Bloomberg Businessweek Weekend - May 1st, 2020

I feel like some of the things that we focused on was certainly continued to on the energy market, we'll get to that in just a moment, but also earnings and expectations about life after COVID nineteen dominated the Bloomberg and our reporting once again and really our interviews, and I feel like we continue to talk about life after the virus that continues to be a big question, whether it's the auto industry, education, hotels, restaurants and entertainment productions

and so how do we tackle all that. We go to people in the know, We go to people who are actually on the front lines as we're making these decisions, making these plan We talked to CEO s, we talked to investors as we offered do this is after all Bloomberg, but even a chef, a top chef out there about how they're handling this and as you say, not just what's going on now, but what they see when they look around the corner. Because what we do know is

life will be different, very very different. We're also going to hear from Keith Barr, here's the CEO of Intercontinental Hotel Group, talk about another industry that certainly will be different. It is one of the world's largest hotel companies, and so we caught up with him about the impact. They've had a big impact, but also what does life look

like afterwards. And also Max Levchin. He may be best known to many of you as the co founder of PayPal, but he's got a couple of new companies, one of which affirm it is making loans to folks to buy things. And so talk about someone who's got insights into what people are buying and not Yeah, so entrenched in the startup world. So I'm so glad we were able to catch up with him. We also caught up with another industry, like the hotel industry that has really been beaten up

because of the virus. Also restaurants around the nation and in particular in New York City, crafted hospitality owner and chef. He's well known. Tom Calichio really a big advocate for the hospitality industry and restaurants in particular. We talked with him about what he's trying to do to get more support really from the government to help out the restaurant industry. It's one of the big questions out there, not just in the restaurant industry, but for everyone as we start

to see this rescue and stimulus get put out. First up, though, let's go inside the magazine. We take a look at Exxon's fall from oil juggernaut to kind of run of the mill, mediocre company. It's the cover story this week. We heard from Blueberg business Week editor Joel Webber and one of the writers of the story, Brian Gruley. Started

behaving less, in a less disciplined way. Then it had into you know, the early odds where you know, they would announce the deal for some acreage or another company, and it was clear to the street, here's how they're going to make money off this in the near term. And so in oh nine they bought a really big natural gas company to get in on shale gas, and I think gas prices started dropping even before they closed the deal, UM, and they could have gone into shale oil.

They totally didn't, um because it made a lot of money then at that time. But they did gas. They got creams uh. Same thing. Uh. They went into the oil sands in the Western Canada, very expensive way to get oil out of sand. Essentially it's more like mining than drilling. And that turned out to be sixteen billion

dollars spent, not for not very much. Russia another they're going to be a great big deal with the old excell On CEO Rex Phillerson is comrad the Vladimir Putin in asion in three to five billion dollars in the Arctic, and then Plutin went after Crimea and Obama said, you're not doing business over there anymore, Exxon, and that kind of killed that deal. And so it was going after

these great, big, risky deals. And underlying this was to some degree the assumption that we all held for many, many years, decades even that oil is a finite resource and it's gonna run out, We're gonna hit peak oil. And and as as all they were doing all that, that assumption was changing radically because of the technology that the navals companies to uh break into very tight spaces of oil and gas and bring out these huge deposits of oil and gas that just weren't acceptable before. So

we went from uh scarce assumed scarcity to and abundance. Brian, I feel like you and Kevin have the makings of a book here. And there have been several books written about x because I think you cite um one where they called x M one of the most powerful businesses ever produced by American capitalism. And they have been a company right, just great, a sign of great corporate America and just have plowed ahead decade after decade. So here we are now and they're in a tough spot on

a many different levels. Can they plow ahead? Oh yeah? I mean, first of all, you know, they're not going bankrupt. They're not. They're not in that kind of trouble. Um.

They have a reasonably strong balance sheet. Given the circumstances of the market and what's going to happen in oil in the next several months, there is there is a good chance that a lot of the independent, smaller players in the shale fields in West Sex Is in the North Dakota are just you know, but I canna be able to make it, and so they're gonna look to the big boys to buy them out. And you know, the Excens and Chevron to the world not going to

pay them nine on the dollar. They're going to buy them on the chief. And that's writer Brian Grueley of the cover story. Entil Webber, the editor of Bloomberg Business Week, and I have to say a departure over the last few weeks, Carol from covers that are all are really strictly about coronavirus. Clearly the pandemic plays into the oil story, but it's much bigger well, and it's also how the mighty have fallen. Right, Who would have thought that we'd be talking about X on this way if you go

back a decade or so. But it is certainly in a different place because of the global energy markets and where we are today. We're gonna more on that story too. In the Bloomberg Business we cover podcasts, so look for that as well. You're listening to Bloomberg Business Week, coming up our conversation with Tom Doll. He's the president and CEO of Subaru of America. Again another industry. Right, nobody's out there shopping for cars. They've been hit hard in

across hairs. This is Bloomberg. You're listening to Bloomberg Business Week with Carol Masser and Jason Kelly from Bloomberg Radio. Well, today we're bringing you some of the most important, we hope informative conversations we had this week on our daily

Bloomberg Business Week radio show, all about the coronavirus. Looking far and wide, Carol for what happens next, and Jason, let's remind everybody our interviews this week again happening in real time news continuing to cross the Bloomberg at every minute of the day, about all industries impacted by the virus. One of those industries the auto industry. And with that we spoke with Tom Doll, he's the presidency of Subaru of America U. This sector, the auto industry man hit hard.

Nobody out there shopping for cars. So we talked with them about how they're adapting and how they're helping others get through the virus. This is gonna be a little bit longer recovery than people thought only because of the depth of it. Remember, we can say we're going to start up our factories and we're they're supposed to start up on maybe eleven, but we're dependent on our suppliers to be able to make sure that we've got the parts to be able to produce the cars and the

volumes that we need them to produce. And the other issue that's going to happen in the car business, I believe, is so many of the other manufacturers have so much inventory that have to be disposed of, and what's been happening in the fleet and rental car markets is something that we have to pay attention to because those cars ultimately have to be disposed of in the marketplace as well. So it's gonna be interesting when the market finally does open up and we see what happens in terms of

the competitive actions by some of the competitors. So let's unpack that a little bit, Tom, if we can, because I want to take you back to something sent a minute ago about the supply chain, because we were talking about this as it relates to Apple and many other companies, UM your global company obviously, and cars are complicated. I don't have to tell you that you know much better,

uh than than we do. What have you seen so far in terms of the pain points and and how you're able to deal with them when it comes to the supply chain. It's fascinating because I've been around a long time at our company and around the car industry. Go back to the company, Is that right, I do, Yes, I've been around. I'm dating myself right. You've seen some things. I've seen a lot. I've never seen anything like this.

I've seen my share of recessions, and this is completely different because you know, I believe when I tell you it just shut down. You don't just simply close an automobile manufacturing plan for nine weeks and then just expect it to start right back up again. The same thing with our suppliers. You just don't shut them down for that length of a period of time and not expect.

There's going to be some hiccups once the factories start to get moving again, and I think we have to plan for that as we begin to bring up our production capacity. It's going to be a little bit of a while, I think, before we get back to the levels of production that we had seen prior to the to the shutdown. But it's gonna be interesting to see how it all comes together. I know our folks are

working very hard to make it happen. Tell me, I am curious what worries you more what the economy looks like, and you know, the confidence that consumers have to go out there and hopefully have jobs that they can buy cars, or is it more the logistics of getting the suppliers and everything back up and running. What worries you more the economy. Well, we'll get the suppliers all figured out. They know what they're doing, and our production engineers are fantastic.

We'll get the factories back up and running. I'm not worried about that. I'm worried about the long term impact that this might have on consumer consumers and their willingness to buy and spend on important things like a car and expensive things like a car or home. Right, a man, great news right now? Right? Mortgage interest rates you probably reported this earlier, are down to the lowest level ever, right,

But people aren't. But the housing markets in the tank um people who have to People need to have some some stability before they're going to be willing to go back out there. So how quickly can these can jobs be added back into the economy and we get back to the point where people now feel more comfortable right, Well, you know, and the auto industry, as you well know, you know, incentive have often been a part of it.

Does that make a difference in this kind of environment or what what we perceive will be the economic environment on the other side of this, Well, there's no question that demand curve is shifted down dramatically. You know, before before the shutdown, we were probably at a sixteen point eight to seventeen million unit sales projection for this calendar year. Now everybody thinks, and myself included, that we're going to be somewhere between thirteen and fourteen million vehicles for the year.

So it's been a big shift. And up until that point, as you know, production was was being done to support that. So when you come out of this thing, there's it's definitely gonna be a buyer's market, and manufacturers are going to try to figure out how they can get that market share amongst themselves in that in that much smaller market, And and you know, there probably are going to be significant levels of incentives that are going to be out

there once it opens up. Um, you know, we have to be smart and how we play that game, because we're not we don't have the resources that a lot of the other manufacturers have. Because of our science, we have to do things a little bit differently. One thing I do wonder about, and I'm curious about workers, Tell me about your workforce and whether or not you've been able to hold onto people or what sure For our headquarters people here that are based in Camaden, we haven't

laid off anybody. We've essentially have a policy now where people are working from home. There's only about a handful of us that come in here every day because we have to essentially kind of keep the business running. But we're very concerned about the health and the safety and the welfare of our people being in being in New Jersey, one of the states that's most affected by it UM,

so we're very We're very concerned. We're making sure that we we disinfect our building, We're making sure that we're taking all the protocols uh they keeping the social distancing and so forth. But so far we haven't know. We're keeping everybody on. Although there's a lot less work to do right because we don't have a lot of business

that we had before. But so far we're trying to do what we can for our most valuable asset, which is our which our employees, our staff right well, and Tom is alluded to you know, you're there in New Jersey. Carroll's in New Jersey. I'm in New York. You know, we're all at the epicenter of this in many ways, and so sort of seeing firsthand at the effect of this, you know, and we've been talking a lot about this notion of you know, what is the responsibility of a

company to the broader community. I know that you guys have been involved with Feeding and Feeding America pretty closely along the way here. Tell us what you're up to and how that works at this time. Yeah. Sure. What happened was we were when the pandemic first started. Uh, we saw all the lines. What struck me was the lines that occurred in San Antonio was the ten thousand people coming to a food donation center to get food.

And so we came back to the office that day and we said, what can we do to help alleviate

the hunger crisis immediately? And we came up with the idea of working with Feeding America in order for us to be able to move quickly because Speedy America, as you probably know, they're they're very, very very good at uh partnering with two food banks around the country where we also have retailers, and so our retailers can then partner with those food banks to make sure that they get the three So we're donating I'm sure you know

that we're donating fifty million meals to Feeding America, enough to enough to um, you know, satisfy almost about four point which i'd be four point one or four point two million families for a day in terms of their meals. That's Tom Doll, the Presidency of Subaru of America and Jason. We know, like the hotel industry, the hospitality industry, restaurants, this industry, the car industry also hurt. Well. This is a business that already was in a state of dramatic change,

in existential crisis, you might say. So interesting to get some time with Tom and figure out what people think about when it comes to transportation. And also it's a manufacturing intensive business, to say the least. You're listening to Bloomberg bus Wee coming up a conversation with David Edelman. He's the founder of Darko Capital and owner of sports Teams, long time investor, a lot of big thoughts and really looking ahead with him. His world contains so much so

it was great to catch up with him. This is Bloomberg. This is Bloomberg Business Week with Carol Masser and Jason Kelly from Bloomberg Radio. We're bringing you some of the most important and informative conversations that we had throughout the week on our daily radio show. A lot of it, of course, Jason relating to the virus, the impact and what's our way forward after COVID nineteen. Well, and we're always looking for folks, Carol, who have their fingers in

a number of pies. That is so true about David Edelman. He's the founder of Darko Capital down in Philadelphia, also has interests in the sports world, in the movie world. He's got it all, and he also had some pretty hot takes about what we're seeing now and what we

may see in the not too distant future. From my perspective, because we do touch a lot of businesses, from you know, student housing and colleges and universities to you know, private equity, I think first and foremost is have to look at the impact this is having on people and you know employment,

and that the economy. You went from having almost three percent unemployment to you know, this is gonna be a big differ instance a big numbers than months ahead come And I think, you know, kind of the insight into seeing industries that are just getting you know, decimated is just really sad and unfortunate. Well, let's talk about the world of education first and foremost. Carol and I talked about it a lot, in part because we both have juniors in high school, and so we're thinking about it

all the time with a senior in high school. So there you go. So a friend of mine for you as well, I mean, and I know nothing has been decided. We here sort of drips and drabs from various college presidents, and many of them appear on our air here with us. They're not sure what they're gonna do. Tell us about how you think about it. From someone who is in the business of housing these students, how do you determine

what to do and when to do it? So we were able to kind of really get some very interesting insight into what happened from the moment the school's transitioned

from you know, on campus to online. And I think the most surprising data point was across the country about students that we house somewhere in the neighborhood, of of them sheltered and quarantined in our apartments versus going to what i'll say, quote home correct and you know, some places like Texas and Louisiana was in the eighties and higher.

And we we learned a lot from that, which was a you know, one, you know, not everyone has a traditional family unit where you know, maybe going home was conducive to I think not everyone wants to be you know, quarantined with their family. And three, I think that a lot of these students made the decision that in order for them to stay focused on their education, they needed kind of the comfort of where they were in their apartment.

And so it was a staggering number for us. I think it real firmed that you know, these students are young adults and uh, you know, kind of putting themselves first as too far as far as a focus on education and what they wanted to accomplish. So you know that that was the first data point that we just

really kind of took us all by surprise. And I think the other part that we learned is that the online experience that these students received was not what they didn't live up to their expectations or candidly the expectations of the university. And I think, you know, one thing we've always looked at in our business of student housing is, hey, what's the durability of universities compared to online learning? You know, prior to this, you know that that online learning was uh,

you know, you know, kind of becoming more prevalent. And we had always said that you can't replace the college experience. And now more than ever, I'm convinced to that, and I think this really proved it. And I where I'm headed with that is that based on the universities we've spoken with, they really want to get open in the fall. Uh. The economics, of course, you know where this is a

bloomberg business. Let's talk about the economics that they can't afford not to open um and not have the students there, number one. But number two, I think they acknowledge that the quality of the education online is not the same as kind of in the classroom. Well, and you have to imagine this scenario where a student or a parent like us is going to, shall we say, balk at the idea of paying you know, fifties sixty seventy thousand dollars a year for an online education, right, I mean

fair to say I think it's fair. Yeah, think it's fair well, and I do you have to think educational institutions are are looking at that, David and saying, man, if we don't get our act together, people are going to be like, especially if the online goes really if it was going really well, to kind of rethink how

we do all of this. You know, and I've always said that, you know, there's over colleges and universities out there, and certainly from the campus apartment's perspective, when we're looking to build apartments, we want to pick universities that we think our value proposition, and a lot of universities that exist don't offer, in my opinion, the value proposition, uh

for you know, for the for the cost. But to your point, the value proposition and paying you for dollars for a purely online experience probably doesn't make sense long term. And that's David Edelman, the founder of Darko Capital. I have to say one of my favorite conversations of the week Carol, because we started up and he basically was like, look this is what it's going to be. This is where we're going to go, so the things we have

to worry about. Well, and what I loved is he really had some great insight on education, uh and thoughts about online education. He's talking to a lot of folks who are running colleges and universities. He's all about, you know, housing for students. But he also got some inside about how the online world is working when it comes to education. But also, as you said, sports, private aviation so much so I'm really glad we got some time with him.

You're listening to Bloomberg Business Week. Coming up, we hear from PayPal co founder Max Levchin on his latest company affirm. This is someone to Jason at the crossroads of startups, technology and the impact it's having on our world. His whole job is looking around the corner, and he's anticipated so many things when it comes to consumers and technology. You're gonna want to tune in Business Bloomberg. This is Bloomberg Business Week with Carol Masser and Jason Kelly from

Bloomberg Radio. Well, today we're being you some the most important and we hope informative conversations we had on our daily Bloomberg Business Week radio show about the coronavirus, and again, Carol vs are happening in real time across the course of the week, So forgive us if maybe the news overtakes it at some point. So much happening in so quickly, Well, we have the opportunity to catch up with Max Left and talk about someone who understands things happening quickly and

the impact it's having on our world. The co founder of PayPal. He's got a new startup. It's called a firm, and it's all about um installment plans to help online shoppers. So really playing into what's going on with consumers, where they're spending money, where they're not. His resume to Jason is a reminder of why we learn a lot when

we talk to him. Listen to our conversation. You know, I have to say, knocking on woods, we've been extremely lucky a firm transitioning to our from home seamlessly, almost almost perfectly, really, and we've been able to support our partners and our customers and our employees throughout this process

generally without too many crazy fire drills. So all then, I feel very lucky and certainly aware our companies where those sorts of people already took place, and you know, I think some of this is just getting started too well. And Max, it's interesting. I mean, it comes at a fascinating time for you where there's so much momentum around what you're doing at a firm and you have this

pretty incredible window into consumers spending. First of all, remind us exactly how a firm works, and then we'll get into sort of what you're seeing through some of that data. Sure, a firm serves primarily a young young their audience as and our customers are primarily millennials and Gen xtas and so forth, and we're really a credit card alternative. You would find this if you're buying a Peloton or shopping

at Palmark dot com. And really every opportunity between we are there in the checkout page, sometimes on the product age where if you don't use your credit card and would like to pay for an item or I ams over time with great degree of simplicity. Everything is clearly priced. There are no fees of any kind. They're not even

a late fees. As a product that every really built on this idea that if we communicate very clearly to our customers what it takes to pay something over time, they would choose us over credit cards and work with

ben at It for eight years. At this point, we have many thousands of merchants that work with us and many many, many millions of customers billions of dollars these transactions that we processed, and so we do see demand in retail, primarily online, although we have a meaningful presence offline as well, and so you're right, we have some some fascinating status were observing. Well, let's get into that.

Tell us about because you know, Jason and I have talked about just kind of on our own world what we're spending money on right now, and earlier we talked about, you know that millennials in particular might stop with all the experiences and they're gonna be spending on their home and other things because that's going to be the world we're living with and you're not gonna be able to travel easily. What are some of the data points that you guys are seeing about where people are spending their

money right now? So you pretty much nailed it to set to say, I think that the headline is exactly right. Uh, millennials and We're not just starting moneials like many of our customers are so on the younger side, but everyone has sort of turned into words. So if you are setting up your home office, your home jim, your home restaurants or your part you home restaurant, that is growing off the charts, So just give you some stats of

office sales that we are processing. Is up overall, homewears or mattressists for insured, to decoration, you know, everything that you might have one you have to make your home nicer. But there's some events that are just incredibly high demand right now. So the the kitchen supplies, for example, are up sent.

Apparently everyone has to baker and make their photo starters, and so sure enough there's lots and lots of things that you need to that, including breadmakers, which is one of the top category apparently, uh, fitness, you know, as you baking need to burn the calorie suit. So across the board, you know, obviously Peloton is a one of the publicly traded companies that that's note extordainly well in that category. But Mirror an Tonal and all the other

merchant partners of ours are all reporting huge growth. The overall categories up a hundred and six, which is you know that that's an incredible growth given how big it already is. UM, I can sort of go on on and on these sort of the losers on the other side, or sort of the unforshaped ones are also quite predictable. UM. Clothing, you know, no one needs to wear pants on zoom, and so most you know, you know what most people seem to be not shopping for for fashion. Um Uh,

there's actually a footnote. I'll come back to that in a second. But clothing is down, travel decimated really estimating sense that Max leve Chind is the CEO of a firm, co founder of PayPal, a stalwart of Silicon Valley. We want to talk with him more expansively about some of his experience and what happens next. But Max, before we leave a firm, I do want to ask you. This has brought into sharp relief a lot of trends within

buying and retail and merchants, so many things. I do wonder from your perspective, what does this accelerate or what does it accentuate? I guess when it comes to the future of buying from the merchant side of things, lots of different things. It could be a multi hour this because what's the most important thing? Then, I think just

to be the your your conversation about the Olympics. I think every major retailer with a significant presence offline is going to have to reinvent themselves from both logistical and real estates management perspective, where show rooms are gonna become warehouses and front of the house is going to become a film into the house. And so there's just lots and lots of major movement that has take pot, especially

for folks who was large real estate holdings. And then while they're doing this, they're gonna have to retool themselves for existence that involves buy online, pickup and store by over mail, of return and store that all these new problemsies that used to be exceptions are now going to be front and center because people are not going to be comfortable walking around the large store with a salesperson

in their face. And so as this takes place, I think it's going to create massive opportunities for people that create software that runs the service systems and connect the dots between different warehouses and fulfillment pipeline and things like that. So I think that's probably the thing that I'm hearing about more and more in just the last couple of weeks. Yeah,

that makes a lot of sense, right. Crisis creates, you know, certainly disruption and innovation and because you kind of have to figure out a new way to do it, and you have to do it fast if you're going to survive. I do wonder to max when you look at specific retail categories, like I look at big department stores, are

people going to want to go back? And I know that's easy for me to say because I live in an urban environment and I have lots of options, but I do wonder, And you know, if you're out in suburbia, that's where you go to, you know, if you want to go to a brick and mortar. But I do wonder what your thoughts on about, you know, like department stores on the other side of this, who are already in a beaten down state. I think the we c will absolutely out of business. I don't I don't think

that's a that's a question at this point. The strong ones will innovate. I think it's an opportunity for those that want to double down on the physical retail and create the impression hopefully the reality of safety. You know, maybe instead of having a physical salesperson, you'll have an iPad on wheels rolling around whether even a store, and telling you where to look. And I think the physical distancing and concern or just personal safety is going to prevail.

But it's not as though we aren't going to get out of the house, especially as soon as we're allowed to do so. It's just we're going to take places where we feel safer, you know, like we are likely to get what we need fulfill than uh, not expose ourselves anymore than we absolutely must. Just you know, trips to the grocery stores have never really ended because people

need to eat. People are going to go buy pants again, They're just going to choose stores where they feel the safest and that they're going to get in and out and right, Max, I do wonder, I mean, especially given your experience and history, and you know you're there on the front lines of Silicon Valley. You've watched, I'm sure with great interest. Is we have all of us as a society sort of wrestle with technology over the last few years and the role that it plays and the

good and the bad. I do wonder how this, in your estimation, this pandemic has changed our relationship with technology. What do we know more about, what do we think more about as we go forward, especially given what you just said as it relates to brick and mortar and sort of that physical experience. I think all the choices

we have to make are brought into sharper relief. And I think right now we are in this extreme triage mode where or you know, can have a video conference and company that has a well known, fairly significant security bug and everybody says, well, that's a real problem. But I'm still going to get on my call right now because I have to run my business arrety to do this or that, and so many choices that we make are going to be extremely solitarian and far or less theoretical. Yes,

I care about my privacy. No, I'm not going to hang up because I need to finish this negotiation or this contract. As we sort of get into a little bit more normalcy or get used to the new normal, we are going to get back to sort of a little bit more navel gazing and questioning, you know, are we making the right trade offs? That said, I think, you know, even the conversation around will Google an Apple there's a property working on to trace contact that's gonna

be a major privacy violation or not. I think in the world where we're canceling Olympics, which to me is a sort of a cornerstone events that define society because we just can't guarantee safety, I think we should double down and lead into technology that will allow us to enable such events again. So I think in that sense, I'm a big alogy bowl. That's said. I think over time, as we get used todays, we will probably start questioning

some of the decisions were making. That's Max Levchin, the CEO of a firm, and let's remind everybody he co founded PayPal. He was the CTO of that company, was chairman of Yell for a long long time, he was on Yahoo's board. So this is a guy who understands, an individual who understands what's going on in technology, really understands disruption, and as you said, someone who is great at looking around the corner, what's coming up next? Right,

fundamental changes are happening right now. Some of the things were happening already. This is an accelerant, but looking ahead, our lives are certainly going to be different, and we know for a fact that technology is going to play a big role. Well, that wrotes up the first hour of the weekend edition of Bloomberg Business Week from Bloomberg Radio. I'm Jason Kelly and I'm Carol Mass are planning coming up in our next hour, including a conversation with the

dean of the Boston University School of Public Health. We're talking about Sandro Gallea, and we love catching up with him. I feel like this is another one of our go to voices as we've been dealing with the pandemic and understand ending how we get through this. Plus this weekend, it is the season premiere of Billions, one of my favorite shows. We caught up with the co executive producer for that showtime hit talking about the industry, but also a little bit of a preview of what you may

see come Sunday night. But like many other productions, right they've had to shut down. So they're thinking to um about how do you come back after the virus, because it's going to be very different when it comes to productions in the city, in the state, and really around the country. Plus another edition of Business Week Talks, this one featuring a conversation we had with Keith bar he's the CEO of Intercontinental Hotels Group. Alright, looking forward to that.

This is Bloomberg. This is Bloomberg Business Week from Bloomberg Radio. Hello, I'm Carol Messer and I'm Jason Kelly. Today we're bringing you some of the most important, we hope informative conversations we had on our daily radio show, Bloomberg Business Week, all about the coronavirus. It's in the center of all of our lives. It is going to affect how we work,

how we play, everything that we do going forward. So a lot of interesting conversations coming up, and Jason, of course, these conversations happening in real time as the news continue to change around us. One of the conversations we had Keith bar he's the CEO of the giant hotel company, Intercontinental Hotels Group. It was another edition of BW Talks.

Loved catching up with him. Also April Taylor. We hadn't talked to her before, but we were so excited because she's a co executive producer of the big hit show Billions, premiering season five this weekend. But first up, We checked in on the virus the medical perspective with one of our go to guests. We're talking about Sandro Galleia. He's the dean of the Boston University School of Public Health.

Check it out. As the pandemic proceeds, we are seeing more and more how this exposes fractures in our society. The the pandemic first started, there were a lot of conversation about how the virus does not discriminated effects everybody, But it didn't take long for us to realize the

devirus does discriminate. That yes, we are all at risk of the virus, but ultimately those who are more at risk are those who are marginalized, who are poor, who are people of color, who live alone, who are single parents, and those who die are those same groups. So what we're seeing is a world where groups that are vulnerable do not even have protections from something as widespread as

a pandemic like this. And you're hearing this from data emerging from cities all over the country and really from all over the world. So I certainly hope that this is a wake up call for us that says, even in the context of a pandemic, we have created conditions where self haves and health have not deviate at a time like this. And Dr Galia, how did we get here? I mean, how did it get this bad? Uh? And

and was this something that always existed? It feels like it's been exacerbated in the last you know, call it ten twenty years. Yeah, well, when you look at the data, it has been explicibated probably in the last thirty to forty years, so about about forty years ago. This is important to to note the American health. American health was among the best of the high income world. Now today

we are square squarely the worst. We have the squarely the worst health of any of our high income country peers. So we have life expectancy is shorter, we have higher death from infector disease, higher that's from from a non communicable disease, and we leave about five years of life expectancy on the table compared to other countries. So you know, I would ask you, and ask every anybody listening. You know we have chosen, we have chosen to leave five

years behind in life expectancy. And now you may be saying, well, I didn't choose that, but we did. You did, and I did because we have we have voted for policies that allow that to happen. So it's been about the past thirty to four years where our health as a country has been getting progressively worse, and it has brought us to a place where when something like this happens, it reveals this underlying truth. Now, the truth is with us at all times. The virus did not create that.

The virus is just exposing it. And what specifically the policies and and and maybe the ones that could more easily than others be reversed. What what would you point to? Well, I think we we need need to really look at this from top to bottom. We would start with the fact that we have a system which ultimately accumulates resources

and rewards those who have resources. That starts from our taxation policies, all the way to our employment policies, all the way to who gets sickly who doesn't, From the state of our education, from the state of our housing.

If we really wanted to tackle this, we would say, how do we create a world where everybody has access to high quality education to allow us to change people's life trajectories, that everybody has access to stable housing, where we have a fair economy to such such that people who work hard can get jobs that puts them on the right track, and all of that ultimately would add

up to creating much better life trajectories for people. That is so true because if you think about it, if you get a good education, you probably get a good job that also provides you with great benefits or good benefits in terms of healthcare, and us some benefits or some benefits. Right, But but we know what's what amazes me and Jason and I um hosted a quality summit that we did here at Bloomberg and we were talking about, you know, how this virus is impacting the more vulnerable populations.

As you said healthcare, the problems have been exacerbated. I thought you said forty five to fifty years. It's a long time. Why haven't we been able to figure this out. We have some of the best and brightest minds in this nation, public sector, private sector. We know the problems are there, They've been there for a long time. What's holding us back? Is it private sector? Is it public sector? Where's the problem? Well, it's a terrific question. I would

point to all of us. I think we are holding ourselves back frankly because those of us wore in the riches. That means me, that means you have been too self involved. And frankly, the system serves us too well. There really is little incentive to push against the system that ultimately serves those who are dominating the cultural business conversation. And

and that is and that is all of us. So we need to say, this is a moment in time which has exposed these underlying inequities, and which shows us that there is a country of health haves which is roughly the riches, and health have not, which is roughly the poorest, and say that is not the kind of country we want to live in now. We do not want to live in that kind of country because that is wrong. And secondly, because if there is another outbreak

like this, it threatens us all. So we're beginning to see with this outbreak that if some of us are vulnerable, all of us are vulnerable. And if this is not a wake up call a moment in time, I don't know what is. And that's Sandro Galia. He's the dean of the Boston University School Public Health and author a very relevant and I have to say, candid and honest

voice in all of this. I really enjoyed talking to him because he's looking at it obviously from the medical perspective, but also from a social perspective and helping us understand some of what this virus is laying there. You enjoyed it. I enjoyed it. I had a bunch of our listeners emailing me or tweeting at me because they that conversation

really resonated with them. What's interesting, You're right, Jason. He talks about how the coronavirus has been really a wake up call about the health haves and health have not in our society. It's a much bigger problem than we may have thought, and he really gets into that. You're listening to Bloomberg Busines Week. Coming up, another edition of Business Week Talks features our conversation with Keith bar He's

the CEO of Intercontinental Hotels Group. This is Bloomberg. This is Bloomberg Business Week with Carol Masser and Jason Kelly from Bloomberg Radio. We're bringing you some of the most important and informative conversations that we had throughout the week on our daily radio show. Of course, talking a lot about the virus Jason on various industries and what's our way forward after COVID nineteen And these are happening in real time, of course, and we were lucky to have

another edition a Business Week Talks. It's our series where we go a little deeper with a CEO and in this case, someone who's right in the middle of the most disrupted, one of the most disrupted industries out there, talking about hospitality. Here's our conversation with the CEO of Intercontinental Hotels Group, Keith bar A challenging time for the TELL industry. I mean when you think about the impact of the travel restrictions, social distancing UM, borders being closed,

cancelation of conferences, meetings and events, um. You know, we've never seen an impact to demand for their TELL industry like this in our life. When I look at the start of the year, we had a fairly good January and February, and then as an industry, we saw revenues begin falling quite quickly, uh in March, and and the impact on people's been significant, right, I mean this industry employees.

Traveling tourism is one in ten jobs globally, and so you've seen millions of people in the us become unemployed in a very very short period of time. And so, Keith, help us understand how that plays through to your business, you know, by the numbers mean how many people have you have been affected within your company by this, either temporarily or or god forbid, permanently. Yeah. So, I mean we have a model where we are basically a franchise

or for most of our business. So most of the hotels that we have around the world nearly six thousand, are really small businesses, are an individually owned hotel who may employ fifty fifty people. Uh, we have about four hundred thousand people who work in our hotels around the world, and many of those people today have been furloughed or

been been made unemployed and so um. Thankfully, the US did pack the Cares Act and had the paycheck Production program which enabled these small businesses to hopefully retain a lot of this staff. Um And at the corporate level, we've been cutting people salaries, we've been cutting capital expenditures, really focusing on liquidity to make sure that we can get through this very very challenging time in the industry. Well, having said that, you know, Keith and having kind of

an asset light business. How has that protected you as a company overall from from falling into a deeper crisis. Yeah? Really, I mean we were some of the less leveraged companies out there in this industry, and since we don't own a lot of assets, we have less exposure. UM. So about focus really has been on customers and on colleagues, and on our owners and how do we help all

those different individuals and stakeholders get through this. So customers has been about giving them flexibility on bookings and so forth.

With our colleagues, has been helping them access the programs that are around the world, whether it's um there's a program here in the UK where the government is basically funding up to eight percent of someone's pay up to pounds, or accessing the federal unemployment and local employment in the US, with our owners accessing the small business loans that turned to grants. Been very, very focused on that because those

are the people that are being the hardest impacted. And we know by looking after all those stakeholders and helping them get through this, we can come out of this the stronger business and a healthier biness. But it is again, you know, people talk about challenging. I mean, you know,

I've been through the financial crisis. I've been through you know, nine eleven, and we've never seen demand drop like this, And I think an industry is going to have to think about how does it come out of this and how do we work with government and how do we work as an industry to help businesses stay vibrant during this timeframe? Reopen uh and then see what the what

the new norm looks like going forward. Well, we want to talk about that new normal for sure, but one thing I want to ask you about keep before we get too far away from it, is what the experience of your owners and your colleagues has been in terms of accessing those small business loans. Because we're hearing varying reports about availability, We've heard a little bit of controversy of you know, who's getting it, who's not, what's coming

back to you as your colleagues report in. Well, let me stop by saying just just for the record, I we have not received any funds from the Paycheck Protection Program UM full stop, and we've been very focused on getting our owners there. So we've been hosting webinars from day one helping our own get to these programs UH and had really good success with it. A number of wonderful stories about hotels, Holiday and Express that was closed was able to access the program and then reopened and

hire the staff back too. So it hasn't been perfect clearly. But if you think about the Small Business Association, I think PROCESS is normally about thirty billion dollars a year in the US, and they did three billion already in a month. Real testament to they're they're trying to help out as many businesses as they can. Um Clearly the

program needs to expand them. You know. One of the things we've been saying to the government was great first then, but these programs are gonna have to expand and be extended because this is not going to be over in a month. Business doesn't go back to normal tomorrow, and so we've gotta think about the long term again, health and stability of an industry, and it is. It's one in ten jobs globally and in the US is in

this sector. And so that's a lot of people who we need to look after, and a lot of small businesses who who buy from local vendors, who hire local construction workers to build these hotels it's this intercatencting of our economy we have to recognize and make sure we can kind of help work through that together. Does the government understand that, Keith, Do you think they understand that when you get on the other side what really needs to be done. I think so. You know, I've actually

had a couple of calls with the US FED. We've been engaging with the White House, with the Senate. I mean, they really do understand that they had to move quickly. They do seem to understand that they're going to have to do more, so hopefully they'll be able to get

the next part of the package out. Um. But I think it's responsibility of business to help continue to educate them on how this is unfolding, the impact that's going to have more broadly, um, and also how we're part of the solution too, because we're trying to help out as much as we possibly can. You know, we are. We're hosting frontline workers and medical professionals all around the

world in our hotels. You know, we're donating hundreds of thousands of dollars to food banks in different markets around the world to help out people who are in need. We're we're providing through a great initiative called First Pashtack First Responders First, giving thousands of room nights to first

responders who close to medical facilities who need accommodation. You know, I think that's as an industry, how we have to rally around is how can we help get through this both by supporting owners, supporting colleagues, also our frontline workers and medical professionals and Keith, as you look around the world, as you pointed out, and as Carol pointed on the introduction, truly a global company, you probably have some inputs that other CEOs don't have in terms of how this looks

on the ground in different markets around the world. What are we missing, what should we know about maybe some things, And the way this virus is manifesting in the economic manifestation at different points of the globe. It's quite interesting. You're seeing the countries who have got out quite quickly on testing, quite quickly on contact tracing um and understanding the use of technology to be able to really manage it and manage the economic impact and open up parts

of the economy. Also countries where they've got very close borders or you know, new Zealand's being put out there in Australia is coming quite well now. Um so countries that have been able to act quickly decisively on testing and shrink tracing had done a better job. And Kevin, the economy is going and it will be critical for the US to do that in Europe as well to it. And that's Keith bar the CEO of Intercontinental Hotels Group

joining us from London. Obviously, Carol, no business or very few businesses have been changed like hospitality, right, and reminding us that tourism is responsible for one in ten jobs globally, so it has a big impact on the global economy. You can check out more of the interview in the magazine and check out the full interview that's online and also in our podcast feed. You're listening to Bloomberg Business Week.

Coming up chef and owner of Crafted Hospitality, Tom Colligio. Yeah, talk about another industry that's been dramatically and maybe permanently affected by this virus. This is Bloomberg. You're listening to Bloomberg Business Week with Carol Masser and Jason Kelly from Bloomberg Radio. Well, today we're bringing you some the most important we help informative conversations Carol and I had on our daily radio show, Bloomberg Business Week, all about the virus.

It remains top of mind, center stage for everyone, and we're talking about everything from the car industry to the business of food. One of those conversations was Tom Calichioh. He's chef and owner of Crafted Hospitality, a judge on Bravo's Top Chef, an advocate for the restaurant industry Jason He's shut down all of his restaurants in New York and l A temporarily laid off his workers. He said it was one of the hardest decisions he's faced in his forty years in the industry. We caught up with

him about the impact and also the difficult way forward. Yeah, this has been devastating, UM, and not only for me. UM. I co founded the Independent Restaurant Coalition, and so I am in constant contact with UH many hundreds of restaurant turners and chefs across the country pretty much on a daily basis. And you know, we're we're struggling out there, and you know, Ppke, we thought was really going to help,

and it doesn't, UM, because we're not open. I think PPP and structure for for businesses and maybe are somewhat depressed and they can hire their staff back, but there's still a revenue moving through their system. Right now, restaurants are closed. UM. Some are starting to open up in some states, but they're they're opening up into a really really depressed market and so p P P UM it doesn't really help us. And so we are asking for a restaurant stabilization package. UM. We're uh, we we sent

our our letter to Congress. We're asking for a hundred and twenty billion dollars to stabilize our industry. So the eleven million employees that in a restaurants UM employee UM have a job to come back to, and not only have a job to come back to when we can finally get open, but we're going to be depressed for

for until we find the VACKNE. So we're talking about another year almost And what we don't want to do is have a situation where people start coming back to work and then we're closing right you know, two months down the road, and everybody's back on unemployment to get or out of the job. Help us understand in in the short term, what's the response been what's what feedback are you getting in terms of what's feasible in order to help the industry. You know, I think they're hearing us.

I mean I've spoken in many members of Congress over the last you know, three or four weeks, and so has so many members of our coalition, and they hear us, um, and they're they're trying to help us to try to figure out and and you know, obviously um uh, they're hearing from a lot of different sectors and people are looking for for uh uh for for help. Um. We just feel that we're uniquely positioned because so many people

are employed by the independent restaurants. And then if you factor in all the farmers and fishermen and winemakers and cheesemakers and other various services that we are purchasing. Keep in mind, and every dollar that we take into a restaurant goes out the door. And so not only are you helping our business stay afloat and providing those jobs and the media jobs and workers, but also all the other people that that we are indirectly employ and neither

these are small farms. We're not talking about big, mega farms. We're talking about small farmers. Uh, fishermen who are you know fishing, you know, dabot fishermen, small teethmakers and so um. You know, there's there's a desperation here. And again it's it's not just the restaurants that were concerned that you know, uh dis Beer Foundation did uh Um. You know, I have has data right now that maybe twenty of the restaurants won't open up. I'm hearing it's gonna be bigger

than that. You know, we're hearing from from from the industry that maybe fifty restaurants won't open up. If that happens, think about the supply chain that it's going to actually end as well. So it's not just the eleven million jobs. It's it's probably million jobs and a lot of lots of people lobblihoods. I am curious. You do say, Washington's listening, So what's the likelihood that they do something in terms

of a stimulus. And you're right, it's not just now, but it's what happens on the other side of this, because this is not a quick bounce back in our economic recovery. No, I mean some some industries I think we'll bounce that quicker than others. I think the restaurant industry, when we open up and mean we're hearing I mean, you know that we have to cut half of our tables out, and you know, then the question really isn't

when we're going to open up. I mean there's this idea that George is gonna open up and texts are gonna open up and people are gonna go, No, it's it's not when we open up, it's when do people feel comfortable conjure getting a place that is busy. When you walk into your restaurant and the bartenders wearing a face mask and a waiter comes up to you and greet you with a face mask, you are not going

to be comfortable eating in that restaurant. Dodger, did someone coughs when they're you know, even even with social distancing, I just don't see how that works out. So we're we're we're in there for the long haul. Um. And when I think Congress they're listening, Uh, they're they're listening. I don't I don't know if there's going to be action,

and that's what we're hoping for. Yet they're hearing us. Um, we have you know, representatives, you know who are making sure that that our our needs are are are being heard. The question is whether or not Congress will act on this. That's chef Tom Collichio, an owner of Crafted Hospitality. Lady and Jason. You know, we've had a lot of conversations with well known chefs, talked with folks in the restaurant industry. I mean, it has been hit so hard and there's

a lot of questions about how it comes back. Absolutely, I mean, and I think we've also learned a lot in talking to these chefs about the entire ecosystem. You know, obviously consumers, diners, folks like us, but the folks who work on the front lines. I mean, these are people who are incredibly in many cases economically vulnerable, and when you think about the broader economy you think about getting back to work, restaurants and food service is going to

be at the core of that. You're listening to Bloomberg business Week. Coming up, we move to television. We hear from April Taylor. She's a co executive producer of Showtime's big hit show Billions, premiering season five this weekend. Alright, this is Bloomberg. This is Bloomberg Business Week with Carol Masser and Jason Kelly from Bloomberg Radio bring you some of the most important and informative conversations we had on our daily radio show, all of it about the virus

and really about the impact. What does the future look like? And again a reminder they're happening in real time. A lot of news continuing to evolve around us. Well, one of the conversations we were really looking forward to Carol was with April Taylor. She's the co executive producer for Billions. She's worked in the business of television and film in and around New York for a long time. She worked on Sex in the City back in the day, so

she understands the business. So she really understands not just the excitement around the season premiere. We talked about that, but also the dramatic impact this virus has had on the production of film and television in New York. Check it out. We as a group of New York producers came together. Um. You know, many of us had navigated the shutdown, UM, which was a rather hectic affair and

UM scary time to live in. Realizing that um times we're going to change, and you know, we're all using terms like the new normal or you know whatever, UM, whatever your industry is attaching to. But we realize that there's going to have to be some substantial changes to how we how we make any TV film product going forward. And we're working really closely with the industry, with UM, all of our partners in the industry and with the CUOMO Task Force too, have discussions that are you know,

guiding us into new solutions. UM. Those discussions are you know, obviously coming from a health and safety standpoint, looking at every aspect of our industry and what we do and how we do it. Uh. Those things are unique in New York, UM as they you know, are different in l A or in Atlanta or any other region. UM. We're focusing our efforts on this area that has had, you know, obviously such an intense outbreak and has this great density issue. So UM, you know, UH, there's really

not gonna be any stone on turned. And the kind of conversations we're having are ranging from the basic PPE conversations that every industry is having to you know, how do we socially distanced while filming UM actors and people who are obviously vulnerable to not being able to wear PP on on a on a set. So, UM, we're just you know, going through all the factors right now. Well, and I do wonder I do wonder too, like like, well, will there be insurance liability questions that come into this?

I mean, do the dynamics and the economics of the business also turn change April because of things like that? I think we'd be foolish to think, Uh, any industry would not be having intense conversations with regard to insurance and risk management and um, you know how we all look at our our employees and our companies. Um, these things are you know, the insurance the insurance business and

their response to a pandemic. I don't think any of us have seen really what that's going to yield yet, but certainly there are a lot of considerations for people's privacy that are now being you know, discussed with respect to testing protocols that it might be implemented. Um, and you know all of the resulting you know, medical disclaimers and comfort level that we all have to have with

sharing our personal information. UM. And that's you know, that extent that is so not a production issue, that is every company's issue. You are listening to Bloomberg business Week Excited to get back into our conversation with April Taylor, co executive producer of Billions that season five debut. It is right ahead of us this coming Sunday, May third. Couldn't be more excited, especially as I feel like I've been binging all sorts of things, but it's all been

leading up to this, April, I gotta ask. I mean, this is a show that obviously we're both fans of me especially, and I was worried when it first came on that was going to feel like a little bit of a busman's holiday, given what we do for a living. And and yet it's a breakaway hit. I love it so many others do. Why do you think it is? Like, what is the zeitgeist that it's capturing here? I think from the business community, you know, there's a lot of um.

The writers do a really cibeless job of, you know, harvesting some real life stories that kind of feed into um into the storyline, sometimes in a in a in a real way. Sometimes they're a little bit embellished UM.

And I think that the rabbitat Tat kind of Tommy Gunn New York, fast talking noss of the nature of most of the characters in a big um attraction for many of us in the New York area in particular, but I think in general, um, you know that or the fact that the character's minds all works so fast and that they have these you know, machiavellian brains that kind of you know, out fox each other at every turn,

building to this intri kid um story. Every season is something that is exciting and and that is entertaining well. And I gotta say, what's entertaining for us, April, no doubt about it is we'll be like, Okay, that feels like this corporate raider or this hedge fund individual. And you know, all of us who have been covering Jason's been covering it for several decades, me too, and so it's just great to kind of, you know, compare it to you know, reality. UM. I got a chance to

catch up with Brian Coppleman and David Levine. They did a panel here at Bloomberg to talk about the series, and they had some great conversations about some of the real life folks that they talked to and anecdotes. How often are you guys, you know grabbing something from a headline or reaching out to somebody in the financial community to say, Okay, how would you guys play this? How

would you do it? I think that the writers are doing that on a on a on a regular basis, And I think that a lot of the color of the show, um is having that kind of real insight that only people in the industry can grab onto and know is it is a true It's either a truth or heavily rumored um you know truth um. So I think that that's something that they're they're constantly doing and looking for, you know, exciting tidbits to throw in there that they know or a wink um or any you know,

or any story as we call them. Well and April one of the other interesting things. And I think, just sort of going back to our broader conversation about New York, is New York is really a character in this show

in many ways. And I know that. I mean, there was I believe it was the season premier last season, um, where Chuck is sort of going from place to place to place and it was almost this like treasure through New York City and you know, this restaurant and this place and this building it feels like you guys invest pretty heavily in this notion of making the city and its environs sort of a character fair, oh, extremely fair. And I think that's one of the you know, major

appeals as a producer on the show. I think it's so appealing that we you know, get to go to all these great places, and that the writers you know, and the creators of the show, Brian and David, are New Yorkers, and that there is a real love of the New York News that surrounds all of these people and that helps define them and and you know color there their world, you know, the Upper East Side of you know, Chuck Senr and you know the cool Bobby

Acat and you know, the different kind of environments they find themselves in, and Chuck being part of this sort of you know a lot of the old guarden riding the middle to a certain degree, um is just you know that it gives us a lot of opportunity, um

to really showcase New York. And that's a lot of the reason why, you know, as as a passionate producer, you know, I was one of the people that jumped into this, you know, early effort to start make sure that we were going to revitalize New York film production as soon as we can. I have to say, right, is somebody who's you know lived, um worked in New

York for such a long time. It is like such a wonderful postcard, um And and it reminds me of Sex in the City a lot in that you just went to the hotspots, the places that everybody was talking about or would be talking about as a result of including them in the show. Yeah. I mean I worked on Sex in the City for a season many years ago, and I my background is actually from locations, so I

have a particular passion with respect to this subject. UM. But it was the first instance where people would call us and say, please come and film in our brand new, very high end restaurant, UM for you know, little or no money, just because the publicity became such a big part of that arians and UM Billions is not far behind that. I mean, we have we really do have a lot of recognition now and people like what it

says when we've come and put them on the screen. Well, and I love I will say this is I don't want to go too far down a rabbit hole here, but um, the music also is unbelievable and uh it features just a lot of great music and not you know, the the obvious music. You know, Jason isbel drive by Truckers things like that, and I think a lot of that comes from from Coppleman especially. Um, I do have to ask you, like give us a preview of this season.

What are we gonna see? We sort of saw, I believe, the sort of uneasy alliance at the end of last season between Bobby and Chuck. Am I remembering that right? It was? I think a very delicate a lot. And I think we see we see these two powerhouses with that are incredibly smart and have slightly different tactics and egos, you know, um make their way through this complicated maze. Again. I think everyone is going to find that there's um

very very fun and exciting season ahead of them. That's April Taylor, the co executive producer of Showtimes Billions and for fans of the show, you know this weekend it's the season premier, season five of that show where as we discuss New York, it's really a character. Yeah, it's really a character, and it's really front and center for her. Really all of New York State where there's so much production that typically goes on but has been shut down by the virus. And with that, she is a founding

member of the recently created New York Producers COVID Response Alliance. Jason, it's all about relaunching productions in New York State post virus. So she's thinking a lot and that group is thinking a lot about how do you come back? How do you do it? Uh, in terms of filming after the virus. And that wraps up the weekend edition of Bloomberg Business Week from Bloomberg Radio. Thanks so much for joining us.

I'm Carol Masser and I'm Jason Kelly. Be sure to tune into Bloomberg Business Week Radio live Monday through Friday starting at two pm Wall Street Time. And if you can't catch us live, check out our daily podcast wherever you download podcasts. You can also watch the show live on YouTube. Just go there and search for Bloomberg Global News. We'll be back next week at the same time. This is Bloomberg