand myself. I couldn't figure out how to find care, how to talk to my boss's boss about still wanting to get that promotion even after I had just had a baby, and every you know, practical and and ambition related question in between. And because I couldn't find that single source resource, that

one complete cookbook, I decided to write it. Well, I gotta say it reminds me of when I was pregnant and what to expect when you're expecting, because I just like it kind of takes you through different parts of that book, your pregnancy, but this takes you part, you know, through different points of being a working parent. Um. You know, there's one thing that jumped out at me about communication,

and I like this communicating with the village. We do talk about it takes a village, you know, to raise kids to kind of do anything in this society. Um, but how you communicate with that village is a really important thing. It is. And listen, throughout the course of the pandemic, working parents have been so stretched and pressured

that we're not doing a lot of communication. When we don't need to write our boss calls, we answer, our kids need that, you know, help getting into distance learning. We're on it. But in terms of that kind of back and forth, the proactive communication with your child caregivers, with maybe relatives, with extended members of your community, with all the people you're looking to and want to look to now in the new normal to help you not

just raise your child, but build your career. You really want to think about how much you're in front of those people, what kind of connections and touch points you're having with them, and have them not be on a need to or must basis, but really be ones where you're building that relationship and making sure that village is a strong one. So what's different about I'm one of seven kids. My mom was a stay at home mom

until we got a little bit older. Uh, and we were all or some of my older siblings were heading off to college. Um, is it tougher being a working parent today than it was a few years ago, or twenty years ago or thirty years ago? And I'm trying to think twenty years ago and so long ago. It's you know, the year two thousand. Yeah. Yeah, it's such a great question. And so many of my coaching clients grapple with this. You know, I saw my parents do it. I see you know some of the very senior people

at work. You know they've done this. Why is it so hard for me? And we beat ourselves up about that. But here's the thing. Working parents doesn't just feel harder or seem harder, It actually is harder for a couple of different reasons. First of all, the way you're working parent now, whether you're part of a dual career couple or if you're a single or solo parent, you are operating in a frame that your parents maybe didn't have to,

and your grandparents almost certainly didn't have to. There was much more likely that one partner, one person at home was going to be more available to look after the great big task of raising the family. And then, think about it from a technology perspective. So even if you're a working parent back in oh five, oh six, that's not really that long ago, but you weren't doing it with that kind of seven pressure and constant communication and that feeling of always being on that we now have

because of the smartphone. Now. Don't get me wrong, I love my iPhone as much as the next person, and it's a great tool it allows for I know, I'm kidding a little bit, but i'm but I'm also it's something that really kind of keeps us going. It does. It does, and that's not something that you know twenty years ago that you're or that your mentors had to do.

So there's a constant pressure. I keep telling people, we're in a new game here, and we've got to get a whole new set of tools and ways of thinking about working parenthood that will keep us on our front foot. That's Daisy Dowling, founded CEO of Work Parent and Executive coaching and training firm. You're listening to Bloomberg Business Week. Coming up next, it's the CEO of lands End on his company's growth and the possibility of becoming a meme stock.

I gotta say it was a fun conversation. I really enjoyed it. I really also found it interesting kind of how they're evolving the company. It's a brand that's been around for a long time, but they're figuring out how to kind of keep it going. Yeah, who did you have one of those backpacks with their initials on when they're a kid? Right? Exactly. I bought a few uniforms from the company. This is Bloomberg. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. Tim

Stenovik from Bloomberg Radio. I'm not sure if you've noticed probably shod cheers of lands and they're on a tear up kind of around this year. The retail are also raising its full year guidance for sales and earnings after it posted first quarter results that exceeded an earlier company forecast. One big reason why e commerce sales that have brought

in a lot of new customers. Land and CEO Jerome Griffith joined us with a look back and look forward to and about the possibility of being a Meme stock. The conversation started with a look back at those fraud early days of the pandemic just about fourteen months ago, well obviously about a year ago when we went into lockdown. It was real shock for everyone, and you know, we shut doors and and furlough folks and took salary reductions very quickly, and we're able to try and adapt to

whatever the new normal was going to be. Our demand went down in March last year, but very quickly rebounded in April and then went on a tear for the rest of the year. You've seen a lot more consumers shopping online, and uh, most of those consumers have been coming from Gen xers and baby boomers who have not been comfortable shopping online before and since our business is an e commerce business. We've been the recipients of a big increase in demand and a big increase in new customers.

We're just this past quarter report increase in new customer acquisition and retaining them over into actively. So yeah, we've we've been seeing some some really good numbers and I've got to say our troops have been extremely resilient. The folks that work in our facilities in Wisconsin have been just just great to work with, and we've seen some really great performance there. Everybody's been working from home. We've

been designing lines from home. We've been using three D design, we've been using architectural boards so our designers can share ideas back and forth while working remotely. And what we've

actually found is we've done a really good job. We've been extremely efficient um our folks are very happy working remotely, and as we get ready to return to the office in September, we're going to see a pretty liberal hybrid work environment where people are being just as creative, if not more creative, and coming up with great new ideas for us to continue to move the business forward. That is really fascinating because it's in contrast to really what

we're seeing the financial community where there is. It feels like a real big push to get everybody back to the office. Does it mean, though, to them that you guys might give up some real estate space because you just won't need it. No, we own all of our real estate in Wisconsin, so there's no sense to give

anything up. What we might do is repurpose some of it. Uh, And we're thinking about that, but no, generally, Uh, we'll have people coming back into the office on on a hybrid schedule, and we may move people from one building to another to make it more efficient, but that will be about it. So when you talk about repurpose, does that mean you might rent it out to other folks? Um, we could. We haven't made it that far yet. We're still in the thinking stages right now. All right, So

talk to me about retail trends. You said that you guys had a lot of new customers actually come on. What were people by during the pandemic and what about those trends if they were different from pre pandemic levels. Do you think stays with us going into the pandemic. We had already had a tagline for marketing purposes that said,

let's get comfy. The most important thing to our consumer is comfort and fit and fabric, and while that was performing extremely well going into the pandemic, as we went through the pandemic, the the requests for Knitwear, Lounge where Sleepware, Home Bedding, Bathhouse really went through the roof. I would say the only thing that was more of an anomaly for us was the quick increase in home. But generally

people come to us for comfortable clothing. We are known as a very casual brand, and we've seen the demand not only continue to increase through the pandemic, but as we're coming out of it, it continues to stay very strong. We think that as people return to the office, you know, the newfound comfort world, they're not gonna want to give it up. We found that our employees don't want to give up the freedom that they have and they don't want to give up the comfort, and this is what

we're hearing from from our customers as well. Yeah, that's kind of interesting, um, but I agree. I see it even in colleagues who come back. I mean, I walk into para genes. I don't know that I used to do that, even if I change at work into kind of on air clothes. It's just our mindset has changed and I think about what I really need. Uh. What about the supply chain, how did that work throughout the pandemic, or how has what happened during the pandemic maybe changed

how you want to do it going forward. Well, I think from our manufacturer standpoint, they've done an amazingly good job. People have have pivoted very quickly with either gearing up or gearing down production. And some of them had a hard time with with COVID. Some people had to close their plants because of heavy COVID cases. But generally they've been able to manage it relatively well. Where we've seen

problems as really getting goods into the country. The pork congestion has just been really terrible on the West coast and that tends to add literally weeks to the supply chain. In addition to that, you've seen increases in pricing uh coming into the US and then from your hubs getting deliveries to consumers, that's also been been increasing in price. And probably the scariest thing that's that's been happening is

a lack of labor market um. People are happy to stay home and collect unemployment versus going out and getting a job and a pretty hot economy. I was reading some things that some are speculating that Land's end stock is getting caught up in the meme stock trading. What do you say to that? What are your thoughts on this? And I'm curious if you're getting questions about this. We have a smaller float, so you'll see when it comes to announcement times around the quarters, you'll see some pretty

volatile swings in and out of the announcement date. But generally, no, I wouldn't think that we're a meme stock at this point in time. Okay, So not where about getting caught up in the craziness of it. I'm not worried about it now. Okay, So let's talk a little bit more about the business because there's a lot of stuff that's interesting going on. First of all, one thing I want to ask you. You You mentioned uniforms before. That's a big business.

I bought uniforms for you for my daughter, uh for school. Um. I'm assuming that business did it stop completely or fall off a lot in the past year, and it fell off pretty pretty far. A couple of parts of the business were tough Obviously, the school part of the business was very difficult, and then in our national accounts, we have an inordinately large relationship with the travel industry, so we do Davis rented Cars, Hampton Ins, Delta Airlines, American Airlines,

and and that was challenge. But what we've seen coming into the back part of is a much faster than expected recovery. Uh. The area that's still challenged in the uniform business is really the small medium sized businesses and that's going to be dependent upon the economy as we run through to come back. But is it getting back to or close to pre pandemic levels from what you're seeing, Yeah, yeah,

it is. We think that this school business will be back to pretty much normal by by this year, and then the national account business depending on the back part of the year. But we see that going much faster than what we had anticipated. So talk to me about

this third party marketplace for sellers um interesting. We brought the technology in last year and formally launched the marketplace in the fourth quarter of It performed very well for us over the holiday season, and what we've done has gone out to many other brands in areas that produced product that we really don't make, so we're looking at additional home products like furniture and home whears, things like that, additional shoes and then accessories, jewelry, sent beauty and bring margin.

That's higher margin business. Right. Well, it's a good margin business for us. And what's great it's it's low risk because we take the information put it all up on our website, but the manufacturers are dropping drop shipping for us, going directly to the consumers. So it gives the consumer when they come onto our website a much broader range of products the shop that they're looking for, and it's

really de risking it for us. Jerome, how big a business could that be for you, guys, especially if you don't have the overhead of the distribution like Amazon does. How big of a business could it ultimately be for you? It could be tens to hundreds of millions. But we're still in the in the point right now where we're sizing it. We're bringing on many more brands as we speak.

We expect to be well over sixty brands by the time that we get to holiday this year, and continuing to grow that and scale it over the course of the next few years. Hey, one last thing partnerships Draper, James Reads Witherspoon. How important is that to um kind of you know, keeping the brand relevant, if you will, just great for the buzz, And what's better than that is it's been great for the bottom line. We've been really pleased with the aults that we saw last year

and then again this spring. In fact, we're expanding our partnership with them in the back part of the year with the home furnishings and sleepwear. Yeah, and we've got some other exciting news coming down the pike, which we'll be able to talk about in the quarter or two. So we're working on some other fun stuff. Looking forward to catching up at another day to on that exciting news.

That was Land's End CEO Jerome Griffith leading a company, Tim that's diversifying the types of products and services it's offering. End investors certainly taken notice. Yeah, Stock on a tear really over the last couple of weeks. Yeah, exactly. All right, that wraps up the first hour of the weekend edition of Bloomberg Business Week from Bloomberg Radio. I'm Carol Masser and I'm Timstantive. Coming up in our next hour, we go inside the c suite at b n Y Melon's

pershing with CEO Jim Crowley and CEO Emily Schlausser. That's ahead of the annual Insight Conference on investment strategy. Yeah, we find out what's on the mind of investment professionals, what their clients want to know about. You know, some of the things that clients are looking for really around the digital capabilities, which not surprising and has certainly been accelerated by what we've seen through the course of the pandemic.

I think the clients are really looking for enhanced usability. I mean, really, their expectations are being set by the ease with which they can do anything else in the digital world, from personal banking to ordering a new bird, to getting food and groceries delivered. Right, So we're seeing an elevated expectation around the ultimate usability and experience. Plus, the CEO of an Appa Valley Winery and the head of the Beer Institute talk alcohol making in the wig

of the pandemic. Spoiler alert, we're still drinking which one beer? Wine about a little bit about It's good to know you're listening to Bloomberg. This is Bloomberg Business Week inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news as it happened. Bloomberg Business Week with Carol Messier and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Hi, I'm

Carol Masser and I'm Tim stock. Plenty ahead in our second hour of the weekend edition of Bloomberg Business Week, including our conversation with both the CEO and CEO of B and Y Melon's pershing. We're talking about Jim Crowley and Emily Schlausser. Emily, by the way, actually entered the

C suite at the height of the pandemic. Yeah, taking on that job remotely back in over the summer wild Plus the CEO of a Napa Valley vineyard talks about how a pandemic and climate change are impacting wine sales. First up this hour, though a story online at Bloomberg Business Week that we want to draw your attention to about the shine coming off the golden child of tech,

and by that we mean Apple. For more, we talked to Bloomberg Business wee gdit Her, Joel Webber and Bloomberg News reporter Joe light as the Coopertino based firm is now getting the same type of scrutiny as its fellow tech giants in the midst of a crucial legal battle. Apple is kind of getting hit on four fronts, you know.

The first, as you mentioned, is this epic lawsuit. Um. The second, they were hauled in front of Congress in April to answer questions from lawmakers around its app store and kind of accusations that it's you know, anti competitive, that they're not allowing enough competition to put programs onto iPhones. Then they've in May they faced you know, kind of two issues they face. Um uh. As he said, Tim Cook, he actually took the stand in the epic trial and

facing those antitrust accusations. And then the New York Times came out with an investigation about some of Apple's activities in China, which just brought a new way of scorn from lawmakers who you know, say that Apple was kind of sacrificing some of the privacy of its users in China in order to gain access to that to that market. So, as he said, it was kind of nothing at all. For a few years, you know, during the Trump administration, Tim Cook had a very good relationship with Donald Trump.

And now now all of a sudden, you have all these things kind of hitting the company at once. So what go ahead to say? I always thought that was unusual, like Tim Cook and Donald Trump, like I tried to get my head around, I'll never forget him any next to the President and not correcting him when he was making statements about the factory in Texas a few years ago. Um, Joe, I'm I'm wondering about potential worst case scenarios here for Apple.

Among the many challenges that you you spoke about, what's the worst case scenario for for Apple? Here? Is it? Is it Epic prevailing in this fight? Um so yeah, so so the Epic lawsuit. I mean, Apple could potentially, you know, lose some of its power over the App Store if Epic wins. I mean, the worst case scenario for Apple is if it starts getting hit with antitrust lawsuits from governments, you know, whether it's the whether it's

the federal government. The Bloombergs reported that as as uh as late as January, um d OJ investigators were interviewing a developer on the App Store, So clearly they're doing some sort of investigation around that. Um, some seat governments have also brought lawsuits against those other companies, against Amazon, against Facebook, against Google, and if it starts getting hit with those sorts of antitrust lawsuits, I mean that's where

the real real pressure comes. I mean, all this lawmaker stuff. You know, they say mean things, but very rarely does it actually result in some sort of legislation. But um, you know, these federal enforcers are a completely different story. I think I think you're right there, Like, you know, it sounds good to talk mean and you know, but it's another thing to actually like a wheeled to stick Joe.

But you know, one of the things that I wonder here is do you feel that, you know, is it worse for Apple that you know, face something you know, on a one on one basis, or to be sort of part of like a zone defense where you've got you know, they get wrapped up in things that might also affect the Amazon's and another and facebooks of the world, you know, other tech companies. Well, I mean, I guess I guess you'd much rather be you know, kind of one in a crowd of people who are are facing iro.

I mean, you know, in the same way like you know, you want to be like if you're a zebra, you know, you kinda want to be in the middle of the herd and kind of and in and hope that you're not the one the line takes down or whatever. But the you know, once they start facing this one on one scrutiny, you know from these enforcers. I mean, one of the lessons we had from Microsoft, which faces zony I trust scrutiny. Um. You know, like twenty years ago,

is Microsoft ultimately one that case. But because of the pressure, because they didn't want to be seen as to um, you know, growing into other businesses that could face even more anti competitive scrutiny, they missed out on some business. You know, people say that that's what gave Google the opening to become the giant that it became. So that that's the sort of you know thing that Apple is gonna want to avoid, you know, fight this scrutiny while

also being aggressive in innovating in business expansion. But you know, you also make a good point that you know, ultimately, even the pressure, the political pressure that Apple and some

other tech companies have faced, you know, it's uncomfortable. It gives great fodder for us to talk about on radio and on TV and in Business Week magazine and online, but ultimately didn't really hurt them too much financially, right, Yeah, so so so ultimately the thing, the thing that you know, I'm sure Apple executives are gonna want to avoid is where they decide, you know, not not to do something.

You know some you know what, one of their one of their attorneys or even executive in his own mind says no, we're not gonna we're not going to expand into that business line because we know that you know, such and such an investigator, that will be just another thing for this investigator or for this lawmaker um to uh yell at this about um so that that's the sort of kind of you know, self editing of their business business that that could ultimately be the effect of,

you know, all the scrutiny. Bloomberg News reporter Joe Light and Business Week editor Joel Webber, you're listening to Bloomberg business Week coming up, how investment advisors are handling the spack I p O trend meme stocks and everything in between. There's a lot going on in the financial world. B n Y Melon's pershing CEO Jim Crowley and the company's CEO, Emily Schlausser. They join us next. This is Bloomberg. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick

Takes Tim Stinovik from Bloomberg Radio. A favorite event where we get to check in with what's on the minds of investment professionals. From advisors and asset managers to broker dealers and family offices, they all collect together in an event. This week, it's the annual b and Y Melon Pershing

Insight Gathering, held in a virtual format. This year, we caught up with bn Y Melon's Pershing CEO, Jim Crowley and the company's CEO Emily Schlauser to talk all about the trends investment advisors say their clients want to know about and Tim how the last year has really changed how advisors advise. It has been. You know, obviously the last fifteen months fifteen months have been quite a challenge,

and you know, two priorities really. First was obviously the safeguarding, you know, the health and the well being of all

of our people. That was priority one. And then you know the second thing, Carol, that really became clear to us is that there really is no substitute for business continuity planning and testing of your business continuity processing, because it became clear in March when we left the office on March thirteenth, literally overnight, we were virtual working from home, and thankfully we didn't miss a b through what was

really tremendous volume and volatility. Emily, come on in here and and talk a little bit about what it's been like for you as as chief operating officer. UM. What are the changes that you've made and how are you thinking that some of those changes are going to be permanent on the other side of this. Thanks Jim, Yeah, and thanks thanks to both of you for having us. It's been it's been quite a ride. As Jim pointed out, So I joined the company as chief operating officer last

July in a fully virtual environment, which is interesting. UM. I did have the privilege of meetings him briefly before I started, but otherwise I've worked largely for the last year virtually with all of my new colleagues. UM. But it's been great. Like we we have adopted very quickly to the virtual environment, UH, and we are thinking very

carefully about what does this mean for the future. And I think we're you know, we're seeing employees that are really getting accustomed to working from home and having that flexibility, and then also people who are changed to get back in and and interact with people in person. So we're looking at options for how we continue with the hybrid work environment to achieve both of those needs while you

building the best environment to serve our clients. I just want to dive right into that because man, Tim and I every day there are stories on the Bloomberg, especially within the financial community that you are seeing a lot of. It feels like we got to be back in the office. Uh, And it feels like the tone of the conversation Jim has changed a little bit from maybe a year ago.

We're well, maybe this hybrid stuff makes sense. Remember James Gorman thinking about maybe we give up some real estate space, um to where everybody now, this is what we've got to be back in the in the environment your financial community. You guys are working with folks that are dealing with you know, millions and millions of investors accounts globally on a daily basis. What are they saying? Are they hybrid?

Are they back in the office, what what do they anticipate? Well, many of our clients, Carol, are back in the office. I can't say though, that there is any one client that is back in the office full time um with their full staff. I think most people are still sort of working through this environment and trying to figure out

how to be hybrid. Who really is essential in office and who really isn't necessary to be an office And in fact, you know, for our clients, the most important thing for them is being in front of investors, being in front of their clients. And that's a lot more virtual going on with that, and people are clients comfortable

with that, Jim, much more virtual though. I have to say though, clients, you know, particularly when you're talking about their investments and their life planning, they really do want to have a personal relationship. And having a personal relationship through a WebEx serve any other sort of form of video conferencing isn't the same as sitting across the table

or meeting in the restaurant. And you know, I've actually myself and Emily, we've been on a couple of business trips now where we've actually met with clients in offices and it's it's the energy is so much better and the opportunity to communicate clearly and sort of get a sense for what the other person is feeling and thinking.

It's much more valuable, Jim. Something we talk about on a daily basis here at Bloomberg, these meme stocks and the rise of alternative investing platforms, whether it's read It, whether it's Robin Hood. Uh, we are really kind of watching this and how it's up ending what's seems to be kind of the mainstay financial community. What are your members, what are your you know, the groups that the folks that come to insight, what do they want to know

about this? Yeah, so it's been quite quite interesting, Carol. You know, thankfully, Um, you know, our platform has through all the Reddit and and beamestock. You know, volume volatility

has performed quite well our clients. Interestingly enough, while we see elevated transaction volumes in these names, the overall dollar value notional value of the of the transactions and things that we're doing for our clients, it's relatively small because our clients are much more what I would call financial planning based, wealth based, and so while there may be some transaction activity in these names on a relative basis is really it's a fraction of their overall what they're

dealing with when they talk about the wealth of their clients. Hey, Emily, come on back in on our converse station. You know you worked at Goldman you were in charge of their Global Markets division. You operationally have had to look at b and Y, MAL and Pershing and you know, look at what the needs are for clients and your team around the globe. How do things look in terms of us getting on the other side of the pandemic. Yeah, you know, I think, um for thought I could come

from Goldman. I was in charge of change management there at their Global Markets division, and so I'm excited to bring much of my transformation expertise to Pershing. You know, some of the things that clients are looking for really around the digital capabilities, which not surprising and has certainly been accelerated by what we've seen through the course of pandemic. I think that the clients are really looking for enhanced usability.

I mean, really, their expectations are being set by the ease with which they can do anything else in the digital world, from personal banking to ordering a new word and getting food and groceries the heard right. So we're seeing an elevated expectation around the ultimate usability and experience, and as such, we are uplifting our advisory and investment platforms to improve the way that our advisors can help their clients move money so they can onboard new accounts.

Um we're providing new modern look and field streamlined navigation. So we're really excited about what we can bring to bear in terms of our our digital platforms. That was b n y Melon's perishing CEO, Jim Crowley in the company's CEO, Emilish Lausser, has some great insight there well still to come. On Bloomberg Business Week. We finished off

the week with a half hour on Booze thirty minutes. Okay, that's enough, first from a CEO of a Napa Valley winery and then from the president of the Beer Institute, all in an effort to find out how a pandemic

has changed America's drinking habits. You're listening to Bloomberg broadcasting from the financial capital of the World, Bomberg Eleve in Frio in New York to Washington, d C. Bloomberg to Boston, Bloomberg one oh six one to San Francisco, Bloomberg nine sixty to the country, Sirius XM Chado one nine team, and around the globe, the Bloomberg Business app and Bloomberg Radio dot Com. This is Bloomberg Business Week. So this last half hour we're gonna relax, kick back, enjoy a

few conversations about wine and beer. We certainly are. Later we're gonna hear from the president of the Beer Institute. First up, though, a look at the wine industry in California. I love this. You caught up with David Duncan, the CEO at Silver Oak Winery, and spoke about how the pandemic has impacted the overall wine industry and specifically how things have been in my home state of California with the droughts, the fires, and just the way the climate

has been changing. Yeah, it's been really a fascinating, uh, you know exercise, if you will, from a from a production standpoint, and you know, being a being a ventnor and baking wine, it's all been pretty much you know normal. Um, we've been growing grapes and making wine and and our teams, you know, we've keeping all of our employees safe and and doing everything that we can to deal with the pandemic. From a consumer standpoint, it's been just an amazing change.

You know, we focused on selling our wines and restaurants, and as our restaurant partners across the country and really

around the world, we're close we're forced to close. Um. You know, we were worried, frankly, and we found that the consumers uh, you know, found other ways to purchase wine and so UM working with uh you know, find wine shops and all the way the states opened up to allow wine shipping really allowed us to to you know, shift our focus and and provide you know, the wines into people's glasses where they were and uh, I think as the restaurants come back, we're gonna we're gonna we're

really gonna see the demand shift again. So can you talk about develops, talk about the regulatory changes here, because I have this memory of I grew up the Central Coast of California wine country, on the Central Coast wine country, and I had this memory of of of going to ups with a case of wine and trying to ship it to a friend of mine in Maine. And this was you know, fifteen seventeen years ago, and that they told me I couldn't do that, and I didn't understand

why at the time. Take me into the regulatory changes over the last year that has allowed you to ship wine. Well, you know, uh ten ten, twelve years ago, we were only allowed to ship wine into thirteen states directly, and that really has to do with the repeal of prohibition you know, back in the thirties, and how um it was given the state control. So each state has its own uh you know distribution model. Uh some states or state controlled some states are most states are you know,

you have to sell through a distributor. They called a three tier system, so it's producer to distributor to either retailer or restaurant and um, and so uh there was a perception really that that um, you know, if if you cut out the distributor, they wouldn't make money and so the distribution would be fighting for their their share and and but I think what really happens is what

I call the buying occasion. So you know, I mean you're probably familiar with different wines that you enjoy and if you can find them at your fine wine shop, you know for fifty dollars a bottle, but at a restaurant that same bottle seventy you're willing to pay that because it's like buying a steak at you know, at the grocery store and grilling it yourself versus UM having the same steak you know, on the menu and prepared and brought out on a clean white plate. You know.

So I think there's UM uh so that that's basically and and you know, the producers and UM really helped to promote the idea, and the states responded that the custom you know, the consumers were there, and with restaurants closed, we needed to be able to sell our product UM and so many many states. I think we can shift to forty five states now. So UM, you know it is, it's changed pretty dramatically. It will be interesting to see how that model continues to evolve as we come back

out of the pandemic. Is that a permanent shift? Yeah, I don't think we know that yet. I think, UM, there's definitely a call for that, and I think the consumer enjoys it. I think we've proved that we're not shipping wine to minors, you know, especially especially ultra premium wines, and which has always been an argument UM and so yeah, I think I think the landscape has permanently changed. Um. You know, I think some of it will regress, but I think for the most part, we're going to remain

in this in this type of model going forward. Do you think the industry faces though an existential threat from climate change? Well, I have. My answer to that question is is generally that if we can't grow Cabalty and Napa Valley, we're gonna have a lot bigger problems on our hands than than than that, you know. So I think that, um, uh, there's certainly is uh um, you

know it is. It seems warmer, although I tell you I just got the data from our ven your team that the average temperature in Napa Valley and this spring was ten degrees below the thirty three year average. I mean that is a remarkable thing. It was a cold spring, um, and we're seeing the vine growth kind of starting off slow. So I don't like to call it global warming. I call a climate change, you know. And it may be actually too cool here, you know. So, um, I think

it's a it's a difficult problem. That's David Duncan, the CEO at Silver Oak Winery. You're listening to Bloomberg Business Week coming up, Tim, we switched from wine to beer. We check in with the CEO of the Beer Institute, Jim McGreevy. You kind of like specialty beers. Yeah, I like the low alcohol beers these days. Every few years, I kind of switch it off, go from low to high. Well, I think that. I mean it speaks to the trends that are are shaping the beer industry. Yeah, there's so

many different choices when it comes to beer. All right, So we'll get the low down from Jim in just a moment. This is Bloomberg. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. Tim Stinovik from Bloomberg Radio. We're gonna wrap up with more on the alcoholic beverage industry, this time with a twenty five year veteran a policy and political work who now heads the Beer Institute, which is the national trade association that

represents America's brewers, beer importers, and supply chain partners. He sees it all, he does, and adds up, according to their website, to a three hundred and twenty eight billion dollar industry that supports more than two point one million American jobs. For more on the pandemic and post pandemic worlds of the industry, we checked in with Jim McGreevy,

President and chief executive officer of the Beer Institute. Where we were a year ago was probably where so many other Americans were a year ago personally and in their jobs, really trying to figure out as of March thirteenth and around there where where our industry would be going. Thankfully, the federal government made the production and distribution of beer essential as part of the grocery system UM, so we were able to keep our breweries and and many of

our folks employed UH in the making and distribution of beer. Obviously, with the bars and restaurants closed for months on end, particularly at the beginning of the pandemic, we saw so many of those jobs lost, nearly seventy thousand as a matter of fact, throughout the US jobs supported by the beer industry. But their Beer Serves America report really UM. It tells the story of a very resilient industry and one that's coming back, we hope as America comes back.

So we're very pleased with with some of these some of this data from our biennial report. Well, it's interesting, you know local beverage center where we pick up like our cases of water and you know whatever else juices and stuff. But I said to them, how you know, I haven't hadn't seen them in about a year, and I said, how are you guys? And they said it was really hard because of their business was supplying all of the local restaurants, uh in the community, and that

was just shut down. Tell us about your members, because we think about you know, those of us who go to the supermarket right or um, you know, to pick up something. But it's the restaurants and the hospitality industry that your members play such a big role on. How How hard hit were they? Oh they were, they were very hard hit. Uh, not just from the the hundreds of thousands of employees that either lost their jobs on a permanent or temporary basis, but we saw nearly twenty

billion dollars in decline in retail beer sales. You know, uh, you think back to that mid March period of the March madness was just get rolling, getting rolling with the conference tournaments leading to the n c A Tournament St. Patrick's Day. We've loaded in a lot of beer in the beer in the bars and restaurants throughout the country for St. Patrick's Day, so many of these holidays, then

moving into the somewhere with Memorial Day, fourth of July. UM, the bars and restaurants in this country were just so hard hit. We're getting near the end of this COVID period, thankfully, and I think we're starting to see these bars and restaurants crowded. I can tell you down here at the Jersey Shore UM we saw lines out the door and down the block to get into some of the some of the bars and restaurants at the Jersey Shore, a lot of that gathering is done around a beer um.

So we're very hopeful for the recovery of the bars and restaurants. Is so important to our country, so important to beer um uh. During the COVID period, we saw significant spoilage of food and beverage and beer is perishable. Nearly nine million UM dollars worth of beer that was just perishable, and that just that just really hurts the

industry and hurts the bars and restaurants. Your industry. Are they having any troubles attracting workers, especially as the economy opens up, a demand ramps up don't see uh trouble attracting workers in our breweries and distribution business. Um again, Carol, it goes back to the bars and restaurants. Right there's nearly seventy jobs lost on a temporary or permanent basis, and you hear lots of discussion around the difficulties of

getting people back into those places. And you know, I think we really need to support the recovery by by getting those folks back to work. Um uh. And I think we're seeing that. I mean, you know, our senses from some of the data, we're seeing that the food service uh, in what we call the on premise, the bars, restaurants, taverns are starting to come back to pre pandemic levels. I think we're going to get there, but certainly you do hear from a lot of different corners this the

discussion around the difficulty in getting some workers. And I think we're certainly seeing that in the bars and restaurants right now. But we're not at pre pandemic levels for the industry yet. No. But you know, I think we're going to have a big summer, uh for all Americans, and I think for the hospitality industry, and I think for the beer industry. Um uh, so I'm very hopeful. Uh. You know, you just see the economic impact of beer

through our Beer Serves America report. One point six percent of of U s GDP comes from our our industry. Two million Americans of their livelihoods in one way or another to the production, distribution, and sale of beer. We're coming out of a period where folks were cooped up. Um, they want out, and I think they're going to um uh, We're already seeing them sort of hitting the bars and restaurants in this country in a big way, and I

think that's only gonna grow. I have to say, some of our listeners and followers on YouTube, I think hearing that you said we're gonna have a strong summer saying we'll drink to that. So responding as the world reopens, hey, listen. One thing I'm curious about present. Binds said to be offering up to create a tax floor down from his earlier proposal to let a corporate tax rate from twenty one, so essentially unwinding the tax cuts um that the GOP

adopted back in seventeen. That's what he initially was looking to do. Now it looks like he's backing off of that potentially, I'm assuming your members are in favor of lower rather than higher corporate taxes. You know, we saw the power of tax relief in our own industry. Um. We are one of the most taxed industries and regulated industries in the country, but we did receive relief from the excise tax that you're paid in two thousand UH twenty and two thousand nineteen, excuse me, UM, And we

saw the power of that UH for our industry. So I think it's I think it's great to see seemingly Republicans and Democrats coming together inching closer towards one another on on some kind of deal here on infrastructure, which I think will only help support the recovery. You know, excise taxes is a tax that we pay that others do not. But the total taxes paid we see in our Beer Serves America report from UH from Beer is fifty five billion dollars. So we certainly want to see

low taxes. But we know in our industry the power of tax relief just in recent years it's been very helpful to us. So what specifically, what what happens when there's low taxes? What happens to that money, because we often talking about it with you know, publicly held companies that you get a tax break, it's not necessarily higher wages or investment in the business. It's often buy backs. So I'm just curious what happens when there's lower taxes

in your industry, What specifically do you see happen. Yeah, Carol, in nineteen seventy six, there are fifty one breweries left in this country. Today there are over eight thousand. And I can tell you when we received the XCISE tax relief.

Over the last few years that we've received UM, I talked to brewers across the country, large brewers, small brewers, all sort of talking about the same thing, using that tax relief to hire more workers, to improve their physical plants, their breweries, their their tap rooms, uh, you know, their their facilities. UM, finding more ways to distribute their beer, innovating more and more so to me, uh and I we see this. We are an industry that has experienced

this over the last few years. Low taxes drives innovation, it drives jobs. Uh, and it drives an industry. Okay, So in terms of innovation, what are some of the kind of interesting innovative trends that are happening within the beer industry. You know, we were talking on our planning call and I was thinking about cannabis and beer, and the political environment seems to be opening up in a

big way, certainly when it comes to cannabis. More generally speaking, What are the interesting trends Jim, that are happening right now? There's always innovating, Carol. You know, a few decades ago, light beer was an innovation of its time, and then we saw the rise of the craft movement and bringing back some of the styles that had fallen off the radar screen for a while, particularly I P. A. S. Today, you see ready to drink beverages in so many different ways.

The hard cellser phenomenon of the last four years preceded by the hard soda uh movement of a few summers ago. Um, that's the great thing about beer. We are always innovating. We want to be where the consumer is, and the consumer right now is looking for more flavor, but also very mindful of health and wellness, calories and other things. So these these hard selsers are ready to drink beverages are are really becoming a bigger and bigger part of

our industry. There. Many of them are malt based, they're made in a brewery, they're made by brewers. Um. That's the kind of innovation you see. And you hear so much about these different hard Selzer brands now, um, but there's always something new in beer. Beer is the incredibly dynamic industry. I just got about twenty five seconds here. When you talk to your members, the outlook, the economic market outlook, how does it look for the next six

months to twelve months. Well, as I said, I think we're hoping for a big summer for every American and for beer in particular. We want to grow those uh two million jobs supported by the beer industry. We want to grow that three thirty two billion dollar economic input that we have. So um. You know, I think that there's always things that can be improved upon, but I think the opportunities for beer are grade. I think the opportunities for our country are very coming out of this,

uh this pandemic period. So I'm very hopeful. That was Jim and Greevy, President and chief executive Officer of the Beer Institute, and that reps up the weekend edition of Bloomberg Business Week for Bloomberg Radio. Thanks so much for joining us. I'm Carol Masser and I'm Tim Stock. Be sure to tune into our Bloomberg Business Week daily show. It happens Monday through Friday and starts at two pm Wall Street Time on Bloomberg Radio. You can also watch

our daily broadcast on YouTube. Just search Bloomberg Global News and check out our Bloomberg Business Week podcast. You can find it at Bloomberg dot com, Apple, or wherever you get your podcast. That's right because a lot of the conversations from this week. If you want the full conversation, just check them out because you will find them there. Bloomberg Business Week to available on newsstands now, at Bloomberg

dot com and on the Bloomberg Terminal. You can also see me at Bloomberg quick Take available on Bloomberg dot com, slash Qt, and streaming platforms like Roku, Apple TV, Samsung TV, and more. Have a great weekend. This is Bloomberg.