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This is Bloomberg Business Week Insight from the reporters and editors that bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week Podcast with Carol Masser and Tim Stenovek on Bloomberg Radio.
Hi, everyone, Welcome to the Bloomberg Business Wee Weekend Podcast. Tim is on assignment this weekend. Well, this past week a global selloff and overall volatility in stocks thanks to tariffs and trade wars, fedchair J Powell saying the US
economy is fine, favorable US inflation prints. We also got US airlines warning about weakening demand, and many many headlines out of Washington, and that included continuing efforts by DOGE, the Department of Government Efficiency run by Elon Musk, in what may be a remaking of the US federal government. And so we're going to kick off this hour with a deep dive into the changes President Trump is making and policies he's pursuing, and ask what is his possible
endgame domestically and globally. One view in just a moment, and got to say it kind of went a little viral. Also this hour, the chief financial officer of on Semiconductor, on Tariff's the macro and going public on a big deal, plus the rise in power demands and possible wider use of nuclear power, and Zach Dell, co founder of base Power, and yes, the son of Michael Dell, on backup power
for stressed out grids. All of that to come first up, though, with a steady stream of headlines out of the White House regarding Tariff's, geopolitics and more, we've got a deep dive into how the United States relationship with the world may be changing short term and even possibly longer term. We wanted to try and suss out what President Trump's endgame may be when it comes to the United States
and democracy. And to that end we turn to Ed Price, a former British trade official Non Residents senior fellow at and Why You. Ed has advised members of the European and British parliaments and writes often about politics, economic policy, and more.
In my view, he is a good thing for America, the nation and America the democracy, because everybody's talking about America and the democracy and we're sitting here doing this again, and he is potentially a very bad thing for the Republic and the Union and the United States. And it might seem strange to make that distinction, because as things stand, we very often think of those things as the same. Right,
we will say USA and we'll say America interchangeably. And as I try to argue in this column, I may be wrong. I think that Trump's absolute structural purpose, is foundational purpose, is to split those two things in half, to get them away from one from the other.
Explain how he does that and what that means. People might hear you and say, wait a second, these things sound like something that are inextricably bound.
So they're not, in my opinion, right, Seventeen seventy six is the moment that the American nation was born, and it was born of breaking the law and defying a king. So that's the rebelliousness, right, That's the flags on the back of pickups. It's great, It's all American. Seventeen eighty nine, when the Constitution is ratified, is the moment that we chose to be legalists and chose to be a republic.
Alexander Hamilton in that intermigrament was saying, look, should we have a king right, and they were arguments about how powerful the president should be. These arguments have never been resolved. And we saw with Nixon, we saw with Kennedy the imperial presidency. Because again, we haven't decided as a nation what exactly our republic is fought. So if President Trump truly wanted to create a presidency with unlimited powers, he wouldn't be able to do it within the existing seventeen
eighty nine United States framework. He would have to somehow appeal to the seventeen seventy six animal spirits to misuse the term of the nation.
So is that where Doge comes in?
Doge goitness me? So Elon Musk is supposed to be a genius. He doesn't realize he's the full guy, right, He's the four guy. He's going to be ousted at some point when Doge goes too far, which it will probably into entitlements, Trump will need.
Which is what they are dealing with, which is what they.
Want to do as we speak. Trump is going to need someone that wasn't affirmed by the confirmed by the Senate to get rid of quickly, and that's Musk. And I think we saw Musk on Fox the other day sweating it a little bit with Kudlog because it looked like he's starting to realize that maybe he's in trouble. His businesses aren't doing very well and so on. So Doze is the kind of battering ram. It's like the vanguard that's seeing how far, like a test balloon, how
far this stuff can go. And when challenged, Musk will be quite easy to peel off.
Well when is I just you know, because I think it's safe to say that some have thought government has gotten really big, and there's some security in that in that you don't move fast and break things that maybe shouldn't be broken. But at the same time, it's very easy to get lazy over existing structure, and waste does get created, and you know whether it's you know, So, what's the balance between good efficiency and disruption, especially in a government like the United States.
Well, I guess there's two points.
Right.
One is that whether or not the American people want a big government is debatable. That's why we have elections. Whether or not the Americans want an all powerful government was already decided at the aforementioned Constitutional Congress, Right, So I'm very careful to try and prize away an efficient government from the size of the government. Donald Trump wants a smaller government, which he then says is more efficient.
So those of us who are worried, and this is the second point, those of us who are worried about fiscal and debt, will go, Okay, that makes sense, But that's disingenuous because what he actually wants is a more powerful government.
He wants a concentration of power.
Scentration of power. So Lord Acton famously says that power corrupts, and absolute power corrupts absolutely. I think power accumulates as well, and this is what we should be watching for.
I want to go back to what you said about Elon and Doge, because I think a lot of people have been proven wrong over the past few months when they said this is a honeymoon that is going to end badly. These two look pretty close at this point. And given Elon's status as the wealthiest person in the world, he proved in this election cycle that he's incredibly powerful with helping to elect people.
And you're saying he might be there longer than I think.
I think I am, yeah, just because he has the resources, and you know, he has said he wants to use these in other parts of the ballot.
So the president with respect has a long and storied history of using and discarding people. And I don't think that Elon Musk rule of his wealth is I.
Mean, there are many books written by those people who want there's described.
There is a library of people that have been have been let down by the president. Should we say, I guess I'm contending. I mean, I can see too that maybe the time is something I couldn't possibly forecast. But I think the function of putting Musk into this thing called doge is that he's easy to get rid of. He's easy to point out later and say, this guy made these mistakes, not me right, and at that point he's gone.
So when you hear things like Canada and this is something I think we all too are asking ourselves. You know again, what is the endgame here? Do you think in terms of President Trump?
Honestly, I mean I might regret saying this. Okay, maybe this is my last appearance on your show. I don't know. I think he's serious. I think he's serious.
Canadians are if we if it ever comes off kind of jokey on air, I'll be honest with you We've had people reach out and say, hey, this is serious. We don't think this is a I think.
It's dead serious. I think Donald Trump's vision is a big sharpie around the entire of North America, including Greenland, with Trump Land written on it. And I think that there's some strategic sense to this, right because of the world of you know, you look at the Second World War, it was just who can get the biggest load of resources in one place. And if you look at Russia
and China, they kind of have Eurasia on lock. So it would strategically make sense for the America, the North Americans to converge together, if not for the fact that we don't behave like that. And the very reason for this country is law, as I said seventeen eighty nine. So the seventeen eighty nine edition of the United States cannot annex Canada. It tried, it failed, It just it
didn't work. But the sort of pre seventeen seventy six bubbling rebelliousness of the nation might And I feel that he's, as I say, dead serious.
If he's dead serious, are you saying or predicting that he might in fact try to make Canada the fifty first state.
I don't know that he would make it the fifty first state. I feel like that's a meme, but I think he would try to.
Bring He talks about it.
He talks about it all the time in Hue. Might or be it. I imagine that the Republicans would never be elected again because all of my Canadian friends are pretty liberal. I don't know how that works, right, but I think that what he wants is some control over the North American hemisphere. It's almost like the Monroe Doctrine is being extended north and being extended north at the expense of these polities that already exist, in particular Denmark and Canada.
If we go along with your thinking, and some others think that he too is not kidding. Is it something that could happen without US military action?
Well, I mean at some point the Canadians would not be happy about this, right, I mean, you can't tell a sovereign state you now belong to us. Others have tried that in history, Napoleon Stalin Hitler, and it never ends well. So I think that the US military would have to at some point invade. I mean this again, it's like amazing to hear yourself say this on a livestream, So I don't think Canada.
But to be fair, the president has talked about it. So we start kind of carrying it out, like how this might happen.
Sure, sure, I think it's not impossible. I mean, you could come in from green We have bases.
There, we're Bloomberg. We got to talk markets, big picture and the way that they have responded to big picture President Trump's policies over the last few weeks, or what they view as his policies. Uh, do you think it's fair to say that the equity and bond markets have not necessarily been a check on the president?
He said to himself, to him, right, you don't look at the stop market anymore.
Yeah, but I mean he's said a lot of things. He said, you take that to heart.
I think he's unrestrained. I think at this point he's he's not thinking about popularity in the way that he has previously. Something has changed in his demeanor.
He's not running for reelection, so.
Or well, I mean, you respect.
That he's not supposed to.
He's not supposed to run for reelection. Again, there's his whole thing, whole thing.
This is this whole thing.
I think he's fundamentally trying to reshape North America. I think Russia is a distraction. Of course, we have to talk about markets, right, so I don't want to pivot away from that. Yeah, but the question for me is China. Is he getting ready to hand Taiwan over py Ukraine?
And full credit to our producer Ceci because she said, you know, as we were planning for this about how Trump and his cabinet have signaled that their content to sit back on Taiwan and China. You have Treasury Secretary Pssent even said he doesn't see China taking action against Taiwan in this term. So what does this messaging tell you is the seating ground on global democracy? Should we feel confident that Trump's presence is enough of a deterrent only got about forty five to fifty seconds.
Democracy is okay because we voted for him. The Republic might not be. And this is what I mean. It might be that there's a period of massive populism in this country, including the seating of Taiwan, and democracy in Taiwan is in trouble. But in this country it's doing pretty well. And that's a real head scratcher right, because we may choose to abandon democratic allies.
But democracy would continue here.
Democracy here, I think for a while. Yep, I'm going to.
Squeeze in one more question because your column ends with all of this political disruption doesn't necessarily mean the end of an era, but rather the beginning of one. Twenty five seconds said it before.
Trump wants some sort of empire, some sort of imperium. I don't know if you would brand it like that. I don't know if you would be honest like that. But at core, he wants to solidify power, move himself to center stage, and create some kind of Autakia in North America.
That was Ed Price, a former British trade official now non resident senior fellow at NYU. Coming up on Bloomberg Business Week, A sector that always bears close watching semiconductors. The CFO of on Semi is next. This is Bloomberg.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern Listen on Apple CarPlay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
Intel got a new CEO this past week. TSMC sales quickened in the first two months of the year, driven by resilient demand for AI chips. Just a few of the headlines out of the semi world this past week and earlier this month, the chip company on Semiconductor made its pursuit of a Legro Microsystems public, disclosing an unsolicited bid valuing the company at six point nine billion dollars
including debt. Now. That followed news last month that the company plans to cut about twenty four hundred jobs this year as part of a restructuring plan, and take related charges of fifty to sixty million dollars mostly this year.
Here to talk about all of this, tariffs and the macro environment is the chief financial officer of on Semiiconductor, Thad trent along with Bloomberg News Senior editor Nina Trentman that is featured in the recent Bloomberg CFO Briefing newsletter can be found online at Bloomberg dot com slash CFO Briefing. Also sign up to get it there. Nina joins us here in the studio. Fad joins us from Phoenix.
Fad.
We want to start with you top of mind. I think for everybody is the macro, the jobs market, tariffs. How would you describe the US economy, the global economy, and the macro and vironment right now.
Yeah, so, first of all, thanks for having me on look. In terms of the terraffs, there's definitely an impact that's happening out there right now. I would say what we're seeing from our perspective, and it's really been happening for the last three or four months, is a pause. Customers are really slowing down, trying to figure out what to do, what's the impact on the terraffs, and how they're going to adjust their supply chain to adjust to these terrorfs.
Right now, what's happening with the uncertainty is that pause and customers just saying we're going to run kind of hand the mouth. We're going to be very very cautious in the short term until we get clarity. So I think clarity is really what we need for this to get kind of back to a growth environment again, given that, given that just the uncertainty around the globe. But what we're hearing from our customers is they're looking for alternatives, and we're in a spotted on SIDI where we can
offer alternatives to our customers. We have a very large manufacturing footprint, a large manufacturing footprint in the United States, and we can offer our custom from res alternatives based on where they're located, where they're manufacturing is and hopefully help them navigate through the tariffs. But to answer your question, it's mostly a pause right now.
It's a pause. Love that word to describe it. You said, tariff's definitely having an impact. This pause. Customers really slowing down. I'm looking at some of your biggest customers, the supply chain function on the Bloomberg WT Microelectronics, Arrow Electronics, Abnet, Hyundai Motor Tesla BYD you play a lot, Volkswagen, you play a lot into the automotive sector, but also the industrial space. All of them pausing, all of them slowing down or is it largely the automotive sector.
Yeah, so you know, eighty over eighty percent of our business is automotive industrial, so that's where we focus. What we're seeing on both sides is a slowing in auto and industrial. If you think about those customer bases have really complex manufacturing and complex supply chains, and the pause is happening across the board and across all gields right now, we're seeing pockets of shoots of kind of green shoots
that are looking good. But general I would say people are looking for certainty right now in terms of the geopolitical situation and where the dust is going to land on the tariffs and.
That How does this impact your current situation at the company, Carol mentioned, you're restructuring, you're making job cuts, you're making changes sort of. How does this affect you?
Yeah, So look for us directly, we don't think there's a huge impact or a material impact from the tariffs directly in terms of our business, but our in customers are being impacted by the tariffs right so the big concern is what does in demand do and what does the macro do as a result of these terraffs in the geopolitical situation. For us, there is a slowdown in the industry. Autos are soft right now. So you know, as you mentioned, we announced restructuring. We're looking at this
is not just a cost reduction, but are restructuring. How do we take cost out of the company that's permanent. So we've been going through a transformation here at a semi for a number of years here and a lot of this is structural nature, where when we think about the market recovering, these are cost savings that are with us forever.
Dad, you said autos are slowing down. Is that because of tariff concerns and automaker problems and issues or is it because of the consumer?
Are both?
Oh, it's a consumer, It's more consumer now Now, I would say what's been happening over time is consumer based, right, I think the demand for autos has been coming down
for a period of time now. The short term, what I've been talking about over the last couple of months has definitely been tariff based, where if you're an automaker and you're importing from Mexico or Canada, you're seriously considering what that supply chain looks like, what that manufacturing footprint looks like, and that is causing a pause right now with those customers.
You've got manufacturing sites around the globe. You mentioned what you do here in the US. The investments that are being announced in this semi area. TSMC to spend an additional one hundred billion dollars in US plants to boost semiconductor manufacturing in the US. How is that going.
To impact you?
Will it impact you? Directly? Will it impact you in directly?
Look, it's not going to have a direct impact for US because we manufacture about sixty five percent of our products in house, so we have a large manufacturing footfront ourselves. So a TSMC coming into the United States isn't going to impact us directly. But it's really good for the industry. The more manufacturing we can get into the United States is going to be great for obvious reasons national security.
So I think for the industry, the supply chain, given what's going on for our customers, I think it's all good. Even though it may not impact us directly. Our customers buy other products from our peers that have manufacturing and TSMC, so the more that we can have a diverse supply chain is going to be great for the industry. So I think these investments are great overall for our customers and for the semiconductor industry.
Should we expect more investments from you in the US? I know that you're investing more in the Czech Republic where you already have a site and you're building that out, But what is your CAPEC strategy entail with regards to US investments.
Yeah, we've been making big investments over the last three years, I would say, and that's in manufacturing capacity. A lot of that investment phases behind us at this point. We've made big investments in the United States. We acquired a fab in East Fishfield, New York. We have a large manufacturing site in New Hampshire. So we've been making big investments over the last several years. You brought up the Czech Republic. When we think about investments in our footprint,
it's what we call brownfield investments. It's not a greenfield investment that becomes a capital light investment for us, so it saves about forty percent capital When we think about a brownfield investment investing in a site where we already have a location, already have the infrastructure. So in the Czech Republic, we have a large site there that we
are expanding. We are going to continue to invest in that site over time, but that investment is a lower capital and it's also faster time to market, so we can get to market two years faster with a brownfield investment than a greenfield investment.
All right, So you've done a lot of investments around the world, and in terms of your manufacturing sites, you also spend money sometimes when it comes to a deal. I know you might be limited in what you can talk about, but that takeover offer for a Legro microsystem unsolicited bid values the company about six point nine billion dollars that includes debt. Offers are not often made public sometimes though done to kind of put some pressure on
shareholders on the target. What can you tell us about this deal moving any closer to being a done deal?
Yeah, Look, we put out a press release that I think details really are sequence of events that have gotten us to this point. Let me start with the strategic rationale of why this is compelling for on Semi. So in on Semi we focus on intelligent power intelligence sensing as we talked about for auto industrial and the AI
data center. Allegro Microsystems has got a great portfolio of sensing products that sell into automotive industrial, very very consistent market, and we believe with our scale and our go we can take that product broader and create innovative products for our customers. Both companies have a culture of innovation, so I think we're going to be combining companies that have common themes of innovation and it allows us to bring
more value to our customers. That's really the strategic value of this in terms of what we're wanting to happen here is we're wanting to get some meaningful engagement with their board, hoping to get some dialogue. At this point, we haven't gotten that. Thus we went public with our offer to say we're here and we're hoping that we get some engagement from this point forward.
Yeah, it's interesting that you're pursuing this deal at a time when dealmaking was supposed to pick up, but we haven't really seen it, and many companies are saying, well, the current environment is just so uncertain.
So talk to us.
About how the company came to this conclusion that now is actually a good time.
Yeah. You know, when you think about a strategic deal for us, it's got to click a few boxes, right. I mean, you've got to have the strategic nature, the rationale in terms of what we can bring to our customers, and then you have to have the financial side of the things. So you know, we think about the creative deals, how quickly we can get to accretion and the shareholder value that we can create over time. The element that you have to take into consideration is the regulatory environment
and that is the unknown right now. I don't think the regulatory environment has really changed much, you know, from administration to administration. So when you think about this, the hurdle is higher when you think about you're going to go to bat for something like this, but you have to have conviction that it's going to make sense and
that you can get through that regulatory environment. When we look at it, we don't compete head to head on any of those products, and we've analyzed everything that we can see publicly, and we don't believe there's going to be a barrier. It may take some time, but we believe we can get this one across the line.
That if you cannot get this one across the line, if you have to walk away, or if the deal falls through, if it doesn't work out for some reason, who do you pursue next?
Well, look, that's hard to say. Right this one has a lot of strategic value to us. We're committed to the proposal that we have on the table. We're hoping to get that board and management team engaged and get in a room and talk about how we can get a combination together.
Could the price go up and are you willing to raise the price if necessary to get the deal across the finish line.
Look, that's to be determined. At this point. Everything that we've been able to look at is based on publicly available information. We want to get together with that management team, understand the true value, and then we'll make determinations. At that point. We have a very compelling offer. There's it's a fifty seven percent premium to the unaffected price.
That was on Semiconductor CFO Thad trent along with Bloomberg News Senior editor Nina Trettman. That was featured in a recent Bloomberg CFO Briefing newsletter, which can be found at Bloomberg dot com slash CFO Briefing. A new one comes out on Sunday. Still ahead on Bloomberg BusinessWeek, two views on the energy space, one on the surge and interest in nuclear the other a startup providing backup power. That's next. This is Bloomberg.
This is the Bloomberg Business Week Podcast. Listen live each weekday starting a two pm Eastern on Applecarplay and the Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa played Bloomberg eleven thirty.
Shares in nuclear power stocks rose this past week after technology and energy companies pledged to support wider use of nuclear power to cater to surging demand from data centers and factories. Amazon Meta Platforms, Occidental Petroleum and Now are among the initial members of the Large Energy Users Group, which is backing a global effort announced in twenty twenty three to triple the world's nuclear capacity by twenty fifty.
It's all about meetings surging US demand for electricity, which will surge almost sixteen percent over the next five years, more than triple the estimate from a year ago, driven by new data centers and factories that are going to suck up power. That's according to the energy consulting group Grid Strategies. To hear more about the role nuclear power will play in meeting that demand, Tim and I spoke
with the president and CEO of ANI. The Nuclear Energy Institute, Maria korsnik Anyi, is the lobbying arm of the nuclear power industry. She began with a near term forecast for the industry.
In the next two years, we're expecting at least four grid scale applications for four different sites, a handful of microreactor applications, five sites with construction activities in flight, and
two microreactor startups. So when I say that nuclear is moving, I just want you to feel that not only is the R and D, which we're going to be very thankful to, our national labs have brought a lot of different ideas to the marketplace, but you're actually now seeing it go into site applications and construction applications to get things moving.
What would you say is the difference between the Biden administration's approach to nuclear energy versus the Trump administration's approach to nuclear energy? How did things change in January?
So that's interesting. You know, this is maybe one of the only things, but one of the very few things that gets bipartisan support. And interesting if you think about nuclear right and you say, hey, well, it's very reliable. You know, it's clean, it's carbon free, it has jobs. You know, like, there's enough in there to love. On both sides of the aisle. On the Democrat side, you're going to get it more for the carbon free aspect
of it. On the Republican side, you're going to get it more for the energy security, national security, high reliability of the energy source, and both sides love the jobs.
So talk a little bit more about the build out. You know, you kick things off with, you know, things that are happening now. Realistically, a lot of folks said, when we really think about nuclear energy while the US is active, that it's still a very small portion of our electricity generation right in terms of a power provider, that that build out might be eight to ten years away. You're in it, you're talking to the players that are
in it. What is the realistic timeframe that it is a substantial or more substantial part of a generation of power here in the United States.
So today nuclear is about twenty percent, just under twenty percent of the generation. But to your point, let's talk about all of that demand. And you mentioned earlier the AI demand that's really getting into the marketplace.
But you know, it's not just AI, it's.
Also ensuring, manufacturing. It's also the fact that you want to build out the clean energy supply that we have today, and so all of that together is really driving this demand much higher than what we had imagined even just a few years ago. The next few years, you're going to see ones and twos of things built. Think pilot projects over the next few years, and I think in the twenty thirties and the twenty forties of very significant buildout. And I want to add, it's not just a build
out in the United States. The conversation we're having about nuclear it's happening around the globe.
Well, and why is it so important?
Look at Europe, look at France, look at China, look at various nations in terms of their percentage of power generation being larger than what it is in the United States.
If the US.
Doesn't have a role in this area, what does that mean?
Yeah, so let's just try that on for size.
Who is interested in building a lot of commercial nuclear Russia and China, And they're not only interested in building it in their own country. Today, right now Russia is building nuclear plants in ten other countries.
And why is that?
Well, it wasn't too long ago where we saw Russia turn off the gas supply to Europe. So I would tell you there's a geopolitical strategy on some countries that would like to control other countries energy supply, and why should we fall for that. So we have fantastic technology, we have the ability to really help our allies and in that way we protect them from this kind of behavior.
And it would be sad to see this replicated in ten to twenty years we look back and say, oh, why do they have the power over commercial nuclear industry? Why do they have the power over all of these different countries. We shouldn't let ourselves get there. So from a national security perspective, from an energy security perspective, the United States needs to lead in commercial nuclear power.
That's the president and CEO of ANYI, the Nuclear Energy Institute, Maria Korsnik. While on the subject of power, you might recall back in February, more than one hundred million people faced frigid conditions across the eastern and central US, including the entire state of Texas, as an arctic blast threatened to break low temperature records. Someone who knows a bit about Texas and the Texas State grid is Zach Dell, who is co founder and CEO of Based Power Company.
You joined Tim and me from Houston, kicking off our chat with a reminder of Texas's place in the US energy space.
Texas is the energy capital of the country. It leads to the country in renewable generation. We have more wind and more solar than almost anywhere in the country, and that's because Texas is the middle of the wind corridor, it's in the middle of the sun Belt, and it's a great place to develop energy infrastructure. It's a free market,
it's a deregulated energy market for the most part. Or Coat is one of the largest electricity markets in the country, and so it's a great place to build energy technology. That's why we've decided to start the company here in Texas. But it's also a part of the country that's seen incredible population growth, it's seen incredible growth in heavy industry, and that's put a lot of stress on the grid.
And so we started the company to increase our capacity for energy consumption and add resources to the power grid in the form of distributed battery storage to help absorb some of that growth, absorb from that demand, and set us up for a future of energy abundance and human prosperity here in the state.
Zach explain where exactly the company lives on the grid in the sense of Okay, it's not necessarily a utility, it's not necessarily an energy provider.
How do you define it exactly, So we are a distributed energy technology company. So we deploy our storage assets on the grid edge on site with our customers. So we install batteries on homes today. Customers sign up for base Power, we go install our battery on their home. When the grid is up and running. We use that battery to support the power grid in times of high demand. When the grid goes down. The customer gets that battery to protect their home from power averages.
Well and tell us about it. Like a customer that signs up, Zach, exactly what are they getting. They're getting batteries right, and there's installation that's involved. I'm curious about how it works. What they get. My understanding is the batteries are big. What it costs? Give me give us an idea.
Yes, So customers sign up and pay four ninety five upfront and sixteen dollars a month and get all the benefits of home backup protection without the high up cost of buying a large generator or buying a traditional home battery. So we install a battery that's twenty five kill a wide hours for one system, and you can get two systems installed, which gets you to fifty kill a lot hours, which will protect your home for up to one to two days, depending on the size of the home and
the event of a power out. So you get a really large battery for really low upfront cost and a low monthly fee, cheaper than a gym membership, cheaper than a Netflix subscription, cheaper than Amazon Prime. And when the grid's up and running, you're buying your electricity from us. We're able to save you ten to twenty percent a month on power. And when the grid goes down, you get to protect your home, keep that fridge going, keep your ac running, keep your lights on, and keep your family safe.
Zach.
We're talking about this in the context of Texas, of course, and a lot of focus has been on Texas's grid. Also, California is grid another state that comes into focus. Any plans to expand to California.
Absolutely, I mean, we hope to be in all fifty states over the next couple of years, and we're working to partner with some of the regulated utilities in states
like California that don't have a regulated energy market. Texas is an amazing place to start the business because the vast majority of the state, about eighty percent, is deregulated, So we are actually a retail actor provider and a battery developer, So we sell power directly to the homeowner and then we own and operate the batteries on site.
In a state like California, you have regulator utilities like LEDWP and PGNE that have kind of geographic monopolies over certain areas, and so we'll partner directly with those regulated utilities provide our hardware and software to them to enter those markets.
And from what I understand too, Zach, that the success of the company's contingent on more and more people right signing up, right, you need to kind of have a network.
Well, not necessarily. We're able to operate our batteries at the individual level, so we don't necessarily there's not like traditional network effect benefits to more people signing up. But obviously businesses benefit from scale and we benefit from scale in the same ways. But it's not like the system doesn't work well if a couple of people in the
neighborhood have it. There's really no meaningful difference if you're the only one in your neighborhood or everyone in your neighborhood has base power, all right.
So if you're as an individual, there's no difference. But what do you get out of building that scale.
Well, we benefit from scale, just like most businesses benefit from scale. So we have economies of scale on the supply chain side, on the engineering side, building out our team, our resources. The larger we get, the lower the cost that we can provide to the customer. So our goals of business is to develop a compounding cost advantage to
vertical integration. So we develop our own batteries, we develop our own software, we manage the insolution, we sell power directly with the homeowner, and by doing all those things, we can drive the cost down for the customer and deliver the most affordable and most reliable power.
Right because from what I understand too, you're monitoring what the prices of energy and so when it goes down, you guys are filling up the batteries. Correct, that's right.
If a power company sees what you're doing right now and says, wait a second, that's a really good idea. What's to stop con ED or PGNE on California from basically replicating what you're doing, but they already have the relationship with the customer.
Well, it's very hard. You have to become an expert in battery hardware engineering, power electronics, supply chain operations. You have to deploy these batteries on site, you have to interface directly with the customers, you have to build a consumer brand. There's a lot of interesting and challenging distributed system software problems that you have to solve to deploy
this technology. So we're really excited to partner with those utilities and help them deploy battery technology in their service territories. As you guys know, these investor own utilities are not incentivized to invest money in op X in R and
D their cap X driven businesses. They earn a regulated way of return on their CAPEX, and so their incentive is really to deploy CAPEX and their service territory and they add that into their rate base and that kind of influences what they end up charging the end consumer. Our business is a little bit different.
We're an R and D driven business.
We develop technology and we bet that that technology is going to benefit the customer and we benefit downstream of that, and so we think that we're an obvious partner or some of these regulated utilities as kind of an R and D partner where we can develop technology and then we can go deploy that technology in their service territory. They benefit, we benefit, and the homeowner benefits as well.
So curious, are you profitable or how many states do you think you have to reach out to or expand to before you are profitable.
I don't think about it as a number of states number. It's really about building the fleet and getting to scale. And so we started the company a little under two years ago. We launched a product in May. We've been scaling rapidly. We're doing on the order of twenty battery installation of the day. We'll continue to scale up at a faster and faster rate and move outside of Texas
and states like California. And you know, we think there's a really attractive kind of economic proposition for the business going forward.
Zachdale, co founder and CEO based Power Company. And that wraps up our first hour of the weekend edition of Bloomberg Business Week from Bloomberg Radio. Ahead in our next hour, Melinda Gates Venture arm NBA, Students Lord Overseas and how to challenge segregation enacted under the color of law. We look at the state of fair housing. This is Bloomberg Business Week. I'm Carol Master along with Tim Stenoveek.
You are listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern Listen on Apple cart Play and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
Plenty Ahead in our second hour of the weekend edition of Bloomberg Business Week, Tim just a reminder is on assignment this weekend. Now for the next sixty minutes, we will touch upon the world of MBAs, including studying overseas and this year's NBA job market, Plus where the VC firm founded by Melinda French Gates is finding opportunities, and the state affair housing in the United States with the author of How to Challenge Segregation Enacted under the Color
of Law. First up this hour and update from the world of venture capital.
Well.
Quite a few of the companies that Pivotal Ventures has invested in are familiar to our viewers and listeners. Elvest and Little Otter, to name just a couple. Those founders and CEOs have been on our air. Other investments include Hugh Founder's First Capital Partners, Millie Monamie, Summer Health, and more.
Pivot Ventures was found in nearly a decade ago by Melinda French Gates, and it seeks to, in its own words, quote, accelerate social progress through high impact investments, bilanthrope partnerships, and advocacy. The companies also invested in nearly two dozen funds. We've got with us. Aaron Harkless Moore, Senior director of Investments
at Pivotal Ventures. She joins us from Washington, DC, erin, when you're looking out over the investment landscape, what are the boxes that the companies or the funds you want to invest in, or you are looking to invest in, what are the boxes they have to check?
Tim, Carol, thanks for having me on today. It's great to be with you. We're excited about this market opportunity that we see in investing in innovators that are building the next generation of companies that are tackling some of the biggest challenges facing our society in caregiving and women's health and mental health. So we want to see founders that have lived experience in building in the areas that they're targeting, and that are taking advantage of huge market opportunities.
Our strategy at Pivotal is to invest in both funds and directly into startups that are again innovating in what they're doing, and so we're looking for founders that are going to bring game changing technologies to the table and also backing the investors that are going to capitalize them as well.
Aaron, we love size and scope here at Bloomberg. Give me an idea of how much stuff gets pitched to you, how much comes across your desk, whether it's a startup or a fund that says, help, we're doing something good, but we need either some funding or some assistance to even you know, increase our impact.
Sure, our pipeline is very robust, and I think it's a it's a hallmark of our strategy that we try to do a couple of things differently. You know, when we're accessible, we don't need a warm intro. So if founders can find us, you know, on LinkedIn, at conferences, at events, we're happy to take those meetings and get to know get to know them and what they're trying to build. We also want to invest early when we can.
You know, typically for fund managers on that side of the table, you will focus a lot on emerging managers, those that are often first time funds. And I actually like to think of them in a different frame, is its next generation managers that are finding new patterns and new types of founders and innovations that they can back. So our pipeline is robust and we're excited to be deploying capital in this market environment.
Well, how would you describe the market environment right now? Because so much of what we talk about is about investment in AI. I mean, there's even a headline from our Bloomberg News team Anthropic finalizes three point five billion dollar funding around at a sixty one point five billion dollar valuation. Do you feel like you're you're missing out at all because of a lack of AI investments right now?
Not at all.
We are investing in AI. Our fund managers are you mentioned Little Otter as well at the top of the introduction one of our newer investments. You know, they raised a little over nine million dollars to continue to bring AI into their behavioral health and mental health platform to
support children and families and caregivers. And so you know, AI is present in our strategy and the funds and the companies that we're investing in, and we think AI is essential to modernize our healthcare system, our caregiving and infrastructure, foundational industries like manufacturing and supply change, wealth tech. It's showing up across our fun portfolio, in our and directly
in some of the companies we're backing. So it's important in something that we're spending a lot of time in at Pivotal Ventures.
Yeah, I should note Rebecca Edgar, the co founder and CEO of Little Otter, was on our program that was back on Valentine's Day Carols just a little over a week ago.
It was a great conversation. Yeah, it was a really rewarding conversation. I feel like eye opening for all of us. I am curious too about the caregiving component that you
guys are investing in. I feel like that comes up more and more in terms of, you know, if it's a book on like how to lead, how to manage, how to move ahead, you got to think about the caregiving component in your personal life, but also have society at large talk to us about how you approach caregiving and what you see as the biggest kind of struggles that we need to really invest in and overcome.
Sure, just to give a shout out to all the caregivers. We're all caregivers at some point in our lives, you know, whether you're caring for young people, the aging, your own family members, your spouse, a friend, a neighbor. We've supported some research at Pivotal Ventures that size the care economy is a six hundred and forty eight billion dollar market.
That's huge. It's actually bigger than the pharmaceutical industry. And we need that modern caregiving system to support women and families in all of us to be able to, you know, do our work and be productive and active contributors to society. So, you know, we think that those investments in those systems, whether it be from childcare all the way through to tools to optimize the home and caregiving in the home, to the eldercare space and in the aging side of
the spectrum, all are huge opportunities. We have funds and companies in our portfolio that we're tracking that are innovating in those spaces, and we think it's a big market and others should be paying attention and deploying capital there as well.
Where do the funds of funds come in here versus the direct investments? Like how do you think of when to make an investment in a company versus when to deploy capital to a fund of funds.
Yeah, both are pillars of our strategy. Our portfolio of fund investments is essential to changing the face of our investment ecosystem and the venture capital sector in particular. There's been some data, you know, pitch Book is put out and others. You know, about seventeen percent of decision makers
at US venture capital firms right now are women. That number is almost doubled in the last decade, but we still have a long way to go, and so as part of our strategy, we think it's incredibly important to back these women investors who are deploying capital and finding great founders in every sector, whether that be supply chain and manufacturing as I mentioned, and the tech that's innovating there,
to digital health, to the consumer space. You know, we want to find women leaders and investors of all stripes that are that are deploying capital across those sectors. And our direct investing strategy is complements that. It's not really an either or. I think it's a both and and we see opportunities again in this care economy thesis. Women's health as well maternal health, menopause, and care around those
themes is a huge opportunity. So you know, with our direct investing, we try to flex and focus on areas that are aligned back to our broader mission at Pivotal to get more power to more people, especially women.
I did mention the Pivotal Ventures was founded close to a decade ago by Melinda French Gates. Just clear clear something up for us. Is there other money in there right now or is this all money from Melinda French Gates? Do you have other.
LPs capital solely from Melinda? Again, she started Pivotal about a decade ago in twenty fifteen, really with a mission to advance social progress and advance women's power and influence, get more power. As I said before, two more people.
And one thing that was innovative when Melinda set this up was this idea that you need multiple tools to advance this objective and to see our mission, and that includes philanthropy, that also includes the investing and the investment capital that we're deploying.
Do you think that gives you more leeway in terms of timing there's not as much pressure for returns over a certain period of time. Do you think it changes your investment strategy because there is this patient capital.
Our strategy is long term, as you noted, and I do agree that having that ability to see the full picture and deploy multiple tools in our tool get as a platform is huge to drive our mission and the type of change that we want to see in the world.
But let me be clear, this is a strategy that is centered on achieving best in class financial return by investing in these funds and some of the themes that we've discussed like care economy and women's health and AI, we think there's a great potential to deliver you know, best in class market rate returns again over the long term. But we do have that patience in our in our with our founder alongside us to do just that.
Aaron, do you feel like that the establishment, the financial establishment, especially when it comes to women founders and funders, are still kind of forgotten and overlooked.
It's easy to stick with the patterns that that one notes. I've been investing in funds and for close to two decades now, and you know, I think that it's it's no one gets fired for sort of following the same playbook.
What excites me about what we're doing at Pivotal Ventures is we're recasting a different playbook that that I think will show other investors and other stakeholders and the financial ecosystem and the investment industry that there is real value to be had by bringing different perspectives to the table, looking at opportunities like this care economy that are huge against six hundred and forty eight billion dollar market. That's
the type of paradigm shifting we want to see. And it's really it comes back to, you know, having that patience and time horizon to play it out and being long term focused.
What is your time horizon for an investment.
It's a typical it's an early stage and investor timeline. You know, we're deploying capital year over year, and you know, on our funds their typical venture early stage fund that will be investing over a three to four year time period and then harvesting the gains beyond that. So you know, it's it's a long time horizon. I'd say, you know, decade plus that we're really looking to drive the results that we want to see both in our funds and
with our companies. If they return capital sooner, that's great, but you know, not at the sacrifice for your building. I think an enduring platform as a fund manager or a business as a founder.
That was Aaron Harkless Moore, Senior director of Investments at Pivotal Ventures. Coming up on Bloomberg Business Week, the NBA jobs market, and more. That's coming up next. This is Bloomberg.
This is the Bloomberg Business Week Podcast. Listen live each weekday starting at two pm Eastern on Apple car Play and the Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa played Bloomberg eleven thirty.
The story from our Bloomberg News team getting our attention. At business schools across the US, graduation fast approaching the mood. Though subdued NBA programs that once offered a glide path to lucrative jobs are finding fewer and fewer seats on Wall Street and in corporate America for their graduates. At every one of the nation's top schools known as the mag seven. I didn't know this, they were known as the Maxie.
I didn't either.
Job blason and outcomes have declined since twenty twenty one, and this year is looking no better. No joke, Carol. You can attest to this. As I was writing this intro, I got an email from Dean mclaris at Columbia.
Business School, right grad grad.
The subject says hire CBS and it's like an email talking about recruiting.
All right, So that is the view from schools inside the United States. Let's go outside the US to France. We've got Emmanuel mctay, dean of the French Business School Etic Business School with us, as well as Dimitri Cassanides, Bloomberg New Senior editor. She spearheads our global business coverage business school coverage, I should say for Bloomberg Business WEEKND. They're both here in our Bloomberg Interactor Broker studio. Welcome, Welcome,
Nice to have you here. Hello, Dean Mattay. Before we get going, we want to ask you about what you are hearing and seeing from other business school deans during your visit here to the United States and other as the schools. How much is the job market a topic right now?
What is striking here is, as always, I mean, the power of the higher education institutions, their entrepreneurial spirit, the amount of resources that they have to reach their ambitions. But also I could feel some kind of anxiety about you know, research funding, about the capacity of welcoming foreign students,
foreign researchers, foreign professors. So I could feel that it was kind of mixed feelings as always, and I mean, the best educational system in the world, especially for business, but at the same time, some question about tomorrow, uncertainty about tomorrow.
I know, you know, I don't want to use the term frenemies, but you are also competitive with these schools. Is this only good news for you if there's an in the United States that's not as conducive to attracting foreign students foreign professors, Is it just great news for UNFL.
But I mean bad news for the US is bad news for US. And of course, if I was really egoistic, I would say, yes, it's good news for US. We will have more foreign students coming to US and probably will have opportunity to recruit talented professors and researchers from
the US market. But no, I think it's not good news because we tend to see US in a very global market, in a very global higher education system, and we see more and more countries I mean turning in onto themselves, not only the US, I mean the UK, Canada, I mean, you name them Scandinavian countries and they want less and less immigration and including foreign students, and it's
not good news at all. I mean, I visited a lot of countries all around the world, and what we can see is that when there is a country which you know, try to decrease immigration, and especially a students immigration, it's a disaster for the country and for the schools.
Wow.
Yeah, that's not surprising. And I think I'm hearing very much the same from other people that we're talking to. I mean, I think it's of great concern because of just the points that Dematase is making, and I think there is a big concern. Sometimes we think, oh, it's a problem for students in terms of the immigration challenges that we're confronting, but I think it is a huge
concern on the research and faculty front. When we've seen the shifts in education on global business schools over the last decade or two decades, one big thing we've noticed is a lot of talent coming to this country to our business schools. Look at the deans of a lot of our business schools and where they've come from. So it's a challenge on many fronts. And I think that there is definitely. You know, however openly they're sort of
airing this anxiety. There is a great deal of anxiety right now and really just kind of wait and see and where is this all going.
I have to say one of the things, my daughter is just finishing up an undergraduate degree, but spent a year over in London at the Lendon School of Economics, and it was such a great combination of US versus being overseas for a full year. The importance of partnerships for you in linking up with US business school. Talk to us a little bit about that.
How important that is?
Definitely. I mean, we want our students, wherever they are from, we want them to go to the best schools all around the world. So we have here in the US. Basically we have three hundred partners academic partners all around the world, mostly for exchanges double degrees. But we have among these three hundred ten, let's say, strategic partners, including
one here in the US. So Berkeley has Business School in California with whom we have launched a joint degree for quite a large cohort of students or a Master in Management, and students spend time in Paris, first on at a campus and then they go to Seoul core are So at a SKK business school, and then they spent one year at Berkeley Hearts. And yes, the graduates from this programmer I mean great people and fine easily
good positions on the job market. So this is why we are here today on the Eastern Court Coase to find another strategy partner.
And who's that strategic partner going to day? I mean, who do you want that to be?
So we have already partners here of course, as you can guess in New York, in Boston we have a double degree agreement with the MI T, we have Pittsburgh. So we are talking to all of them and will I mean find the best partner here just to I mean join lounge joint program to probably lounge initiatives in terms of entrepreneurship artificial intelligence. So we want to do more than just exchange and.
Yeah, meter to do more students, more NBA students in the United seeing that they want a program that is not just US based. Do they want to have some exposure overseas?
I mean, anecdotally, we are hearing that I don't have a lot of the data on that, But in interviewing a lot of the students in the last few months about any number of issues that we've been reaching out on,
that is definitely something that they're seeing. And I think that there's probably something about what's going on in the world right now and in our country with the government and the new administration that's making students and prospective students consider, you know, it might be that I'm not going to be working in the US, maybe I will want to go work abroad. What you know, where are the kinds of programs that are going to really position me the best?
And I think that some of what Dean Matase is describing with their partnerships also is something that's seen as an if you're a student that's coming out having done one of those programs, there is a competitive advantage to that.
I also think about oh, please jump in.
Oh, I mean we now welcome every year something like one hundred American students at EDEK.
This is how big is your student base?
All ten thousands, okay, from all over the world, so one hundred and twenty countries. What they are looking for is probably a good retail on investment because of course suits and fees in France are not the same as the one in the US. Also probably lifestyle. And also something which is very important these days is that, I mean the purpose of the school is to put business at the service of common good and this is something maybe that these days in the US is going to
be i mean put into questions. So we have a lot of research on climate finance, on ESG, on sustainability, and this is something that they're going to learn still learn in Europe and in France especially, which I suspect will be less a bit less the case in the US this day.
Right That is definitely one piece of it. Is there some pulling away from some commitments that we see with our government right now, and that throwing into question where we saw business school students wanting to go over the last decade, wanting to do more good with what they're doing, and now suddenly you find yourself in an environment where it's like is that going to be prioritized? Are the companies going to be prioritizing that? Like what are the
opportunities for that? So I think that the other thing I wanted to quickly touch on, Dematist was you had mentioned a number of the rise and the number of American students studying now leaving the US to study business. Is there a number you can attach to that. I mean, what have you seen over the last couple of years in terms of not just specific to a deck, but you know, broadly speaking, you.
Mean in terms of American students moving to Europe. Yeah, yeah, so's it's been increasing in France. I mean we are now welcoming I think four thousand and five hundred American students, I mean amongst four hundred and fifty thousand students. So it's not so many of them. I remember that twenty to thirty years ago we barely could see American students in our schools. I mean it's the American students wanted
to stay here. And year after year we can see that the number are increasing, and in all of the programs, so including in the bachelor program. So we have a young student moving from the US to Europe and to France to study I mean business. It's the case for the masterin Management and also at the NBA level. So yeah, I think over the past two years we have increased the number of American students by twenty five persons.
Wow.
The inserted regions of the US. Different business schools are known for different specialties. If we go to Silicon Valley, we'll talk to a lot of Stanford graduates. For example, here in New York, you know, the Wall Street sort of feeds from NYU and from Colombia. Is there an industry that your business school feeds into?
Finance and asset management? I mean, this is we were talking about that just before. I mean and in a very special way. Because we have a kind of recipe, good recipe to monetize the results of our research. So we launch a research center in asset management twenty years ago, and the story ended up with EDEK selling a spin off in finance for two hundred million euros at the
stock Extende of Singapore. So we have to compete with American business just what you teach, Yeah exactly, Yeah, we have to compete with you guys and you I mean, schools here are a lot of resources, huge endowments. We don't reach the same amount, So we have to find other ways to find resources.
That's fascinating, and so that helped to finance the school education.
It goes to the foundation, to the ed Foundation, and thanks to this money, we we launch Aventure fund for impact startups. We are financed a research center on climate finance.
That was Emmanuel Mattey, dean of the French business school Edek Business School, along with Dimitri Cassanin's Bloomberg News senior editor, Still Ahead on Bloomberg Business Week a blueprint for undoing segregated housing in the US.
It debunked this myth of de facto segregation and showed that the segregation of our communities which still persists today, was created by intentional government policy, and those policies were in violation of the Constitution, and so we have an obligation to remedy the ongoing impacts of those policies.
This is Bloomberg.
This is the Bloomberg Business Week Podcast. Listen live each weekday starting a two pm Eastern up on Apple CarPlay and the Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa Play Bloomberg eleven thirty.
Well, we got some news in the world of real estate affordable housing. To be specific, millions of dollars in federal contracts for affordable housing were canceled after a Department of Government Efficiency Review of Nonprofits website and LinkedIn profiles for terms associated with DEI. That's according to current and former staff at the US Department of Housing and Urban Development.
That canceled awards Carroll include ongoing projects in more than one thousand communities to address homelessness, disaster recovery, persistent poverty, and other housing issues. This according to a list seen by Bloomberg City Lab.
And this came from our own reporter Kristen Camps, who covers housing and design housing policies, something that Leah Rothstein knows very well. She's a housing expert and author author of Just Action, How to Challenge Segregation Enacted under the Color of Law, which she co wrote with her father, Richard. She joins us now from Oakland, California. So great to have you here with us, and really timely topical, Leah.
This book is a fall up to your dad's book, The Color of Law, which explored how housing became so segregated. For those who maybe don't really understand kind of some of the history here or have forgotten, perhaps remind us kind of how housing became so segregated.
Sure, well, you know the subtitle of the Color of Law is a forgotten history of how government segregated America. So it's not uncommon to have forgotten this particular fact of our history. You know, we have an idea in this country that we've adopted that the racial segregation of our communities is a form of de facto segregation, a kind of segregation that was created by private actors or
personal preferences, or economic conditions, or by accident. And what the Color of Law shows, with detail after detail of government policy from decades of this country's history, government policy from local, state, and federal levels that intentionally, explicitly and
purposely created racially segregated communities. So it debunked this myth of de facto segregation and showed that the segregation of our communities, which still persists today, was created by intentional government policy, and those policies were in violation of the Constitution. And so we have an obligation to remedy the ongoing impacts of those policies.
And that's exactly where your book picks up just action how to challenge segregation and acted under the color of Law. So what is the solution here, Well.
There's no one solution, just like there wasn't one policy that created segregation. It was many, many actions and policies of governments.
Well, can we go there, just remind us of the policies, As you said, it wasn't just one policy, Like what were some of those specific policies.
Sure, there was redlining policies which determined where banks could or would give loans for mortgages and small business lending, and it determined that neighborhoods where African Americans lived were not good places to provide loans to homeowners or business owners, and so African Americans in those neighborhoods had no access to mortgages and couldn't buy homes and build wealth. That's
one example. Another, the most powerful example is how the government, the federal government subsidized the suburbanization of our country in the mid twentieth century after World War II, when we
didn't have a lot of suburbs in this country. Most people lived in urban centers, and the federal government, through the Federal Housing Administration, helped to subsidize developers to build the suburbs that we are used to today, and did so on the condition that those developers only sell their homes to whites and This was explicit government policy written into the FHA manual, written into the d of the homes that these developers built, saying that the home could only
ever be owned or occupied by whites. Now, those homes, when they were first built and sold, they were affordable for working families of any race. The white families that got into those homes got into home ownership when it was affordable. And those homes and suburban areas around the country are no longer affordable to working families. So the white families that got into them when they cost one hundred thousand dollars in today is money built up wealth
as those homes accumulated in value. Now there were several hundred thousand dollars, in some places over a million dollars, and so those white families accumulated wealth through the increased value of their homes, while African American families, who were explicitly prohibited from getting into home ownership when it was affordable, weren't allowed to build wealth in the same way. So we have a wealth gap today that exists because of those past government policies.
Is it fair to say that the explicit things that you and that your dad talked about in his first book, those are no longer enacted current.
Many of them are no longer enacted as explicitly as they were. There's many policies and programs that have a racially discriminatory impact, if not an explicit intent, that are still you know, in place today. But you know the example I gave about the subsidized suburban homes. So you know, since then we've passed the Fair Housing Act, which says we can no longer discriminate in the sale and rental of housing. Those restrictive covenants on the deeds of the
homes are no longer legally enforceable. But even those though those laws have changed, the situation doesn't just resolve itself. When the homes and suburbs that were created through government subsidies, you know, are no longer affordable to families who don't have intergenerational wealth. So they're not affordable to African American families who were denied the opportunity to build the same
wealth that whites could. So this is how, even when those racially explicit policies get changed or revoked, the consequences are ongoing unless we take intentional action to change them.
Okay, So that brings us up to speed to essentially today. And you know you said mainly the explicit policies are no longer there, But there are these implicit policies I think that many would argue still do prevent homes from being built in certain areas and do perhaps prevent more people from living in certain areas. And a lot of those happen on the local levels, such as zoning. How do you look at that?
Yep, yeah, Well, in just Action, we focus explicitly on local policies and programs because that's where we can have an impact as residents, as organized activists, as voters. And that's also what can have the biggest impact on challenging segregation. Even though the federal government had a large role to play in creating segregation, once it's established, laws like zoning, like you know, housing development subsidies, Section eight, program administration,
all of these happen on the local level. So there's a lot that can be done locally to challenge the segregation that was set up by the federal government. So zoning is a perfect example. Passed by local city councils, planning commissions, and zoning has enforced segregation by ensuring that
in more affluent, whier areas. Those areas tend to be zoned only to allow single family homes, so that ensures that homes in those areas remain unaffordable to only the most affluent people because as demand increases, you can't build more homes to meet that demand. You're limited by how many lots there are in that community because you can
only build one home per lot. So some communities are challenging single family only zoning to allow more than one home per lot, which can open up access to that community to a broader range of households because there's a broader range of housing sizes and affordability options created.
How does the division politically within this nation, you know, either to prevent seeing more equality when it comes to housing and more diversity when it comes to housing.
Yeah, great question. It's cyclical, right. So when we live around people who only look like us and have similar life experiences than us, we tend to not support policies that we see as helping other people. And when we live in neighborhoods that are more integrated and we have more access and more exposure to people who are different from us, there's less polarization. We understand each other's life
experiences and hopes and dreams. We understand we're not that different, and people tend to support policies that help a broader range of people when they have personal relationships with people who they think of as other. So the segregation of our communities keeps us polarized because we don't have we don't have natural social contact with people who are different from us, and then we tend to continue to support that maintain that segregation.
You mentioned that you focus on the local level because that's where people can have an impact, from voting to zoning and more. Can you share with us some examples of communities in certain areas of the country that you think are doing this well and why they're doing it well, how they're doing it well.
Sure, so, you know, in our book we give dozens of examples of strategies and programs that local communities can adopt, and for each one we give an example of a community somewhere in the country that successfully adopted that. So there isn't I would say, one that's doing everything, because there's so many pieces to this puzzle, but there's many communities that are doing something. Zoning changes have been you know, catching on around the country to meet the affordable housing
crisis that the whole country is now feeling. And there's some success stories around the organizing for zoning changes. There's an example I love is a community land trust model, which is a locally formed nonprofit organization that creates permanently affordable home ownership opportunities in areas with housing costs that
are rapidly rising. So we wrote about a group in Durham, North Carolina that was a predominantly African American community that was gentrifying and you know, it was near Durham, Sorry, it was near Duke University, which was increasing enrollment and investors were buying at properties and the longtime residents were being displaced. And in that time, the residents there started going door to door talking to each other about what they wanted to do to improve conditions in their neighborhood.
You know, simple beginning community organizing, right. They were talking to their neighbors. They decided they wanted a park in their neighborhood because they didn't have a park. Kids were playing in the street, and so they advocated that the city turn a vacant lot into a park, and they won. They started to see, oh, we can really make change here. They learned about the community land trust model and started.
They crowdfunded to buy two vacant lots and built homes on them and sold them at affordable prices to and moderate income families. In the land trust model, in the home sale, the land trust retains ownership of the land underneath the home, so only the home is sold, so it's more affordable than if you were buying the home and the land. And when the homeowner wants to resale resell the home, they have to adhere to a maximum resale price, and that ensures that the home is affordable
every time it's resold. So this group that started by going door to door to get a park in their neighborhood now has a land trust with over three hundred properties all around the city. They've prevented a lot of displacement in this neighborhood by creating affordable homes in an area that home prices were increasing really fast that people couldn't keep up with one great example, but there's over three hundred communities around the country with a land trust
and they're growing rapidly. It's a great model, a great tool in the toolbox for addressing these issues.
That's Leah Rothstein, author of Just Action, How to Challenge Segregation Enacted under the Color of Law, wraps up the weekend edition of Bloomberg BusinessWeek from Bloomberg Radio. Thank you so much for joining us. Be sure to tune into Bloomberg Business Week Monday through Friday starting at two pm Wall Street Time on Bloomberg TV, Bloomberg Radio, and on Series XM Channel one twenty one. You can also listen to us on Applecarplay and Android Auto. It's free in
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