Bloomberg Businessweek Weekend - March 31st, 2023

in the banking world. First Citizens Bank Shares agreeing to buy Silicon Valley Bank. You've got leading the rally in bank stocks today, troubled First Republic, which following report a Bloomberg report that US authorities are considering more support for banks. So this one has really in on a tear to the upside. You've got the FDIC probing management conduct and the failures of SVB and Signature Bank. So a lot continuing to be on. So with that, let's get to

our daily update on banks with US. Back with us is Bloomberg Intelligence Senior Alice for US Regional Banks, Herman Chan. He's here in our Bloomberg Interactive Broker studio also with us a voice who helped guide all of us through the last banking crisis and subsequent regulation that came out as a result. He testified numerous times before US and European policymakers and regulators on the crisis and global financial sector.

Josh Rosener is managing director of the independent research consultancy firm Graham Fish Share author as well. He joins us via zoom in New York City. Josh Herman, Great to have you here, both of you. Herman, I want to start with you. First Citizens bank shares soaring today. Did they really get a great deal in buying SVB and is that the interesting story or is the interesting story that that helped calm everything down? I think it's a little bit of buff It was a great sweetheart deal

for First Citizens. You're gaining really strong deposits that are largely rate free, and you're getting the loans that coming on the First Citizens books that's lost share agreement. So think of it as insurance against potential losses, and it really vaults the bank to become a top fifteen, top twenty institution. And the thing that analysts are looking at is the accretion in book value. Basically book value could increase by upboards of fifty percent, maybe even one hundred percent.

So we're still waiting on numbers on that, and that's why those stock has really popped atay. What is a First Citizen? Because they've been buying lots of other banks over the years. It feels like, you know, something goes wrong, the FDIC comes in and it goes to First Citizen. Yeah, it's it's a small or less known bank. It's based in Rowley, North Carolina. It's a family run, which is interesting.

The founder, the CEO is the founder's grandson, so it's been family operated and a large chunk of the family owns the shares. It bought CI a couple of years ago, so that was sort of its claim the flame of coming into the New York, New Jersey area. So they've got a lot of things going on, and it has a lot of credibility with the FDIC having done numerous transactions during the Great Financial Crisis. All right, Josh Rosner, come on in. It's been a busy couple of weeks.

I mean it. You are go to voice for us so often during the Great Financial Crisis. How are you looking at the headlines today and the headlines over the last couple of weeks, well, it was definitely a sweetheart deal. How am I looking at the headlines today? I think everyone is starting to finally realize that sometimes the aftershock

of an earthquake is bigger than the earthquake itself. And so I think we're starting to realize that, yes, you've had problems with the longer dated assets and the securitys portfolios, but regardless of what happens to interest rates, at this point, we're well ahead of the upcoming credit cycle. We're going to see rising delinquencies, rising defaults regardless of what the what the FED does at this point, and so to some degree, the fenshands are going to be tied. So

you think that there's more to come. I think there's there's absolutely more to come. Typically, you've got a lag effect of interest rate hikes by about twelve months or so, and so you're not only worrying about today the choking off of credit or the tightening of credit conditions, but obviously you're going to end up seeing that impact the loan portfolios as we see repricings. And I think that

many cases that's going to be pretty dramatic. You can't add five trillion dollars to the fed's balance sheet, or you can't print five trillion dollars without leading to some misallocation of capital, significant misallocation of capital. And Josh, when it comes to First Citizen and SVB, why did it take so long to get a deal done? Well? I mean,

I think that's the other interesting thing. If you look at the law sharing agreement here, which is obviously massive, the FDIC is going to end up taking you know, some hit there, but they did so really by making a systemic declaration. I think it took a long time because it seems pretty clear that they didn't want any

of the g sibs to be the bidders. I think that you could have actually put together a deal more quickly and with less laws sharing, But because we don't want them to be bigger, because we don't want them to be bigger politically, I think they recognize that that's a bit of a problem. I think functionally it's a

problem as well. But I think it would have actually created more problems for them politically at this point, and because they designated this as a systemic failure, they actually don't have to follow the FDIC's requirements of least cost resolution, which allowed them to actually take more laws sharing. The downside of that is, there's only about one hundred and fifty billion dollars in the FDIC Deposit Insurance Fund and how many of these can you do without ultimately depleting them?

And I want to bring Herman back into the conversation because when it comes to First Republic, will there be a buyer in this scenario as well? Yeah, I think we're still waiting to see what's going on. I would point to the fact that the Bloomberg News article said that the regulators are looking to even add more liquidity opportunities for a First Republic to tap to shore up

their balance sheets. You point you can point to the fact that the thirty billion dollars deposits collectively from the largest US banks gives them a short term bridge to a solution. All of the points to us that the government and the banking industry doesn't want First Republic to fail. And how bad is it if we've keep throwing this much money. They've also been tapping right right the FED, So does it tell you how bad it really is?

Then we calculated that the deposits may have left to the tune of about eighty nine billion dollars, and that comparable to one hundred and seventy billion dollars at the end of the fourth quarter. So you're talking about a pretty big chunk of the balance sheet that's missing. But it sounds like things have stabilized a bit, and so they're they're hopeful that there's an opportunity for them to become a full fledged independent institution without needing any further

help from the government. I get, Josh, it feels like little Boy Blue, right, and it's just like hollow water hollow. That's kind of what it feels like. Maybe the water's coming slowly, but that's what it feels like. Or somebody said to me last week, or we overheard you know, you see one cockroach, you think that's it. It's not. There's a million more behind the wall. So help me, like how you are looking at this and where the

next shoe to drop might come from. Well, remember, the problem wasn't even the losses the unrealized losses in the in the health maturity portfolio in these particular banks. It was that they had the unrealized losses are the liquidity in both the health maturity and they're available for sale portfolios. But worse than that, they had large amounts of deposits that were uninsured and little cash on hand to meet withdrawals. So those are really the two other pieces to it,

besides the impairments due to interest rates. There are a lot of banks that have upside down HTM portfolios, a lot we're talking, you know, well over one hundred. That is not really the concern in my mind. The concern short term was the concern about deposits, cash on hand, the uninsured portion. But again, I think that the weird look becomes You've had a very long up cycle at

zero rate. I mean we've seen you know, main street commercial and industrial loans, small commercial industrial loans, see loans you know, priced when we were almost at zero rates at libor plus four to six hundred. Now as those read price, how many of those main street borrowers are going to be able to actually sustain their payments at significantly higher rates. I think that becomes really the problem.

And so I think we're about to go from the liquidity questions of this cycle to the credit side of the cycle. Do you agree, Herman, Yeah, I think there's going to be some normalization and credits. The banks have had very little loan loss content over the past several years, and it's been impressive that losses haven't really formed. A lot of that had to do with stimulus measures during

the pandemic and the FEDS quantitative easing measures. But at this point, it does seem like we're heading into a recession and you should see loan losses really pop up

and normalize further. Industry. Yeah, if you remember, if you remember back in in the third quarter of oh five four, we had a massive hurricane and everyone said, oh, this is a temporary blip, and that was when I had said, nope, the housing prices is eighteen to twenty four months away, And it was really driven by the fact that we'd had a full rate cycle and the problems we're working their way through the system and they would ultimately create

those losses. We really have the same thing going on here. It's not in residential real estate this time to some degree, the market's well aware that it's in commercial real estate. It's in sort of see credit corporate. But we haven't had a cycle now since the Great Financial Crisis. Hey, you know Josh, it's interesting. There's a lot of places we can go. Does it make sense? And I was just reading something from Bloomberg that a company like Charles

Schwab is getting caught up in all of this. You know they're getting caught up because yes, they've got the health of maturity portfolio issues, and yes it looks like they've got a lot of uninsured deposits. But you have to remember it's really a securities firm where their banks are really used. Just as you know liquidity, it's really other people's money in a different way. I don't think it is sensible. Most of the assets are on the securities side, so I think if you were to net

them out, they're probably fine. That's interesting because brokerages in particular have come up a number of times in my reporting. So do you think they're a bit more unscathed and if so, what would it take for them to become more vulnerable at this point? Well, so, first of all, not only they do I think, yes, they're more unscathed, but they also have a much much more wealthy clientel, and so I think the stresses are going to be

a lot less. I think you have to remember the loan portfolio is not going to look like a bank loan portfolio for the most part. You were talking about the strains in specifically commercial real estate. Do you think that could potentially be the next shoe to drop? Well, I mean, I think I think there's a number of shoes to drop once we start recognizing the credit side of the cycle rather than the liquidity side of the cycle. And so, yes, I think that commercial real estate is

a problem. I think there's a lot of again discrete loans, small commercial loans, not just real estate, that are going to be wildly problematic. A lot of those have moved outside of the banking system into the business development corps, into the private equity firms, but I think those are going to be, you know, somewhat problematic as well. And so that's really my point is we are going towards a hard credit cycle. I don't think that's immediate. I

think that there's a lag defect due to rates. And so my question is if we are this early on having calls to guarantee deposits, we have to remember that when you're guaranteeing deposits, ultimately are also guaranteeing the assets. And is that really where we want to go as a society. Well, I think that's okay, So unpack that a little bit. I think about you know, you went before lawmakers, You've talked about the sector and the regulatory environment.

So Josh, why would that be so problematic? And I'm just kind of playing devil's advocate here, Yeah, because ultimately, you are guaranteeing the assets of the banks at the end of the day, if you're guaranteeing the deposits, we should have a system of bad management equals failure. Bad management equals failure not only for the companies themselves, but at the same time, there has to be some level

of diligence required. The FED cannot actually bail you out every time, and bailing you out means that the FED is going to be guaranteeing the assets. We're seeing that right now, taking of long dated treasuries and mortgage assets off of the bank's books and holding them. That's not really the way to resolve a system. Now, we could talk about better ways to do it, but that's not where the conversation has gone yet. So right now we're

still in this phase of people screaming for bailouts. Guarantee my deposits, guarantee my deposits. I'm not really sure what that ultimately solves for, and I'm not sure that we have the ability to do that. You know, you're talking about at the end of the day, fourteen trillion dollars of deposits right, Well, again, multiple poles of that in assets, Josh, and we have let Silicon Valley banco under. I think we should have let it go under. I think we

could have done an orderly resolution. Do I think that it was systemic. I absolutely don't think that it was systemic. I think that Frankly, one of the pieces that we're not talking about is Dodd Frank sought to prevent the bank regulators from stepping in and providing support to individual institutions, and that change is why the regulators felt that they had to probably had to use the systemic designation as the way of stepping in, thinking they were avoiding contagion.

But I don't see anything that was particularly systemic, and I don't see any real reason that depositors shouldn't have been bailed in. Are there any other cracks that are forming right now that are concerning for you? Again, I think that I think there are cracks. I think, you know, they're structural their long term, they've been for a long time.

I think we need to address the leverage ratio. I think that we actually have to also start thinking about when in two thousand and nine our banks held about one ninth of their security's portfolio and treasuries, and today it's almost almost a quarter. We have to ask what banks businesses because it doesn't seem that it's the old fashioned business of lending, and so it really has become more of a casino. And the question is, well, they thought they were playing in a safer casino because they

were just buying treasuries. But treasuries are given as zero risk waiting under BOSEL and is that appropriate? And does that incentivize less lending and less prudent behavior? You know, yes, you know it's crazy, Josh. Is that. I feel like we had these conversations during the Great Financial Crisis about come on, if it's a bank, be a bank, right, rather than get into something. But here we are again having this conversation. I'm also going to say, where was

the FED oversight when it comes to interest rates? Because one of the BERG terminal users reach out to me and he's like, here, I can show you, you know, an event that they did at the Saint Louis FED that was worried about community banks an interest rate risk. So where was that oversight? Well, it was sorely lacking. And again we're looking at, you know, a handful of

banks as having been problematic. But as I said, if you go through the call report data, which was really available, you didn't have to be a central banker to see it. You didn't have to be a financial markets expert in banking to see it. It's all there in the financial in the call reports, you could have seen how badly managed the interest rate risk was in the banking system. And so where is the regulator? I think that's a

good question. But now we're in a place where the FED, being both the regulator of the banks and the central bank who's supposed to meet its dual mandate of price stability and full employment, is sort of caught in a betwixt and between, because if you save the banks, then you're actually not able to effectuate your mandate of price stability full employment in your monetary policy mission, and so their hands are ultimately tied. You can choose one or

the other. You can't really choose both, Josh, I have to get your thoughts on pal and yelling. What's your take as far as how they've done so far and what you think needs to change. I think they've done. I don't think they've done a very good job. I mean, frankly, I think that even from the start, the systemic designation of these institutions was silly. I think that the fear that we couldn't let these institutions be wound down in

the traditional orderly way is silly. But problematic is you put in place a one year program where you're telling banks that they can pledge their long dated securities to the FED at PAR, which does nothing to clean up the gap between par and mark to market. It's an extend and pretend there's no parrot. There's all carrot, there's no there's no requirement that may figure out a way to address it, you know, at some reasonable period of time before it expires. And so we're extending and pretending

into the tougher side of a credit cycle. I don't know how that actually plays well, and I do think that the mark to market problem remains the issue. Do we need to. I know we both have like a million questions for you. Do we need to be worried about money market funds, commercial credit lenders? I'm going to assume you ask fintech, insurance companies, trade credit and elsewhere. You know, we talk about shadow banking. Do we need to be worried about that stuff? You know? I don't

think we really do at this point. Again, I think the credit cycle itself is where I am more concerned, assuming that we make it past this liquidity cycle and the front end of the interest rate cycle, but the interest rate cycle becomes a credit cycle, and I still think that we're a few quarters away from that. So to me, the question isn't is there a recession on the rise? And it's is the recession on the horizon because of a failure to manage the illiquidity and bank

balance sheets at this point? Or is that on the horizon because interest rates are going to feed their way through the python in credit losses and Josh, we only have about thirty seconds left. But should the Fed continue to high rate or do you think they need to cut well, I think that they'll probably have to stay pat for the moment. I think they're going to have to acknowledge or accept that the target inflation rate is moving north from here probably three and a half four percent.

Whether they are willing to acknowledge it or not. They've been sort of I think Pollyanna ish on it for a while, and I think that's the reality. So I don't think that they can afford to cut, and I think that their interest would be in hiking. But again bank solvency versus their dual mandate, their hands are. You're

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Big Again Bright Yeah Yeah, Teas. All right, Yes, we might be playing that song for Jazz because she is from Texas or my relatives in Texas, but now we're really playing it for her next guest, because right now we've got an opportunity to really get a check on the economy from the city level, which I always love. Back with us is fort Worth, Texas Mayor Mattie Parker. She is with us via zoom from um fort Worth Hey, how are you, Matt Matda. I'm great, good, thanks for

having me on. Well, see like the lead intro there, that was good, So good to have you back. Mayor Parker. When we talk back in October, I'm curious, it's been a few months since then. How has your world changed? And I'm curious about the economic and business outlook how it looks right now. Well, I think one huge factor that's positive for fort Worth is that with growth comes

a lot of prosperity. And while across the country we're all kind of on pins and needles or what this economic situation really looks like, everything from flation, inflation, housing costs, etc. But in Fort Worth we still grow at a rapid pace every single day based on our high quality of

life and what that comes, jobs and opportunity. And so while we are maybe cautious at times and prepared for the future and what it may bring, right now, we're really positive and feel like we're on the right economic trajectory for our city. So job growth, home prices, all

of it kind of the same. Economic growth the same from when we talked, what six five six months ago, it really has I would say the housing market has changed a bit yeah, in some ways, yes, but it's kind of odd, honestly, and anybody in the real estate industry would tell you that right now. Part of it is just because our prices have continued to rise or

stabilize a bit, you haven't seen the dip. And there's actually an article in the Wall Street Journal, I think yesterday about East versus West in terms of what prices look like across the country, we've seen them to be still strong here. Housing stock is still concerned. We have seen is a slowdown and the number of new projects

coming online, especially with new housing. So we're watching that really closely because in a fast growing city, you've got to have a place where people to live, right and you're talking about the stock of housing. So clearly the inventory is still an issue in North Texas right now. Absolutely, it's really an issue across any high growth state like Texas.

And so what do you do to make sure you have different product in a place like for Worth that's growing rapidly, Everything from multifamily, single family housing, increasing density within the inner city, those are all considerations we're having to make. And also important is you want to attract

a young workforce into a Citylight for war. So when it comes to home building, I mean, you know, we've seen booms and bust before throughout the country, and certainly anything that's connected with energy or oil, if you will. Are people holding off in terms of increasing the housing stock or is it just a case that they want to build but they just either don't have the labor, the materials, or what have you. Yes, yes, yes, it's really all of the above for a lot of these

big players in this space. So in the City of Fort Worth, you have to kind of ask yourselves in any city government that's smart, is what can you do as an actual government to really encourage good development? And the number one thing we have to do is make sure we're streamlining our development services and providing optimal infrastructure for any of these potential projects. And that's a real

focus for us right now. And second is really make sure we're having frequent meetings with organizations like our Real Estate Council locally to understand the needs on the private side and understand how they're kind of thinking about housing stock in the future and what these projects really look like. And then lastly, everyone's been really nervous in the last few weeks, especially after Silicon Valley Bank and then First Republic and these considerations is what does that mean for

the banking industry in general. We're very proud of our banking industry here, regional banks, community banks, large players here in North Texas, and we see a real stronghold and a positive economic outlook, but we have to all recognize that could change tomorrow and being really responsible with the rhetoric whether we're using to support the banking industry here. What are some of the biggest regional banks that are in that particular area in Texas. I think probably I

would say Camerica is a big one. Frost Bank is a big one as well. Umb is another great regional bank. I think everybody uses a different definition of what's regional versus community bank, but I think it's important for me to mention in North Texas and forth specifically, some of our most amazing corporate partners are actually these banks that really care about their clients differently than maybe you see

across regions. They feel like their family, and because of that, even in a potential economic downturn, they have a responsibility to understand what's happening economically for families in the region and I'm really proud of everybody that's been a partner here and for ors, we're very fortunate. Hey Mayor Parker, what signs of nervousness did you see among either individuals or businesses because of the banking stress and the collapses that we saw of those three regionals over the last

couple of weeks. Well, I think the main thing I heard from business leaders in Texas was just an open ended question, which was had this bank been let's say, in Houston or in Dallas and been maybe more on the energy side focus and not in Silicon Valley, would have would have the FDAC Treasury stepped up the same way, open question right, which is interesting And I'm just listening to those that are experts in this space, but importantly

making sure we're telling our story of fantastic banking and financial partners in North Texas and how your your deposits are safe and that you're actually your money is working better for you in these in these smaller and regional banks, and importantly, even the big players that we have in North Texas that are you know, the JP, Morgan's Bank

of America, Wells Fargo, they're excellent corporate partners. And stewards in our communities also though, and I don't know if that's similar in other in other markets, but I know that we're really lucky here and for Worth. Can I ask you, I'm just wondering because of the banking stress that we've seen, there certainly has in the market's been a reset about expectations about what the FED might ultimately do.

We also just talked earlier in our broadcast that because of this situation, that we're likely to get a hard economic landing and a recession that maybe could be deeper and wider than maybe we were anticipating three weeks ago, which is pretty remarkable to turnaround in the sentiment how do you see it? Do you see her well action coming? Well?

I think for us and for Worth and North Texas specifically, we have to understand what an economic recession would look like for us and how that would probably different than other region across the United States because of our high growth and economic opportunity in the projects that are already

on the ground. And I would venture to tell you and those that are business leaders that are already talking about this, that even if we do go into recession in North Texas, we would weather it better and come out of it more quickly for a lot of the factors we've already talked about today, and just being really responsible in supports for that and watching the markets closely. But let's be honest, anybody that's trying to gamble here and guests is really difficult and we just have to

be patient and watch it closely. The one number one topic I have heard from constituencs here locally or interest race, especially in mortgages, and back to these prices, an impact of those high increases. You know, just a few months ago you could get a mortgage rate for in the high twos or threes. That's unheard of right now. And so what does that mean for home prices in a place like Texas where you're seeing rising prices across the state. And I was going to ask you what the biggest

concern was among your constituents. But interesting enough about how you're talking about what is happening clearly with the correlation with mortgage rates. Are you seeing any sort of easing there? Because we were talking about housing earlier, but when it comes to those applications to try to get a mortgage, are you seeing any sort of easing there or is it still tough for a lot of your constituents at this point because of even though housing prices have cooled,

still relatively high just given historical standards. And I haven't seen any data, but I know anecdotally. At first, I think there was a shock to the system when you saw the jump in rates. But I think at this point, families that need to be in a home and they find their spot, they just shop mortgage rates as best they can and decide to go ahead and move forward, recognizing that even a five or six percent seems high

from what we've seen in the last several years. It's still something that they're willing to embark on as a family because it's a high quality of life that they want to be in this area. And it's it's just a competitive sport to find a house anywhere in a big metro area, but certainly in a great place to live, like fort Word. So I mean, bottom line, even though the housing stock may be not there. I mean the great relocation that we talked about, you you know, back

in October, that is still happening. It really is, And there's a variety of companies we could brag on and talk about what's happening. I think one industry and specifically that I know Bloomberg is really watching closely, is this

concept of entering of magnet manufacturing, especially for evs. We're really proud to be the first home for empty materials to manufacture their magnets here for batteries in the United States, and this is an effort across the US, but I think fort Worth, for a variety of reasons, will lead the way. A special connection with Alliance Airport now Paro Field and Hill would in the work they're doing a mobility innovation zone, and companies are noticing fort Worth for

different reasons. Easier to do business. We're incredibly scrappy here. We want you here, and we're really focused on emerging industries that we know. Will you have an impact economically not just for our state but the entire country moving forward. Mayor Parker, I do you want to talk to you about manufacturing in crypto and all these good things, But can I ask you what is it like to be one of the youngest mayors of a major American city in US history? Well, some days it's awesome and other

days I really question my sanity. I'm being honest. Why why Yeah, Well, it's just a weird time to be in politics. You can imagine, you know everything. First of all, we're just divisive as a country right now, and that really rings true in a city. Also, I sometimes I love social media and other times I kind of question why I'm on it, just because it becomes this platform that sometimes it's toxic rather than does things for good. But at the end of the day, it's a huge

honor to be mayor of this city. My family lives here, we care about it deeply, and it is unique to be a part of a new age demographic and that's kind of emerging, not just in politics, but in business also. I'm really proud to carry on that tradition for my city and didn't know that i'd be one of the youngest mayors when I was elected. But I've got some great colleagues across the country now and we can kind

of commiserate in the job. But no two days are the same, as you can imagine in a fast growing city, and for the most part, it's been a ton of fun and then occasional blips when you have days when they're pretty tough, you just have to remember how fortunate in my case, how fortunate I am to get to do this job. Do you feel the front and center? And this is something Jess and I talked. She said that, you know before we got started that there are people

you know that question your age. Do you feel like you see it sometimes in a conversation with someone. I don't think age matters ever, to be not honest, but do you ever are having either business dealings or political dealings where you know they're either talking down or looking down because of your age? You know? Yes, maybe, but mostly since I've been mayor, I would tell you once you can get in a room with me and talk about the issues. Any concern someone may have had about

age or experience dissipates pretty quickly. You just have to be on your game. And frankly, I've experienced that as a woman in business in general, you have to be kind of the smartest in the room and most prepared, and surround yourself with really bright people. Also. So is it easier to be younger or is it easier to be a woman or harder to be a woman? A harder? Oh, good question, you know, I think in some ways age

has been a bigger factor or talked about more. Okay, my gender in this role, but I have seen sometimes frankly, it's not just that I'm a woman, but I'm a mom of young children and kind of the looming question of how do you do it? And I'm like every working parent, every working mom. Some days it's awesome and I'm killing it, like I'm keeping the balls in the air, and other days it's a little messy and just kind of being vulnerable and owning that. And for some people

it just depends on your setting. They don't really understand that necessarily because it's so foreign to their day to day. And that's okay with me. I like to be a trail boser in that way because I know some really amazing women out there doing the same thing in their respective industries. Walk us through what your day to day is like, Is it kind of similar day to day or their variety of changes, obviously depending on what your constituents are looking for. Yeah, I think that's true about

any mayor's role across the city. You never know what can happen. I mean, you could be in crisis one day, something happens in your community, or you could kind of really stick to your schedule. I really try to spend a predominant amount of my time focus on Fort Worth, even though there is a need to pull me across that country for different opportunities, to make sure we're highlighting our city for the right reasons. So just kind of

creating a balance of time and commitment. And we have council meetings every Tuesday between work sessions and a council meeting, and so that can add up really quickly. Make sure you're reaching with constituents and then working alongside my colleagues on council. There are eight other people on the diets with me, soon to be ten when we redistrict this May, and making sure they have enough time from me and understand what their priorities are that we can kind of

carry forward for the city. If I'm being honest. Right now, I was texting with a twelve year old who has lost his basketball somewhere at school warns practice. So sometimes that's a little bit distracting, but you know, we're making it happen and really proud where we are in the city. Yeah, exactly. Listen, and I know last time around we talked with you.

You are a Republican, but you are not shy about taking stands that maybe are taking a position that is against the GOP or feeling very differently and coming out and saying it or criticizing the current state of the GOOP. Do you still feel comfortable doing that and what gives you kind of the strength to do that? Well, I think for me in particular, Aget I remember I did. I've kind of been behind the scenes in policy for

over seventeen years. I really enjoy that. And to me, when I make a decision or take a certain stand publicly on any particular issue, it's really about the policies that we have, whether they're locally or across Texas or the United States, that I think need to change or evolve, regardless of party. Kind of agnostic about those things. Let's really dig and understand why we have a policy in

place and what may need to change. And to your question about why or how I do that, my perspective right now is this job is hard enough as it is, and if I felt like I was ever compromising my own integrity or my belief on what should happen or what is right, why would I be doing the job anyway? And I just find it to be exhausting if you're constantly hedging out of fear of what a party may or may not do. And that doesn't mean I don't have a lot of respect for certain platforms, but I

also disagree with many. Also, I've tried to stay out of the headlines when I can, or when it really doesn't necessarily help my role as may or help my city. But occasionally I've had to push that aside and say, hey, this is important enough for fort Worth. I'm willing to make a headline, not because I want to be front and center, but because I want to bring attention to a particular cause that I think warrants that in that situation, I wanted to follow up on as far as pushing

for new gun laws. Can you tell us more specifically what it is that you're looking to do and change? Well this session, honestly, you know, they did a lot of inner and studies on what may need to happen. Of course, understandably after the tragedy in Uvaldi, and the one public stance I've taken in Texas, and this is out there already, is that I wish we would consider raising the age limit from eighteen to twenty one for those semi automatic rifles. I think there's a way to

reconcile some of the concerns I've had in Texas. Right now, you have to be twenty one to purchase alcohol, to pursis tobacco, and I just think there's some inconsistency in our policies, and particularly in Uvaldi, I felt, based on those circumstances and what I know in that case, the individual that perpetrated those horrific tragedies in killing these young children and two teachers could have been prevented had there been a different age limit by no means, So I

think that's going to solve things overnight. We just experienced what happened in Nashville yesterday. We can talk about gun laws across the country, but I do think it needs a balance. I think what Senator Cornyn and his bipartisan group tried to do in the Senate was just that sort of marrying different policies that need to happen across

the country. And then lastly, I would just say listening closely to local law enforcement and what they're seeing, and it's really important detail that we're not talking about always nationally in the met it is the bulk of the gun violence you're seeing in this country among the youth

or actually black market weapons. So we talk a lot about legal gun purchasing ability, but black market weapons are still a consideration that we have in a large city like Fort Worth and across the country, and what are we doing to kind of curb gun violence. We had a young man killed in a water Burger parking lot right just a few months ago. He was a young high school student, and honestly, that would have been the kind of thing that was just a brawl right in

the parking lot a few years ago. But in this situation, a child died because there was a gun involved. We have to run. Appreciate covering so much ground with you. Be well, Mattie. Mattie Parker, of course, the mayor of Fort Worth, Texas, joining us from the city of Fort Worth. This is Bloomberg. You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern on Bloomberg Radio, the Bloomberg Business app Band YouTube. You

can also listen well. I've on Amazon Alexa from our flagship New York station. Just say Alexa Play Bloomberg eleven thirty. We talked earlier with the team over Doohn Hopkins Bloomberg School of Public Health. They talked about pharmaceutical advertisement and treatment efficacy. Well, right now we have a guest in the healthcare space using AI, the human genoman more to improve health outcomes. So great to have back with us. Katherine Stoulin, she's the CEO of Gendx, a small cap

publicly held company. They're roughly about two hundred and seventy million in market cap stocks up twenty five percent a year to date, and she is in her Bloomberg Interact, a broker's studio. Nice to have you back. I feel like there's a lot of places I want to start. Let me start really big, broad if we may, because we're in a funny, interesting, confusing at times macro environment.

You play in a very specific space, but you've got to be watching market volatility, the headlines about the banking sector. How do you see the environment today? So we've taken a very i would say responsible approach to how we're managing the company moving forward. So when I started, we combined two companies, so Semaphore and GenX actually came together

last year. I took the helm of the combined companies May second, and we had already started to see the pressures of the economy and the company had been burning about ninety million dollars in Q one last year. So Job one was really figuring out a plan to ensure that we could become self sustaining as soon as possible. So we went through a series of changes in the company. We actually shut down a few of the business lines that were materially negative gross margins and we're in their

nascency or just we're not performing. And where we landed was in a place where we have a distinct competitive advantage. We can really help people in a unique way in the marketplace that also happens to deliver on very healthy growth margins and as well reinverse moving forward. So we've really been taking the era of growth at all costs is behind us, and we have been really focused on

revenue driving growth moving forward. Well, Catherine, I'd love to talk just about the your main business because it's pretty fascinating and correct me if I misinterpret what you're doing. But you basically take the full genome sequence of a person and try to look for genetic diseases and that type of thing is that is that basically it So

you're right on. What we do is essentially take a genome's worth of information and we distill it into actionable insights, which is an incredibly daunting task if you think about the fact that it's only been about twenty years since the Human Genome Project delivered its first its first draft. Really, so we've been really working to develop the technology that can take a genome's worth of information and deliver it. Deliver the information in a way that provides a definitive diagnosis,

looking more comprehensively than a single gene like Bracca. We want to look at the entire scope of the genome. So what's the holy grail? Like? When we think about this, like in an ideal world, you would say, okay, we've said we've mission accomplished. What would it mean for a patient and or a medical professional. Ultimately, we want to diagnose disease as quickly as possible, get them on the treatment that's best for them, so truly personalized medicine, and

get them on a healthier path. Now, ideally, what that means is we're all walking around today with DNA that can help inform our health and it can either help diagnosed disease immediately or even get to the point where we can prevent disease. But there's one piece that would make that information even richer, and it's the information that

we find in each of our own mrs. So being able to have an MR, an electronic medical record, so being able to take a look historically, having a longitudinal look at each of us, and being able to say, what are the different lab tests that we're taken, what did an MRI say, what different treatments have I been on?

And be able to take the genomic information from within you and have that additional context from your own medical history that can then give us an even more precise diagnos So it's not like just the case of out of the out of the womb that we're we do this mapping and we know kind of what's to come. Is it even that that is a fantastic starting point?

So okay, we are starting to do newborn screening. So we are we're working on a study right now called the Guardian and Steady, and that really is taking a look at healthy babies, sequencing their genomes and screening for two hundred and fifty conditions so that is a fantastic starting point, and we do want to get to that point where we can make this available and accessible to absolutely everyone, so your customers are more of the scientific

community rather than me bringing my newborn to you and say, can you sequence its correct. What we're doing is we're working with providers. Because I've been in the genomics industry for ten years, I've been in the healthcare industry for thirty.

It gets more and more before I know it. But really, what we want to be able to do is continue to work with providers and ensure that the information can be delivered responsively, because when you have a healthy newborn, the last thing that you want is a whole bunch of worrisome information. What we want to be able to do is hold onto the information and when there is a emptom be able to provide on demand whether or

not there's an underlying genetic condition. And I think what's really important about the study that we're doing right now, it is Wendy Chung, a fantastic pediatrician and geneticis out of Columbia, who is driving the entire thing. A thousand patients or a thousand families have really enrolled in this since it launched in October. What we did was a retrospective analysis, So we took a look at our own

database at GENDX, and we predominantly test children. And what we did was we said, if we took the Guardian screening criteria and applied it to our database to our patients, we actually would have been able to diagnose twenty percent of the children that we tested at birth. Instead, they went on for eight, nine, ten, eleven years without a diagnosis. So in other words, okay, so that's interesting because I keep thinking about we talk about disruption innovation. We've seen

it in a lot of different spaces. We certainly saw it as a result of the pandemic, just in terms of buying online. You know, I never carried cash anymore as a result of it. But I do think about healthcare disruption and I have been thinking the genome, like this has got to be where it all comes from. Ultimately, how tricky is what you're doing is it is highly complicated. I mean, if you think about it, why is it complicated?

If you think about the twenty three thousand genes, there is a very big gap that we call variants of unknown significance. So there's just an uncertainty about the characterization of those variants. Are they disease causing or are they not. So we're still in the early days of learning so much about individual genes and variants within each gene that it creates in inequity in and of the genome itself.

There are certain variants that are very clearly pathogenic or not pathogenic, but then there's all of these variants where we just don't have enough information yet. The more patients that we test, our underlying interpretation platform actually gets smarter, so data we need more patients, we need more data,

and then we learn more about those variants. And it strikes me as I don't want to sell like a sales rep for your company here, but it strikes me as a type of thing that if I were an insurance company, I'd probably be on board with this, you know, you'd want to identify these type of conditions early. I mean, is that kind of the selling point for you guys.

It is fascinating to see seventy percent of commercial payers, so insurance companies are paying for XOMERGINO not at birth, so that's something we need to figure out in the future.

But they're paying for it in the pediatric setting. What's even more interesting, so Signa and United health Care earlier this year both put out new medical policy supporting utilization of our xome or genome as a first line treatment for exactly that it helps produce their costs because right now it's just a big trial and error of different tests which are inefficient and creates a lot of waste

in the system. So they're actually very much on board with ensuring that people are getting this technology because it helps them too. I want to get back to our conversation. Catherine Stouland, the CEO of Gendx, is with us here in studio. I want to get back to what you guys are doing, because we were just talking in our break Mike and I with you, and there's a lot of more interesting things that we want to get to.

I want to ask you, though, you said in the break that this is your first time as a CEO of a company. It's publicly held, it's a small cap which can move around a lot. It's a week that I'm looking at your share price. It's down a lot, it's still up twenty five percent year to date. How do you think about those things as you run your company, and it sounds like it's going to be a long, you know, runway if you will, in terms of what

you're trying to do. Absolutely well, we happen to be, I think, in a very rare position, just having raised one hundred and fifty million dollars in January, which was a very difficult market to be raising money in. Although glad you did it now so then so glad that we did it, and that enables us to get to profitability in twenty twenty five and to be in that position, I think is a very rare place to be. And what we've said to the team, the stock is going

to be noisy. It just will be, and the best thing that we can do is stay focused on executing on our plan. We have a clear plan that gets us right to that twenty twenty five profitability place. We have a lot of operating ricor for the team, so we're really LEAs staying focused on driving revenue, driving volume, bringing down our cogs. So we try to keep the stock price noise as much out of the discussion as possible and really keep it focused. We have a lot

of work to do. We have a lot of patients that we're serving. We have a lot of customers. We work with hundreds and hundreds of hospitals across the United States, and so there is plenty to keep us busy. And what I say is, so long as we can deliver on the goals that we've put forth as a team internally report that out to the street, the stock price

is going to follow. So I very much believe that our board has been nothing but supportive of our kind of maniacal focus on execution this year and for the following year. So that's the best message that I think we can be delivering to the team. And fortunately we have a very mission based company. Employees come to the company sometimes because they've used our exom er genome to diagnose one of their own children. Wow. And so people really really care the samples that come into our lab.

It is usually of a child who is a rare disease. It sometimes is a sample from a baby who's in the neck and the parents are waiting to get an answer. So there is very much a connection of exactly how important the work that we're doing day in and day out is in terms of being able to bring an answer which brings peace of mind to parents and it helps get their child on a healthier path sooner. You know, Catherine.

When I think about what your company does and what its ambitions are, some of the real trendy market buzzwords come to mind innovation, disruption. The problem with disruption is, you know, not everyone likes that right that there's often pushback, existance, And I'm picturing you know, my kids seventy five year old pediatrician talking to you and really not being on

the same page, not being trained in genetics. So I'm curious, like, how, you know, what are the roadblocks to further adoption of this type of technology and using it in diagnosis and treatment. I assume there's probably some pushback from the medical community that is at risk of being disrupted from this. Is

that Is that fair to say? So, it's interesting we have a groundswell of support from medical geneticists who are well equipped to be able to interpret the information, know which patients to use the information on, and they have put out very clear guidelines that other providers listen to.

And what's interesting now is if you look at the medical societies outside of medical genetics, so the American Epilepsy Society, they've come out to tell their practitioners a neurologists and pediatric neurologist that if you think that a child has may have epilepsy, you're witnessing a seizure, you should use an exome or a genome as a frontline. So we are starting to see providers from other groups outside of the medical geneticists receive the message that this is something

that can help them. It's our job to make it as easy as possible for them to identify which patients are eligible for it, and then in turn, this is something we have not solved yet. In turn, we have to be able to deliver the information in a way that is easily understandable to a non genetics expert. So that is a probably interpretation the interpretative test itself exactly. So do you guys do that we do that you do?

That is part of what we do exquisitely well is being able to take all of that information and say this is a positive test result, this is what it means for your patients. But because is historically it really has been geared towards a genetics expert, part of my challenge to the team is to say make it understandable for the seventy five year pediatrician, because then it becomes much less of a barrier for them to utilize it.

So how what does the test cost? So we are in a very fortunate position after a lot of work and publishing a lot of data. Seventy percent of commercial payers pay for our services. We're continuing to get more and more coverage and in fact, United Insigna just issued coverage earlier this year saying you utilize this testing. So what so usually four out of five patients have zero out of pocket, which is great. Our goal is to make sure that, from an equitability standpoint, everyone has access.

We work with state medicaids and in fact there's six states right now that cover XOME and genome for baby as well as parents. So we're starting to see even more and more coverage across the board. But if not, what would it cost? You all? Think about thirty seconds leapt If not, then it's about thirty five hundred dollars. I feel like I have a million more questions. You

wrap it up real quick. Well, I was to say that, you know, is it a matter of a doctor suspecting a patient has something in sending them to you, or would it be more prophylactic. Say, ideally you'd want to do it to everyone. I imagine ideally you want to do it to everyone. But if there is a potential that there is an underlying genetic condition, we want the clinician to order from us. We'll get them an answer and hopefully get that and that's when it's covered by insurance.

I guess yeah. But the more data that comes in, the more tests that are done, it gets even better and better it does. And the more testing we do, the more we learn that more people actually are impacted by this. Hopefully you come back in a few months and talk more about the progress you guys are doing. Katherine Stoulan, chief executive officer of gendx US. Here in our interactive Brokers studio. You're listening to Bloomberg Radio. You're

listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern Listen on Bloomberg dot com, the Ion Radio app, and the Bloomberg Business App, or watch us live on YouTube. Jess, here's some startling statistics about one profession. For those in it, some forty six percent would not recommend it as a career. Only thirty three percent feel fairly compensated. Ninety three percent think the shortage in their field will only get worse. So

those are pretty rough numbers. They are. And when I know what profession you're about to talk about, and this is something that was pivotal, especial, it always is pivotal, but especially in the week of the pandemic. Absolutely, we're talking about nursing, which, as you said, we were reminded was so crucial to get us through the COVID pandemic. So let's get more on the state of nursing. Great to have back with us, doctor Aman Abuzaid. She's CEO

and co founder at Incredible Health. Her company connects hospitals with nurses and other healthcare workers. She joins us via zoom from Austin, Texas, Doctor Abuse, Nice to be checking in with you again. How are you. I'm good, Thank you so much for having me. Hey, so listen. I shared with our audience and viewers some of the statistics tell us about your State of the Nursing report, which I believe was just released today. Yeah, I was released

to date. It's our fourth annual report and we use hiring data from over seven hundred thousand nurses in our network on the Incredible Health platform, and then we surveyed an additional three thousand two So as far as just the main findings, I'd love to start off with some good news. Actually, there's been some improvements since last year. So eighty percent of nurses plan to stay in their field until retirement, which is a big increase. It was

only at fifty five percent last year. And then there's also been a ten percent degrease in the number of nurses who are planning to leave their current roles this year. So that's that means that turnover will hopefully be improving in the next twelve months too. Can we can we

ask you why that good news? Why do you think those numbers have improved, because I know they were pretty dismal when we were talking to you before they were I think I think the main reason is that the pandemic and the intensity of it has subsided a bit. And then we're also through the triedemic. You know, there was this r RSB flu time period too, so you know they're looking their nurses are a little more optimistic about the long term in the future, their future careers.

There was a nurse in my neighborhood, A neighbor who she was like, I'm done, I'm done, wouldn't go like just because it was just too much UM coming at her. So I can totally relate UM walk us through some of the numbers though that weren't so great. Yeah, I know. So now having said that, even with that some of that good news, that's a little bit more longer term

looking that they want to stay in their careers. In the long term, there there's still a lot of frustration about what's going on currently with understaffing, would burnout and with pay. So, you know, more than sixty two percent of the nurse say they're not hopeful for the next generation of nurses, and forty six percent would actually not

recommend a career in nursing. When asked about, you know, staffing shortages, ninety three percent of the respondent said that they expect they are experiencing the nursing shortage getting even worse and so and they have all a set over seventy percent have pointed to inadequate staffing being one of their top concerns. What I'm wondering about, Oh, I was curious about as far as what could be done to

help healthcare workers feel more supported. Yeah, there's there's quite a bit that all of us can that all of us can do for for for the hospital executives in particular, they can definitely invest more in career advancement, that more training opportunities for nurses so they're encouraged to stay in

their health system. There's also quite a bit more work that needs to happen with providing more flexible scheduling, so allowing nurses to pick pick not just full time roles but also part time roles, and not only twelve hour shifts but also four hour and eight hour shifts and weekend shift options, just so they can fit work into their into their into their lives a little easier. And then you know there of course, like the other big trend that we're seeing is with wages. You know, wages

has increased overall. We're seeing a fourteen percent increase in sign on bonuses, in the use of sign on bonuses overall, and the actual amount of sign on bonuses has also was that ever a thing years ago. I had a sister who was a nurse. I don't remember her. I we're talking about a sign on bonus. It wasn't a thing at all. We've also seen the actual hourly rate increase.

I think the reason it's become a thing is because you know, there's a huge supply shortage here, right, There's a huge demands supply demand and balance, and as a result, because we don't have enough workers, wages will go up.

So as far as kind of piecing all of this together, are there are more nurses that are planning now to actually stay in this rule a year from now versus obviously before because you were explaining all those statistics now, So if they are planning to stay, does that potentially bode well, Yeah, it bodes well, but they're more likely

to stay now. Keep in mind the turnover still high, right, The turnover annually is at twenty two percent, but thankfully a much smaller percentage of nurses are looking to leave the field altogether. You know, one of the things that I remember, Doctor Obvious from I think we talked last time, what's the average I hate that word, what's the average nurse make? But what's the average salary in nursing? It's about ninety three thousand naturally okay, natural average obviously varies

dramatically by state. Yeah, no, right, lots of variations. And I know we've talked about as you said, there's not necessarily a lot of people coming into this profession. Once again, is it, you know, opening up immigration and I know we've talked about this in the past. Is that the fix? What's the fix in terms of encouraging people to enter And I often find that's a lot of people from other countries that are, yeah, those nursing So there's two

keyball necks that are happening in the US. Number one is at nursing school. So there's there's tens of thousands of Americans on wait lists to get into nursing schools, but the nursing schools cannot handle more capacity, and so we need to expand nursing school capacity in this country and train more nurses. And then there's another ball in that happening right after nursing school. And then there's not enough programs at hospitals and other other employers that train

nurses to become more specialized. So both of those are the two huge ball in next that we have just got about thirty seconds. We've talked with you about this before. Any progress that we're making on this are you seeing it not honestly, not yet not it's not showing up in the data yet. But I know, I know that many nursing leaders and HR leaders and nursing education leaders

are actively working on it. They have to be stressed out because if you think about an aging population, we're all going to just need more of certainly healthcare services overall, but definitely nursing in particular. Um M, I'm good to check in with you again. Doctor Monabu's age. She's co founder and chief executive officer at Incredible Health. Joining us via zoom from Austin, Texas. Yeah, I mean, I think

about it right. We just know that an aging population is just going to need a lot of healthcare going fore, and you do wonder whether the doctors will be there, the nurses will be there, absolutely, But then hearing about the wage gains signing bonuses, will that be enough to continue to get workers in that field as long as the pool of workers are right there? All right, you're listening and watching Bloomberg Business Week. This is Bloomberg Radio.

You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern on Bloomberg Radio, the Bloomberg Business app, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa Play Bloomberg eleven thirty. Welcome to the weekend edition of Bloomberg Business Week. I'm just written in

for Harold Masser. Plenty ahead in our second hour of the weekend edition of Bloomberg Business Week, including Ali Baba's announcement to split into six distinct units, plus Pinky Cole, founder and owner of Slutty Vegan Restaurants, on growth and makin Vegan food accessible to all. First up, this week's cover story, Dungeons and Dragons has never been more popular, thanks in part to Stranger Things D and D themed

podcast and influencers on YouTube and TikTok. But after fifty years of business missteps, the giant toymaker Hasbro, which owns the game through its Wizards of the Coast division, is looking to finally turn the fantasy franchise into its next billion dollar brand. For more, Bloomberg's Paul Sweeney and Mike Reagan spoke with Bloomberg News Entertainment editor Felix Gillette and the editor of the magazine Joel Weber. I have to

admit it, Michael Reagan. I am not. I never was, have not been, nor am I expected to be a player a fan of the Dungeons and Dragons thing, but I know it is a huge thing. You're not a dungeon master, Paul. I'm not a dungeon master. But it is important, and I'm gonna tell you how important is it it gets the domestic cover business Bloomberg business Week magazine. That's some pretty good stuff. Dungeons and Dragons epic quest to Finally make money is the title of the story.

Joel Webert joins us here. He's the editor of Bloomberg business Week. He joins us here in a Bloomberg Interactive Broker studio along with Philix Gillette, Media Entertainment and Telecom editor for Bloomberg BusinessWeek. It's also the author of a book, It's Not TV to Spectacular Rise Revolution in Future of HBO. That's right down my alley. He's also here in a Bloomberg Interactive Broker studio. Joel, Dungeons and Dragons kind of guy boy. You put me on the spot. I'm gonna

say I've never rolled the dice. Oh okay, but I am looking for a Dungeon Master, which I promised to myself I wouldn't say, and then I said it. And I am looking for games. I know that there are some hardcore D and D people at Bloomberg and in the newsroom. I consulted with them at length about this story.

And and Felix happens to maybe be able to bridge the normal world and the D and D world and tell us why this game, which has been around for fifty years, is beloved by legions of fans, has become popular yet again because of you know, cameos in places like Netflix, is about to be in a movie that drops, you know, Hollywood blockbuster, and yet the franchise is the word used in the story, undermonetized. Yes, why what happened? Why is Dungeons and Dragons not Lord of the Rings?

It's cursed now, I mean in some ways it is. You look back at the history. It's been going for fifty years now, incredibly popular, very active fan base, and yet always hard to make money from Dungeons and Dragons. And Hasbro, which is coming off a rough holiday season, toy sales are down. They've pointed to Dungeons and Dragons as potentially having a very big year. So this movie, this Hollywood movie that drops tomorrow with Paramount, is the start of a big D and D blitz. Wait they're

doing a movie. Yes, yes, Chris Pine, Michelle Rodriguez, one hundred and fifty million dollar budget and yeah, it's coming down. People are pretty excited about. They really need it to be franchise material. Yeah, so first of many here. Yes, they tried this back in two thousand, they had a Dungeons and Dragons movie. That was what happened then, just terrible, like one of the worst sci fi fantasy movies ever made.

It generated less than thirty five million dollars in the global box office, yet still spawned two follow up D and D movies, both of which went direct to cable TV on sci fi. But it was kind of a disaster for Hasbro. They had just acquired Wizards of the Coast, which also owns Magic the Gathering. Magic the Gathering has turned into this incredibly good business. One of my favorite takeaways here is maybe we should be doing a Magic the Gathering cover story. That's so easy because it's a

collectible card game Dungeons and Dragons. The problem with Dungeons Dragons is it's a game played in people's imaginations with dice. Those are like the two cool thing and rules kind of hard to make money there, Yes, I love that, straight to the Sci Fi Network. That's the Homer Shark Nado. I'm not mistaken and you know cool favorite right there. I put those D D movies the shame. Let's not put those in the same category. But Felix, I wonder if there's a sort of a bigger picture issue here

in that. You know, I'm a I'm a father, Joel's a father. I don't know if you have kids, but Paul's a father. Kids just don't play with toys anymore. It's everything's on the phone, or if it's not on the phone, it's a computer. D and D just not make that leap, you know, was Hasbroo kind of a sleep at the wheel there and didn't sort of push it into the digital world. I mean, is it a game that that can may I tried and they started

two thousand and seven. They had this big presentation that they were going to make this D and D digital gaming table. It never came out. It was a big flop, And now they're trying again. But I think it's an interesting challenge because I think part of D and D's appeal is that it is an analog game. It's something that you can play around a table with a bunch

of friends. I think parents have now embraced it because they want to get their kids off the screens and they're like, hey, this is amazing, actually something you'll do that's not a video game. And yet again hard to make money selling people dice and rule set. So yeah, Hasbro wants to make it more digital. This next edition, which is called One D and D is going to premiere next year. It's got all these new digital tricks

that are going to be attached to the game. That Hasbro's promising and they think it'll be great because they think, oh, once we get players in a virtual tabletop environment, will start you know, it's the same model as all these other video games, all these micro trans transactions. So you start with the big Blockbuster movie and you start rolling things out. It sounds great, sounds like it could work. But they had a big folly. Yes, they headed into this.

What happened earlier in the year that enraged and I'm talking enraged the D and D. Yeah, that's an easily triggered group. I would imagine, Yeah it is. And you know it's the exact opposite playbook. I mean usually when you get one of these big blockbuster movies coming down based on an adaptation, you want to get the geeks like really fired up in a good way. And they got them very fired up in the bad. Let's let's

do the exact. The long story short is, they changed the licensing rules around how you could incorporate D and D playing conventions and ideas into other RPG's, other role playing games, and other supplementary materials for the D and D community. For the past twenty three years, it's been this open source model, and Hasbro decided, you know what,

like maybe we should gain more control over this. If we're going to start building out this big Hollywood franchise and making streaming programs, video games and all this stuff, like, we need more control over it. But they handled it in a very you know, not a very smooth manner, and uh, you know, pissed everybody off in the role playing role playing community and uh, you know, angered everybody. They basically had to apologize, they had to retreat this.

Oh you know what, we're not going to change those rules. But hey, here's our blockbuster movie too. Yeah, why don't you come out and see the movie? Uh, you know, so it's and they it's a big question mark going forward as Dungeons and Dragons gets more digital and there's more digital properties around it. Everyone, I think was hoping that Hasbro would maintain this less a fair environments and if they are not doing that, then a lot of

people are going to be cut out. And well it's an interesting I mean, these guys that has we are just following a playbook that you know, Lego did very well a movie, and nobody's done it better than Bob Iger when he with all the Marvel characters and you know Warner Brothers with a DC comics. I mean, those in Holly would call that intellectual property IP, which is the term creators hate. But it's true. If you've got intellectual property, there are so many ways to monetize it.

And I guess what that's what these guys are hoping to do with this Dungeons and Dragons. They are the challenge again with Dungeons and Dragons is at the start of every D and D campaign. Every time people get together and play. You play with your own character. You make a character and then you play with it, and then you have like, you know, a unique setting for each one of those groups. And you know, all those great IP adaptations are based on universally loved characters and settings.

And without that, it's like what do you have? You have dice and you have kind of a vibe. You know, that's like what we when talked enough to Pawtucket, Rhode Island, talk to Chris Cox's the CEO of Hasbro and he himself is is a dungeon master. Dungeon loves Dungeon. He's been playing since he was a kid. He's so into it and he pass a test. Is there like a

certification process like a serious and there are books? Yes, but it is kind of the ven diagram of like corporate CEO and dungeon master, like you kind of have to be a very like managerial person. Well, I'm looking at your story here and the photograph they were south by Southwest? Is that where like the cool kids are I mean yes, Paul Nerds run the world totally. So they had they had the premier there and weet any feedback, Paul, you're suggesting that D and D players aren't the cool

I'm not sure. Maybe I'm making a pause resumption there. The initial reviews of the movie were good. Of coming out of the south By Southwest, people liked it a lot um. I went and saw a preview. I did not love it that much. Um as a more casual player, and I think, uh, you know, it's got Chris Pine is amazing. It's fun seeing those classic D and D monsters, the intellectual devour, which is like a brain on legs that goes around, steals your brain. That stuff is really

fun to see on the big screen. Again, I thought it kind of suffered from the characters, the script. I didn't think it was great. But you know, but fans, fans are who this is fully exactly not the target demographic base. I think it's pretty big. It's how big how big Felix? You know? I asked them that. I

was like, how many people play? And they're like, well, it's a bunch of rules and people with dice entirely certain millions, they say, fifty million people have interacted with the brand, but you know, at what level That's a little hard to say. But it's not a huge business. I mean it's a one hundred and fifty million dollars a year business for Hasbro somewhere in that ballpark to give you, I mean magic. The Gathering does over a billion dollars of animal sales at this point. So, um,

you know, there's there's room for growth for sure. One thing that surprised me reading the stories. You know, I'm gonna date myself a little bit here, but I grew up in the seventies, I guess, in the golden era of D and D and you know, everyone in the elementary school was playing it. But it kind of felt like to me like that game had been there forever. I'm surprised to read it was it was invented in

nineteen seventy four, so it's only fifty years old. Pyramidwestern guys, Gary Geigax, I don't know what I'm saying his name wrong. And David Arnison, any idea whatever happened to them or they still getting royalties on this thing, or you know, you think they'd have like islands somewhere and like the Caribbean, but they don't. They you know, they had immediately a big falling out the two founders. They were battling each

other in court forever. The business the Gary Geygax started TSRU, you know, just got crushed under debt and all these expansions that didn't pay out. They ended up selling it in nineteen ninety seven for twenty five million dollars to Wizards of the Coast. So yeah, it's it's been a struggle for everybody who has ever tried to make money

out of this. And here's Hasbro right, and and you know Hasbro and toy companies in the middle of all this, and you're right, like maybe the toy business isn't what it once was, but they see Hollywood and they see that ip potential and like, if you can roll this into a franchise that's sustainable, like you you could be

able to organically do it. And and then you know thing Worth mentioned that Felix and Tom Buckley write about in the story a little bit is you know that last time they tried to drop this movie in in the early two thousands, right, it was right when Lord of the Rings in Harry Potter. And it shows you if you do this right, how big of a business

it can become. What I'm thinking, with Thrones being so popular toa that's got to add a little Yea and dragons, right, And you know, they have in the last couple of years, like you know, especially when the pandemic hit. The fifth edition of D and D, which is the current one, is the most popular in the game's history. And I think one thing that they do have going for them is there is this whole new world of D and D influencers, and the game has translated very well into

the live streaming world. It plays very well on YouTube, twitch, TikTok podcasts because people it's performative. Naturally, you get a bunch of people that are charismatic playing a little D and D together and they're funny, and it plays out live and it's great. The spontan ad works really well with those mediums. I think that actually works better in the live streaming world than it does in the scripted world.

And the other thing here, though, is you actually, Mike Reagan might be the target audience for this, right, like you know your kids, kids you brought up your kids, you know, for for brands like Hasbro, kids are no longer the demo that they're really going for it. And Business WEEKI has written about this before, like that adults are actually the ones who still buy toys and still buy games. Yeah, so adults have become a huge driver business.

So you know, Mike Reagan, what's it gonna take for you to get into Dungeons and Dragons this weekend after you watch the movie? Someone? Uh? Will there be women there? No, just your buddies from the Seven Guys from Yeah, now, I got a lot of guys buddies that still play it. I Uh. So this is gonna the premiere tomorrow, Yes, okay, so we'll pay attention. Yeah, well times, well, yeah, perfectly excellent.

So I'm just looking at the stock here. I mean, it's a seven point two billion dollars stock has Bro. It's down thirty five percent and trailing twelve months. Not great. Mattel down twenty three percent to trailing. Roll the dice on this, all right, I'm just looking at the stock. You know, you have an old stock jockey, but it'll be interesting to see. So it's important for the company. It's important for the stock. I'm guessing U, Felix, great stuff.

Really appreciate taking the time to come in here. Felix Gillette, Media Entertainment and Telecom editor for Bloomberg BusinessWeek, is also the author It's Not TV, The Spectacular, Rise, Revolution and

Future of HBO. He joins us here in a Bloomberg Interactive Broker Studio and Joelobergh, of course, editor of Bloomberg Business Week Bloomberg he joins us also on the Bloomberg Interactive Broker Studio, and of course Phillis story Guess What Isn't Domestic cover of the issue of BusinessWeek magazine, available now on newsstands, on the Bloomberg and at Bloomberg dot Com. Slash BusinessWeek Dungeons and Dragons the movie Who Would Have Guessed It? Matt Miller plays that I know it. I'm

sure he does this this Bloomberg. You're listening to the Bloomberg Business Week Podcast. Catch us live weekday afternoons from three to six Eastern Listen on Bloomberg dot Com, the iHeartRadio app, and the Bloomberg Business App, or watch us live on YouTube. Hello, Hello, We're gonna talk at about

Teddy Bears. Listen back for a moment. I'm it all our focus on banking, and rightfully so, but let's get a feel of how this change and sentiment over the past couple of weeks or at least this new narrative, if you will, might be impacting consumers and retail with us right now is Sharon Price John. She's president and CEO of the publicly held small cap Build a Bear Workshop back with us via zoom in New York City. Sharon,

nice to have you here with justin myself. Last and we talked, it was more than a year ago, December twenty twenty one. What's changed for you in your business and what's on your purview if you will, in the last twelve to fifteen months. What's changed? Yeah, well, we've

continued to post record results. I mean, we just announced our year in on March ninth, and we're happy to be able to share double digit improvement in both the top line and the pretext profit line, with our top line up about fourteen percent and our bottom line up about twenty two percent. And that it's we had seen at that point continued momentum in the business at first quarter a year to date and but so that's not

what's changed. That's what's remained the same, and that last year, twenty twenty one was a record profitability year for us, and we eclipse that in twenty twenty two with another record profitability year. What's changed is that we've evolved so much as a company and that we have a much

broader addressable market. We appealed to consumers for different reasons for shopping, not just which would be a typical type of event for us, which would be a birthday for a child, but now from the adult consumer what's called adulting. A big trend with gifting and adult to adult gifts. A lot going on with build a Bear, a lot of collectibles. We have a lot of fun licenses, like most recently announced ted Lasso Bear, but things like a Deadpool Bear or Matrix Bears Friends Bear. How well did

those kind of bears do really fun? Like? How well? I mean is it? Are they profit drivers? Or give me an idea? Well, I'm as a publicly traded company, clearly, you know one of our objectives is that we choose to do things that hopefully are profit drivers. But the kid that the business now has, as I noted, when I speak about it having a broader addressable market, I

don't mean that that's not meaningful for us. About forty percent of our sales are now to teens and adults, and yes, those licenses often have clearly they're going to have a royalty associated with them, if that's the impetus for the question, but they also generate generally a little a little higher price point as well, because that consumer has more latitude and the way they think about it.

At the same time, we balanced the portfolio with a very accessible prices, with very accessible prices for kids, particularly with our Birthday Treat Bear where you can come in at the month of your birthday and pay your age to get the Birthday Treat Bear. So if you're turning two years old, you can get an entire bill of Bear Special one one Mooney stopping experience for two bucks.

That's pretty cool. Your products have definitely evolved with the tastes of children today, So when you think of Super Mario Brothers or Paw Patrol, Harry Potter and I know a lot of the accessories can definitely add up quick. So with the straws earning out look ahead, what do you think this really tells us about the direction of the economy If consumers are still willing to spend on discretionary items at specialty retailers like yours, Well, first of all,

we don't think of ourselves. Is just a specialty retailer. We think of ourselves as an experiential brand, an opportunity for families to come together to share memories. We're multigenerational, like twenty five years old. And yes we do evolve our licenses with the times, as you mentioned, but things that are evergreen, like a Harry Potter that appeals to a broad broad range consumers. To your question, though, our accessories business is, you know, to be able to address

your bear and make it very much your own. That's just a part of our creative process. That's how kids and adults feel empowered by making it incredibly unique. And you can even put the sound in the bear, so

it's a one of a kind in many cases. And that's you know, and where when you think about that as the experience and the takeaway and the importance that Teddy Bears play in the lives of children, particularly its comfort animals, a lot of psychological background on the need for that type of special, kind of special relationship with a stuffed animal. I don't know if you can consider us completely discretionary. I gotta say for my daughter it

was a discretionary which was a little kid. Hey I say that, I say that from a vantage point of a mom of three, so you know, some of it could be tongue in cheek, you know, as a CEO, but there's some reality to that. I remember, go on a trip we forgot we forgot our stuffy and man we had to get a new one in front of replacement one really quickly. Hey, UM, one thing I want to ask you, Sharon is UM and I want to step back just to some of the bigger, broader macro

that's going on. UM. As a CEO of a company, you have to think about recession, consumer retail in general, but the recent market volatility and concerns about our banking system. UM, how has that impacted you at all? Yeah, of course that's very concerning. I mean, we want to see a strong economy, We want to see people in you know, good financial situations. I can also say, though, on looking back on the last few years, there's certainly been a

lot of volatility. UM. I think some of the most multiple as economic times you know, in our modern history, clearly inclusive of the COVID outbreak and even prior to that in retail, UM, the retail apocalypse, so constant feels like a lot of constant changes and uncertainty, and I think that, um, you know, families and businesses have to be here for that. You know, we're in a strong

financial situation. We have very prudent financial control. We finished this year with forty million dollars in cash and return seventy million over the last two years to our shareholders, announced a special dividend, and have no borrowings on our credit facility. So with all of that in mind, and that we did mention that we expect are in the guidance that we provided from a range perspective, another five to seven percent on the top line, another ten to

fifteen percent profit expansion through twenty twenty three. But the reason that we feel and shared that and feel like that there's some confidence. Clearly that's excluding anything entirely appeaving. But we've been able to manage as a team and as a company, that brand relationship that we have with guests, and be able to pull the proper levers when needed to manage through some of these uncertainty economic times. Clearly you've probably heard as well, I've we already been in

a recession. Are we under said a recession? Now? Are we going into a recession, right, it's you know, I don't know that we You know, there's a lot of different I would say earmarks that are pointing in different directions, and I think that the key is to be diversified and flexible, and that's what we've been attempting to do by pivoting the company to have revenue streams and traditional retail as well as eCOM entertainment, looking for different ways

to meet the needs of guests for different reasons. Hey, hang on ver second, just quickly, did you shift around your banking at all because of the nervousness within the banking system. We have a very strong relationship with our banking partners. Okay, that's what I wanted to know. You talk about expanding your revenue stream and these strategies. You've

got the metaverse that you guys are certainly embracing. You're also thinking about content and linking up three Witherspoon and her media company just got about forty five fifty seconds. Just talk to us a little bit about these strategies if you could. Yeah, in a brand that has sold two hundred and twenty five million furry friends over the last twenty five years, and when you understand that each one of those furry friends represents a story. We're really

a storytelling company. So when you think about the extension and expansion of our brand and our business into the entertainment arm and the content driven arm, it's not really that much of a stretch from that perspective. So yes, Hello, Sunshine's three Witherspoon's Company. We did announce a feature film deal. We also have Mary Mission our Christmas holiday and holiday. This is a particular property that we launched years ago

starring Glisten. We'll be out this holiday as well in an animated feature, and we're we'll be in launching the build of their feature documentary with award winning documentary and Taylor more than later this year. So we have a lot of different ways to connect again with a broad base of consumers yep, and to monetize the value and enormous saluity of the builder bay Ram. Sharon's so good to check in with you. Sharon Price, John CEO of Build a Bear Workshop, joining us right here on Bloomberg

business Week. You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern on Bloomberg Radio, the Bloomberg Business app, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa Play Bloomberg eleven thirty. We've been talking about Ali Baba, certainly a name that is front and center today. It's up about fourteen percent as we speak, jumping. I think it's the biggest intra

day climb since January. It all has to do with plans to split into six units. So we want to get to the news and the impact it's having on the overall Chinese names at trade here in the United States. With more on the news, Thatt's bring Blueberg News Equities reporter that follows the Chinese ADRs. The trade in the US is Chen's here in our Blueberg Interactor Broker studio. Ishan tell us about the news. First of all, I feel like it's interesting that Jack Mark comes back after

missing for a year. That was yesterday and then we get this news today. So walk us through the news and maybe the significance of it. Yeah, great, great, First, thanks for having me today, and you know, it's definitely

a very interesting week for Ali Baba today. The news is showing it's like a radical restructure and clan for Ali bah Bah because and now it's going to split the whole business unit Empire into six Indi video units including e commerce, cloud and also media, and it potentially pays the road for them to raise funds and eventually explore the IPOSO in the video units. So unlock's value, I bet investors seas potentially right, And I think it's more than a lock value because you know what analysts

and investors are telling me. They see it as a wing wing situation for Ali Babba and Beijing. So first of all, it's for sure like a lock value for investors. If you look at the like a mass on the you know, some of parts of each innovating units is treating like it should be way higher than currently where

it is treating now. But also thinking about from the regulatory perspectives, we all know that Beijing over the past two years have been having this sweeping crackdown on the tag industry and the main concern was that, you know, the concentrated power of Ali Baba and many tach firms, it's not helpful or healthy in terms of competition or

innovation in the industry. So now that Ali Baba. What it is doing is to break the big empire into pieces, so in a way that should potentially is the concern from Beijing from the regulators, and this is a move or should you know, get the blessing from them. And it's great to have you hear each and because obviously you're one of our star reporters on the Egrist team, but I also know this is a rare move right when you're thinking about technology companies specifically based in China.

So what do you think this means for the industry and could potentially be template for other companies to follow. Yeah, that's a great question. Actually, I have seen analysts and investors saying this is a game changer for the industry going forward, and it could serve as a blueprint for other firms such as like JD dot Com, Tensent or

bai Do to explore a similar paths. And Tenson could be a most real, the most reasonable candidate here for a breakup because it has huge influence just as bah Bah, and it has different business lines and actually I already started to divestis some of the units, but still there are romantic entities could become standard long segments would Jack Mark have done this without the Chinese government kind of

putting pressure on the internet sector. And I'm wondering if this if Ali Baba was in the United States, would US regulators you think, similarly been saying we've got to push for a breakup. I'm curious with analysts how they're weighing in on that, if they are. I mean, I haven't seen enough reporting there. But it's a very good quastion.

And I was say, since you brought up Jack Mar, I think it's interesting because this news today, also called incidized, was the news we saw yesterday that Jack Mar was spotted back in China again after a year more than

a year of like traveling or staying abroad. Right the market of course took that also as a very positive sign because Beijing right now is pushing and saying that it wanted to support private enterprise to revive as economy, but it really needs to gain the confidence from the companies and investors after you know, a series of crackdowns of different industries. So now that Jack Malla is coming back, and then was this split plant appeared to you know

pay Road for you know, the company's future. These are all like a turning the sentiment of ali blah blah, but also Chinese ados in general. Yeah, they were all up today, right, or a lot of them are. And I know you've also covered different calls, say like with Marco Kolonovic over at JP Mortgage, he was talking about buying the dip on Chinese equities in this particular back even during right in early October, during that whole reopening

type trade, and some of that had paid off. But are you seeing any other analysts kind of still calling for maybe still continuing to buy this or do you think it's run its course? Because it's interesting if you're looking at the right as far as how they've performed so far this year more probably kind of flat, not not really obviously so the big rally in the full quarter, right, because on the JPM call, we walked together on a story jazz and at that time I think the call

the man sciss is about the reopening. But remember that reopened Raley we have seen from November last year. I have fizzle outs a bit, especially after a quarter of you know, like earnings praying there's quite a bounce off of that low right, casino stocks in hotels, Yeah, also like a travel relating names, but it has already played out, so investors now at the point of they wanted to see, ah,

what is the fundamental value of these companies. They are focused on the regulatory certainty and certainty, but this news definitely help in terms of, you know, the regulatory perspect that's what I wantation because I do feel like depending on I felt like we went through a period of even we start with the pandemic, you know, shut down,

open up, like it was just kind of startling. And even with the tech sector, China has been very clear about wanting to be performing in the global economy at a higher tech level, like this is important to the global growth and the growth in China specifically, but there's a lot of oversight about privacy and data gathering, and I do wonder does a move like this come tech entrepreneurs in China and investors when it comes to investing in these names, or is it a reminder that China

and Chinese officials could at any moment be like you know what, I still don't like how big this company is or the impact it is and that they can move in I'm just wondering if things are settling down in terms of that, right, I think that's a very

good question. And back to the news here. I think one question investors are asking on today's news is where are like these potential in the video units or spending of Ali Baba into a list in Hong Kong or in China the Domesta market because ever since you know dds IPO debacle in New York, right, but Agian has been calling for the so called homecoming listening of Chinese companies.

These are reasonable speculations that even they you know, break up and eventually list some of the units, maybe they offer the shares or issue the shares closer to home. So if they do that, what the regulation, I say, what kind of message does that sense? Right? I think it's in line with where Biging is pushing for more regulations in terms of the listing share offering, and they also wanted to give access to domestic investors to all them trade all these you know national bit like bit

tech firms. So maybe no listings in the US potential yeah that yeah. No, I just think it's really interesting in terms of the sector and how it's been playing out. Ryeah, No, definitely, So really we don't have a ton of details yet right as far as the timetable, could be moving forward on this because I'm sure investors are eaching to know. Yeah, yeah, I like today's I think the first step in terms of splitting up and could potentially pave the road for

a wave of pol spud. We haven't seen any details in terms of timeline or you know what is the IPOL plans Florida individual units and still doing cost cutting to shore up the bottom line. So that's business as usual. Thank you so much. It's an important sector and I love talking about those Chinese names that trade here in the United States. Ishanshin, thank you so much. She's Bloomberg News Equities reporter. She follows the Chinese ADRs that trade

in the US. Joining us here in our Bloomberg Interactive broke or studio. You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern Listen on Bloomberg dot com, the I Heart Radio app, and the Bloomberg Business App, or watch us live on YouTube. Well, earlier this month, our next guest opened her latest outpost right here in New York City, up in Harlem, and in doing so, it was a bit of a homecoming

of sorts for her. Her Slutty Vegan Restaurants are said to be valued at one hundred million dollars as she continues to expand and include restaurant Tour, Danny Meyer's Enlightened Hospital, Pality Investments, and Essence Ventures CEO Rich Dennis's New Voice Fund among its investors. So let's head to Atlanta, where her company is based. Pinky Cole is the founder and owner of Slutty Vegan Restaurants. She joins us via Zoom. Pinky, so nice to have you here with us. I was

looking forward to this conversation. Tell us about your company. Well, good, great to have you here. Tell us about your company, the food that's on your menu, and what demand from your customers and from the growth of your business tells you about the vegan food world. I started with crazy. We get a little bit of frozen in terms of Zoom, so we're hoping we can work that out technically and

get back to her. But the vegan business, the food business, the protein plant based food business, is something we talk about a lot here and so curious to get her perspective on it, because we certainly have seen a lot of investment all to go into it, and certainly seen the public side. They are a publicly held companies. There are private brandies. They've struggled a bit though, since you

know the industry, which is about a decade old. They have definitely and especially being us being here in New York, I feel like there's so many different options on the vegan side of things. But me being from Texas, I've definitely seen it expand in that state, especially in Austin and other areas, which has been interesting to see over

the past decade. As far as these different restaurants and just looking at their menu right now, as far as the different burghers, seeing some of the names Dancehall Queen and some of these other ones, and it's really fun. And we'll ask her about it. I did a little bit of googling before we do. We have her yet, not quite yet, but did some googling into terms of her name and how it came to be. And yeah, hopefully we can get to her in just a moment

to have her explain it. In the meantime, let's just remind you how we closed on this Monday. We did see stacks bouncing around a little bit volatility. But what was really key is that it felt like some commonness came back to the financial markets, and certainly with the bank sector, which rallied. Whether it was regionals, whether it was the big banks. They finished off their highs, but nonetheless that provided support for the overall market. That two

year note yield popping above four percent. Right now, we're looking at a two year that finished or trading at about three ninety nine, so just below it, but move up from what we saw last week, right and especially coming into today, getting some promising news with First Citizens SVB, looking at what's happening as far as it purchasing all of those the loans that are there. I know a lot of people were concerned as far as trying to figure out what parts of SVB or certain banks potentially

going to try to buy. But then you came into this week and then obviously the good news with First Citizens. If you're thinking more broadly, though, the SMP five hundred energy was the biggest gainer to day, up more than two percent of Fortunately, if you're thinking more of the technology and growth side tacked down close to one percent. Communication services on that side too, down about one percent, but obviously that having to tanty yields. All right, we

do have our guests back with us. Let's get back to Pinky Call, founder and owner of Study Vegan Restaurants. Pinky. Sorry, we're living in this technology world that most of the time works but doesn't always. So tell us about your company and the demand that you're seeing from your customer and your growth what it tells you about the vegan

food world. So I started this company in twenty nineteen, and I had no idea that I was building a hundred million dollar brand and went from a ghost kitchen to a food truck to now having almost ten locations in Atlanta, Birmingham, and now New York City. And what I realized is there was a market to help people to reimagine food in a way that they haven't seen it before. So of course we've had beyond me, you know, disrupt the industry and possible food and to disrupt the industry.

But now Floody Vegan entered the conversation and started to disrupt because there were so many people that were looking for plant based alternatives and wanted it in a way where it tasted good and you didn't have to compromise the things that you like. So I am in the business of helping people to reimagine food and it's allowed

us to grow exponentially. And now here we are with one hundred million dollar brand and we have no, no, no, no time in slowing down, Like this is a growing business and I'm excited about it and you're talking about reimagining food. How exactly did the pandemic help potentially fuel growth? The pandemic literally was the best thing that could have happened to me. Unfortunately, I know that people were compromised

by everything that happened in the pandemic. Hell, almost the last couple of years people were still trying to figure out what it was. But in that time, we got super creative as a business and focus more on our marketing to drive traffic to the business. And what we realized is more than ever more people wanted to support startup companies. So we came in at a right time where larger corporations wanted to be in solidarity with us. They wanted to support us in our elevation and our growth.

So it gave us a competitive advantage to be able to be in the marketplace and do really well and now here we are. We've literally been able to open up four additional locations in a pandemic. Would the business have been the same had we not had a pandemic, I'm not sure. But what I do know is it taught me a lot. It taught us how to be chameleons in and the pandemic, and it also gave us an opportunity to really really be able to grow in a space where people were so confused about what was

happening in the restaurant our industry. So how do you think about vegan Because I'm looking at your burgers and they do have great names, and you have a lot of fun. You think about food and kind of sex and the fun like it's it's really it's kind of a fun menu to go through. But having said that, I'm seeing cheese, I think I'm seeing I'm seeing a lot of stuff. Vegan isn't always locale correct, So you know, I like to say that floody Vegan is like the

tree all. You know, when you go to the hospital and you got to check in and you go to the triage first. I like to meet people where they are. So when you look at slutty vegan. This is not the salad joint that you go to in your local community. This is not that. My audience is not just the vegan. My audience is the person who likes me, who probably would never otherwise try vegan options unless they met a

sweaty vegan like me. But this is literally a place where wherever part of the journey you want, you can literally come and learn how to eat plant based living, even if it means vegan comfort food. You know what I want to do is I want to change the narrative of what people think about veganism. When they think

about veganism, it always sounded rich and inaccessible, right. I wanted to make it accessible for all people and give it an opportunity for people who have never tried me vegan options to say, you know what, let me try to go vegan, and then I say it's slutty vegan and I like it. Now I can go to other restaurants to do the same thing. So it's literally an opportunity to meet people where they are, even if it

means vegan burgers and fries. I'm curious as far as how you were able to mitigate the challenges of inflation and supply chain issues over the past year. It's hard. I would be lying if I sat in this interview and told you that we don't have those problems. We face every problem that every single restaurant tool quite frankly,

has to deal with. That's inflation, that's labor shortages, that's our food cost going up, like everything, supply chain issues that those are the others and flows in the restaurant industry. What I will say is it gives us an opportunity to really unlock those challenges and get better. Like whoever said that the restaurant industry was easy was a lie.

It is not easy. It's very difficult, but it's so worth it because we really get to tap into our consumer in another way, the last couple of years, we have not increased our prices, and we may lose a little bit on the back end, but we are so consumer driven and it's more important for us to our consumer to have a really good experience first, and then

we could deal with everything on the back end. And that is what will make us a disruptive business and it will keep us in a conversation as sustainable for as long as everybody can remember Pinky can you access all the funding that you need and want, especially in an environment where you know we're talking a lot about banks. We talked about Silicon Valley Bank and its role for startups. Are you do you have the money you need and or can you access it if you need it? And

just got about fifty seconds left. We got a really great problem. Everybody loves Slutty Vegan. I literally say no to so many people who want to invest in slutty Va. We are oversubscribe, but we are always at the dating pool. We're just about to go into our series being Around, which is super, super exciting, and I'm just excited about what's out there, and I'm excited about the conversations that we already started to entertain. You want we will be successful?

Do you want to go public? Is that the end as a couple of months? In a couple of months? Wow? Okay, I really like that. And you're going to continue to expand, right, You're gonna open up twenty more? Is that this year? Just quickly? It is Operation World Domination? So yes, yes, and yes, okay, we'll come back in a couple of months. Tell us what's going on. We'd love to kind of

continue to follow your story. Peeky Coles, she's founder an owner of Sletty Vegan Restaurants, joining us via zoom from Atlanta. George I thought was interesting in terms of access to capital. She's on it. This is the Bloomberg Business Week Podcast, available on Apple, Spotify, and anywhere else you get your podcast. Listen live week afternoons from three to six Easttoning on Bloomberg dot com, the iHeartRadio app, tune In, and the

Bloomberg Business App. You can also watch us live every weekday on YouTube and always on the Bloomberg German