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Last all right, yeah, come on us and China. Why can't you be friends?
This story is in the upcoming new issue of Bloomberg Business Week. It's actually the remarks of the upcoming new issue, which will be on newstands later this week, already online at Bloomberg dot com slash Businessweekend on the Bloomberg It really gets to the decoupling that has.
Been going on between the US and China.
And what hey, don't call it decoupling.
What I'm going to call it decoupling. But Biden officials are saying, whoa, whoa, whoa slow your role on decoupling.
Let's get into it with Bloomberg Sean Donn and he's senior economics writer Aplomberg News with us on.
Zoom in Washington, d C. And then we've got the editor.
Of Bloomberg Business Week, Jill Weber here in our interactive Brokers studio. Jill whatever you call it, it's kind of a little bit dysfunctional.
It is.
I think it's like maybe the Great American Walk back. What do you think, Sean, is that is that accurate?
You know?
The coupling is a word that I've hated for years. It's a word that is it implies like a divorce. And I think the US and China are always going to be kind of neighbors that try to get along, that have a relationship, and they just try and put up fences here and there.
Are they staying together for the kids? That's what we want to know, Sean. Are they staying together for the kids?
I mean the coupling feels a little bit like that, right, I mean, it's kind of it's it's it's one of those hard ones. Look, the US and China have this immense economic relationship. They are among each other's top trading partners. They will continue to be among each each other's top trading partners for some years to come. I think what the US has been trying to do in recent years has been to try and cut off certain strategic parts of the relationship. You know, we've all been reading about
the semiconductors. There's this big competition over electric vehicles and so on. In the US wants to try and get ahead of China and compete. It's tired of having its intellectual property stolen. That's something we've seen in recent years or recent decades really, and so it's a dysfunctional relationship.
The US is trying to reset it. It's trying to put some boundaries there, and the Chinese are saying, well, if you're trying to do that, you're trying to contain us, and that's really impolite and that's awful, and so there's a terrible shouting match that's going on. The problem for all of us and for the global economy is these are the world's two largest economies, and if they can't get along, if they can't find a floor for their relationship, then it really is going to be a terrible buzz stuff.
And it's not just the kids that are going to get hurt, the whole neighborhood.
That neighborhood being the world so interesting.
We've heard Janet Yellen and Jake Sullivan recently kind of say as much in their remarks and speeches and whatnot. Wondering what was the language that jumped out to you that sort of attempted to reset with this narrative is yeah, so look, I mean.
It's it's there's two things. One, US officials have been trying with increasing frequency to get out there and say we are not trying to decouple. We're not trying to have this big rerupture with the Chinese economy. We're trying to have a sensible, strategic and focused change in the relationship. And then something interesting happened when Janet Yellen talking that she took that a step further and talked about the
relationship between national security and the economy. And then a week later, Jake Sullivan, the National Security Advisor, came out and he started using a term that the Europeans have been using and said, rather than decup, we're looking for a de risking of the economy, which is kind of a more polite Yeah, and it's a very European term.
It makes perfect sense to me, as jehean. Let me first say that I think it's an incredibly well written story. I loved it. I breathed through from start to finish, which isn't that I always do with my attention span on exactly, I have the problems learning disabilities. But I think it's right in this you know, black and white world where everybody's either in bed together or at war, to acknowledge that there can be nuance. Right, we're not kind of completely decoup, but we're not going to totally
isolate China. We just want to de risk and diversify. And that makes sense because we've been so concentrated in terms of the supply chain. We found out over COVID nineteen, over the pandemic, that we had way too many eggs in that basket and we need to move a few out. But that doesn't mean we're totally leaving.
And that totally makes sense. We all get that there's a problem, though, and that is that the world is more complicated and that there aren't these simple levers that you pull the kind of d risk or or decouple. The fact is is that you and I have been buying a whole lot of Chinese goods in recent years.
And even though you know we've had to try the trade wars of the trunk years that we all remember, the trade between US and China last year was at a record level, in part because of our appetite for Chinese goods and a lot of companies, A lot of big American companies still want to do business in China. Tesla still wants to sell cars in China. In fact,
it's adding to its factories there. So you know, the relationship is we can try and have this kind of Washington Beltway conversation about the risking and so on, but in some ways it's not just the governments that get to choose companies, and consumers are going to affect that
decision in a lot of ways. And the problem is that people are worried, not just about an economic conflict, right, people are worried that you get this rhetoric building and building, and it gets into things like Taiwan and worries about a a move on Taiwan by mainland China and how the US might respond in a more belligerent world, and that gets out of hand, and then it's going to be an even the uglier world.
So we also don't want to encourage slave labor. We don't want to support the Russians in their war in Ukraine. You know, there are things that we definitely need to be conscious of and make decisions based on those.
I find this to be a tricky pass for American leadership to walk, you know, because it's like they can't go maybe full Trump here, because we know what that looks like. And there's some version of backpedaling that is happening. But they can't backpedal too much because then if it's going to be Biden in the election, like you know.
We got back pedaling on China and on Saudi Arabia, come on the rematch.
And I think that's and I think that's one of the big issues that we have right now, and it's why we're seeing this language now. The administration is trying very hard to tamp down the relationship, to tamp down the rhetoric, because it knows that in the next year, as we go into a presidential cycle, things are going to ratchet up again and it's going to get even
more heated. So let's try and bring things down for earth a little bit now, and because we know what's coming ahead, and we also you know, it's a relationship that's not going to go away, and I think, you know, you're trying to set these new guardrails for the relationship. The administration has worked very hard to try and keep it focused, but the rest of the world is really
worried about this. And as much as the language is aimed towards Beijing coming out of Washington right now to try and reduce the temperature there, it's also about telling allies that, look, we're not trying to get into a conflict here. We're not trying to have a major rupture between the world's two largest economies. We know that this is an important economic relationship and it's one that's going
to endure no matter what we do. Uh, And we don't want the rest of the world to suffer as a result of of us going down a chaotic path.
Sehn.
Do you think the Biden administration would have wanted to have had this out in the open like this earlier.
If not for spy balloons entering the lexicon?
Yeah, so, I mean, we know, you know, one of the things I heard from from from folks as I was reporting this piece was a desire to get back to Bali And that's the phrase that they use. And Bali is where last November, Uh, President Biden and Chu Jinping.
This really is a romantic company.
We got to get back to thee they shot down, and they had their you know, they had their shot down in that kind of promise more engagement. They were going to get along better. Anthony Blincoln was going to head over there earlier this year, and then of course that balloon drifted over and everything went the pot. And you know what people in the youuistration are trying to do now is to get things back into a place
where we can start getting that engagement again. There can be a frank conversation and you can talk through your issues rather than yell at each other. It's completely unclear whether that's actually going to happen.
Yeah, But at the same time, and I'm going to bring up something Matt you shared, but it's also shown in your story that you know, it's not just the Biden administration in the US, you know, with a delicate balance when it comes to a relationship with China. And I understand that these two are the biggest superpowers out there, and I understand why it's so important. But Matt you shared earlier that Italy has signaled to the US that it tends to pull out of an investment packed with
China before the end of the year. We're talking about Belt Road, which has been such a big Chinese initiative. There's a bigger, broader global thing going on where everybody's being very delicate. It feels like slowly when it comes to China and their relationship, even Apple as they pivot to India a little bit, there's still like, you know, Tim Cooks over there, I love you, I love you, China present shit, you know what I mean.
Like it's this delicate balance.
Yeah, and look, the rest of the world hates where it's stuck right now, right because they're stuck in between these two quarreling parents, and it has they have important relationships with both with the world.
But isn't it like the whole world kind of stepping back a little bit from China.
Yeah, the whole world is everyone's reconsidering their their relationship with China, you know, and for all the reasons he talked about, whether it's slave labor in Xinjiang or whether it's just an over alliance on everything from semiconductors to
antibiotics coming out of China. At the same time, I think if you talk to allies of the US, a lot of them are also have their concerns about US industrial policy right now, and what they feel like is a more selfish economic policy coming out of the United States and the potential consequences for them there. And they also are more broadly concerned about a world that will
become more fragmented and what that might mean. And IMF came about, you know, a few weeks ago, so that was going to mean slower growth in the world, which no one wants.
It's you know, I would just I want to talk about what's going on debt ceiling, but I do want to tell our listeners to encourage them to go to the website read your story because it's a great piece, and even better, buy the magazine because I like the actual paper copy.
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I think this is really exciting. Cheryl mckisson Daniel joins US right now. She is president and chief executive officer at Mackissik. It is the oldest minority owned professional design and construction firm in the US. It's, as Carol was saying before the breakout family owned business for more than one hundred years, and I think it is incredibly interesting now, especially because of all the problems we're having regional banks, the jump in interest rates, the tightening of credit markets.
So I'm very pleased to welcome Cheryl to the program. Thanks so much for joining us. Cheryl, Hi, how you doing it? We're doing I'll speak for both of us, fantastic, Sarah. I love it because we have a whole week ahead of us and I'm just getting settled in here. Let me get first your take on being the oldest minority owned business, the oldest my already know design and construction business in the US, and a family owned business for one hundred years. How much does it mean to you?
How important is that to you?
Wow?
I stand on the shoulders of other generations, and so you know, I feel like I'm winning before I get started.
For them to.
Navigate this country of ours, this great country of hours, for five generations is an amazing thing, and so I feel honored, I feel blessed, and I feel as though I have a mission to keep this company going, especially in New York City.
So how are you doing in that mission right now? How is business at Meckissick.
Business is booming.
New York just passed a three hundred and twenty two billion dollar budget and a lot of that is capital work throughout the state. And then of course we have a significantly large budget for the City of New York, so there is plenty of work for Mechissick. Corporations are working or have large capital programs. I think the only area where we're seeing some slippage is with our developers
with respect to residential and office space. I think the interest rates are affecting their ability to make these deals work. And then we also need to deal with our affordable housing. We need to get something in place where we can get some assistance from our government for affordable housing so we can make those projects work as well.
Cheryl, take a step back.
Let's go to office because we certainly are just trying to figure out if that's the next shoe to drop. And we've been speaking a lot about, you know, the nervousness that continues, certainly among the regional banks. They rallied a bunch of them today, but nonetheless there's still questions. So office space specifically, how would you describe it? And you guys really work within the state of New York.
Correct, we're in New York.
We're in Philadelphia, Orlando, and down Nashville.
And you know, office space right now has dwindled, as we know, as a result of COVID. You know, if we just take my hometown Nashville, Tennessee, where Amazon just finished a beautiful, you know, mid rise building, there's nobody in it. People do not want to come to work the way they used to. Most people want to well, I wouldn't say most, but a lot of people want.
To work remotely.
We in Nashville, we're trying to renovate or develop a building that my building, my grandfather built in nineteen twenty four. And I was just on the phone with a prominent developer on Saturday saying, Okay, can we make it office space?
And the answer is absolutely not. You can't get a loan from banks for office space.
For my understanding, a lot of the banks that are failing are the banks that you know let money on you know, office space construction. And so you know, it is in a crisis right now. And you know, I don't see, from what I can tell, how we're going to recover with the office space without doing maybe some conversions.
Yeah, well the conversions.
Yeah, conversions. Housing is a big issue in New York.
As we know, we need over eight hundred thousand units of affordable housing. Housing is an issue in most urban cities, and so you know, maybe that's the answer.
But a bunch of developers I talked with at Milkin last week, they said, how do you take those buildings that are in midtown old buildings like they're just not the idea of converting them into housing. It just doesn't make sense. You really need to knock them down. But then there's the problems and issues where the exteriors you know, are old and wonderful and nobody wants to mess them up. So it's it's complicated and converting isn't so easy, or you know, creating conversions.
Is this good news for me chistic? I mean, can you guys do conversions or can you go to places where we knock down buildings and put up new ones? Is this great news?
We absolutely can.
I mean any construction project that's vertical, we are happy to participate it. On in I can't say it's great news for the private industry because we still need our developers to be able to borrow money at a good interest rate, so the deal makes sense for them, and so that's a concern for our industry.
So how much has it slowed down? Like does it?
Is it crisis situation in terms of what you've seen slow down in terms of development? And what tier of the market are you talking you know, is it top level top tier properties?
Is it?
Like?
What is it?
So?
So at McKissick, the majority of our work is with large institutions and government. So we work for the higher ed K through twelve, you know, like.
The Columbia Business School right uptown.
Columbia Business School, Lehman College, Hospital Olds, you know, Cony Allen. So those projects are moving along. You know, the MTA looks like you know, their their capital program is going to be whole.
And so that is the bulk of of mckissick's work.
We're not really working for private developers building residential or office space. But I can only talk to you about what my colleagues are telling me that are in that area, and they're telling me that their projects are slipping out to the point that you know, they're carrying staff in hopes that a project's going to start in six months, but what if it doesn't what if it gets you know, trashed completely because the interest rates are still a problem.
You know, there are companies in New York who have gone out of business in the last two months just around that issue.
Yeah, because they've felt staff you.
Know, you basically and mc kissing you have the dream product mix. Then you want to be in hospitals, you want to be in universities, you want to be in you know, federal government projects, because they get credit cards exactly. But your colleagues that are in other sectors, they're not able to get loans, or if they are, the loans are just unaffordably expensive, is what you're saying.
Well, yes, right, And as a result, the builders for those developers, you know, what do they do with their staff because the way we went our work is by having confident staff to you know, implement, you know, whatever project that we're going after.
And you know, staff again is hard to find, so you can't let us a key staff person go. You have to hold onto them in hopes that the project is going to start. And so I'm seeing that across the board with these construction firms that work for private developers that are in the office space or residential space.
Yeah, we've heard that a lot in terms of the labor market, that builders just don't have the people that they need.
As a result.
What is that?
Still is that still putting pressure on costs, the development costs and just unfortunately Shara only have about thirty forty seconds left.
Yeah, well development costs, everything's going up because the supply chain is a problem still So still yes, still, yes, you know there are contractors who have contingencies just based on supply chain issues and the cost that might you know result as the you know, because you can't get switch gear or any other kind of product in a you know, reasonable amount of time. And as we know, time is money, and so you want to make sure, you know, you cover yourself if you have to wait
on a supply chain. So yeah, those issues are still out there.
Yeah that listen, what a great dvantage point and just very real in terms of what's going on and what a great company.
I want to come over and check out the buildings you're putting up. It sounds awesome. I want to go to Nashville and see that building their grandfather put up.
Let's go on the road, Cheryl'll come back soon. We would love it. Cheryl McKissick Daniels. She's president at McKissick.
Joining us via zoom in New York City.
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All right, we want to kind of ship back to the markets if we may, because one name that's certainly been front and center and that has palent Her soaring more than twenty percent. We saw it in the aftermarket, we saw it in today's trade. I was just going to pull it up on the Bloomberg and see where we are up twenty three percent, so pretty much holding on to its gains. A lot of it is because they talk so much about AI on the call with analysts.
So let's get to it with our Yes Bloomberg News VC and Startups reporter Lazette Chapman in our San Francisco bureau. And Andrew McAfee, MIT scientist and work Helix co founder at the MIT Sloan School of Management. He joins us via zoom in Boston. Folks, thanks so much for being here with Matt and myself, Lazette. First off, just briefly kind of what we heard from Palenteer, in particular the excitement and narrative around AI. Tell us kind of what we got from the company.
Yeah. Sure.
Palenteer, of course, is a tech company that's been unprofitable for two decades up until this past quarter, so that was another thing that's been driving the surge and the stock price. They did a surprise profit, and then they pivoted very quickly to talking about this AI platform that they say that they've been working on for the past
several months. They will be releasing to select customers they didn't say who a little later this month, and then it'll be available more broadly for their hundreds of customers in the months to come. Of course, their customers include some of the the you know, largest branches of the military here in the US, as well as that of our allies, along with a bunch of commercial customers.
So that's driving the news.
So and Andy, let me ask you about, you know, what kind of worry this could be When I read the Pallenteer story and I saw that they deal with very sensitive data, criminal databases, DMV records, phone data, and that they would be providing solutions AI solutions to the military to bring to dig through this data as well as you know, other institutions. I thought it's a little bit scary, and then I saw the CEOs quote Alex Carpi says the machine must remain subordinate to its creator,
as if the alternative is even a possibility. You Andy wrote the book Raise Against the Machine with my buddy John Brynielsen's brother Eric, so it's great to have you on the program. Should we be worried about this AI, especially in the hands of a company like Palenteer.
We should always be mindful when extraordinarily powerful new technologies come out, and generative AI is an extremely powerful new technology. One way to think about it is, we have finally built a technology that understands this, that is fluent in human languages. This is kind of wild and we weren't expecting it, and Matt, like you point out it can be used for all kinds of purposes.
I'm actually optimistic.
I think Palenteer has a pretty long PreK record of safeguarding the sensitive information that it's given and of building very powerful technologies that normal human beings can work effectively with. I think it's an ideal match for this new category of generative AI, which is all about letting us do this and interact with huge amounts of data.
Well well ways.
Like Lizette Nandy, this is why I wanted also to talk to you, because I feel like we need to be rationalbal rational as we talk about AI, because I feel like there's a lot of folks out there saying, oh my god, you know the world's coming to an end. Andy, what is the smart conversation? As you say, you know, there's lots of data and information in the hands of a lot of companies already, I would say and argue just about every company.
That's out there on all of us. So what is the smart, rational.
Conversation to have around AI and a company like Palenteer.
And what's not going to happen is that chat GPT is inadvertently or with Palenteer's help, going to take all the things that the NSA knows about it and tell the Internet about all that sensitive information.
That's so unlikely.
We don't need to spend a lot of time on that. What it's going to do instead is let an analyst at the NSA use different techniques to interact with huge amounts of information and draw conclusions with it. Now, again, there are risks associated with that, but I think it's fundamentally a quantum jump in productivity and in our ability to deal with machines and huge amounts of information.
Well, you could, I mean see AI, Lisette. You could see the AI using for example, the way back machine and digging into Carol's social media profiles. Maybe she posted a picture that wasn't very flattering on friends to her back in the day.
And not all Facebook, not on friends, and now.
Someone could go and find it. Isn't this a concern? I mean, you could find it anyway, But this is a giant machine helping you to do that kind of things. That kind of stuff come on in z that.
Yeah, I was just going to say, I think it's really worth keeping some sense of context around this. This is information and data that Palent's software has allowed, has aggregated, cleaned and integrated for you know, the intelligence communities, for the IRS, for the veterans affairs, for all sorts of military operations of ourselves and our and our allies for
over a decade, if not more. The AI tweaked to it, if you will, is simply applying that data against large language models to go ahead and make it more accessible to more users that have the permissions to access this different information, this different data sets. You're not allowed to access it, you're not allowed to use it without it being logged and pallateer software, which they say is going to make them more secure or already more secure than some of the alternatives on the market.
But Andy my understanding, there was a great thing. I think it was in the times of just kind of a very basic understanding of how generative AI works and how it like initially it's kind of code and gobblygook, and then it gets smarter and smarter the more information that's kind of put into it, So something like whatever Palenteer is using or anybody out there gets better and smarter and more accurate the more data that goes into it.
So two mets concerns and sentient. He's freaking out here, he's heading for the hills.
Amazing, I mean use that word.
That's that's the term crator worry that don't need to.
Discuss what's the balance of making our next level of AI maybe incredible for our world and smarter and safer, and also securing that it doesn't get into the wrong hands.
Well, I think, like we just heard, companies like Pealantry have a long track record of segregating the data and making sure that it can't ump over those walls very easily. So that's not a thing that I'm worried about. You point out, Carol correctly, that these large language models tend to get better, they get more fluent, they get more nuanced as we give them more data.
Great.
I would like to interact with an extraordinarily fluent, nuanced, very flexible technology. I spend a lot of time filling out spreadsheets, making budgets, doing.
Stuff like that.
I would love to be able to say to a piece of technology, hey, give me the first draft of this and let me tweak it from there.
That's what I think is the real innovation here.
Well, and you know the limit on that is going to be the ip that the large language model has access to, right, Lizette. So I mean, for example, I would love to generate an AI chatbot that can comb through all the different used car sites and find me the exact nineteen eighty five nine to eleven sc that I want without us on roof please, But it can't because Auto Trader, Car Gurus, Classic Cars, Hemmings, they don't allow these large language models to come in and look
at all of their pictures. Yet if they don't have the IP, they really can't do business, can they exactly?
And so that's what we're going to be seeing and that's what they're working on now at Pallunteer. In the weeks and in the months to come, they talked about refocusing the engineering resources of their three thousand plus mostly engineers on staff. They have a very small sales team and they're looking right now.
To build.
You know, this platform on somewhat of a bespoke basis for customer after customer because like everyone has mentioned before me, it really comes down to each individual use case, what data they have access to and what you know, how they can bring that forward with AI to two larger use cases that are that are generative.
Hey, you guys, I want to put this to both of you. What's the company to watch when it comes to AI right now? Is it feels like everybody that's right, any earnings call that's the words that have been dropped.
It's obviously not IBM it because volunteers. As we have AI and the stuff goes up twenty three percent, we have new AI and the stalk falls person.
To both of you. Lizette, you first is Poundteer? The company to watch? Is it Microsoft? Who is it?
Let's see how they do and their results? Okay, you know this is a platform that they still haven't figured out a pricing strategy. Carp Alex CEO Alex Karp said, our strategy is to take the whole market.
They're building it on the fly.
They are pricing it as well on the fly, and we'll have to see how that works out in earnings. They have a big event coming up at June first to say more about it, but proof's going to be on.
The pudding, Andy, who are you watching?
Who's the company that all of us here at Bloomberg should be watching when it comes to AI? Is it?
Can we whittle it down to one person or one company?
No, But the company that I'm going to be watching very closely is Google because the team at Google wrote the paper in twenty seventeen that that presented the architecture that OpenAI is now using for GPT four and chat gpt.
That was a Google innovation.
They published it openly, and another company has taken the first steps with it now. I don't have any inside information, but I'm pretty sure that Google is very keenly aware of that and would like to get the momentum back in the AI space and the generative AI space. They also have an extraordinarily deep bench of talent here, So that's the company that I'm really watching with keen interests.
I just wanted to ask what you and Eric are up to now? You know, you know what are you doing?
Andy?
Eric and I talked about this stuff all day.
We are the co founders of a startup that is working in the generative AI space. We are plotting our next book and our next research that Matt, these are fascinating times. We haven't seen progress this fast with an important technology in my career, and my career is long enough to encompass the web and the smartphone and the social web.
This stuff is crazy, and it's getting better so quickly, and more capable, so quickly.
Bigger than the Internet, bigger than an engine.
Compare it to I don't quite know. Okay, it's up there, it's up there.
Pretty cool. It just developed so quickly.
I know, well, well, actually AI has been around for a long time. This is just a whole other level and it just keeps getting.
Right exactly, and we weren't expecting this particular leap this quickly. And then the companies have demonstrated who are leading the charge here, how quickly their technologies get better. If you go look at the images that AI can generate, and you go back just twelve months, you will see these staggering improvements in the kinds of images they can generate in response to a prompt.
Sounds like I called them off guard as well as the world.
I actually saw AI make a trailer for a new Wes Anderson version of Star Wars, and it's pretty impressive.
It is pretty amazing. We lost Andy, Andy, come back soon. We want to continue this conversation, both of you. Incredible Annie McPhee McAfee, excuse me, co director, as we said, am I yes, yes, yes, MIT scientist and work Helix co found our just want to get it right at the MIT Sloan School of Management. Then, of course our thanks to our Lazett Chapman VC and Startups reporter.
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You love them verty.
Christina Stemple.
She is founder and CEO of Seattle based farm Girl Flowers. She is here in our interactive brokers. Dude, a little bit of a whirlwind trip back to New York. How are you?
I'm great? Thanks for having me?
Wait waiting back to New York. Are you grew up on a farm in New York?
No?
Come by the mic.
We want to make Indiana, Indiana come to New York frequently. And I get to talk to Carol. I love talking to you guys. Okay, okay, And you brought flowers.
We should say for listeners who can't see, we've got a couple of gorgeous bouquets up here, and those are.
YouTube and Bloomberg originals can see them.
Though, yes, exactly, I was going to say that, let's drive the traffic there, flowers.
What is the what is the drop dead date?
I would say right now? Actually, when you said Friday was oh, really late. Yeah, I mean it's the sooner the better, you know. We do do some deliveries on Saturday, but depends where you live in the United States and whether you can get delivery on Saturdays. Sundays. We do
not have local delivery on Sunday. So really, Friday is the last time you can order flowers if you live in a place that is lucky enough to have delivery otherwise earlier the better we all know, Like delivery delays are everyone so what?
So all right, let's say I order flowers for my mom and for my wife who is a mom, and then do I like keep them in the basement refrigerator and break them out on Sunday or I mean I.
Sent my mom her flowers. She got them on Monday this week, and I say happy Mother's Day week like you is. Yeah, nobody gets mad about early flowers or gifts. They get mad about late ones. I say, it's a Mother's Day a week and pam for her all week long.
What's demand like right now?
It's high, it's really really high.
To go back to pre pandemic level or what is not?
No, But I well, I mean I would say that if we did Sunday delivery jests, probably because everybody's last minute. But you know, the economy is definitely impacting every business, including us. But right now we have the demand thanks to the big flower companies that have spent you know, a century, you know, building up flowers as gifts, which
I'm really grateful for. So we don't want to miss out on the demand, right But it's really hard to scale a company, as you know, everyone knows you can't really scale a company from like, you know, twenty x what it is normally without having to scale back down afterwards.
So do it because like a UPS will pull in some of the executives to get out in trucks and so on and stuff with and drive during like the holiday season.
Right, Like we see Amazon hires more people.
What do you do?
We do the same thing. Everybody is like, you know, we're all heading to Boston from here from New York. We already have people in Boston working. We have people at lots of our position your main distribution. No, it's just one where we had more space. So that's why we you know, we ramp up all the places that we can get more space. We have places in California that we have you know, people at we have South America. We have a a AY in Ecuador and Qito that
we scale up to full capacity, multiple shifts. We just really, you know, we're not going there.
Are other I mean, surely Mother's Day isn't the most flowers, right, Isn't Valentine's Day?
No?
It's not really, I mean, industry wide, Christmas the holidays is the biggest reported holiday for flowers. For us, it's Mother's Day though, because the holiday, you know, Christmas holiday is more like you know, trees and wreaths, and it's.
The red belity flowers they call those, yes, point set us plants things like that, but cut flowers.
Our industry and our niche is Mother's Day. Mother's Day is like it's not even just the super Bowl. I'm calling it this year like we usually do. It's literally every holiday wrapped up into one because we need it to be so big because right after Mother's Day we go into the summer slump, which means we're gonna have four months of lighter sales than normal, and this year is gonna be even worse, probably because of the economy.
So so well try and offset that with other programs. A buddy of mine once when my wife had our first baby, gave us some kind of subscription where we got a new box of flowers every month. Yeah, and my wife has said for the last three years it's the best gift anyone's ever given her.
That's a great testimonial everybody listened to. Yeah, we do subscriptions as well, which are great. We do some you know, weddings and events and things like that will will pop up in the summer. We do faux flower arrangements, and you know, we're just constantly trying to come up with new things that will keep you christ State.
And how much of your revenues is booked on this holiday.
Over twenty percent of our annual revenue will come in one week this week, so it's a big deal.
Yeah, So you know I was asking for you got in because Matt and I talked with a guest earlier about where produce and fruit are.
All coming from. Where do all your flowers come from?
They come from all over the world, but mostly from South America and Europe and some United States. So right now, for the whole year, we'll probably be seventy percent South America seventy percent important, thirty percent domestic. Certain holidays, it'll go more to like forty sixty or fifty to fifty. But for the year, you know, we're trying to get it more to a fifty to fifty. But you know, flower farming is is is. There's a lot we get to here for an hour about flower farming in this country.
Why.
I mean, it's expensive. You know, it's your competing with other countries where they don't have the same you know, flavor issues. And I mean think of how much you have to pay per hour right now, plus all of the you know, insurances and workers comp and lawsuits and legal and things like that. It's just really expensive.
What is the flower to get for Mother's Day? I mean, I know on Valentine's Day, get the roses at Christmas? I get the point sets you know, is there one for Mother's Day?
What is it?
Yes?
But I would also say don't do roses on Valentine's Day, But that's another story.
Okay, I'm with you. I am so with you.
Yes, women don't actually want roses, but peonies. We pulled ninety two percent of our customers and peonies are their favorite, and thankfully it's peenie season. We are beholding to mother nature though, so we've been on pins and needles because you know, you place these orders, put them on for sale on your website long before you actually have the flowers in hand, and if it's too cold or too hot, it messes everything.
Does that happen?
It happens all the time.
You know.
Last year we had you know, thirty percent of our ponies on order didn't come in in time. They came the week after Mother's Day and so last minute we had to fly them in. It was really expensive. You know, it runed our cot. You know, our Uni economics for our bouquet is like great, we just extold all those at a loss, you know, for some of them. So this year it's looking really good, so fingerscrass. We still have one more shipment coming in this week, but so far, so good.
Yeah, that is I mean, your supply chain, how complicated is it? It's nuts and how expensive and like you know, we talked about sustainability, like moving stuff in, I mean, how do you work on that?
It's I often say, like anything we do after perishable, like really perishable product that we have is going to seem like a cake walk because you can't make a mistake. You're beholding some other nature and we found that she always wins. You cannot fight mother nature. Literally, she will win every time. So you know you're just beholden too. Is it too hot? Is it too cold? Is there shipping issues? Like after they leave our warehouses, then we have to rely on you know, third parties to deliver
them on time. And you know, people are upset when they're not, of course, and then they're dead and swift to reshift. And if you over order, it's going to end up in a landfill. You know, it's gonna end up compost. You know, you can't just sell us sweater like a sweater later in you know in June?
What do you do when you have leftover flowers? Do you bring them to like I don't know, churches or shelters or.
The few times that we do, Yeah, I do a flash say we are we do a flash tell if you see us do flash down, I'm like, oh, that's a little bit of it here that we over ordered. So we do flashtail to sell them really quickly. But we're really really good at our supply chain.
I need to ask you because I feel like with the banking and the regional banking crisis and so on and so forth. You know, we've talked with you in the past about funding evaluations and so on and so forth. Are you able to access all the funding.
That you need. We are still bootstrapped companies, so we are still Yeah, we've never taken any outside capital. We got one hundred and four no's now we probably could raise capital.
May know now you don't need it.
Now we don't need it. We're doing okay without it. We just kind of kick at old school and spend less than we may bank like banking or anything like.
You don't need any of that.
Yeah, we're okay right now. Banking, we had some issues with Our bank was Silicon Valley Bank and First Silico val One, so we had it. We had some glitches in the last couple of months. The First Republic was our secondary bank. So we are now with Chase. So yeah, of course, you know, so we're now you know'd, we're confident know about that. So we'll see if there's funding options there, but if not, we're just reinvesting our profits and trying to grow kind of old school.
At twenty seconds, What is the next big growth project for you guys.
Next big on. I mean we now are looking towards fall, already putting orders in for Thanksgiving and Christmas and looking forward to that. An exit plan or anything. I mean, yes, I'm definitely looking for an exit plan as well sometime or I'm just going to be one hundred years old.
Work one hundred hours a week, always amazing, always fun. I love talking with you because I've said this to you before. I love small business and try and get an idea, and you're not so small. I mean, I don't know what your market cap. It's tens and millions of dollars.
It's yeah, and we're doing okay.
Good luck with the holiday. Christina stambul Matt order your flowers.
I'll order them now. While Christina is in this udio.
She's founder and seat of farm Girl Flowers. Joining us here in our 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, and YouTube.
You can also listen live to our flagship New York station, Just Say Alexa Play Bloomberg eleven thirty.
This is nassigras console.
I'm stander.
All right, We're going to talk a bit about space explorish and when you think about it, yeah, you think about the billionaires, you know, Musk, Bezos and Branson. But what about the former dishwasher engineer who is also successful sending rockets into space and giving Musk perhaps a run for his space money. This story is the cover of the new issue of Bloomberg BusinessWeek, on newsstands tomorrow, already online at Bloomberg dot com slash BusinessWeek, and it's on
the Bloomberg terminal. The story an excerpt from Ashley Vance's new book entitled When the Heavens Went On Sale The Misfits and Geniuses Racing to put Space within Ray's reach. Excuse me, great title, Ashley, As you know Bloomberg BusinessWeek
features writer. He's also author of another book on Yeah, one of those space billionaires, Elon Musk Tesla SpaceX in the Quest for a Fantastic Future, Ashley jetting us on Zoom from Palo Alto, California, along with the editor of Bloomberg Business Week, Jill Weber here in our interactive broker's studio. Joel incredible story and we do focus on the billionaires, but there's so much more here, including what is in Ashley's book.
Yeah, I'm really excited about this book because you know, BusinessWeek did a space issue of a number of years ago, and wow, it was ahead of its time, but not as quite as thorough as Ashley's book, which takes this idea of like, look, there's going to be a space economy and it's going to look completely different than anything that's come before it. It's going to involve a lot more satellites in space and this low Earth orbit thing. Just get ready to hear so much more about it
and the entrepreneurs that this brings out. Obviously there's the Elon Musk and the SpaceX thing, and they really helped pioneer what this looks like.
But they are not alone.
And that brings us to the excerpt because there's this really unlikely SpaceX rival that actually found And by unlikely, I mean you couldn't imagine a more unlikely candidate, right Ashley, Yeah.
Well, no, it is a one of a kind story.
You know, You've got this guy named Peter Beck who's from New Zealand.
I think a lot of times in space we think.
Of you know, either the billionaires or you're like a NASA veteran or some MIT PhD. But Peter, you know, he essentially left school at sixteen, got his equivalent of the GED and was working at a dishwasher maker, you know, as an apprentice, and then he worked at a government lab for a while. But he really just did He's like this possessed engineer who was doing all this rocketry stuff in his spare time and is in the shed outside of his house, and he made it work.
I mean, like for one.
Hundred years, individuals had kind of tried to make a small rocket that could get to space, and Peter's the first one that actually managed to pull this off. And today Rocket Lab is like the second coming of space X. They're really the only two commercial rocket companies that are making a real go of it.
So tell us more about this guy, because New Zealand not exactly known for space exploration or rockets, and yet here we have a guy and Planet Lab publicly traded company.
How did this all come about?
How do you get into rockets when there is no rocket industry around you?
Yeah?
I think just through force of will you know, I mean, Peter is he must be like, I don't know what number you want to put on it, like a one and a billion kind of engineer. And and you know, he did a lot of this early work building sort of a small rocket and then a little bit bigger one and then and then finally getting to something that could could play in this commercial field.
And he was able to Marshall.
You know, there are these regulations around the space industry that forbid American engineers from helping a New Zealand company like rocket Lab, and so Peter he didn't have anyone but had like build a rocket.
Before on his team.
Nobody was like real experience doing this, and he cobbled together this group of twenty year old New Zealanders and Australians and they managed to pull this off. I mean, he's he's sort of like what I think of as the platon ideal of engineer. It's just like runs in his blood, like Elon wants to go to Mars. Peter like just wants to make things that go fast and rockets and is just possessed to.
Have to do that.
Well, it's so cool that someone with that perfect description of engineer's personality in mind ended up with the money needed to sort of take that vision and personality and turn it into what he was able to turn it into. Can you talk a little bit about how he got that money and the operation he built that you described as something that might have looked absurd because it was three people in an office the size of my New York City apartment.
Yeah, I mean, you know, this is like the story of commercial space right now. You know, for sixty seventy years, this was government backed stuff. It was the thing that nations did, and only a handful of nations had ever really been major players in space. And then we had this kind of like billionaire era, obviously led by Elon who is the most successful, and now you know, we're in the venture capital era of space. Over the last two or three years, about two hundred and fifty billion
dollars have been put into commercial space companies. And rocket Lab was was near the front of that line of Peter. He was with these three guys in this research lab and they built this tiny rocket and sent it off and it was it was enough of a proof of concept that he seemed real that he could come to Silicon Valley. Coastal Adventures was one of the first companies to put to put money into it. But you know,
there's a pretty funny story in my book. I mean, Peter comes to the valley, is this total outsider, you know, and he's like putting his engines and his rockets on the table and just like assuring these guys that he can do this. And he kind of like did it at the right time and has they're a public company now. I mean, you know, he's really gotten quite far all this and pave the way for for dozens to hundreds of other companies.
I want to talk about just how crazy that is because that burst rocket he built. When you write about this in the book, and we excerpted this part, he ends up holding a bar of solid rocket fuel in his hands. I can't imagine a more dangerous idea. But yet, in order to do this, he had to figure out the propellants. So walk us through how that challenge, how he cracked that challenge.
Yeah, I mean, this is a guy who, like I'm not kidding, you know, he used to just he would make propellants on his own, you know, at his house. He used to dress himself up in like garbage bags just to keep this toxic stuff.
As a parent when your kids like, I'm gonna go over to Peter Beck's house, You're like, no, he's not exactly right there.
Like, you know he as a kid, he had this like total freedom growing up, Like he would just go on the shed and his parents wouldn't see him for hours and then but yeah, he would put these plastic bags on. He was telling me, you know you have this this apartment. At one point he's like, yeah, I don't. I did so many experiments. I don't think the grass is ever going to grow in that in that spot again. And and there's this amazing video that people can find on YouTube.
The first rocket was called the at One.
It's a T E A and and you know it's Peter, two other guys, you know, and Peter's got this white lab coat on to sort of add some kind of like.
Semblance so that he knows what he's doing.
And they're just literally in a shed on an island in New Zealand, and he hits this button and the rocket takes off and it works, and he's just out there shouting. I mean, there's something like kind of just very wholesome and authentic, and and you know, we write about it.
In the story.
I mean, he's a bit of like the opposite the anti Elon. This is not like a this is not a guy on Twitter stirring things up. But you know, he's just very focused on what he wants to do.
Okay, so we can definitely talk about the anti Elon, But in order to talk about the anti Elon, we also have to talk about the Elon because you know, SpaceX obviously has pioneered this. What does Elon have to say about Peter Beck and Planet Labs and the two of them have met, actually.
Right, they have.
I mean I actually like arranged this dinner matchmaker. Elon's like, Peter wanted to have dinner. I was like, well, you better buy me a steak and bring me some flowers. But you know, I mean SpaceX, Look, they are the giant in this this field. They're sort of lapping everybody. But the you know, Rocket Lab is incredibly real and the only you know, other player. But I think for Elon at least he Elon claims, you know, Rocket Lab was not on his radar. We were talking on the
phone when I was in New Zealand. He's like, oh, what are they up to? And then I did set up this this dinner with Peter, and I think maybe Elon's tune changed where Peter said, you know, it's kind of like, be careful of poking the bear. Because because shortly after they had this dinner, SpaceX started this program where they do these these ride shares for small satellites, and small satellites are like what rocket Lab specializes in, and SpaceX drop the price drastically for what they charge
to take these small satellites up to orbit. And it looked, you know, very much like a direct shot at rocket Lab. So I don't know if Peter regrets regrets that invitation.
It sounds like yes, maybe, But it's interesting, I mean, Ashley, when you look at the entire space race again, if you will, it's a very different one than it was from the sixties, right under President Kennedy, and it was very government led, right, and all the money that was plowing into it. I had a dad who was involved in it, you know, from the government perspective and.
Public private partnerships.
When you look at it today, is it going to require Yes, the Elon Musks and SpaceX's of the world, but also the Peter Beck's in the Rocket Labs of this world as well.
Oh yeah, yeah, I mean things are so different. I mean it's kind of you know, sort of amazing like that. From the Apollo era until about I don't know, ten or fifteen years ago, you know.
Things really hadn't changed that much.
The rockets, look to say, the satellites were on very antiquated technology, and we've had this huge shift. You know, Space X sort of kicked things off, but now we have We've got much cheaper rockets the satellites, like for the first time, I write in the book, you know, we've brought Moore's law to space. It used to be these these very specialized computing systems that we're old and we're using like consumer electronics. Now it's all very modernized.
And you know, the biggest data point I can give people is that from the sixties until twenty twenty we had put up two five hundred satellites in lower Thwarbit. From twenty twenty to twenty twenty two, just the last two years, that number doubled. It's going to double again this year and the next year we're going to get to one hundred thousand satellites.
It's amazing.
Possibly like in the next decade, and so you know, it is not governments that are are putting all those things up. These are companies that are building a sort of computing shell around the planet. And I think this is like our next is our next big technology infrastructure play, you know, like the next stage after sort of the dot com boom.
So by the end of your book, do we know who is going to win?
No, this is still still tom.
I think it's going to be AI generated Ashley. It's something that we just don't even know yet.
We already have. We've already got AI in space, you know, for verre or worse.
But but you know, there's a couple companies that are kind of clear winners, like Planet Labs is this satellite company. They pioneered sort of the low cost satellite and they're doing great. Rocket Lab I'm sure will be around. I think we're going to have There was such this like frenetic explosion of activity. All this back stuff helped, you know, add some gas to the fire, and I think we're going to have We just saw Virgin Orbit go bankrupt. I think we're going to see a little retrenching here
for a minute. But the underlying principle that like the economics of this, that this is a business as opposed to a government led endeavor. You know, I think all of that stuff holds.
Okay, So we got to talk about Rocket Labs here. Who else figures into the book that you were excited about, don't you?
Yeah?
I mean Planet Labs, the one I mentioned. They're the satellite company. They've surrounded the Earth with hundreds of imaging satellites. They take pictures of every spot on Earth all every day and sort of get this.
Sounds like espionage, but it's not really.
It's more like this this kind of like real time accounting system of human activity. You know, where is oil going, how many cars are in a Walmart parking lot, how many trees are in the Amazon sort of counting these things. There's another company called Astra, which is like the the opposite of Rocket Lab. It's this sort of like chaotic, fast paced company that's trying to make the cheapest rockets ever created and are sort of.
Going through some things and then maybe you know.
One of my absolute favorite stories is this guy Max Polyyakov, who was the former owner of a company called Firefly.
He was Ukrainian.
He poured two hundred and fifty million dollars into this rocket company, and then you'll see in my book the US government tosses him out of the country right before the war with Russia.
Unbelievable stories. Fifteen seconds. Elon, though, in your view based on what you're seeing, because is still very central to what's going on.
Just very quickly is Elon?
Did you say yeah?
Elon?
Oh?
Yeah, I mean SpaceX is just the dominant force looming over everything in commercial space. They're lapping everybody.
Just watch if you have dinner with them, because he might impact what he's going to do. Ashley Ohwi's Great Stuff features writer Bloomberg business Week. Check out his new book, When the Heavens Went On Sale, The Misfits and Geniuses Racing to put Space within Reach an excerpt in the new issue of Bloomberg Business Week on newstands, online and on the.
Bloomberg and Our thanks to Jill Weber as well.
This is Bloomberg.
You're listening to the Bloomberg Business Week podcast. Catch us live weekdays from two to five pm Eastern.
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You can also listen live to our flagship New York station. Just say Alexa Play Bloomberg eleven thirty.
Carol Masser along with Jess Mettin.
She's back at our Bloomberg Interactive Broker's studio. I'm here live in Beverly Hills at the Milkin Institute Global Conference. I'm reading from a book and here's what it says. Those first weeks that United were a frenzy of NonStop activity, from the moment I walked into the office on my first day to the moment my heartstop thirty seven days later. This book is called turn Around Time, Uniting an Airline and its employees in the Friendly Skies, and it's written
by Oscar Munos. He's the former CEO of United Airlines, which then became United Continental and then back to United. He was also executive chairman at United. Oscar, it is so wonderful. I wish I was back in our studio with you, and I know you're there with Jess. Congratulations on the book. It's very personal and you talk about your time at United. Tell us a little bit about when you landed No pun intended as CEO in twenty fifteen, it was.
Five years after their merger. What was top of mind?
What were you seeing Oh well, thanks thanks for having me both of you. It's great to see you. And I listened to you guys quite a bit, so it's good to see you personally.
You know.
I think, you know, I had a lot of insight into the business only because we all was on the board. But as we all know, being on the board and
leading something in is a very different situation. So even in a short few days as I met tonight traveled, I could I could sense, you know, there were smiles and nagulation and people wanting to say hello, but there was always this kind of this lingering, holding on to a sleeve sort of thing and look at like, almost without being dramatic, you know, help me, help us sort
of things. So I could sense something, and I think my first, my first interview, I used the terms I'm finding our team disillusion disenfranchised, and disengaged then on the three d's, just because they had and I also said I'm a little embarrassed as a board member that we didn't see this before. And so that's what I found to your question, And then of course lots of things happened. Everybody wants to know what you're gonna do first, and I thought I would ask my team rather than myself.
All right, there's a lot I'm sure of conversations and talking to your team. One month in though you did suffer a near fatal heart attack, I can't even imagine some of the things that you were dealing with personally, professionally.
Give us a little bit of what that was like.
I read a little bit of a passage from your book, but I just can't even imagine. Take us again back there.
You know, it's every time I begin to talk about it orally, when I write about it, all of that comes back to you. Because heart disease is the biggest killer in America by far. The symptoms are varied and wide, the difference between men and women, and unfortunately, what a lot of people do is they just ignore those signs and you know, we take a shower, we lay down,
and of course never to be done. So I was fortunate to have a good friend who's a cardiologist, who I did a lot of again, I trained for you know, we ran marathons, we did long bike rides.
I mean, so I was fit. I was a vegan.
But he'd always kind of warned us that heart diseases is not optics, it's internal plumbing.
And one day in.
Particular, he said something to the degree that listen, if you ever feel anything weird, call nine one one. The worst you can be is embarrassed. And then he added something that I remembered those a couple of years later when I had my event, when he said, when when you call nine one one, immediately tell him where.
You are, which like, duh, of course that makes sense.
But then he had it because you may not make it past the phone call, and I remember exactly where I was, and I'm like, okay, that's a little dramatic. But two years later, I'm sitting there having my vegan protein shake after a run, and my phone buzzes and I go to move it and my legs sort of give out. I feel clammy, and his words came rushing back. I crawled over to the landline. Some of you may know what that is and call nine one one and
told him immediately where I was. So thirty seven days into the job, and again in the story you really can't make up thirty seven minutes later, Wow as in the hospital and I was on life support on a heart artificial heart lung machine because I had my heart had gotten pretty blown up.
And how did this end up basically transforming your career as well as how you ended up managing United through what Carol was just talking about, this huge transformation between twenty fifteen up until early in the pandemic when you were still CEO.
You know, the few days, the thirty seven days before the event, the Heart event, I got a chance to meet a lot of the people that united what became pretty immediately my family. And so to your question, there's two things that happen, not quite transformational, but certainly ratifying. The outpouring of love, support, kindness, food, flowers, car herds from all over the world from the United Family was amazing. My kids would read those notes every day, so you know,
I confirmed what I had seen out there. These these are wonderful people, but they're sort of wandering nomad's in the desert, and there's no North.
Star for that, by the way, North starts Plaris, and if you fly us, you know us.
So there's a history and a tie into everything. So the people were amazing. The second thing for all of us out here, you know, this concept of mind over body and all that sort of stuff. I never once thought I was never coming back. I never once thought I was in any kind of serious situation. My doctors didn't agree with me.
Right, I mean, I'm surprised to hear you were a vegan and this happened typically to think that would be obviously more healthy lifestyle.
Again, you know, heart disease is a genetic aspect. I didn't know my biological father, so I didn't have any of that history. So it's what's important for all of us get. You know, if an EKG doesn't do anything stress tests do. There's more invasive process and there's a lot of great new technology that's coming out that's going to be if you think about breast cancer and the old way we used to you know, women used to do it.
Now mimography comes in.
There's new as a company called Clearly that I'm involved with that does in essence mimography for the heart. So there's a lot of waste to do that. But you know, the transformation was partly that and partly the fact of I was, you know, I just I love this United Team and we knew we had to do something about it, and.
Didn't who I was, didn't chinchaw I'd led, But.
Of course there's a level of gratitude that comes with surviving something like that.
So how did you create a culture that was better for employees, better for the company overall, and better for those who flew United.
This will be a shocking revelation.
I did nothing but actually listen and learn from the tens of thousands of people that we have out in the field that take care of you, the people you see and the people that you don't see below the wing and in the maintenance facilities. And then the thirty seven days before I was on a massive listening tour and nothing, nothing structured, nothing deeply you know, academic or intellectual. It was just a human conversation. It's like, just tell me how it's going, tell me what you can think.
And I heard lots of different things, and in a very pivotal moment for the turnaround in United, it's on a flight with a flight attendant. And I was on a flight and I went in and talked with the flight TENSI hig, I'm Oscar, and she clearly did not want to talk to me.
Oh really, that's how far we had disengaged our folks.
It's like I don't want to listen, you know, why am I going to waste my breath right over time? We had had I don't know five six CEOs in the last few years. What she said to me when I finally got her to open up, she just said, Oscar, I'm just tired of always having to say I'm sorry,
I'm sorry, the coffee sex, I'm sorry, we're late. And if you think about an individual that works with such a large global company, who we embodied this concept of friendly skies, but everything was broken and they are the ones that had to, in essence, you know, apologize, That's how you lose human engagement. And so to your question, how we built the culture is just from that perspective, is just telling them like, okay, employees, you don't have
to do anything. I and this team have to regain your trust and from that we're going to build what you see now.
So I am curious.
You know, we're all flying around. People want to go out and experience things. The industry today it can be stressful. Again, what is it that you think we could do better in the airline industry? And I think I know there's things you've talked about in terms of the type of fuel that's being used because it certainly has a carbon imprint. We just have about a minute left. How do you think it can go to the next level if you will?
I think two things.
I think from a broader perspective, air traffic control in America is outdated and obsolete. If we don't start getting it fixed soon, like a lot of the other infrastructure, we're going to pay the price. I know it's easy to blame the airlines for a lot of the delays. We are often hampered by the fact that we can't put a lot of airplanes in the air because we can effectively and safety monitor them without slowing everything down A and B. You know, a little carrying goes a
long way. You're not the only one that has something important to go to. And if you just kind of lay back a little bit, you know, have a little care. If somebody is in a wheelchair, you know they're in a worse state than you, and I know they're holding you up.
But it wouldn't be a bad thing if you just show it to a little love and care.
We're going to leave it on that note. Just great words in a world where I think it's very trying on a lot of people. We certainly see it from the financial perspective, but just in general, there's a lot coming at people and great to hear your story and to see you know what you personally and professionally have achieved. So Oscar, thank you so much for for spending some
time with us. Oscar Munnos He is of course the former CEO of United Airlines executive chairman as well, and his new book is turned around Time Uniting an airline and it's employees in the friendly sky. So some really, you know, just logical about how we can make things better. And it's amazing when you start listening to people what you cannot find out.
All right, Oscar, thank you so much.
You're listening to the Bloomberg Business Week podcast. Catch us live weekdays from two to five pm Eastern on Bloomberg Radio, the Bloomberg Business app and you too. You can also listen live to our flagship New York station, Just Say Alexa, play bloom Berg You Love Them Dirty.
Well.
The new I show Bloomberg BusinessWeek is out on news stands, online and on the Bloomberg terminal, and that means we get to dive into the latest pursuit section and for our summer arts preview edition, we have not one, but two great voices to help guide us through it. Chris Rouser is the editor of Pursuits and James Tarmi is our resident arts columnist and the opener of this week's section deals with the elite collectibles market, which looks like
it could be following the broader economy into recession. So what does it mean that we're no longer splurging on all these things that I thought were supposed to be resistant even in an economic downturn.
Yes, So people tend to think of collectibles like wine, fine art, maybe watches, gold, whatever, to be detached from the stock market and to just be detached from the broader economy. And you know, during the pandemic, collectibles like classic cars, like watches and jewelry and handbags really soared because people weren't spending a lot of money on other things like maybe living life, traveling in restaurants. So collectibles
became more broadly popular and soared in value. Now that people are spending money on other things and people have maybe bought the classic car that they wanted over the past three years, the market is softening for these things. A fine art can maybe be more cyclical, and James, who wrote the story can talk to us about that. This is the opener to our section, which is all about our summer Arts preview and culture preview.
Mister Tarmi, come on in.
I do think that we are at an interesting tipping point because a lot of participants in the collectable market broadly really started during COVID, and so there is a perception, not unfounded by the people who are sort of new to these various categories, that anything they buy will go up, because that's what happened basically from twenty twenty to late twenty twenty two. And now you're seeing the growth curve
slow or flatline. It's not to say that these categories are collapsing by any means, but you're certainly not seeing returns that are out pacing the S and P. And so what it does is one, it pokes a hole in this notion that these are a hedge against traditional equity markets. And two, it is a real kind of come down for people who might have assumed that they were buying something to then resell it at a spectacular profit.
And it's very interesting to drill down from category to category to actually look at what various experts are saying about the mid, short, and long term future of these various objects, and Chris.
Touched on some of it. So go through them because you do.
You cover cars, you cover wine, you cover handbags, sports memorabilia. I mean, I kind of love how you started with a pair of Michael Jordan sneakers, which we're expected to go through for a lot, right.
Yes, well, and this is the thing, and this is the real paradox of it. The sneakers still set a worldwide auction record, right, they hammered for one point eight million dollars in an auction bumped to the total up to two point two million dollars for a pair of you sneakers.
Right, they are.
Collectibles, but are my culture. They are, and they have real cultural sociological cachet. But it's still two point two million dollars a ton of money. The joke, though, is that it's the very very bottom end of where they were expected to go. They had a high estimate of four million dollars, and there's a tremendous amount of chatter leading up to the sale speculating that these would be ten fifteen million dollars sneakers. So they set an auction record,
but they still disappointed people in the actual category. And that's what you see similarly in classic cars, right, you still see some very good prices, you see some strong results, but you don't see dazzling results.
Chris, I want to bring you in on watches because you guys just did a whole big section on like the yes, unbelievable watches. So what's going on with that, because that's another thing I felt like some would always hold their value.
Yeah.
So you know, watches over the past fifteen twenty years have really like had a slow burning boom and then in the past five four or five years really taken off. And I remember during the pandemic talking to friends of mine who are collectors, who were like, just buy a watch, is guaranteed to be worth the three times what you bought it for, you know, in five years, And I said, no,
it's not. You think that because you joined this collector's market during this boom, and like you think everything is just going to double the second you buy it, and that's not true. And this and we're seeing that now in the watch market. The high end resell market for watches is softening, especially for these things that people have really been competing over. So people with high value collections have seen the value of their watch collection it's decrease.
Now that said, do I think watches are going to grow generally into the future.
Yes.
Is it hard to get a new watch?
Yes?
Is there still a big market for this, Yes, it's just not going to give you those crazy returns of people were seeing in the past two years.
Kind of like a reality check, Yeah, totally.
And this whole idea of assets don't always go up, You're right, like had we have a generation that just doesn't understand that, just like inflation goes up.
But gen z it believes now when they buy something that it's not something that they own and then they throw out like it's something that they can trade and resell. So that that has changed the dynamic for all these collectible markets. And now for handbags, for example, maybe burkins broadly are sort of softening the very high end ones are like Dynamite, but more inexpensive bags that or more broader range are actually going up because people kind of want less expensive alternatives.
Right, And what we are seeing is a bifurcation in the market between very very kind of powerful name brands like Rimez Birket, bags like roll Exys and so forth, and things that might be slightly lower down on the kind of spectrum of prestige. And that makes intuitive sense because the price discovery already exists, right, Thousands of Rolexes have already sold, so you know that you're buying a
Rolex for an accurate price. It's harder when there is a slightly lower tier or a niche brand, or some slightly more customized thing where you don't necessar really know what you're actually purchasing.
It's a really great point. Where do you want to go?
Let's go to the best Books of Summer because we always love books.
Tells, Yes, is he just like?
Can he just not do?
Like?
He just does everything?
Enough?
Is enough?
Matter?
Things to leave something for the rest of it?
Deserted Island? Oh you did that? Made a movie?
Oh?
Sorry?
Yeah?
Yeah, the Making of Them made of another major motion picture masterpiece by Tom Hanks, is going to be great. It's going to be a big book. There's also Elliott Page's memoir Page Boy, which we're really excited about, and the new Colson Whitehead book also.
Yeah, that very good.
Honestly, probably my favorite of the bunch, which one the Colson Whitehead. It's set in the nineteen seventies Harlem and is a mosaic of characters, but it follows the protagonist who's this kind of family man and also furniture salesman and also like low key criminal fence as he navigates Harlem as the entire city of New York, but particularly Harlem sort of degenerates into anarchy. So it's a lot of fun.
And this is over Jackson five tickets, right.
Well, that's how it begins. It's like a one more job and he's out because he wants to get his daughter tickets to Jackson five. It's magnificent.
I've been trying to get Taylor Swift tickets. I know what this is.
Like, Well, there you go, it's just this version.
You're gonna have to sell a Rolex to get.
And I can't.
All right, one more thing. What do you want to highlight?
UK arts?
I didn't realize money funding.
Well, this is the thing, you know, it's been going on for a while. The funding government funding for UK arts institutions has not kept pace with inflation, and it's also become a lot more diffuse so organizations that for decades relied on the government paying for their various bills
no longer can rely on that. But at the very moment where it's becoming a truly critical issue, there is an increasing scrutiny on the source of private funds, and so UK arts institutions in particular are in a real pickle because they are stuck between a rock, which is dwindling funding from the government, and a hard place, which is an audience that will not accept, or a very vocal part of an audience that will not accept funds from companies that are perceived to be bad for the environment,
like the big oil companies exactly, or even companies that might be gambling companies.
And so.
The problem is that people don't really have a fantastic answer for where else they can go. And unlike the US, where you know, we have a very long history of relying on private philanthropy, that doesn't really exist in the UK, So people are forced to get creative and they're really staring down a barrel here.
Yeah, I thought this was really kind of eye opening. I had no idea first of all, what was going on over there, and then how they're getting creative to bring and funding. There's a lot more in that story. There's a lot more in this section, including the upcoming art auctions which people will be buying, but it's going to be a little bit different as well.
Really all right, guys, we got to run. Thank you so much, so love it.
That's the dynamic duo of Chris Rouser and James Tarmi on the Bloomberg Pursuit Summer Arts Preview. Always great to speak with them.
You're listening to the Bloomberg Business Week podcast. Catch us live weekdays from two to five pm Eastern on Bloomberg Radio, the Bloomberg Business App, and you too. You can also listen live to our flagship New York station, Just Say Alexa, play Bloomberg You Love Them thirty So.
Last year, four point one billion dollars in tequila was exported from Mexico.
That's up one.
Hundred and sixteen percent from twenty nineteen, Americans sucking up eighty one percent of this and women edging out men in consumption. But when it comes to women running the brands in Mexico, well, there are just a few odd Considering that women have been so involved in tequila and mescal for centuries. So one such woman who did launch her own brand is Bertha Gonzales Nieves, an alumna of Jose Corbo International. She co founded Casa Dragonez Tequila in
two thousand and eight. She joins us on Asmayo de Sinco on Zoom from the Hotel Matilda in San Miguel de Allende, Mexico. I'm sure I like killed some of the pronunciations, so I'm really sorry about that.
Asicico demayo. Sorry.
I haven't even started drinking on the Cicco demio and I'm already messing things up. Bertha, is so nice to have you here with Jess and myself on Bloomberg Business Week.
Welcome, Welcome, Welcome.
First of all, for those who are watching on YouTube and our streaming service, tell us where you are, because it's stunning behind you.
Carolyn, Jess, I'm super excited to be here on the show and not such a special date, and I'm actually moved locations. I was in Hotel Matilda, which I call my home away from home here in San Miguel de Allende, but we are at La Casadra in San Miguel.
And this is the Obsidian bar Ah so this is where people can visit right to do sampling.
Correct, Yes, this is where we do tastings, and we do. We just actually are closing up Cocktail week here in San Miguel, and we had such exciting jamming sessions with some of the top bars in the world like Atta Boid Dante employees only, So it's a very exciting week here in San Miguel.
So you talk about sampling, We're going to do a little sampling because you are kind enough to send us some and I'm going to pour it for Jess and myself. We're going to be very careful becus we're still on air and we still have to finish up our broadcast. But as you open and as I pour, love to tell you a little bit about your tequila and what you guys have done. There's so many out there on the market, but tell us about what makes your special.
So we are.
We became entrepreneurs in the tequila industry for the opportunity of continue to push the boundaries of what has been done before and try to ex found that tequila repertoire through modern production and showcasing the beauty and the gift of Mexican craftsmanship. So what we're trying to do is we believe that, you know, expanding the experience of taste to continue to seduce the palettes out there that not only are lovers of tequila, but also love and respect
other categories like champagne or pognac or whiskeys. And we want to showcase the complexity and the real beauty of the spirit in every single label that we do. And I think the best example of the innovation that we bring to the category it's it's expressing the tequila that we're going to try today on the show, which is Casa Reposao, which is a tequila that the first tequila ever that has been rested in Japanese Mitsunata oak casts.
I have and I'm smelling it and it's really lovely. It's very soft and smooth.
Yeah, it's very beautiful.
It has these beautiful butter Scotch magnolia flower and still elevates and showcases the herbaceous, the citrus and the floral notes that people come for in tequila.
And I know you've talked about how this is important to be savored, not necessarily be taken in shots.
Can you talk to us about the craftsmanshift here.
So when we founded the company, we set on a quest to deliver a true sipping tequila. We wanted to prove that tequila can be part of the of the sipping ocation, of the spirits industry, of the luxury sipping occasion, and as people are sipping on single malts and cognacs, we wanted to have to showcase that tequila you can actually sip and savor.
So what we're trying to do.
Is continue to evolve the spirit, you know, on the way people perceive it and the role that it really plays in a sip in occasion. So that's why this plant is such an extraordinary plant. There's around six hundred different aromas and flavors cataloged in the Mexican Academy of Tequila.
So the options that we have as producers are really endless, and we want to showcase that complexity and that balance and that richness in everything we do, as well as the purity of our water and our gavet in all of our expressions.
Bertha, I have to say I am not a lover of tequila on its own usually, and I just kind of said to Jess, I think had my first shot maybe just about a year ago, which is kind of embarrassing, and I often drink it in Margarita's.
But this is really lovely. It's very gentle, very smooth.
And you talk about the choices that you have, I mean, because not all tequila is the same, So how do you choose in terms of what you want to put in.
We you know, we become entrepreneurs for having the.
Opportunity of exploration and satisfying never ending curiosities. I think that if people enjoy as much our tequila as we enjoy producing it, we're doing something right.
So the decisions that we take.
Are just always based on our juice being the hero of our company. So we truly give ourselves a chance to explore and truly give ourselves a chance to When we had the idea with Reposado Misunara, we had the idea of really studying Japanese whisky and really trying to learn what they have accomplished in the last twenty years and the nuances and the beauty of the spirit they were delivering. And that's how we found the Misunata cask.
And then we went on a quest to convince, you know, the only independent.
Producer family in.
Japan of Japanese casks, and you know, it took us time to convince them. I remember in twenty eighteen they sold us two casks and with those two casks, we started really like learning about, you know, the relationship within tequila and this Japanese oak. And as time went by, we started following in love more and more and more. So it's less about us having having the freedom of a canvas and really exploring it.
And then really we're committed to bringing your news to.
The tequila lover and that's really kind of like the decision making process that we follow.
Our Bluebird Pursuits did an incredible story that highlighted you among a few other women where it's women.
Led tequila companies out of Mexico.
And what they pointed out is that women have been involved in the tequila or the making of tequila for a long long time, and yet there are a few that are running their own companies. You are doing it. How difficult. I hate to ask this question, but you are a rarity. How tough has it been to build to be a woman in the tequila industry in Mexico? And just got about forty forty five seconds.
Yeah, No, I think it's been.
I don't have another frame of reference. I only have the history of my own career. Yeah, but it's been, you know, it's it's definitely there's been challenges in the
industry for me. But I always focus on building my career by really focusing on my craft and let my craft open the door, you know, rather than position myself as a woman in the tequila industry, because I really want to be shown will I really want to be recognized as a professional in the tequila industry rather than a woman in the in the tequila industry, and because I believe that, uh, craft doesn't recognize gender and uh and that's really my focus and I continue to really
just stay focused on that. But today I believe that there had been many women before in the tequila industry. They were just they never were recognized for it. And today I'm really excited to, you know, to welcome more women into the industry. Yeah, and constantly talk about that. You know, your passion into an industry should not be based on your gender. You should just choose something that intellectually provides you with a platform for your growth and your development.
Bertha, It's a pretty incredible. Cassidragniz on this single. Demayo are really lovely tequila and great to check with you and hear about your story.
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