Bloomberg Businessweek Weekend - May 13th, 2022

is it peak or is it not peak? Yeah, that's the question that remains, and we have a great group of people to help really break down and help us find some answers, starting with legendary investor Alan patrick Off from Greycroft Carroll. He. I mean, look, it's fair to say that he's seen a cycler to write early investor in Apple, so he knows what's up with markets like this, and he had an interesting perspective on some of the tech sell off that we've seen in some of those

well known names. Plus we're going to get a good check on the consumer. The CEO of Tapestry talking about our company's latest earnings, little hint they've been raising prices. All of that to come. We begin, though, with a Bloomberg Big Take this week and this week's issue of Bloomberg Business Week. It's an incredible piece to view online. It's interactive, it's really well told visually, so I encourage everybody to check it out. It's all about exploring Japan's

front lines. It's where for millions of Japanese, the confrontation between the U S and China it's already a reality. Here to explain Bloomberg Business Week editor Joe Weber along with Matt Campbell, who's Asia editor for Business Week. It's

actually a series of islands, um and what's interesting. I think Americans would probably be most most familiar with Okinawa, which is one of them, and this series of islands, uh, you know, you end up closer to Shanghai and mainland China than to Tokyo, which is pretty incredible when you see it on a map. And I do recommend reading it online because the immersive experience that we built for

this story is pretty incredible. And what's interesting is obviously the tensions between US and China have been palpable and if anything, have been simmering and during the trumpet aministration escalated UH. And this is like a little quiet area that's right next to Taiwan. As we've been talking about Ukraine and the tensions there, obviously a lot of UH tai Taiwan UH interest has been peaked, I think. And what's really interesting about these islands is, you know, there's

this demographic crisis in Japan. UH don't have enough workers. A lot of the workers that they would have on these islands have traditionally come from China, and obviously with zero COVID China has not had that. That means there's

now tourism dollars coming from China as well. And obviously there's a huge American military presence there, which makes all of this really interest because this is this is a frontline right even though there isn't an active conflict, that doesn't mean that there isn't tension and that it's all rooted right in this place, and it has some really interesting and fascinating domestic implications for for Japan and geopolo

politics and even American foreign policy. So so, Matt, what was the thing, the initial thing that sparked your interest about what Yoshi set out to tell him this story. Well, I always look for what I call small stories that tell big stories of ways to go to one place or one company, or one series of events, and then go from there into a better understanding of big, mega trends.

And what's cool about this story is Yoshi, fabulous reporter in Japan who put this together, was he found the series of communities in Japan which are struggling with the exact same problem that Japan as a whole has, which is, on the one hand, economic dependence on China and in fact growing economic dependence on China, but a deepening security

alliance with the US. And obviously there's a contradiction there. Well, and you know, part of what I have to say, as I was reading through it was really stark for me.

And where you said where he said, you know, should a war come between the US and China basically and unlikely but increasingly plausible Senar scenario because what's going on in Ukraine, Like I don't even I mean I do think about it, but not and I feel like you realize, Okay, how vulnerable or how how this might play out ultimately, Matt, Well, indeed, and Japan something that that is very apparent if you go back in the history a little bit, is Japan

is deeply involved in the Taiwan issue, but Taiwan was a Japanese colony from until ninety Actually, in Taiwan there are somewhat fonder feelings about Japan than there are many parts of Asia. Japanese governments have said in various terms that they view the security of Taiwan as a strategic interest. So if things really kick off, Japan will absolutely be part of the story. What's happening militarily on the on the islands, well, there are two things happening. One is,

Japan is an increasingly strong military power. Military spending in Japan has increased dramatically over the last decade or two, and we'll continue to do so. And the other thing is as the US pivots more of security strategy toward containing China, a huge amount of that investment ends up in Japan overall, and particularly in places like Okinawa, which has something like seventy U S military bases on one island, if you can imagine that. So, so really this is

the front line of geopolitical conflict. Yeah. One of the things that interests me about the story was a parallel with Germany, which obviously Germany has had no military spending since World War Two. Now it's established that it will be a big presence. One of the surprising elements to me about this is Japan. It was sort of in a similar role, except that spending his increased as has its alliance in the US. So, Matt, how has that

played out domestically in recent years in Japan? Well? So, Japan under its post war constitution, which was actually drafted by the US military, has a clause that says, in as many words, Japan and will not have armed forces. That has never really been observed. It's always in the post war era had a military. That military is now growing in seemingly well funded, increasingly oriented towards containing China

in very forceful ways should the need arise. That was Bloomberg's Matt Campbell, along with Business Week editor Joe Weber, coming up coach Kate Spade, Stuart Whitesman. You've heard of those brands have all right, Well, they're all under the Tapestry umbrella and they wait in with their latest quarterly update, and also talked about the outlook. We're gonna get an update from Tapestry's CEO. You're listening to Bloomberg Business Week.

This is Bloomberg. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stenoby from Bloomberg Radio. Tapestry, you know the brand, well, they owned Coach, Kate Spade, and Stuart Whitesman. They came out with their quarterly update this week. They talked about prices, they talked about the outlook,

and they also talked about China. And we got to check in with the company's CEO, joe An crevoice Ran and she joined us to give us her take on earning season, and really, let's understand the health of the American consumer in the global consumer right so important to our economy. What we're seeing in our business is strength

and momentum across our business. As you mentioned, our third quarter outperformed, led by strength in North America, and we drove double digit global sales growth across all of our brands at Coach, at Cape Spade, and at Stuart Whitzman. And you know, Tapestry is a powerful combination of iconic brands that offer tremendous value for consumers. And we have a platform that we've transformed to drive innovation and customer engagement,

and that model is delivering results. We're seeing that in the strength of our digital business, increased customer acquisition and pricing power across brand. So a lot of things are are working and performing, and it really reflects the strategies that we've put in place over the last few years, UM to stay closer to consumers and drive growth behind our our powerful brands. So we want to dig deeper into that. But let me ask you, if you had to describe the consumer in a word or a few words,

how would you do it? And would you say that the consumers back at pre pandemic levels or maybe even better, are still a little bit under it. Yeah, the consumer is quite resilient. UM. You know, we've been driving growth above pre pandemic levels for several quarters, UM. And you know that's that's most apparent in our Coach brand, where we've had more quarters in a row, but also true

at Cape Spade and its Stuart Whitzman and UM. You know, our business in the third quarter reflects really the strength and momentum we're seeing around the world. You know, we talked about our growth in North America. We drove growth in North America in the last UH in the last quarter UM. But we also saw strength around the world in all areas except for China. So we saw strength in Europe UM and strong growth in rest of Asia as well as in Japan. So UM business is performing UM.

In fact, even in China going into the quarter, we saw strength and and UM. You know that business only started to weekend when we saw the disruption related to COVID in the market towards the end of the quarter. Joann, I want to I want to hit on the China point and dig into that a little bit, because you had to have in North America, you overcame pandemic related weakness in China when you look at the results overall.

But I'm but I'm wondering from a planning perspective, how you're thinking about how long these lockdowns last and how long you're going to see that weakness in China where business has just dried up since this resurgence of COVID. Yeah, the business was disrupted, but it was disrupted in a very discrete way. UM. You know, by the by the impact of COVID in the market. And you know, our business has been quite resilient over the last two years.

As I said, you know, we've been driving growth above pre pandemic levels for some time, UM, and that shows the resilience of our model and the way that we're able to shift. UM two changes that we're seeing in demand and changes in the supply chain and supply around in the world. And our latest disruption has been in China. But as as I mentioned, we had strength in the market and we've been driving strength as as China came out of the first round of lockdowns, the consumer was

incredibly resilient to in. There's so much stress out there. It feels like certainly when we watch the financial markets, right and we look at some individual names, even though your stocks rallying, it's down about this year, but it's it's broad based selling. It feels like no market or sector is immune. It certainly seems in the stocks sell off. You sound pretty calm, and you sound I don't know, is it cautiously optimistic optimistic? UM, help me understand fundamentally

what the outlook looks like. That might you know, I think we're all trying to figure out what is the outlook amid a rising rate environment and what is the business environment and what's the market environment? Um becauld You seem pretty calm, Yeah, well, and we are optimistic. We're very confident. You know, we have such iconic brands in our in our portfolio, and our focus has been on, you know, restoring the health of our brands and driving

better and stronger engagement with consumers. And when we do that, the business perform. So we're really focused on fundamentals UM and you know when we talk about transformation, actually I heard you discussing investment UM in the business in the in the show just prior to when I came on. You know, we're investing, and we're investing in digital tools and innovation and technology that's making us better. And as we focus on the fundamentals, we're seeing traction. We're engaging customers,

were acquiring more customers. We acquired one point four million customers in the last quarter alone, and since we've embarked on our transformation, we've acquired thirteen million new customers to our brands over the last twenty one months. And these are customers who are coming in and engaging with our brands. They're shopping at higher au are higher prices than average, and they're coming back more frequently, um And the customers

are also increasingly younger. So as we focus on the fundamentals of our business, it gives us confidence because we're seeing much stronger engagement, much healthier brands, and much stronger engagement with our consumers. Joann, I'm wondering about your pricing power because you said that there these customers are paying more than they were paying earlier. How much of that

has to do with inflation? Where where are you seeing a rise in costs right now on your production end and in your supply chain, And how much are you absorbing of that versus passing it along to the customer, Because as Nil Saunders, an analyst with Global Data set in a note after your results, Uh, the customers that you have at Tapestry can cope better with inflationary impacts

than the average customer. Yeah. And the way we think about our pricing power is really in terms of delivering value to consumers um And, and that's how we've been thinking about In fact, we started this pre pandemic before we started to see pressure on the cost side of the equation, and those pressures are real. We're seeing pressure

on the cost side of the equation. Like others in the industry, UM a lot of pressure in freight related to the supply chain dislocations that we're seeing, but our focus really on the pricing side of it, and the pricing powers really driven by the value we're delivering to consumers and those emotional connections that we're developing are allowing us to drive pricing power, and we're seeing that across

our brands. You know, some of the investments we've we've made and tools and technology or helping us leverage data better in across our value chain, so that's making us more informed on pricing decisions. It's also making us more informed on our assortment decisions and our inventory management, so we've got the right inventory. We're seeing higher skew productivity UM with more concentration behind more powerful items, and that allows us UM to drive pricing power as well and

to clarify our messages with consumers. So on the value side of the equation, we continue to deliver unbeatable value for our consumers across all of our brands, and that's helping us more than offset the pricing pressure that we're seeing UM in terms of cost. In terms of our expectations going forward. That was Joanne kravoice Rat, the CEO

of Tapestry. Still ahead on Bloomberg Business Week, measuring and tracking how we watch, where we watch media and apps, a company that does it all increasingly important, Carol, because now we're talking about ads with Disney Plus and of

course with Netflix. We're gonna be joined by the president of TV squared by in event on the changing patterns of target consume media broadcasting from the financial capital of the world, Bloomberg eleven Frio in New York to Washington, d C. Bloomberg to Boston, Bloomberg one oh six one does San Francisco, Bloomberg nine sixty to the country Sirius XM Chado one nine team and around the globe the

Bloomberg Business app and Bloomberg Radio dot com. This is Bloomberg Business Week, alright, So how are we view and listen to media? Right? Like? I don't even know how you're doing it right now? Are you on your phone right now listening to us? Are you on Bloomberg Radio listening through tune in on? So nos, exactly right. There's so many different ways, there's many options, and increasingly all of this is converging and our next guest gets that

big time. It's Joe can sella president of TV squared by Innovative. This is a global measurement and attribution platform for converged TV. Essentially, it means that it measures audiences in a in a media world that's coming together right now, so people who consume media via different platforms like smart TV and set top boxes. Thank you so much for having me, guys, it's great to be here. Well, I just want to get your your takes before we get

right into the analytics here. I just want to get your take on the streaming environment because we did see that Disney beat expectations when it came for Disney Plus subscribers, shares moving higher in the after hours. Different story than Netflix. And I'm just wondering how you would characterize the environment right now, because it's it's interesting like this incumbent Disney that Netflix disrupted. Uh now Net is on the other side of that with shares down, you know, more than

seventy from its highs last year. Yeah, A vod is definitely the cool kid. So I think you know, Netflix held out as long as it could, and you know they they held off from bringing ads in for the longest time, and then we saw the fluctuations with the share price, and here we are. I have not had any early indication as to what the Netflix offering is going to be, UM, but you know, thinking that it's probably going to be the same as or similar to

what everyone else is doing. But you asked me, Tim, you know, to describe the streaming world right now, I think I can use a very nice British term, which is bonkers um. And you know, the latest statistics that were that we're seeing because TV squared by Innovid actually measures linear and streaming, but streaming is actually now accounting for, according to the I A B about twenty one point

two billion dollars worth of TV inventory. So it's really we've seen this massive transformation and shift to CTV during COVID. Help me out, though a number a loan doesn't always give you perspective. So twenty one point two billion in TV inventory, what percentage is that in terms of streaming? Look at it this way, Carol, It's a seventy billion dollar universe in the US. It's about two hundred billion globally,

so it's small. I would say if you look at local television So you think about local broadcast local cable in the US that is also twenty two billion, and think about how old, um, that kind of industry has been in existence, you know, thinking about the cable companies and everything else. So if you think that CTV is now the same size as local broadcast on local cable,

it's really come from nowhere. And at the end of the day, everybody is now watching TV in such a different way that we're going to continue to see this this huge growth in CTV. Joe, how does the technology at TV squared by innovd work Because when you talk about a streaming the streaming landscape, it's really fractured in terms of that end user and how the end user gets that signal could be on a row who, it could be on his Amazon fire Stick, it could be

on a smart TV by l G or Sony. So the data is really disparate, and I'm wondering what technology you have to be able to provide companies that are looking for this data with accurate info. Yeah, it's a great question, um, and one that we've tried to solve tim in software. We believe that the only way that you can solve for the challenges of the modern day advertiser is to be global um and to have a solution that is software based that truly scales. And that's

easy to say, but it's actually harder to do. What's been amazing about the recent acquisition by Innovid is that we've basically been able to kind of superpower our measurement, which is, think about it this way. Innovid has a ad server that delivers ads for the of the top two hundred advertisers. What does that mean. That means everything.

That means about a billion ads a day UM, and it means that we can take every impression that gets served and pump it straight into TV squared and either map it to like who did I reach, what was the audience demo? And did they take an action? So I want you to think of this as we've done the hard bit. We've done the stitching together of all of these different platforms, and because Innovid actually delivers the ad we can see if it's a show that runs on Peacock, on a Roku device, on a Sam's on TV,

we can still see that impression. Therefore, for ours, what's beautiful is there's no walled gardens and we're independent. So if you're an advertiser, everyone's calling us saying, hey, wait a second, you can see all the way through the customer journey. What happened? That's Joe can Sella, the president of TV squared by inn of It. You are listening to Bloomberg Business Week More to Come. You know the name venture capitalist Alan patrick Of. He checked in with

us about today's market volatility as well as opportunity. You've had a career that's bounced fifty years. This is Bloomberg. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. Tim Stinovich from Bloomberg Radio. All right, with all the market volatility again this week. I mean it's really been the theme of market volatility. So we recently caught up with a perfect guest to talk about it. He has seen a lot of market cycles. Fair to

call him legendary Alan patrick Off an early VC. He helped build and grow such companies as America Online, Office Depot, a little company called Apple Audible as well. He's the chairman emeritus and co founder of gray Croft. He's also got a new book out, Carol. It's called no red lights. Reflections on life fifty years in venture capital and never driving alone. You know, everybody I meet has lived for such a short time relatively in this market that they

only see everything going up. And I've lived through so many cycles that to me, this was inevitable. It's going to come. Everybody was living in a euphoric state that things are only going to go up. And I think you better be prepared for some kind of hiccup. And I don't know why it's going to happen, but that's just the way the markets work. How big of a hiccup and how long of a hiccup, Well, I think it depends on what the after fall is after the

this initial setback. You know, well the market stabilizer is it gonna, you know, after a certain period of time, go down again. I mean the levels that the markets at has just been increasing steadily until the beginning of this year. I mean last year was dramatic. The whole Trump era was dramatic. I always follow the theory the markets stone like surprises, and all we had with surprises for four years and the market kept going on. So

I think we've got an after effect of that. And uh, I just say one thing, This is not the time to sell. I think you've got to ride the rocky periods and watch how and see how it stabilizes. Even a name like you know you've got Meta um uh you meta platforms? Right? You know? Facebook um down about this year. We were talking about Netflix before we got going. It's down almost since April nineteen when it just freaked out the markets right when it came down with a

lack of subscriber growth. So I don't know, how do how do we make sense of some of that? Is that opportunity to you or is it like there's some there's something wrong. Well, if I were following public markets, I'd be looking very carefully for where the opportunities are in terms of companies that have relatively good values in relation to their revues and their profits, and which ones have the balance sheets that are going to sustain themselves

no matter what happens to interestates. But in terms of Meta and Google and Apple, I think we're going through a period where, for finally, the Congress are now focused on the monopoly positions that these companies have, and there's legislation pending, and I think that it's it's it's long been long and company really and coming. You realize that the old the Internet has not had any regulation. There's been no regulation in twenty five years. We're living with

outdated monopoly laws. And I think that Europe has just passed some very significant laws and the US is gonna follow I think very shortly, and that is an overhang. Very curious about your thoughts on this does them and compoly power that you argue that some of these big tech companies have to what extent does that stifle innovation

when it comes to startups? Of course it does. I mean, you know, I can't tell you the number of companies I've been on the board of where I'm going to a board being and they'd say traffic was down or twenty whatever the percentages. Why Google change their algorithms? I mean, that's monopoly if I've ever heard it. I mean, we are original monopoly lawyers were related to control of the railroads,

the control of of of oil. UH. Now we're seeing a different kind of monopoly control, and that is, you know, when you have ninety percent of your search going through one vehicle, UH, and when people are putting their own internal products and offerings ahead of other products that are available that's monopoly get hurt. Yeah, ultimately, of course they are. Well, let's put this way. The advertisers are getting hurt. The

competitive businesses are getting hurt. Uh. And I think everybody is mesmerized by you know, one day delivery and uh getting low prices. But at the same time it's hurting a lot of small businesses. Elon musk and Twitter, what do you think about that it worries me? One person? This is this is the major social media uh communication platform all of us. Maybe not all of us, but

a lot of us certainly use it. Uh. And to have one person and this will be a private company also, I think it's again another element that I would be concerned about. And I think it's also going to be subject whatever government potential government regulation. I mean it hasn't he hasn't going through this process yet. I think that we still may see some headwinds that may slow this down or prevent it. I don't think it's good for society.

So talk to us about this book. We were reminding you, we talked about this that when you were on last with us, which was a few months um, you actually leaked that you are coming out with a new book. So why did you write this? Yeah? I mean I have been asked for a long time to write a book because I've been in the business. You know, by being in a business fifty years, you become, you know, first year the father of venture capital. Then you're the

grandfather of venture capital. Then that's the legendary Alan Patrickov, so you know, being a legend. I wrote it because for two reasons. One was I thought it might be valuable and why I gave the title no Red Lights. Uh. I've lived a multidimensional life and I feel that that's a valuable idea to convey to younger people about don't get lost in your own, you know, small world, be open to opportunities and get involved in politics, get involved charities,

get involved in art. And I've done all of these things and there's not much that I haven't been involved in or that I'm not open to. I live a very active, multidimensional life and always have. I thought that spirit would be valuable to convey. Plus, I saw what was happening to older people who are you know, kind of checking out because of retirement ages being forced on them at sixty or they sold their company, and they

go to Florida and they started playing golf. And I was saying, as I started my first company at thirty six, my second company at seventy two, and two years ago, I decided to start Prime Time Partners at eighty five, and I thought that I wanted to be a poster child. You know, I'm now eighty seven. I thought it would be kind of inspirational. I don't want to overdo it, but that people who might read it say, listen to this guy can do it. You know, why can't I

do it? Why can't I? Maybe if I only inspire one person to say, you know, I'm going to follow that lead and take on some new challenge, go back in the same business I've been, only do it all over again. The sub headline of the book is Reflections on Life, fifty years in venture capital and Never Driving Alone. What do you mean by never driving alone? Is that everything in life is cumulative, where we don't get where

we are by doing things by ourselves. It's I find it's very valuable to always be a partnership with people and whatever you do. And I follow a very collegial approach to everything I've done, and I find it a good practice to be open to meeting new people at all stages. Uh. And as I say, life is cumulative, and the people you meet early on in your career, they come back at you again and again. And I can tell you that which I say in this book.

Many of the people I met when I was very young in this business are all running some of the major companies in this country are certainly certainly in the city, but in the country. And I say to everybody, turn to your left and turn to your right. You just don't know where someone's going to end up. And you and you developed those associations and relationships, and I find

that that that's been very helpful in my life. You know, Alan, I think many would argue, you know, certainly coming out of the pandemic, and we just saw the speed of change and innovation pick up so much momentum because companies had to for survival, whether it's digitization or you know, we talked about digital medicine, like just so many different things and how we shopped just so many things kind

of just picked up so much momentum. But there was many would argue a lot of innovation during what was a very very difficult time and I just wonder when you have looked at innovators over fifty years, like, what is it that stands out from somebody, whether it was an Apple or another company, that you just knew that this was somebody or an institution that was on the

cusp of doing something very differently. Well, you know, no one uh has that much foresight that they can pick when years all the time because as part of the business that there are a lot of losers in the in the process. But you know what you'd like to find is someone with who's right, got a vision and who's passionate about what they do. Uh. And I think that is fundamental to being really successfully. I mean, you know, Mark Zuckerberg was a perfect example who was a passionate person.

Sergey and Larry were passionate. Steve Jobs was passionate. I think that if you're driven, uh, that has a lot to do not just knowing the technology, but have a vision of what you want to do. And I one of the things that concerns me is I give a lot of lectures or courses in colleges every now and then, and UH, when you ask people in these business schools, you know, how many of you gonna start a business.

You know, three quarters of the class raise their hand and they have no passion really about what they want to do. They're doing it because someone in the previous class, UH started and made five million dollars and sold their company, and they figured if they did it, why can't I do it? So as a result, they started a new

dog watching company or a new delivery company. And so we have a lot of a lot of repetition and not as much originality in the in the startup and uh an innovation as we'd like to frankly, as i'd like to see. You know, most things today are applications of existing technologies. That's great croft Alan Patrickov really well known venture capitalists and someone who has seen so much. If you missed any of the conversation, I want to hear the full conversation. Just check out our podcast at

Bloomberg dot com. And that reps up the first hour of the weekend edition of Bloomberg Business Week from Bloomberg Radio. I'm Carol Masser and I'm tostead of coming up in our next hour, Barista's Unite the unionization of Starbucks. It's the cover story in the magazine this Week, plus well known chef Danielle Balou on the state of the restaurant industrating. This is Bloomberg. This is Bloomberg Business Week inside from the reporters and editors who bring you America's most trusted

business magazine. Plus global business, finance and tech news as it happened. S Bloomberg Business Week with Carol Messier and Bloomberg Quick Takes, Tim Stinovic on Bloomberg Radio. Plenty of hand our second hour of the weekend edition of Bloomberg Business Week, including the look at the state of the restaurant industry, especially in New York City. We'll do that with a claim chef Danielle Blue He's actually opening up a new restaurant. Plus a look at the current edition

of Bloomberg Pursuits. We've got art in there, We've got theater in there, We've got music in there, plus the books of the summer. I love that list. First up this hour, though, we do want to get to the cover story of Bloomberg Business Week. It's on the Starbucks revolution, with a push toward unionizing baristas. We caught up with the editor of the magazine, Joel Webber, and the reporter on the story josh Idolson, Joel, I want to start with you because this is the third time that Howard

Schultz has been at the home of Starbucks. Does the Starbucks that he found when he returned just about a month ago as CEO. The surprise I think that probably awaited him um was one that he was not probably familiar with from his other stints, which was this newfound power that the labor has and Starbucks, which I found

really surprising. The workers of Starbucks have you know, for all of this talk about unionization sweeping the country right now, Amazon being one that we've talked about extensively, all those all of those roads lead back to what has been happening at Starbucks, and Starbucks have been really the workers of Starbucks have been galvanizing force that a lot of

other workers in corporate America have been inspired by. And and josh to his credit, saw this long ago and started reporting the heck out of it and going to as many states and and talking to as many workers who were behind the scenes without union effort. And so what you really have here is a CEO who helped build this company into a global brand comes back to it and has found that the workers aren't buying that

same vision that he had laid out long ago. And you see this tension between the workers and Schultz and and it even culminates with, you know, the workers being invited to the White House Um and the company sort of saying, hey, you know we we we got cut out of this. So so Josh Um, what what do you know? You're somebody who follows um labor obviously very closely. I think Josh is like probably as good as it gets in terms of labor reporting in this country right now.

And what really distinguishes the Starbucks story for a wider audience here, So in recent decades in the United States, it's pretty much unheard of for workers to win a labor board election at a company as prominent as Starbucks, where there isn't a union already and there isn't some kind of deal between the union in company to play nice.

And it is being done mainly through workers mentoring each other, not just workers organizing their coworkers, but workers training other workers to train other workers, to train other workers to organize their coworkers. And that is how, as one worker put at, this ultimate group project has spread so quickly and has proven so difficult for Starbucks despite all the resources at its disposal and the goodwill that it's had

to stem this movement from growing and spreading further. There are a lot of directions I want to go, Josh, but one question that continues to stick out to me is, you know, Starbucks is as corporate is very pushing back, very aggressively when it comes to these unionization efforts on an individual level, even before Howard Schultz came back, remember he flew to Buffalo to meet with those unionizing employees. What is what? What does that stake here for Starbucks?

If there is widespread unionization across US stores here, to what extent does that affect Starbucks business? Well, there are two big reasons that companies tend to resist unionization, and one is money and the other is power. Of course, for the union to prove its worth two workers, it is going to need to show that it can extract things from Starbucks that workers one an otherwise get, and

some of those things are going to cost money. But the other reason that companies fight unions and that they often are willing to spend a whole lot of money both on anti union consultants and on making improvements to try to modify people is that they don't want to give up that control over how the business has run. And Starbucks for years has bragged, including Howard Schultz has bragged that there's an empty chair at the board meeting

that represents workers voice. So now you have workers saying why is the chair empty? Put us in the chair instead. And so for Starbucks is to become substantially unionized would mean that Starbucks executives have less unilateral ability to just decide what the business model should be, what the rules should be. And that's part of why the stakes here are so high. Josh, what happened at the company? I thought this was the one where they paid their workers

as well, they had nice benefits. I mean, this is something at Chultz kind of took pride in. As you as you report what happened two different ways, and one is to say it's not as dreamy as it may sound. Even the fifteen dollar minimum pay that the workers will be guaranteed by August is not a living wage for someone with a child. In a city like Seattle, the staffing issues have been egregious at times, especially during COVID and the handling of COVID disappointed some workers and left

them feeling betrayed. The other answer they would give is that it's not enough to be better than other fast companies. They believe they should have more say in their working conditions and therefore in their lives, and that there is no one particular thing that Starbucks could solve that would make them go back to being okay with the company having all the control. And where does where do things

stand with Schultz? Because as you write, this is not a He's not permanently CEO right now, right He's just back on an interim basis. So where where will this dispute go? That's what they've said. They're supposed to be a permanent announcement in the fall. There are some people hoping that Schultz stays on, but it is a fight that is deeply personal for Howard Schultz. Coming up, we catch up with the CEO of Brooks on the changing landscape of running shoes and be going by someone that

you might know. We're talking about Britishers who weren't bout there. This is Bloomberg. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovik from Bloomberg Radio. All right, so he has headed up Brooks Running for more than twenty years, Brooks being a century old Seattle based company that makes, as you would guess, running gear. Yeah, well, if you go back some twenty years ago, this was

a company that was tinkering with bankruptcy. Also one more thing, Carol, it's a subsidiary of the standalone company of Warren Buffetts and Berkshire Hathaway, along with you know, other really well known brands like Sees Candies and Dairy Queen. The journey is all in a book by Brooks Running CEO Jim Webber, his book Running with Purpose. How Brooks outpaced goliathe competitors to lead the pack. You know, I think there's there's more uncertainty in our world, maybe than ever before for

business people. And you know, there's so many things you don't control. And that's such a cliche, but it's just true. So we start with the fact that we're going to have things that we have to navigate that we don't control. And so I think the key for us has been customer focused. And I'll give you one example, Carroll. You know, and and when in March the pandemic hit. All the lights went off all retail clothes. We had no radar

for demand what was going to happen. And because we were customer focused on the runner, once we saw them starting to run and buy gear, we we sort of you know, hit the gas pedal again. So so I think the key for us to navigate all these crazy times is our customer focused on the runner and disadvantaged. I think we have because it's it's it's all we do.

Jim back in, it feels like years ago at this point, Uh, you moved or shed much of your presence in China this according to Reuters, and instead moved a lot of the shoe production to Vietnam. I think that for a lot of people, that looks really prescient doing that before COVID even hit. But I'm wondering if that actually managed to help you over the last two years. Because it's not just China where supply chains are are SNAr This

is a worldwide issue. There's no question about it. Tim And and you know the truth of the matter is that last fall, being in Vietnam, in the south of Vietnam, where where many of our key production partners were was a tough place to be because for three months, almost half of our our production capacity did not make one shoe that was in Q three last year, and so we're we're short on inventory now, we're not delivering demands. So I don't think it matters maybe where you are.

Of course, the supply chain disruption and transportation and logistics has impacted impacted everyone, no matter what your product is. So yeah, I think I think it's been super challenging. But you know, given our history, we've been through challenging times before, and so you know, our team rolled up our sleeves and we just have to roll with, you know, the changes that have come forth and do our best to keep our customers informed, and we communicate with our

retail partners and runners. You know, we don't have all the product that they are demanding today, but you know, we're doing our best help them understand why. I would say though in the last several months, things have stabilized for us, you know, in our industry, and that you know, we've been pretty much running at full capacity now for over four months, so we're no more normal mode. If

there's such a thing as normal in this supply chain. Well, you know we're going with we're going with smaller boats to smaller courts. Um air air freight isn't even affordable anymore. So we've just tried to navigate around, you know, the constraints that that are out there in the supply chain right now that we all have to deal with and costs your up. But you know we're because you know, again we're we're focused on the customers. So we just we're trying to do our best to navigate through that

and supply demand well. And in terms of pricing, what kind of pricing pressure leverage do you have with consumers right now? And just got about forty seconds and then we're gonna come back, and I promise we're gonna talk in Yeah, I would say, we don't feel like we have a lot. We've raised prices where we could modestly, I would say, And we don't raise prices every year. So this is the first pricing increases that I think

we've made on our key shoes. The adrenaline goes in probably three or four years, so so we have raised selectively some prices up. But you know, we don't think the consumer can be bear everything, so we've got to navigate that. What's the first your first exposure or interaction with Warren Buffett when he became interested in the company. Well, it goes back for me. I was reading his annual letters when I started in the business world in the eighties,

so I felt like I knew him. But we were owned at the time by for the Loom, which was a Virtue Hathaway subsidiary, and we began to sell shoes at the annual meeting Expo, and so I sent him a note saying how much fun we had, and we met a lot of shareholders, we sold a lot of shoes, and he said, great, if you're ever in Omahawk, come by. We'll go have a steak. And so I went to

lunch with Warren. We met for three hours and and I knew he was going to like the Brooks story because it's we're building a brand very uniquely and distinctively where a challenger brand in a great category, and it's a great business and and we've been growing at double digit now for literally for twenty years. So I knew he would he would be intrigued by the story. And it was just a wonderful meeting. And he's a sponge.

He's just so curious about anything in business. And and that's the conversation, the first one that we had about Brooks. What about the conversation since I mean, how would you characterize how much you're in touch with Warren Buffett? I mean, he even himself in the forward to your book, writes that Berkshire Hathaway has followed a dramatic hands off style in its operations, with only twenty five employees, well three sixty employees go about their jobs and the many dozens

of individual companies like hers. Yeah, so does he often talk to him. I believe Berkshire must be one of the most unique corporate cultures in all the world. I cut my teeth at Pillsbury, and in banking and and and then in in building brands like Brooks. But Berkshire is so unique. They never call in one sense. You know, they've described they have a very distinct acquisition strategy and investment strategy looking for great businesses. But once they buy

the business, they don't. They don't require us to morph our reporting around their needs. They take all of our reporting in the way we want to look at the business and we share it with them. So so they morphed to these hundreds some different businesses, We don't morph to them. And so the only require we send them are quarterly reports and any report, much like any any public company would do. And the only required conversation is annual camp frankly and uh, and they they empower us

to run the business. We love that we take full responsibility for everything that happens here, good and bad. And uh, you couldn't ask for a better home if you want to build a brand in It's wonderful. It's like our lesson is we're always told like if you don't hear from your bosses, that means you're doing your job and that's good. So it's like it's when there's problems, that's when they come. They come a knock and and they expect you to manage it and solve those problems. And

we know that, so it really works. Great. What did you learn in doing this book? Because it sounds like you know you obviously when you came to the company was very different. It was, as I mentioned early, are like on the brink of bankruptcy. A lot of different heads of companies. UM tell us about that journey. Yeah, I think the reason one of the reasons I wrote the book is Brooks is a is a fantastic challenger

brand story, and and we're in a great category. It's global and running and every big platform brand some of the best brands in the world, from athletic footmar and apparel, from the outdoor industry, from fitness is doing running gear, shoes, head to tell, and and obviously bras and jackets and

everything else. So that's where we're competing. But I think in the world there are more challenger brands and there are leading category platform players, and so I wanted to share this story because I think what we're doing is has been a lot of fun, and it's we're building a great brand and a great company and uh and hopefully there's other people that are involved in categories. Maybe there are a challenger brand that will get some value on it. That's Jim Weber, the CEO of Brooks Running.

Next on our menu, Fame chef Danielle Blue on opening a new restaurant as the New York City restaurant See opens up as well. This is Bloomberg broadcasting from the financial capital of the world, Bloomberg, Eleve and Frio in New York to Washington, d C Bloomberg to Boston, Bloomberg one O six one to San Francisco, Bloomberg nine six to the country Sirius XM Channel one nine and around the globe, the Bloomberg Business and Bloomberg Radio dot Com.

This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stenovan on Bloomberg Radio. The next guest is definitely well known to our Bloomberg Business Week audience and community. I'm guests, and some of you have eaten at his establishments as well. We're talking about chef and restaurant toward Danielle Bloo, owner of several restaurants in New York City alone, and he's also got restaurants around the

world in Singapore, Dubai also at Sea. Well, the good thing is that's the oldest spectrum of the market because I even a retail store like a Pistoi Bloom restaurant daniel La Pabion, which is a year old Dismounts and Danielle is celebrating is twenty nine years. And of course the Grata being a distiw restaurant, as well as Babu Bully Suit that are also casual, more approachable. I think

we have been. We have been having a very good quarters and we are entering to a second quarter with very strong a lot of demand, a lot of private dining as well. People are going out, people are spending, but no more than before or if they do it because they really wanted to splurge on the missing things they really missed. But we see the lunch coming back. The midtown business lunch are coming strong. But there's also

that blend of business people and social people. People want to gather together and celebrates, and the buildings are filling up more and more, and we see the activity inside. We see also in the amenity floors, so many people come for lunch as much as in the restaurant. What about when it comes to finding employees, because we know that's been so difficult for for many industries. How are you when it comes to staffing the restaurants? Well, that is um it is challenging. But we have a lot

of young people coming to New York. A lot of people want to move back to New York, move back or move to New York because they see no opportunity to be part of this uh sort of new beginning again. In New York and we see a lot of young talents who maybe we aren't thinking of it and now engaging a coming to New York. And we have also a lot of more people I think on the job market coming. So it is perfect. No, we are trying

to be very careful. It's a balance between the shift we operate and the amount of staff we have in order to guarantee the quality of service and food. So you've seen a lot of cycles. And I think even after nine eleven, right, people were really concerned about in downtown New York in parts of New York and just it came back. And we've seen so many different cycles. And this wonderful grand city that is Manhattan, um in New York City, how would you put this cycle? Uh?

And and then and kind of do you expect that we get back to kind of the grand levels that we saw pre pandemic. I think the worst part of the cycle is almost there. The bad part of this cycle is when the RF came out and only distributed a third of restaurants a compensation to help them restart their business, and more than tutor that would say at one point four million restaurants never got anything and so this, uh,

this was this forced a lot of closure. This forced to so many business to not be able to reopen the business they had, it was impossible. And also you know, the last three years to an apt year, the get good at the amount of lass that restaurant business had. And I hope the government will do something about this

very unfair sort of distribution that happened in our business. Well, we talk a lot about people moving out of New York and we've also talked a lot about the way that jobs have changed here in terms of remote and people not having to necessarily live in New York City to work here. Do you think New York City ever comes back to levels, at least when it comes to employment, when it comes to the service industry that we saw

a pre pandemic. Of course it will, because I think the transition of the home office situation will still last couple of years until there's really a settlement of balance between people's life and business necessity. But uh, and I think there's a lot of I mean, in our business, the hospitality. If someone say about to work from home, it's not gonna work. You're gonna have nobody's serving your meal.

Right there are so many strains and stresses still on this industry, and I think about labor, certainly in labor costs or just finding the workers you need, but also Danielle about just higher food costs. Are you able to pass all of that along to your customers. We try to be very very cautious on raising price as much as we get hit every day with the rays of something.

I mean, if he's not the land, the asparagus. If it's not the asparagus is the audi shows of course they come off the show, come from California, that to travel over the way to New York, and so we get very creative and try to really work with our local suppliers as much as possible. That's our conversation with chef Danielle Blue. Catch a full conversation. You can find that at business week dot com and Bloomberg dot com.

You're listening to Bloomberg business Week. Coming up, what is widely considered the most important art show in the world and its new focus. This is the Spring Art auctions get under way and Carol, they are getting price here also getting assist from John A dive into the magazine's pursuit section. That's next This is Bloomberg. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovich from Bloomberg Radio. Every new Watch is like

a new piece of arts. It has in different stories to tell the time. Wines as a whole really speak to that quintessential Need is the most powerful car made in the US period. You get the beautiful interior, the iconic design that's very cheek and posh. Even if you play for it, it's something that get. It is time for Bloomberg pursuits and joining us his arts columnist James Tarmi, who had a lot of work to do, because man, this section is all his nice job. By the way,

this is really good. I want to start with your recent trip to Venice for the B and L A. That's work. That is absolutely work, and I will continue to insist that it is. To whoever questions my fourth coming expenses, What was it like being there? Because it was the first one in person since the pandemic? Right, yes, it was actually delayed a year, and I have to say that this was the most triumphantly successful being that

I have been to in a decade. It was more art better art, more people than I have ever seen before. It was a real must see in a way that I can't overstate. All Right, I had never heard of it, so I'm an idiot, so tell me that. Wow. All I could say is wow, listen, thank you for admitting that. Let me let me give you a brief over you that's gonna be played over and over in a promo and over. So so the being l is, as its name implies, an event that occurs usually every two years.

It was still late a year because of COVID, but this was the fifty nine edition of it. And what happens is there's this park on the southern tip of the island called the Jardini and they're around thirty national pavilions in thirty different countries UM put on their own contemporary art exhibitions. And it used to be a sort of, um it sounds like an arts World fair, but anyway it is. It is and it's a way of kind

of stating kind of the your national identity. But it's also a way of kind of putting forth, um, how progressive and interesting your your country is in terms of the way it's it's a form of soft power effectively. And so then there's in conjunction with that, there is a colossal exhibition in two parts, one in this massive pavilion in the Jardini and then the other in the Arsenale, which was the place where Venice when it was a republic,

UH created its ships. It's a huge ship building factory. UM. And so there's it's I mean it's it's acres of of of space where you put art in. And then there's also ancillary pavilions in the Arsenale, and then there's literally hundreds of other exhibitions spread throughout the city. So

you it is amazing, and so you see it all. Well, you need at least five days, usually six, I mean, just to go through the main exhibition, which was curated by New York I mean, she's Italian, but she's the she's the curator of the high Line UM to Chili Alamani. She curated this time almost universally lauded, which never happens. UM, just a real triumph. But you you need all this time to go because you're walking through the city unless

you're very, very rich. And then you have a private boat that you've hired for the week, which UH George Cluney and a Mall would definitely have their private boat. It's around two years an hour if you can get one, and they just kind of sit outside whatever exhibition space and then you get on and take a different place to place. But if you're spending tens of million dollars on art, then two hundred fifty years an hour is

like whatever. Yes, unfortunately I'm not and I didn't spend that was there was there a theme or like a takeaway? And maybe how different from the past. Yeah, so this is actually what thank you for that leading, Carol, because this is exactly whatever it might be too. I'm an idiot,

but I can usually get people. I mean well, so, so it's very very interesting to me, at least certain to anyone who's focused on the art market, is that there is a major preoccupation still with figured of painting, which is say, painting of people the human form um and it in the contemporary market driven contemporary art market right now, it takes the form of um, figured of

painting of non white subjects. And this has been extremely popular for let's say, the last six years in the market, I mean it's been popular for longer kind of outside of that, but um, it's basically a product of people realizing that non white, non male artists had basically been left out of the art historical canon for centuries because of intrinsic biases and institutions and collecting habits and so forth.

So everyone sort of rushed to correct this. And the easiest way of demonstrating that they are rushing to correct it is a literal figure of the person who you're collecting. Um, And this bionale was a major transition away from that, not and that it was a transition away from collecting or emphasizing identity and the work of non white, non male artists, but a move away from figuration. People are saying, Okay, well maybe these people have more things to say about

the world than simply that they exist. And so it is um in in many respects, and more sophisticated step forward. And it could have major market implications. Um as the art world can oftentimes dictate the trajectory of the art market. How did this theme manifest in gian Maria Sosati's piece

that wrote about yes, so the Italian pavilion is incredible. Uh, it's around twenty square feet and it's this artist jem Y to Saudi, as you say, who was said, by the way, yes, practice really just trips off the tongue. He uh sort of had could could do whatever he wanted, and he created the series of hunting Um industrial rooms that were empty, so it was like a sweatshot lit by fluorescent lights with sewing machines, just deserted. It looks freaky,

It is really freaky. And then at the end you walk into this huge kind of warehouse and out onto this nearly pitch black concrete pier where you then dimly realized that you're surrounded by like black ice, cold water and anyway. So so so it's this, there's no figuration.

It's very very weird. So how does this sort of new way I I don't necessarily want to say it's a new way of doing things, but on a scale like this, how does this translate to the market Because you can't really buy or transact in an experience like that, well, even if you are worth billions of dollars. So that's a really great question. And there are ways of manifesting u conceptual ideas in in in art artistic ways that

aren't necessarily experiential. So um, there are UH artworks that I mean, in very very very simplistic terms, can be abstract but have conceptual underpinnings. There are artworks which can be figurative and UM have conceptual underpinnings. There are many different ways that you can create art that people can buy that isn't simply about the artists, and I think that is something that we are increasingly going to be

seeing UM in the UH years ahead. I feel like the theme of it right will play out in works of art that ultimately people will buy right like this, This this overarching theme. But it's a little grim though, Oh it is grim. But you know, the thing is that some people are grim, some people are actually kind of optimistic, but everyone's looking to the future. And that was what was a real change from from the art

market and from years past. I have no easy segue, but I gotta go there because I want to talk about the Devil Wears product, the musical, and I want to talk about Elton John because you have a story in Pursuits about this. Yes, this is wild, it is it is. It's going to be heard it here first, folks. It's going to be a major hit. So it's Elton John collaborated with Shana tab who's a lyricist and a songwriter herself and um an author and a playwright, um

and she is. She created Stuffs, which is right now at the Public Theater, which is like Hamilton's level hype in terms of you just can't get a ticket tickets or selling for like six hundred dollars over the price, I mean, big, big stuff. Anyway, she collaborated with all John to do Devil Wears Products the musical and um, the title sounds like it wouldn't be good, but you know it's going to be great. Well, I certainly hope. So. She she's a really ton haunted person. And Elton John

is John. He does pretty well, but he does Okay, he does Okay, Um, so it's going to be really big. And so the whole thing is them translating the movie, which everyone has very strong feelings about, onto stage and making it feel fresh. Okay, we only have a couple of They do make it fresh, but you're gonna have to read it to find out. Why. I want to talk books here because it's not too early for us to start thinking about summer reads. You've got some great fiction,

some great nonfiction, in here. Um, David Sedaris is still spinning yarns. Yeah he is, and he's got a lot of houses. I had no idea he's made so much money. Is really rich and frankly, you know, like if if you are, if you follow his writing, Um, you know, he spent a lot of time at the beginning of his career talking about what it's like to be poor. Now he's just sort of kind of unabashedly uh, describing the Picasso that he bought it, so the bees which

house is he going to put it in there? Well, you know that's a great question, because he did just buy a second apartment on in his Upper East Side co op. I guess, um, because he didn't want to hear it's kind of convoluted. But his long term boyfriend, he calls me his boyfriend, but they've been together for decades. Uh, Hugh Hugh is like learning the piano, really learning the piano, and one of them didn't want to be around the other when they were practicing, so we just bought another

apartment above him so that he could hide. Um. It's it's stuff like this, but you know it's still hilarious. Um. And there are a lot of really good jokes that I cannot tell you on air, um, but they are phenomenal. And there's a lot of other books, uh, covering so many different topics. Thank you so much. Glad you had a great trip, and I'm glad you shared it with all of it. Thank you so much for having me.

All Right, that's our our columnist James Tarmy, and that are ups up the weekend edition of Bloomberg Business Week from Bloomberg Radio. Thanks so much for joining us. I'm Carol Masser and I'm Tim Stanovk. Be sure to tune into Bloomberg Business Week Monday through Friday. It starts at two pm Wall Street Time on Bloomberg Radio. You can also watch your daily broadcast check it out on YouTube. Just searched Bloomberg Global News and got our Bloomberg Business

Week podcast. You can find it at Bloomberg dot com, Apple, or wherever you get your podcast. Bloomberg Business Week is available on newsstands now at Bloomberg dot com, business Week dot com, and always on the Bloomberg terminal, And you can also see me on Bloomberg Quick Take available at Bloomberg dot com, slash qut and streaming platforms like Roku, Apple TV, Samsung TV, and more. Have a great weekend. Everyone ready to buy smart Yeah, if it's you know,

you know, not too expensive budget art. Yeah, not the stuff that's Incursued's all right, this is Bloomberg.