Bloomberg Businessweek Weekend - March 3rd, 2023

President Vladimir Putin he begins the war. A network used throughout Europe, including by the Ukrainian military, then faced an unprecedented cyber attack, and it's one that everyone is finally talking about. Yeah. I feel like it went from no

One to everyone, and they should be. The story is coming up in the new issue of Bloomberg Business Week on newstands tomorrow, already online at Bloomberg dot com, slash business Week, and of course on the Bloomberg Let's get to it with Bloomberg News Cyber and Emerging tech reporter Katrina Manson. She joins us via zoom in New York City. And of course you've got the editor of Bloomberg Business Week, Deil Webber, right here in our Bloomberg Interactive Poker Studio.

So tell us about this hack in my ongoing propaganda for rto messaging m. Katrina and I found ourselves in the Washington DC bureau and Katrina was like, have you heard of this company vias that? And I was like, what are you talking about? She was like a satellite company. I was like, I don't know anything you're talking about. And it turns out that there was a hack at the beginning of the Russian invasion, and no one initially

attributed that to Russia. But as the weeks passed and Western governments, you know, finally got around to pointing a finger. They pointed that figure a finger out Russia, which obviously Russia says that we're innocent. But what it really revealed was something that I thought was worthy of further exploration. And Katrina did a great job on this. And it turns out satellites are really unsecure and that is a little frightening when you think about the amount of data

that is sent there um. And so this virset hack that you read about, Katrina tell us why it ended up being a much overdue wake up call for the satellite industry. Well, I think tracking it down was so fascinating. Reports came out in drifts and drabs. There were other journalists who are very obsessed with this issue, who were of course covering it, but it was very hard to

put together the overall picture. And some cybersecurity researchers did incredible work really trying to encourage the company to talk about this in public. And when I say cybersecurity researchers, I mean hackers. They have been trying to hack Space for a decade clubs for white hat reasons. That's classically known as for good to share their information so other

people improve. But it's a really sensitive area. And so one of the main people I spoke to for the story, Ruben Santa Marta, he's been warning since twenty fourteen that Space is insecure. And he said to me that page ten and eleven of one of these very esenteric papers that he'd written actually essentially predicted exactly what happened to the Ukrainian military, which relies on commercial satellite in remote

places to get their Internet connections. That's essentially how they want to link frontline troops to commander control, to control drones, all the things that you would need to respond to a very swift or what was intended to be a very swift lightning invasion by the Russians. So the stakes were incredibly high, and it came down to a lot of researchers who've been clanging the bell for this for so many years. Another one I spoke to called James

Parvell for the story. He intercepted satellite data transmissions that's from the satellite down to in this case, ships that were relying on satellite connections, and he got hold of the crew manifests, passport details, credit card details. It is extraordinary how much out there in space there's not encrypted, and how easy it is to get hold of it. I see, And I was still hoping she was going to talk about Captain Midnight, but we'll get to that later. I have to I wonder if you can talk a

little bit about the US intelligence on this. The US looks into it gleans that the Russians were prepared to take significant diplomatic and strategic risks, which feels like something that you could have told us before the US intelligence looked into that, Katrina. But I wonder if you can talk about how much the US knows as we stand today and maybe the extent to which we don't know. Well, I can tell you what I know, which is definitely

not everything. But I think the US worked very quickly within about four weeks to work out that they thought it was the GRU that's responsible. That's Russian military intelligence. They have allegedly done lots of hacking, according to the US in the past. And what was interesting about that was that it was coordinated with the invasion. Now, once they established that, they then spent six weeks trying to

commence the Europeans that they were right. And I think it has interesting echoes for the rest of how the US approached the Ukraine invasion, which was to flag early on to the Europeans, look, this is going to happen. We have the intel, and the Europeans, namely the French

and German, said no, we don't think so. And there in the case of the satellite hack, the US actually went above and beyond and shared additional intel I'm told by a European official with the French and the Germans to try and convince them not only that this had happened, but that it was really important to blame Russia in public. And that's something the countries simply don't usually do well. As you say, at the end of the story, you have a quote from a source who says it is

super super repeatable. So that's that's distressing. I was going to say, the good news is that this will never happen again. I may well be invited back. I'm sorry to say, so. Walk us through what has to happen in order for this to not happen again. I think at the most extreme end, some groups in the US are calling to make space systems um a critical infrastructure sector.

I mean, that is terrible job, and I'm sorry to even introduce it, but it's essentially to say, give this sect way more prominent government support and essentially potentially regulation. That's something satellite companies mostly don't want, and I think the US government isn't going to do that. It would require Congress to step in. It's part of a five year review. I mean, it's just going to get sucked into all sorts of bog down into stuff. But the

easiest thing to do is to set standards. And that's actually what the source who said this is super super repeatable it's doing. He wants international countries to agree. Well, how do we run our satellite systems. What do we do with the satellite up in space? How do we

control the link, what goes into the ground network. And as you have more and more satellites going up into space, I mean the numbers are kind of these numbers look like yeah, I mean, it's from about five thousand active satellites in orbit at the moment to within the next seven years. But my end predictions are one hundred thousand. That's because satellites are getting smaller. Launch is getting easier. Everyone's into this new blow or low Earth orbit, which

is much closer, so easier to get to. The satellite that got hacked was a geostationary satellite way higher, So you're going to see way more satellites in which means that if one gets hacked, there are others you can rely on. But I think what's key is establishing standards and working out what goes into that gloom and protecting ground networks. I mean, that's actually what the entry was

in this hack. And there are really convoluted chains between the different operators of a satellite network, and it seems that the ball got dropped in that case, there was a third party operator that's whose speech. Then it went all the way to buy that. It's our new kind of warfare, right, cyber warfare, and it like you think about nuclear deterrance, Like how we create that kind of

deterrence when it comes to global satellites. Incredible story. Katrina Manson, Cyber and Emerging Tech reporter at Bloomberg News via zoom Joel Weber, editor at Bloomberg BusinessWeek. This story in the new issue at Bloomberg business Week Magazine. You're listening to the Bloomberg Business Week podcast just Live week days from two to five pm Easter on Bloomberg Radio, the Bloomberg Business a band You two. You can also listen live to our flagship New York station, Just Say Alexa play

Bloomberg eleven thirty. All right, So, getting to a clean energy world, it is already up ending the establishment. It costs a lot of money, and it requires a whole lot of new infrastructure. So Carol, this is going to bring us to our next big story in the upcoming issue of Bloomberg business Week. This story takes us to a two hundred and eleven mile road in the Alaskan wilderness. Yeah. The new issue of Bloomberg Business Week, out on newstands

later on this week. Already on the Bloomberg this story you can find it and also at Bloomberg dot com slash business Week. So let's get to it with us. Is David Wollman, Bloomberg Business Week contributor, joining us via zoom in Hawaii along with the editor of Bloomberg Business Week till web where he's here in our Bloomberg Interactive Broker studio. The story fits into another conversation we just had about energy infrastructure and all that it entails. Don't

tell us about it. What really stood out to us when David pitched us the story was that it starts to look like how the US will will try and become energy independent. There's a lot of stuff that we need to achieve that, and you know, we're gonna need to continue to import stuff for the foreseeable future. But a little place called Alaska happens to have a lot of resources. But in order to get there, we might need to build a road, um like two hundred and

eleven miles into the wilderness. And it really speaks to what a complicated idea energy and dependence actually is. It sounds great and then it's like, oh, right, how do you get that stuff out of the ground and into you know, electric batteries for cars? And David, what does that look like in Alaska? And how have we come to a moment where we might be willing to, uh, you know, compromise some wilderness to get some new cars. Yeah.

I first learned of this story because a guy in this tiny truck stop of called Coldfoot Camp up there about sixty miles north of the Arctic Circle. He sent me a direct message on Twitter and he said, you know, there are these helicopters flying in and out of this place all the time right now, doing all this prep work for this very controversial road that would cross some two hundred and eleven miles through the wilderness to access

this long sought after mining district called the Ambler. And he just was trying to sound the alarm about it, saying, you know, nobody really knows this is happening. There are a lot of these controversial infrastructure projects related to mining in Alaska. This one just you know, doesn't have any

Trump family members who are making news about it. And so he felt like I gotta tell someone, and so I flew up there just before the snow in the fall to see this with my own eyes, and you know, like a lot of these big infrastructure debates, you know, it's just as thorny as you could possibly imagine. We absolutely need these minerals out of the ground for green tech future, and it would be absolutely destructive to an

invaluable piece of wilderness. And so you know, then the question becomes where do we land on this particular one versus that particular one or Bristol Bay, because we do need to develop more domestic sources for the supply chain. But you know, mining doesn't exactly have the most impressive track record when it comes to careful extraction of these materials, and so that that was sort of them again, the really thorny issue I wanted to go see firsthand. So

what's the status of the Ambler Access project currently? Yeah, it was really like a kind of pipe dream for a long time. You know, geologists have known about this impressive mineral resource out there for generations now, but it's just way way too remote for anyone to take seriously

when it came to the economics of extracting it. Then, about ten or fifteen years ago, this idea of building a road connecting the famous Dalton Highway to the to Ambler, it began to get a little more grown up attention, I would say, And now that there's momentum from Biden's Infrastructure Bill, the Inflation Reduction Act, and of course Alaska's kind of pro mining senators, the road has really gotten

gotten more of a push. And so now there are some mining firms that have claims both in the mind the Ambler Mining District and then all along the proposed route as well, that are just trying to keep inching this thing forward, inching it forward, trying to please all the various stakeholders, you know, critical among them, I should add, are the Alaska Native corporations, which are you know, very powerful up there and also own some of the land

that the road would would travel through. So right now they're doing kind of preliminary groundwork with like studying animal habitat, building helicopter landing zones, and trying to get this environmental impact statement finally permitted so that they can they can press forward with the thing. David, can you talk about how the American consumer plays into this. I know in your story you talk about how increased demand for evs

might actually be a helpful solution here. Yeah, I'm glad you asked that, because this stuff gets so dizzying with the like should we build it? Should we not? Should we drill it? Should we not? And I paused at some point and just thought about my own life frankly, and my children saying, hey, you know, can we get an electric vehicle already? Like we should? We should be doing this thing. They're worried about climate change like everyone else. And you know, we noticed this is more me and

my wife than me and my kids. But the tax incentives now, thanks to recent legislation, so that the everyday consumer is gonna get a nice rebate if they buy an EV But there are various those evs have to be produced or I think the specifics are some percentage of the materials, and the manufacturing has to happen within the United States in order from the consumer to get

that rebate. And so now suddenly, like beyond Alaska Native corporations, beyond the mining companies, even beyond the legislators, the really the big push to access these materials might just come from everyday people like me who want to replace you know, the families mini suv with an EV and I think, you know, that's one of those sort of demand wins

kind of kind of conversations. David just got about thirty seconds left here, So it sounds, you know, we understand the demand and the need for this, at the same time it sounds like it could be a mess and impact the climate negatively as a result of building this road. So thirty seconds, that's a big deal, and that's a

big part of this story. It is, you know. And then the pace i'd ad is the time horizon puzzle, because even if they greenlit this thing tomorrow, no OAR is going to be coming out of the ground any sooner than a decade from now. So the question is, like, will our critical minerals ten to fifteen, twenty years from now be the same critical minerals we're talking about today. It's an incredible attention to people end on right like the future, like this seems like the future, but like

the future changes. That's right. Ten years is a long time, certainly when you're talking about this incredible story. Deep Dive highly recommend people check it out online or on the Bloomberg or pick up the magazine later on this week. David woman. Thank you so much. Rider joining us via zoom from Hawaiian. Of course, our thanks to the editor of Bloomberg Business Week, Joel Webber. As we said, that new issue out later on this week. This is Bloomberg Radio.

You're listening to the Bloomberg Business Week podcast. Catch us live week days from two to five pm Eastern on Bloomberg Radio, the Bloomberg Business app band you two. You can also listen live to our flagship New York station Just Say Alexa play Bloomberg e Love and Dirty. So

much has come out of US lawmakers. You've got the infrastr Structure Investment in Jobs Act that's more than half a trillion dollars in spending, the Chips in Science Act that's almost three hundred billion, The Inflation Reduction Act that again is another half trillion for healthcare, climate energy. We know, Maddie, the US government has put forth some major, major spending initiatives. So with that in mind, we wanted to talk to our next guest about what he is seeing, specifically delighted

to have with us. Bob Pragata. He is CEO at the nearly fifteen and a half billion dollar market cap company Jacob solutions. They do engineering, construction services, specialty consulting, and clients really across industries and across the world. They're based in Dallas, but he is here in our Bloomberg Interactive Broker's studio. Bob, good to have you here with Maddie and myself. First up, Always good to talk with someone like yourself because you see so much. How would

you describe the economic and business environment right now? I would say that it's what we're seeing. You talked about the legislative kind of undercurrent right now really to stimulate the economy. We're seeing it robust. It's a generational kind of opportunity for companies like ours to take advantage of long history and success within the infrastructure world, the advanced facilities specifically semiconductor and life sciences, as well as all

that's going in the whole energy transition environment today. So this is in my career, Caroline, I've never seen anything of this magnitude. Really, how do you decide what to do in that situation when you do have that much opportunity? What's your thinking behind like capital allocation and things like that, First and foremost a balanced capital allocation program, But really

this is an opportunity for us to grow organically. You know, we made some big transformational moves within our portfolio and the end markets that we serve, the services that we're going to concentrate in on some digital platforms that we've invested in, and so we're feeling really strong strongly that this is the time for us to take advantage of some of these tailwinds that were that we're seeing, and

so it's exciting times. It does sound exciting, So talk to us about tailwinds because one of the things I love to do, and this is why I also love to play. I know we focus on public markets, but I love private markets. Get an idea of the trends that are really taking hold as a result of whether

it's the government money or private money. What trends are you guys working with or working on or involved in that you say, Okay, this is the future or these are the things we're going to all be talking about a lot in the future. First and foremost, climate change

and what we describe as climate response. Obviously in a lot of press on this, it is the global disruptor of all global disruptors and the way that that then transcends down into the transportation world, the water world, everything about the environment, energy transition, and just how it affects all of our lives globally. Is the number one second that we've really been focused in on is digital enablement. So we don't want to turn into a technology company

or a tech company. We're going to stay core to our intellectual horsepower and our science based consulting. But digital enablement is now turning our whole world upside down, is really enhancing the solutions that we can provide today. Favor before you go further digitally, what does that mean though specifically? Because I feel like we've been living in a digital world for some time and I know it can explode in a lot more ways. So what does it mean specifically?

If you could, why don't it be specific? And then I'll give an example. Yeah, so right now in the broadest sense, is the use of software platforms combined with our intellectual horsepower in our services in order to facilitate

and enable a more productive or efficient solution. Before all of that would be done, Yeah, with just us and what we knew about the domain knowledge we had around different facilities or infrastructure, etc. Today, with software we can expedite that that no how and use those algorithms even enhance the solution. And here's an example. We've been in the operations in maintenance world for water facilities, water treatment, wastewater treatment forever. These facilities generate a ton of data.

Conventional means would we'd take that data and then in the field we would make decisions on treatment methodologies, what to do with some of the energy byproducts, etc. We're in partnership today with a company called Palenteer, and with Palentier as well as our own unique and proprietary algorithms that we've developed, we're enhancing worker productivity by fifty percent on having the data right in front of you that's already analyzed and ready to go, and our people in

the field are able to capitalize on that. So's it expedites things, makes it smarter, quicker, all that good stuff and smarter on the smarter front, less efficiencies or defects. Okay, is there anything within all of the government spending that we mentioned at the top that's helping you achieve some of the goals that you've talked about specifically? And what would you say is maybe the single biggest thing that

something like the IRA has enabled you to do. Specifically, on the IRA, I would say what it still probably three to four months out from being out. Public's what the effect that it's having in our environmental as well as potentially in the energy transition components. So those programs, whether it be grid modernization or everything that's doing to electrify the world, even to include the electric vehicle ecosystem, that's having a big effect on our business, even prior

to the real funds fluent. The other one's a Chips ACT. Yeah, yeah, which is which is a big one, and the Chips ACT is in real time. But what companies, specifically large US companies have done is they've already announced and have started the design of these facilities. We've been involved with that from from the beginning. So the Chips ACT is going to do nothing but continue to facilitate that growth. So you're talking about the actual factories, the buildings and

all that and manufacture the chips. Okay, how far along are we on the impact of both of those? I know you mentioned I already taking a couple more months. Like if we're in a football game, what quarter are we in here? Early first quarter? Okay, early first quarter, i'd say on i JA the Infrastructure Act. Yeah, we're probably we're in the first quarter break. We're talking about

the CEO of Jacob Solutions, Bob Purgatta. One thing I think is interesting and I feel like these are things, you know, Mandy, that we've talked about a lot, climate change, renewables, bringing when it comes to chips, like more manufacturing back in the US. So what you're seeing is that, Okay, we've been talking about it for a long time, this stuff is really happening, and you're seeing tons of money

going into it. That's exactly right and in the early stages and probably goes without saying, you know, we have been waiting for this. We got announced a couple of years ago. But how we measure it through our pipeline into actual opportunities and then flowing through our p and L. We're in the midst of that right now. What does it mean you think for like the US going forward specifically?

I mean you work globally, so when you look at we've always talked about globalization and global supply chains, and it does feel like there's pushedback, Bob against that. So are you seeing that we are seeing it in a couple of different forms. But here's where Jacobs is a bit different. So you also hear about We talked a

lot about the tailwinds. I think it would be fair to talk about some of the headwinds, things like inflation, the war on talent, these types of issues, labor shortages, etc. We've been able to really power through all of that because of our model, which is around optimizing our global talent and utilize them for local solutions. And that really has been in twine intertwined in our culture, our culture of inclusion and diversity and being a global company that

provides local solutions. We've been able to really put that into great effect over the course in the last few years as we've seen these headwinds as well as tailwinds

buoy our business. So even though you're seeing maybe the world pushed back against globalization, for you guys, in your strategy, it's key to have people in the local markets to understand those markets they're working with it and having people on the ground they're correct Fay, that's a fair way of looking at it, while at the same time having global talent for expertise that we may have in Australia or in Southeast Asia and India and Europe all over.

So I think about for our investors who are listening to you, and you really do have this incredible vantage point. I wish we had like a half an hour more to talk. What would you say to them as we are in this kind of tricky environment. You know all the FED talk and it's all important, but you've got to be looking years ahead. What would you tell our investor audience about here's where you need to focus, focusing on companies that are not exclusively but have a heavy

focused in those areas with long secular growth trends. We talked a lot about infrastructure. Oh, it's a big part of our business, advanced facilities, tech, manufacturing. I mean, these are trends that are not two three four year trends. These are trends that are tied to the digitization of the entire world, the energy transition that we're moving to in all of efforts around climate response. I would say investors that have opportunities to invest in those sectors and

companies that support those sectors, it's a great investment. I didn't hear anything about chat GBT. All right, that'll be the next time. Another group of Investments Web. Thank you so much. Come back soon or join us via zoom because love the advantage point. Like I said that, you've got Bob Forgota. He's CEO at Jacob's Solutions. Joining us here in our Bloomberg Interactive Brokers studio, you're listening to

the Bloomberg Business Week Podcast. Catch us live weekdays from two to five pm Eastern on Bloomberg Radio, the Bloomberg Business app band you two. You can also listen live to our flagship New York station, Just Say Alexa play Bloomberg eleven thirty. This next story has it all for US celebrities, fugitives, and even the Fuji's. On that last point, Pras Michelle, you might remember him as a Grammy Award

winning rapper, longtime member of the Fuji's. What you may not know is his role in a high stakes negotiation between the US and China. Carrol, That's for sure. It is the cover story of the new issue of Bloomberg Business Week. It is mind blowing by the new issue. Add on newstands now on line up, Bloomberg dot com, slash business Week on the Bloomberg terminal. So let's get to it with Bloomberg News Investigations reporter Anthony Cormier. He

joins us here in our Bloomberg Interactive Broker's studio. So I feel like Anthony, that this story, the more it gets told, the more riveting and the more cinematic it gets. So tell us about um the member of the Fuji's and the connection with one MDB. Right, So you know, Pras Michelle is one of the founding members of the Fuji's, the nineties winning nineties Grammy winning a rap act and he met a a unassuming, baby faced Malaysian businessman in two thousand and six at a nightclub and his life

changed pretty dramatically after that. That Malaysian man was Jolo the Accused, a financier who who's facing very serious charges of embezzling from a Malaysian sovereign wealth fund. And we picked this story up after you know, Joelo has been charged with multiple offenses, He's at least been been accused of bezzling money, and he asks for a favor from

his dear friend Praz Michelle. So many different places to go on this one, and I feel like you got to love a story that is not only being told by us in all the esteemed business outlets out there. But it's also being told by page six, So let's go to it. First of all, how did these two come together and how did Praz get so intertwined? Right? Well,

Praz had, you know, process a connector. He's the kind of guy who has friends in business and in politics and in entertainment, and he, you know, he meets Jolo at a party and they slowly become friends, and they begin to explore these sort of business opportunities together, and Joe found that Praz had connections to the Obama White House and what they have been accused of is using straw donors to donate money to Obama's twenty twelve election campaign.

Many years go by and Pras is essentially excuse me. Joe is essentially facing a slew of charges for for two complaints and he needs some help from representation. Turns to his dear friend Pras and he says, listen, do you have any help? How can you connect me with a lawyer with representation? So I can you know, make this thing go away? And that begins the sort of

you know, saga of how pros assembles a team. He goes to an old friend who connects him with a gentleman called Elliot Broidy, who is a Republican fundraiser from California, and they put together this plan where they intend to influence the new and perhaps chaotic Trump administration. They're hoping that they can they can get an end there, and

then things take a turn. They go and they meet with and they meet with Joe, and you know, at this meeting they're introduced to a gentleman called Sun Le Jeun, who is the Vice Minister of Public Security for the People's Republic of China, and they have a big question. They want to see if the Chinese can get back a critic who's living in the US overlooking Central Park.

And this gentleman is called Guo Wangli and he's begun to make all of these absurd allegations about the PRC, and the Chinese want him back, and they say to Praz and his group of friends, can you get him back? And you know that that leads again to the very unusual set of circumstance. Well then what does PROS do after that? But you know, there's a number of things that happened between there, but one night Pros is sleeping and the Chinese, including suddenly Sean. They're in the United States.

They're trying to meet with top members of the White House or the administration, and they can't get anywhere. They the meeting doesn't happen, and so they phone pros basically and say, get to the Four Seasons on fifty seven, Poe right across from our building. Get here now. And you know he arrives. There's this very cloak and dagger scene where he's told to exit the hotel and circle it twice to make sure I'm not being tailed. And his bag, his phone's going a bag and he's alone

in a room with two chairs. He doesn't have any idea what's going on, and he's basically like, oh my gosh, they really they can't kill me in the Four Seasons. So let's bring in the editor of BusinessWeek, Joe whatever, Joel. I mean, I feel like we could just listen to Anthony go on and on about this because and we will, because who cares about me right now? The quote, the quote that you hit in the story was they can't kill me in the Four Seasons. Give me a T shirt?

Yeah exactly. Yeah, when you get there, yeah, yeah, I'll go ahead and keep reading, and the story there's so many dimensions of the story and it just keeps you going until the end and then you're like, Wow, I can't wait to watch the movie about this. But so the next turn in this story is basically going to be when the prose uh goes to trial. Right, So, what are the charges against him that the US is bringing,

because yeah, yeah, he faces campaign finance allegations. He faces violating what's called the Foreign Agins Registration Act, essentially acting on behalf of a foreign government. He faces some very very serious offenses. And many of the people who were also charged in this case, they've already, for lack of the word, they flipped. They're cooperating with US government now against prostincts. He says he's innocent, says, yeah, I'm not going to accept a plead to a t a charge

I didn't commit. He plans to fight it, and h you know, as far as we could tell, he's going

to launch a pretty vigorous efense defense. You know, I have to say, we've been looking forward to talking to you, and Joela has been like kind of teeing us up and just giving us little nuggets because part of this coverage, there's your great story, the three of you, this reporting, but there's also this incredible sidebar that talks about I said page six, right, this is a story that we've reported on all the financial journalists, but also page six

because of Leonardo DiCaprio and Kim Kardashian. So tell us about that part. So you know, as the agents are as the FBI agents are pursuing Jolo, they want to find out where his money went, what he was up to, and they knew that he partied all of the time with all kinds of a list celebrities. Leonardo DiCaprio, Las Vegas, with Kim Kardashian, the record producer Swizz Beats. He gave them extraordinary gifts. He had financed the Wolf of Wall

Street forri Leonardo Characrio. And so they begin to squeeze these celebrities. And you really rarely get a look at the way the FBI treats a list celebrities. And these documents are reporting shows how serious they took these these cases. And they brought you know, in fact, Leo in his case, they brought him, they sat him down for this this long and sort of invasive interview. They brought him back before grand jury. They went through his emails, his BlackBerry

mess dog got grilled, ELDG. He did actually he did, you know, he you know, he had quite a lot that he did remember. And then if you read the report from the FBI, there's quite a lot of documents he didn't remember either. And you know, he had a pretty long and extensive history was showing. You know, while we know the parties, I think that's been pretty widely reported, what no one has known is how close they became.

Their relationship went beyond this sort of you'll find it my film and you'll come to my yacht to let's build a billion dollar movie fund, Let's build an eco resort in an on an island. Let's you know, let's get money for this or for that. And you've got Leo connecting Joe with all of his you know, his buddies. I mean, their their relationship was much closer, I think than the public has known to this point. Okay, wait, Kardashian kim Ya, so play some poker? Does pretty well?

She plays baker eye? Actually sorry, actually pretty well? Yes, she does very well. How well does she do? And what happens with the money. She does so well that she's up three hundred and fifty thousand dollars in chip one night, chips one one one night, and she her security guard effect says, you got it. Those aren't your chips. You can't take them home. She's OK, give them back to Joel, though Joela says, no, nope, they're for you. She has a note to do with this many chips.

She walks to the casino counter. They literally give her a bag of two hundred fifty thousand dollars in one hundred dollar bills. They put it in a garbage bag. She puts it on her She puts it in her carry on luggage and gets on a Southwest flight back to la which is a roth. I love you Southwest, but that was I think to many of our right there. It's beautiful. You can't make it up. It is perfects. You're welcome, You're all. The teaming up was right on

the money. Anthony, Thank you so much, Well done the whole team. Your investigation. Anthony Cormier, investigations reporter at Bloomberg News. Joe Webber, the editor of Business Week, this is the cover story. It's a mustrid. You're gonna have fun this weekend checking it out. This is Bloomberg. You're listening to the Bloomberg Business Week podcast. Catch us live weekdays from two to five pm Eastern on Bloomberg Radio, the Bloomberg

Business app band you Doo. You can also listen live to our flagship New York station, Just Say Alexa play

Bloomberg E Love and Dirty. So let's talk about the cloud a little bit, because you know, we talk about it so much, Mattie with I feel like, certainly through the earning season, whether it was Microsoft, where it was Amazon, Gartner has got some statistics out there about worldwide spending on public cloud services reaching nearly six hundred billion dollars in twenty twenty three, up more than twenty percent year

over year. Yeah, and the next guest that we're going to talk with, Julia White, is going to give us some really good insights into overall cloud market dynamics. She is the chief Marketing and Solutions Officer and a member of the executive board at sapp. Julia also spent more than twenty years at Microsoft building out Microsoft Azure, and she is with us via zoom in Seattle. Julia thank

you so much for being here. I wonder if you can just start off by giving us a background on your company, including the fact that I need to be calling it SAP instead of SAP, which is hilarious because you literally have that in your FAQs on your web. We've had a crazy all of a sudden, We've had like an earning stump, so it's like all of a sudden, we're going through our notes, so we're with us a

little bit. But I love I love that you. I was literally just looking at and you have that in your FAQ, So yeah, just give us, just give us the background here. Absolutely great to be here with you

and SAP or SAP as it's formally pronounced. We provide the cloud solutions for business transformation, right, so you talked about Microsoft in my past life or Amazon who have big cloud infrastructures, and SAP provides the business solutions, so for things like finance management, controlling inventory, supply chain, HR processes, procurement, all the business systems that run companies. Those are the cloud services that we build and provide to our customers.

You know, Jel, what's great about talking to a company like you, and we've been talking in awful lot about Maddie and myself about it spending with a lot of our guests. What are you seeing, especially in a global macro environment where there's so much debate about the outlook FED policy, you know, the big macro stories that are out there, what are you seeing firsthand in terms of your clients and your customers. Yeah, definitely some interesting trends.

I'd say for sure, we've switched into a rigorous process around tech spending. Right. There's no more nice to have tech. It needs to be proven, it needs to be able to demonstrate real business value. And you've you know, you've even seen in the recent earnings around some of the big cloud infrastructure providers, you know, some of the growth starting to slow a bit because customers bought a lot during COVID. Right, they've moved a lot of existing business

systems to public cloud providers. But that was just basically picking up an existing system running in in a cloud to get some of the efficiencies, which is great, but now they needed some of that business value to come out of it, not just running it in a cloud model. But are you're seeing a lot more decision makers being in the mix as they purchase these things and really saying like, well, how are you going to help me

with inflation? Right? How are you going to help me refactor my suffl That sounds like CFOs are in the inquation or the financial guys are like, okay, great, we want to spend it, but tell us how that helps us with the bottom line? Is that fair? Yeah? Way more CFOs in the mix. And really those value cases coming up, right, and I think the three big ones right showing shifting business models, which is a CFO led conversation. I need to go from selling products to subscriptions. I

need full customer life cycle engagement. Right, that's something very hot. Supply chain refactoring. I mean, twenty years of going global supply chain, now we're refactoring all that to be more regional. And then interesting the last one, despite controversy or other things saying otherwise, sustainability still top concerns, switching to be more sustainable as companies, we still see constantly driving purchases.

That's really interesting, especially given the change in the supply chain piece that you mentioned right before that, I would think that given some of those headwinds, it would be really hard for these companies to continue to prioritize that. How are you kind of seeing that play out? Yeah, you know, again there's lots of speculation and rumor that sustainability is dropping. We're not seeing that in terms of

people behavior. And actually it's somewhat a little bit of a silver lining as people need to shift their supply chains right from big global to more regional and more suppliers. In some cases they're investing in more sustainable agriculture as an example, bringing new people into the supply chain that weren't participating before, which enables you to be more sustainable, bring more diversity into supply chains. So in some ways

they're actually very aligned. Or also the case where you're doing more reuse I know in circular economy actually brings down costs, helps supply chain resiliency and improve sustainability. Your sweet spot for SAP is mid market, which you know, the big you know, large cap companies often get a lot of the headlines, a lot of the attention, But tell us about the mid cap space, which I think,

just like small caps, tells us so much about the economy. Yeah, thank you for asking, Because most people think s IF the only serves the biggest of the world companies, which we do, but the majority of our customers are actually in mid market, and you know, the things that we're seeing big companies amplify when we talk to our mid market customers, right when they have little fluxes in revenue and it can be devastating impacts on their bottom line,

and so working with them on how they manage inflation, better management own cash flow, better business planning. And the nice thing about cloud technology is it gives any size customer, but midmarket customers access the same sophisticated business process tools as a big company, right, so it really has a democratizing effect to it. So we're able to really help mid market in the ways we help big customers, but in a way that's more agile and cost effective for them.

What would you say is one of the biggest mistakes that you see some of these Not to put it on them, but some of these midsize companies making when they are struggling and they don't necessarily have access to the tools that you offer yet Yeah, I think that the biggest mistake is they spend too long running their company on Excel and they you know, they're moving spast they're trying to be efficient, but they don't realize what

they're missing out on. And you know, I was actually just recently working with a kind of mid size chemical company and they waited a long time to move into automation of business processes, which it just helps a lot

of our ound efficiency and decision making. And you know, once they spent the time to know want some more modern, you know, enterprise resource management, they were able to react much more quickly and they saw remediate results, but you know they had to go through that journey to get there, and then in retrospect they're like, I'm should have done this earlier, but it takes time and focus. It does remind me a little bit, and we don't have to get into this, but it reminds me of FTX using

quick books. When we all found that out, we were like, oh my god, how did you have such a huge company and do that. But then we talk to these startup guys who are like, if you have a big idea, just make it happen and do it. But it sounds like I'm I'm hearing from you that you do need to focus on the bones and the infrastructure a little bit as well. Yeah, really thinking about all these processes. Yeah, they're getting it done, but at what costs and what

are they not getting? And it's oftentimes hard to see the opportunity cost or the missed cost of what they're doing. But as we work with them, and part of it too, is it used to be I mean big and hard and expensive to deploy, and you know an ear hear you know enterprise resource process right, it used to be on the premises, but now the cloud changes that so fundamentally.

But I think a lot of mid market customers are still coming to realize that actually I can get a really robust enterprise resource system in place in a couple of months. You know, it's not three years and three hundred million dollars anymore. Julia tell us about just got about a minute or so left here the feedback loops. So in other words, you're talking with your clients and customers. You're saying that these organizations are feeling the impact of

a downturn in the economy. So you say about value with fewer resources. So how do you go back to your creative team or your engineers, when your solutions team and say, hey, here's what we need to be doing, because this is what the customer demands. Yeah, I think the things that the big trends we're hearing from our customers are automation, which means, you know, using AI to identify where there's inefficiencies and automating that out and helping

the customer be much more predictive with what's next. Right, Like the world's changing fast and all of our whistle balls are kind of imperfect these days, and so that agility to do different kinds of predictive planning is the generative AI move kind of impacting you guys all of a sudden, because it does seem like it's all of a sudden everybody's radar. Well, we knew it's not brand new, Yeah, it has, but it has definitely hugely revolutionary opportunities with it.

So absolutely looking at how we use it in a bunch of our different products, whether it's HR and onboarding to customer engagement. All right, gonna leave it there, Hey, thank you so much, really appreciate it. Julia White's chief Marketing and Solutions Officer at SAP. Joining us via zoom from Seattle. You're listening to the Bloomberg Business Week podcast. Catch us live weekdays from two to five pm. Eastern on Bloomberg Radio The Bloomberg Business a band you two.

You can also listen live to our flagship New York station Just Say Alexa play Bloomberg e Love and thirty. I'm so delighted at our next guest, looking forward to bringing him in because we want to talk a little bit about the startup world. Bloomberg is reported AI has been one of the only sectors. We're startups with little art, no revenue, have raised huge funding halls even an environment

where checks are hard to come by. We talked about it chat gybt just with our brad Stone, So we wanted to get some thoughts about the startup world and we bring it someone who has built two unicorns. So great to have back with us and here in our Bluebird Interactive Brokers Studio, Studio or Levine. He is co founder of Ways They of course We're sold to Google for more than a billion dollars back in twenty thirteen. He was an investor and move It, which Intel bought

for a billion back in twenty twenty. His book, which we recently talked about is fall in Love with the Problem, Not the Solution, a handbook for entrepreneurs or so great to have you here with Maddie myself. How are you thank you really happy to be here. I'm excellent, all right. So we're so glad to have you back with us. So much to talk about. We've got two nice long

chunks of time to do it. Talk to us about the startup world right now and how you see it, because there is a lot of attention on AI, in generative AI, courtesy of that Microsoft investment. How do you see it? How do you think about it? So we startups are here to stay, right at the end of the day. There are many startups that are starting from the problem and trying to create value through solving a problem,

and they're here to stay. And at the same time, we have seen in their recent years overinflated valuation that created some tensions with the parish market that we are experiencing in general. And I think just because there was so much money floating around out there, a major part of it us yes, right, And so for a certain extent, I would say, when you are being overwhelmed with amount of money, then you are actually urged to spend it in order to show progress, and the result is that

you might be spending it on the wrong things. Well, I love to hear you explain it in such a simple way, But the way that I always think about it is just that's how you get a wee work. Is always what I think about because I'm obsessed with that story. What do you think is given that, do you think that maybe and a higher interest rate environment might actually be good news for the startup world? Um? You know, at the end of the day, the higher

interest rate is in order to fight inflation. And over the years we have seen that that sort of medicine actually works, right, and so we are likely to see that until we will see some sort of a slowdown in the market and then and then interest rate will start to go down again and growth is going to come back. But does it make it harder to get funding? Right? Look, I describe building a startup in three dimensions. Right, It's a long roller coaster journey of failures and it's always

like that. Right now, if you'll add to that, on top of that the environment that is making it even tougher. Um, And I would call fundraising as a roller coaster in the dark, you don't even know what's coming. And these days it's longer and it's harder, and but it was longer and harder before as well. Or how many times if people say no, no, no, no, hundreds of times, hundreds of times, how difficult was it? And were there

times You're like I'm out of here? You know? One of the things that he's going to make entrepreneurs successful is the great is the never give up attitude, right, And so you will hear no so many times, and you might be going home crying, but it will never discourage you from your mission. So you kept add it obviously many times. But it is interesting because money support

all these things are necessary. I mean, was there a moment, whether it was Ways or something else where you were just like, gosh, you know, we've got a couple of days left or a couple of weeks left of money or or something where you realize something's got to change positively in our direction. Or did it never get to

that point? I would say that, you know, with Ways and Movie and ten of other startups that I was involved at in all of them, Throughout the journey, we ran into the near the end situation right really close to the end situation, and in most of it we will recover right. So so at the end of the day. Look, the persistency and the value that you create is going to be paid back. Now, if you don't create value, if you don't solve a problem, if you don't figure

out product market feed, you will die. Unfortunately, you will die. You can't just create, right, it's gotta have it's gonna

have a reason to exactly, yeah, and real value. I do wonder if we can also just go back to the idea of all of the nose in the room really quickly, because it's such a great point in question, Carol, I wonder if you can talk about the challenge of maybe not being part of the Silicon Valley broke community straight away, like a lot of times we talk about this, the VC folks who all went to Stanford together investing in one another, and you come from a little bit

of a different background. Was that an added challenge for you? So for a second, I would say, Israel might be even a better ecosystem than the Silicon Valley for startups, right, And so Israel occasionally called startup Nation, and there is a good reason for that. The ecosystem is actually very supportive and very powerful, and so they are at the end of the day, they are more startups per capita in Israel than they are in out of place in the world, and it turns out to be working beautifully.

Right at the end of the day, if you start in Israel, you might have equal likelihood of being successful. Then if you start in the Cilicon Valley. How come talk to us a little bit like because I feel like we've we've talked a lot over the decade and then some about how what a great incubator Israel is for so many different types of companies and technologies. So what is the difference? I think we just assume everything is Silicon Valley still in terms of the narrative, But

what are the differences? What is it about the environment in Israel that attracts or makes it such a fertile ground for startups and ideas? So I would start with generalizations, right, So at the end of the day, what you want we have in an ecosystem that supports startups are actually four cornerstones, right, So entrepreneurs, investors, and then engineers and experience.

These are the four cornerstones. And entrepreneurs will usually go into this journey if the fear of failure is low and the fear of failure is low in the Silicon Valley, and it's low in Israel, and it's actually high in many other places. People afraid to fail. The supportive of the investors is critical inspired It's the fuel of the ecosystem, right, and so you need to hear regulations that enables that.

In many cases, you need to encourage them. But at the end of the day, if you invest in Silicon Valley or you invest in Israel from taxation points of view, it is going to be the same. So really allowing the same thing engineers a lot of engineers in Israel, and experience and one of the things that actually growing rapidly in Israel. More and more entrepreneurs are paying it forward to the community. I'm doing that through the book that I'm trying to help enterprise to become more successful.

But the major difference is actually reside someplace else. Israel is in a tough neighborhood. And when you grew up in a tough neighorre, you grew up tough, right, And so military service is mandatory in Israel. And the result is during your three years of military service, you realize that giving up is not an option, and you realize how to build and work in teams, and the loyalty and commitment that you have to the mission is way greater.

And these actually makes the Israel ecosystem so unique. Did you find We've only go about thirty forty seconds and then will come back and continue conversation. But your military experience, were you often in your pursuit of your companies and building of your companies drawing on your experience? Um so that was long time ago, right, you know what I'm saying,

But yeah, absolutely to you. You know, at the end of the day, some friends that that I've been doing the military military service with them and they are now, you know, in different startups of mind and obviously you realize that there are a lot of things that you have learned over there and you don't pay attention that

you've learned them there. We are here with Ori Levine, co founder of Ways and also a changed your life, which changed my life completely because I was living in Los Angeles at the time, driving to my like weird internships at four am and having Ways help me navigate the city. So it was very very critical for me.

But Oria, I want to talk about how the tech has changed because what I think makes Ways so interesting is how much it relies on the community, of course, to help you understand where the bad traffic is and where things things are, you know, difficult that should be avoided. How have you seen that community driven technology change over the course of your career? So so, crowdsforces is a method that is not widely used, but at the end of the day, it's the best way to actually gather

information and gather data. Right. So occasionally we are doing that because we're looking at the general behavior. But the case of Ways is really unique because we have created a paid forward social network of drivers. Right, so you report back to the rest of the drivers and help them to avoid graphic jams, to avoid speed drafts, to avoid accidents and so forth. And in return, you are

doing the same for the drivers behind you. And so this magic that we help the rest of the drivers actually turns out to work beautifully and created the best driving tool there is. Do you think the other big tech companies, social media companies could learn a lesson from that? Like we talk a lot about the challenges of social media companies Instagram, the way that it's impacting young people, etc. Do you think that other big tech companies could learn

from that community helping each other energy. So I think that you know, Ways is all goodness in some of the other social networks, it's not necessarily the case, right, And occasionally we are seeing overuse by in particular younger generations, and you look at it from the outside and say, no, no, no, there is something wrong here. Right, It's nearly impossible that they're spending so much time or this is so important for them that they might be leaving or dying by that.

And I think that the essence of all businesses in the world should be very simple. Create value, and then the value that you're going to get out of that is a derivative of the value that you create. You know. The thing I love. You know, I've talked with Kathy Wood a lot of our canvest you know, this whole idea of innovation disruption, and I think it gets thrown around a lot, But this whole idea of a company like yourself, like creating Ways totally went after the establishment

and change the way we do things. Uber did it with driving right and getting a car. It's like, just there are better ways, different ways, substantially changing the way we live and work. If you will, how do you look at at the future and what kind of catches your attention about things that you think, Okay, this two could really change the way we do things in a better way. So you're right. Disruption is not about technology. It's about changing behavior. Right at the end of the day,

changing the market ecplibrium. Now, if you look at the pace of innovation, and if we will have a time machine and I will send you back into two thousand and seven, that means that I'm going to take away ways from you and Uber and your iPhone and Netflix and pretty much everything that you're using every day. Right, So it's unclear that we will survive, right, right, This is how fast things are changing. In fact, if you try to ask yourself, so what does it mean about

the future. So for a second, I will make the following statement, Right a decade from now, if you think of the top ten companies of the world, right sop and Amazon and Microsoft and Google and Facebook and Tesla and whatever, and ask yourself which one is going to be in the top ten a decade from now. Now, the answer is that we don't know, but only five. If we would know, then I will tell you you know what sells short on those that are not, and this is it, right, and we are done, but we

don't know. The more interesting perspective is going to be which one which companies are going to take their place in the top ten, some of those you haven't heard the name yet. This is how fast things are changing, right. So in particular, you look at AI today and you say, wait a minute, this is actually entering into our radar two months ago. Right before that, you never heard about chat Gypt or GPT in general, even though that the

technology is being developed for a long while now. But all of a sudden, we are experiencing some sort of change of behaviors, right. And the change of behavior is not whether or not the technology is good or not good, or good enough or not good enough. It's not about that's about the fact that there are some people that are going to CHET GPT before they go to Google. And when this happens, that changed the behavior. Right now, in reality, you would say, wait a minute, it's not

good enough. And actually, instead of getting multipled perspectives on the search of Google and then you can actually choose the one that makes sense for you, You're going to get one and it's going to be written in a beautiful way that it makes perfect sense, even though that it might not, but it's still the case right now.

The reality is that you look around it and what happened in the market, and you say, wait a minute, Google just announce their own right, So obviously they haven't built it in the last two months, right, they have built it for a long while, and now they realize that maybe even if it's not ready, we have to go to the market with that, because otherwise we might

be missing the opportunity here. And they're not the only one, right, So all of a sudden, there is a realizations that, okay, change is likely to happen in the market in the way that we are generating texts possibly searching for information definitely, because you're going to get nicer results. Right if you search Google, you're going to get whatever some other actually generated in a single web page. But if you use the language regeneration, then you're going to end with something

that is written beautifully and you might like it. So all the time that we're spending since Microsoft, the news of Microsoft in their investment has come out, it's smart for us to be focusing on this because there's a lot of smart companies that are focusing on this, and so it has the power to dramatically impact our behavior or already is in my mind, definitely yes. And it's still a long journey for CHET, GPT and anyone else that is doing AI and MGPT language regeneration. There is

still a long way to go. So if Google hired you right now as a consultant specifically on its rollout of its chat GPT, what would your biggest piece of advice be about how they could corner that area of the market faster, faster, even if it's not good. Look, everything that you go to the market, you go with something that is not ready, Like you go with not good enough first and then you eat rate with the feedbacks that you get from the users on for justice

all the time. Right, they throw it out there and we all play with it. Ways was not good enough at the beginning, right, so, and there were multiple iterations until it became good enough. And when it's good enough, then this is where you are going to win the market.

So at the end of the day, now they could have done that faster, right, but they actually look at the disruption as a threat and the real way to look at disruption is as an opportunity because if you take Uber for example, Uber is an amazing example of disruption. Before that, we only had taxi drivers. That's it. Right now, the market today is ten times bigger than it was before,

ten times bigger for on demand trips. Right in this ten times bigger market, there is room for Uber and Lift and Grab in ninety nine taxi and there are three times bigger room for taxi drivers. So disruption is actually creating an opportunity because what we are saying about disruption is that it changed the market tech flibrium. Now, by definition the market tech flibrium, then new one is better than the previous one, because otherwise the market will

not go there. Yeah. No, it's really fascinating, right. It didn't just displace. It actually grew a market so exactly an access and behavior. So people who didn't necessarily order cars to do things of a sudden, they could exactly so interesting or so go go, go, no go twenty seconds, thirty seconds. What's the next problem you're working on? God be quick? So you know, I'm really proud of my books. Steve Wasn't, a co founder of Apple, called that the

bible for entrepreneurs. And I think that this has this is going to have a bigger impact in all of my startups because it's going to help entrepreneurs to become more successful. We were saying a lot of people didn't have a playbook, right, and now they do have a playbook, thanks to you. Because the book is called fall in Love with the Problem, not the solution, a handbook for entrepreneurs. Or it was so great to have you back in studios. Welcome anytime, so come back soon. Thank you. I really

appreciate it. Or Levin, he's co founder of Ways. As we mentioned that book fall in Love with the Problem, not the solution of handbook for entrepreneurs, but it's so true, right, figure out a problem, yeah, watch the market size or look for the market and then go at it. Or of course inner Bloomberg Interactive Broker Studio. You're listening to the Bloomberg Business Week podcast. Catch us live weekdays from two to five pm Eastern on Bloomberg Radio, The Bloomberg

Business a band you two. You can also listen live to our flagship New York station Just Say Alexa play Bloomberg e Love and Verdi. I did come across a research note that talked about online gambling in the betting market. Globally, the eyes and shared exceed one hundred and fourteen billion by twenty twenty eight, growing at a compound annual growth rate of nearly eleven percent. So we've got a great

guest to talk about it. He's here in our Bloomberg Interactive Broker studio, Charles Gillespie excuse me, as co founder and CEO of the publicly traded SmallCap Gambling dot Com Group Limited. They operate in US, Ireland and Malta. They are across the globe. You might know some of their sites including Gambling dot com, Bookies dot com, and rhodowire dot com. Again, like I said, he's in studio with Maddie and myself. How are you. I'm very well, happy

to be here today. Well, tell us a little bit about your business in the industry and what you're seeing in the last year or so. Our business is doing very well, and the entire industry over the last several years has shifted its focus away from Europe, which is kind of the historical home of regulated gambling, toward the United States, as the US has become the center of gravity in this global industry and the growth is just a phenomenal you know what's phenomenal? Give us an idea?

Can you give some Paul Parks? Uh, well, you've got I think it's already up to something like ten billion in the US and if you look back three four five years, it was sub one billion. But what kind of growth are you seeing on your sites? Well? We uh, we delivered growth of one hundred percent and nearly one hundred percent in Q three and in the US, and um, the US has been been huge for us. You know, it's really you know, our story kind of mirrors the

global story for the industry. Um. When we started the business coming off a lower levels exactly, you know, coming off of essentially nothing, you know, four or five years ago. Um, when we started this business back in the day, there

was no regulated online gambling in the United States. So we left and we ended up building one of the most important affiliate marketing businesses in the industry, based in Europe with a with our biggest office in Ireland and our biggest markets really being the UK and in Ireland. And then slow, slow and steady things started to change in the US. You know, you actually got online casino gaming in New Jersey nearly ten years ago already, h

and that was a big deal. Um, we didn't really see that, you know, spreading across the United States ten

years ago, and it didn't. It took. It took a number of years before the dam broke, and the dam broke in twenty eighteen when the Supreme Court issued a ruling that invalidated this this nineteen nineties era sports betting ban, and that created the climate for what we've seen today with with regulated sports betting now rolling out, you know, across the US twenty plus states already with online sports betting, and you know, it's it's it's a states rights issue, right,

so each each individual state is for you to kind of do it the way they want. And I means your growth basically just banking on that, like just the growth going across the United States. Yeah, we had a profitable, high margin, high growth business before any of this, and then you layer on this this incredible growth in the United States and it you know, it obviously gets very very exciting. New York sports betting regulated, you know over a year ago already that was the biggest launch to

date in the United States. But the real prize that's going to come for the industry here is online casino games, right, which is frankly as a very different margin profile. You know, if you think about sports betting, it's actually quite a low margin product. Typically. I don't know a ton about this industry. I mean, I know generally, but so what's the what's the margin the sports betting? Well, if you if you think about think about it this way, think

about player values. You know, an online sports betting uh player is worth you know, probably a thousand to two thousand plus depending on the operator. And that's how much there betting. What do you mean by that? That's that's what the lifetime value of the player would be to the online gambling operator that through the door. Um, and you know we're in the business of referring players to

the operators, right, so they pay us something. Not they don't pay us the entire lifetime value of the player, of course, but it's a very healthy proportion of that. And when you compare sports betting to online casino, online casino is roughly twice the value. Okay, of course, there's not as many people that play online casino has been on sports. It's a more kind of niche products where

sports betting is quite you know, mass market. Everybody can wrap their head around sports betting, but an online casino, the volume I would assume like there are people who just play it over and over again. Absolutely, and you know that's that's how the gambling industry works. It's part of it is the odds. Part, part of it is that house edge. But but you know the other part of it which people forget is it's how many times

you pull that lever. If you only pull it once, even if the house edge is very high, it's not such a brilliant business. But if you pull that lever a lot, even if the house edge is very very low, like it is in slots, it's a fantastic business, and make it up on just the frequency. Yeah, where does the macroeconomic issue come into play with that? Because you know, we keep talking about whether or not we're heading to a recession this year. Is that concerning for the gambling industry? No,

do people gamble more when the economy is bad. It's not that people gamble more, it's that the activity is largely resilient to the economy. Even in fairly mature online gambling markets, you know, you look at the UK, which has had regulated online gambling for fifteen years, you know, and that and even in the UK, it's still growing

by eight or nine percent a year um. And in the US the growth is so spectacular that any any sort of headwind, which there isn't really even if there was a headwind, you probably wouldn't even see it, and you don't given you yeah, you wouldn't feel it. Given the over all growth. What's the biggest thing in the US that drives people that? And like for the Rihanna concert that some people call the super Bowl, was that

a huge push for you guys? Is it stuff like that? Absolutely? Um. Player acquisition around sports betting is very event driven and you know there is no bigger event than the sport than the Super Bowl. So um, you know, March Madness is also coming up in a very very important time of the year for for player acquisition. Charles, how many people these player acquisitions could be you could be, Carol, exactly how many come in like on the Super Bowl?

Can you give us an idea range? Well, you know, companies like ours would refer um, you know, in any given month, we're referring you know, over ten thousand new depositing customers an average. Um, yeah, I mean sometimes it's it's substantially more than that. But but you know, when you think about our business model, the the online gambling operators, they only pay us when we've delivered a customer to their door who has signed up, been verified, has deposited,

and has made a bet in a regulated state. So if the value proposition we provide to them is crystal clear. And and you know, there's a lot of talk these days about so you've checked all those boxes before you pass them on. Well, that's their job that they need to do that, but they don't owe us any money until they've they've cleared all those checks. Do most of those people clear no? Like like like yeah, I'm just curious,

like is it half? I mean, it's tough to speak to you know, each step in the process, but you know, a lot of one of one of the issues, a lot of people sign up but they're not in a regulated state. You know, if you're in California and you sign up for DraftKings, you can't bet, you know, and and and that you know. But if you if you hop on a plane and you come to New York

for whatever reason, then you can. So. A lot of it is really education, and historically there has been challenges with payments, you know not you know, especially a couple of years ago, a lot of US banks just did not differentiate between illegal offshore online gambling and actually regulated tax paying legal onshore gambling. So you said on average about ten thousand that you're passing on. I understand it.

It's usually it could be a lot more than that in any given month, but on super Bowl, so like at a super Bowl leading up to the Super Bowl, is it five times that amount? I understand over a lot it's going to even out, but yeah, uh yeah, or if it's March madness, substantially more. We were we haven't even reported Bloomberg. Did they tell you we like numbers?

We love a number. We're just kidding. Will report Q four on March twenty three, and you know, we'll give a little color on on Q one at that point as well. I'm sure twenty seconds left. It sounds very rosy. You seem like growth is coming, especially as regulations ease. Um. Twenty seconds, What is the one tricky thing for you in your business? Um, if there's any headwind at all? It's uh, you know, inflation rights. Uh, you know, talent is expensive and um, you know we our business runs

on people. You know, we do everything and wages are expensive. Yeah, yeah, yeah, you know and for the Fed. Yeah. But we've got people all around the world, so we can we can manage that by by hiring and lower cost jurisdictions if necessary. It's something we've heard from every head of a company. It's all about workers and um, finding them and then being able to pay them. Charles Gillespie come back soon. That was really fun, co founder CEO of Gambling dot

Com group. Here in our interactive broker studio, you're listening to the Bloomberg Business Week podcast. Catch us live weekdays from two to five pm Easter on Bloomberg Radio, The Bloomberg Business Avandue too. You can also listen live to our flagship New York station Just say Alexa, play Bloomberg, e Love and Verdi. We'n get right to it, Mattie, because Season A to Bar Rescue debuts this weekend on the Paramount Network. My husband and I we definitely have

binged on Bar Rescue in the past. Back with us as John Taffer, he's host an executive producer, Bar Rescue, creator his own restaurant franchise concept. It's called Taffer's Tavern. They're in Georgia, they're in Maryland and DC and they are growing. He's here back with us in our Bloomberg Interactive Broker studio. So nice to have you here. I feel like we're getting back to normal. I feel that way too, but not quite. There are things that aren't

happening yet that need too. You came in and you're like, I gotta share something with you. Tell us what's going on. Why are our things not quite back to normal? John? Well, you know, in my wife, outside of television, in my practice, I help independent operations and I help large corporations, so I get a good perspective of both sides of that fence. Right, there's a tentativeness out there. Operators have been a little bit. When we used to make bold decisions, we're not quite

making bold decisions right now. We've sort of stepped back in this conservative mode, if you will. Right, we're a little scared of employees. We can't lose them, we can't find them. They're sort of in control of the moment a little more than we are. At times that's concerning, our costs are concerning, and then we're all facing this issue a value proposition. Karen. What I mean by that is, if my steak goes up and cost three dollars, I got to charge you nine dollars more because my cost

is one third. So here we're getting increases in chicken breast and in all these products a dollar or two, a dollar or two, but for us, it's a significant impact on the value proposition of our restaurants. So we're fighting that value proposition. We're dealing with the employees, and we're stung. So the industry isn't rising at the level I was hoping it would because of this tentativeness. So meaning what they're not opening up new establishments is what

does that lead to? John? You know, it's not only opening new at Wishman's is taking bold steps into promotions, new day parts, new menu items, new creativity, new marketing programs, all the things that we would do to energize and keep our concepts fresh and entertaining. None of that seems to be happening right now. What's the biggest mistake that you see people making of all of those that you mentioned that you miss. Yeah, you know, I think that

there's this view today that the customer will understand. Right, customers know that we're you know, we're short staff, They're going to understand. Customers know that our prices are going up, They're going to understand. I worry, madisone how long that understanding is going to carry for? You know, there's inflationary impact And I was talking earlier today. I just read an article this morning. Supermarket inflation is about eleven percent.

Restaurant inflation is sitting at about eight percent. So in theory, comparatively, one could say, boy, the value might be greater at a restaurant today than at a supermarket in a sense, right, but it's not being realized at the rate that it should. And it's very concerning. Well, I mean, so what if that continues? John, what is the longer term impact? You know, it's interesting our Ka Crater, who is our food critic here, and she said pre pandemic like it was just an

explosion in the restaurant. It was called, I forget what you's called like the golden age of restaurants, and just people were trying new ideas and throwing things out. Pandemic hits it's obviously a very different environment. And as you say, we're coming off and you're feeling this tentativeness. If it persists, then what longer term do you see happening? Potentially? I see flatter revenues long term, okay, because you know it's

innovation because eventually that elevates us. Right, So when we're not having innovation, when we're not having the depth of employee, the concentration of management, all these things take their effect on This kind of concerns me a little bit. Yeah, you know that Boomtown, dude, Yes, but that Boomtown that you were talking about was a height of innovation. New concepts, new chefs, new things were abound everywhere. Not so much now, and it's just not the same experience, right, And this

is such a privileged position to be in. I'm in New York. There's a great restaurant in every corner, but it doesn't feel the same. I feel like I'm paying more to be there for a longer amount of time, not necessarily get everything that I want. Right, do you see do you have a timeline for when I can get my great New York City restaurant vibes back? You know, It's funny. I was staying and I won't say the brand at a very high end luxury hotel, about as

high end as you can get in New York. There's a few weeks ago, yes, and my breakfast room service came in a cardboard box, no plates. You didn't like that. It's like I was in the middle of the pandemic. So I called up the general manager and I said, when do you become a great hotel again? When does that happen? Is it next month? Is it six months from now? And we're being serious, I'm being serious, And when do we make that commitment as an industry to say no more, we have to get back to normal.

I think that's a very powerful question, Madison. I wish I knew the answer to it. At some point, you're going to get disgusted and you're gonna go will you're taking care of and you feel better. That's my concern. Yeah, it does feel like I've been places too, and I'm like, wait,

we're kind of out of the pandemic. Although we did talk to our team over at Hopkins earlier today reminding that we're not completely out of it, but it does feel like people are still falling back on those ways, and it's like, well, wait a minute, you know, we should kind of go back. Is it just because they're still looking to save costs or what? I think it's just some say they don't have the staff to do

everything that they'd like to think about. Somebody who owns a business for years, they believe their life is stable. This pandemic comes along. Now they're not stable. The instability is very fearsome to them. Right now, we're coming out of the pandemic, but the fear isn't gone yet. And I think it takes time for that fear to sort of heal a little bit, Carol, you know, and then to get to that point of decisive decisions again. And I think the economic environment worries us. I think the

international environment worries us. I mean, there's a lot of things to be concerned about if you want to strategically look forward, right John, you know what's great about you? As you say, you're talking to the mom and pops you own bars and restaurants, You're talking to the big businesses out there that all you own multiple establishments. Do those conversations often involved talking about recession right now? Yes,

they do. Because it's really it's fascinating our market conversations where so many people like, nah, we're just gonna miss it, or it's going to be soft landing with no landing. You're hearing recession. I still hear the word recession quite a bit, and I hear it of course low end, mid end, what mid end okay, good end hiring that I think that there's more of an economic concern with regard to inflationary impact supply side impact, which is still

a big deal. You know, a restaurant, if you get a certain hamburger style, your bun is sized for that, your plate is size for that. Now you can't get that hamburger. You get a smaller hamburger. Doesn't fit on the bun, doesn't fit on the plate. Here's a good one for you. Get a kick out of this. Those little ketchup packets, they were up at forty cents for a while. Yeah, there was the shortage. Ye, so now

restaurants have to buy plastic cups. Get Ketchup squirt in a plastic cup, and now the plastic cup doesn't fit on the plate. With the French friend, these little things become big deals when you're in a production business. Yeah,

and these subtleties become nightmares. I talked to the owner of a taco restaurant in Dallas, and he told me that the millennial obsession with Tapa Chico was like ruining his business because it got so expensive because of the glass shortage and he would just get wiped out of it all the time, but didn't want to raise the price too much. If you were giving that restaurant owner advice, what would you say. You know, it's funny. I did a rescue this season of a guy who's losing two

dollars a hamburger. Yeah, and he's proud of the fact that he's selling one hundred hamburgers. It you'd be better if if you sold no hamburgers. That's what I would tell him. We're here to make money, well, so we have to raise the prices. It needs to be reasonable, you know. JC Penny. I love a quote that he said, if you don't take care of the customers, you'll lose the customers. If you don't take care of the business, you'll lose the business. So I have to say I

wrote a note I'm always shocked here. I'm going to read on the generous pores that are done. Like as I watch your show, and you have the technology that measures it in an instant and the thousands of dollars that go out of a business, it seems like such an easy fix, right, So people are basically bartender's overpouring, right, And no, I'm stud I know. So I'm like, is it that easy to fix for most establishments? John that

if they just completely Yeah? Completely. We have the systems. Now, we have devices that we stick to the bottom of a liquor bottle when you buy it and it goes into the supply room forget what it's called that when you pick it up and put it and bring it to the bar. On the map on your tablet, you see the bottle on its way to the bar. Now it's at the bar every time they pour it, I

know exactly how much they're pouring from it. So all these systems are in place, it doesn't match up with the dollars that are ultimately Absolutely the consumption and the usage, the consumption and the sales don't match. Right. You consume the hundred drinks, but you only sold thirty, right, And the owners when they hear the thousands of dollars that are going at it sometimes add up to hundreds of or one hundred thousand dollars or whatever. For the year.

Thirty seconds left, John, Unfortunately, season eight, what can we expect? Oh boy, it is a tough one. You know, last season pandemic was a valid excuse. Yeah, this year we were just talking about the lack of aggressiveness, of assertive. They need a kick in a butt. Yeah, I mean, customer traffic is up twenty percent of more. This is the time, seese, this right step, But they're not. So it's a very aggressive season, Carl. But I think I changed a lot of lives this year. I love hearing that.

It's really fun. It's small business. I talked earlier about the backbone of our country is these small businesses. So I'd love to kind of watch and keep an eye on it. John, Thank you so much, good luck, Thank you, good to see you again. Always good to be here, always good good luck with the season. John taff Our, host and executive producer of Bar Rescue, joining us in our interactive broker studio. What a delight. Be well, travel Well.

You're listening to the Bloomberg Business Week podcast. Catch Just Live Week days from two to five pm Eastern on Bloomberg Radio, the Bloomberg Business Band, You Too. You can also listen live to our flagship New York station, Just Say Alexa, Play Bloomberg, e Love and Verdi. All Right, we do want to get to you. One of the big stories of the day, and it certainly was news coming off of the weekend. And I feel like it's something Maddie that we've talked about before when it comes

to China and the coronavirus. Yeah, it's a really critical story. The idea that China's government rejected a US Energy Department assessment that the COVID nineteen pandemic likely originated with a lab leak. The Energy Department, which had previously been undecided on the origins of the pandemic, joined the FBI, saying the virus likely spread via a mishap, and The Wall Street Journal reported exactly that yesterday. Well, our next guest had talked about this back in April of twenty twenty.

He came out saying that the most likely starting point of the coronavirus crisis was an accidental leak from one of the Chinese virology institutes in Wuhan, great to have back with us. Jamie Metzel, founder and chair of the global social movement One Shared World, and Atlantic Council Senior Fellow. He's worked at the US National Security Council, the State Department of the Senate Foreign Relations Committee so much you should check out his bio. We're so delighted to have

back with us, Jamie, he joins us via zoom. Jamie, it is good to have you here with Maddie and myself. You saw this line. You've been front and center for a long time about the virus and where it came from. To see that journal headline, tell me how you're thinking about this, To see it once again in the headlines, Well, Carol, it's nice to speak with you again. You and I've

been talking about this for years now. As you said when introwing me, from the earliest days of the pandemic, it was pretty clear that a lab origin was at least a very serious hypothesis that needed to be fully investigated. And now with more and more, albeit circumstantial evidence, it seems that the weight of the available evidence, which is imperfect, is leaning increasingly toward a possible lab origin of the pandemic.

That doesn't mean a bioweapon, it means a lab accident and obviously then followed by what I've been calling a criminal cover up. The Department of Energy has America's leading national laboratories. Many of your listeners will have heard of

the Lawrence Livermore National Lab. They have some of the top scientists in the world, and it's fantastic that they have been continuing to investigate, and they have shifted their perspective toward believing that a lab origin is more likely than not, which is, of course what I've always believed. What would you say is the single biggest piece of evidence that makes you feel like you said that it was a lab accident and a mistake and not necessarily

something more intentional. So it just wouldn't make sense. It's just logic. If China was developing a bioweapon and then intentionally released it. Everybody knows that you can't control a deadly pathogen like this, It just wouldn't make sense. And we don't need to bend over backwards. We can use Akam's razor in trying to understand what happened, because we know that the SARS Kobe do virus ancestrally comes from a type of horseshoe bats that don't exist in Wuhan.

Their natural habitat is more than a thousand miles away. We know that the Wuhuant Institute of Virology had the world's largest collection in the laboratory of SARS like viruses. We know that they were doing basically research and experiments attaching furan cleavage sites able to infect human cells two

stars like viruses. And then in the exact city where they're doing exactly that, we have an outbreak of a virus exactly like what they were intending to create, not to release, but I'm guessing as part of a research program with the intention of developing some kind of of pan coronavirus vaccine. And so I don't know if if you or your listeners heard that the entertaining rant of John Stewart on The Colbert Show, but he says, wait a second, the virus and the lab have the same name.

I mean, it was very, very funny, but it's it's an unimaginable coincidence that this could happen in the same place. And the more that we've learned, the more it's just seemed for me more likely than not that this does come from a lab origin, Jabe. Why is it important for us to know exactly where this virus came from. It's a really important question, Carol, because some people could say, well, maybe it came from a market, Maybe it came from a lab. Let's have better lab safety, and let's try

to restrict the wildlife trade. If that were the case, every time a plane crash, we would say, hey, another plane crash, let's redouble our efforts in airline safety. There's a reason why we try to overturn every stone understanding why a plane crash, because we know that's a very, very real problem. We don't fix it, it's going to

happen again. If, for example, we knew tomorrow that COVID stems from a lab accident in Wuhant, that would supercharge our efforts to regulate the proliferating containment virology labs around the world. China is building a level four lab in every one of its provinces, and right now, our safety and security you can hear I'm in New York with these sirens in the background. Our safety and security depend on the regulators and norms and other behaviors in every

country in the world. So if you're we're here in New York. There's a regulator or a non regulator in Uzbekistan who is or isn't overseeing a virology lab, and our safety and security and lives may depend on what happens there. It's just a crazy way to do things. And that's why understanding what happened will, I think help focus our efforts to prevent these types of tragedies from

happening in the future. Understood, Jamie, Why is it also important that China acknowledge that this is how it happened? And I think about this at a time when US China relations are not great to say the least, and there's such a need for transparency to be fair on both sides. Yes, So you know, people say, and many people have said this to me, let's let bygones be by guns. We're not going to get China to cooperate here. Let's play nice, let's not criticize them, and maybe hopefully

they will collaborate in the future. What I say to that is, there is absolutely no way to expect transparency and accountability in the future if we can't have it now. After according to WHO estimates, fifteen million people are dead from this entirely avoidable pandemic, because that's what happened last time with the First Stars two decades ago. China did this same kind of thing, covering, up, lying, and eventually it was forced to tell the truth and forced to investigate.

If we say, all right, well now we're giving China another past, but next time we really mean it, then next time we're going to see the exact same time type of behavior. And we need transparency and accountability, not just from China but from everybody. And that's why the standard is. Our lives are at risk. And whether you're a Democrat or Republican American citizen, I need citizen anybody. We all need to push for the highest standards of accountability.

Jamie good to check in, come back soon. Jamie Matzel, founder and share of One Shared World and Atlantic Council Senior Fellow, and as we said, has worked with the US National Security, in the State Department, and more. You are listening in watching Bloomberg Business Week. This is Bloomberg Radio. This is the Bloomberg Business Week podcast, available on Apple,

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