Bloomberg Businessweek Weekend - May 27th, 2022

weekend edition of Bloomberg Business Week. Coming up, We're going to dive into a special double issue of the magazine, much of it centered around the tech Stock reckoning taking place in We begin, though, with the story that really overshadowed all others this past week, a deadly school shooting in Texas that claimed the lives of nineteen children and

two teachers, now reigniting the debate over gun laws in America. Yeah, it definitely was the overarching thinking this week and just thinking, Wow, here we are again to help us understand what impact

this might have on policy in our nation's capital. With primaries ongoing and midterm elections on the horizon, we bring in Bloomberg Business Week National correspondent Josh Green, who follows politics, and Josh, I gotta say when I was listening to President Biden speak this week following this mass shooting at another school, kids impacted, young kids. You know, it's not the first president calling for tougher gun laws, and I fear it's not going to be the last. What's the

political will for tougher gun ownership legislation. Well, there's a lot of political will for it among Democrats. But Republicans are another story. Um. You know, going back to the child massacre in Newtown, Connecticut, Republicans have consistently opposed and sylabustered even modest background check bills. And because of the rules of the Senate, and because most Republicans don't want to pass any kind of gun control legislation even in the wake of a massacre like the one we saw

this week. Uh, gun legislation just dies in the Senate, and you know, nothing President Biden does, or or Democrats in Congress do, seems to be able to change the effect. It's interesting, though, Josh, because we do see a will for it from voters. A majority of Americans do support stricter gun control laws. This according to a Morning Consule poll that was conducted last week that was after the shooting in Buffalo, but before the most recent mass shooting,

said that six Americans support stricter gun control laws. So it's the politicians, the Republican politicians who don't support it. But the Americans, regardless of where they are on the

political spectrum on a whole, do yeah. I mean the calculus that most Republican politicians make is that pro gun people, gun advocates n r A members are much more active on the gun issue as voters, um than the broad survey of Americans like the one that you discussed, and that for for those voters, gun control will be a motivating issue to go out and in the case of Republicans, vote against anyone who supports gun control bills or narrows

the ability to own giant arsenals of automatic weapons. Um. You know, like we like we've seen in all of these recent mass shootings, so most of them, not all of them, but most Republicans have been unwilling to vote

uh in favor of any gun control legislation. Now there is a slim, a very slim possibility that something could change this time around, and one of the important things that happened this week in the Senate is that the Democratic Majority Leader Chuck Schumer, instead of just putting up a bill, a messaging bill on gun control that he

knew would fail. Has stepped back and allowed Connecticut Senator Chris Murphy, a Democrat who is the senate staunchest gun control advocate, to try one more time to cobble together a bipartisan coalition UH to tighten background checks so called

red flag law they're trying to put together. My own reporting talking to people is that the chances for this bill are very, very slim, but you know, it is still alive, and maybe this will be the massacre that uh, you know, pushes ten Republicans um into agreeing to support some kind of legislation, and that would be a large enough number presuming all Democrats went along in order to overcome that Senate fellow booster. I mean, Josh, how how

strong is the gun lobby? I feel like for years we talked about how how strong it was and how influential. I feel like this is one of those issues, just like abortion. It's so divisive within this country and you feel strongly about one way or the other. Um. But but what is the political strength of the gun lobbying, especially when it comes to politicians. Yeah, you know, a great measurement of that question is that the National Rifle

Association is having its convention in Houston this this weekend. Uh. And there are a parade of Republican politicians, headlined by Texas Center Ted Cruz, who are showing up to speak to the n r A. And so I think that's a signal. The fact this is going on even in the wake of this mass here in Texas shows you how powerfully pro gun and pro gun rights um a big segment of the Republican Party almost every Republican elected officials,

certainly at the federal level. UH. And so as long as that dynamic exists, as long as Republican politicians believe there is a price to be paid for supporting gun control legislation, they're simply not going to do it. And we've seen that again again and again and again. This

this is the twenty seven school shooting we had this year. So, you know, I think once we got past in the massacre in new Town, Connecticut with nothing happening, you know, I think at that point Republicans are just sort of willing to accept any outcome, no matter how how horrible. Uh, you know, how how how how ghastly uh And just say, you know, This isn't something we're willing to act on, and until that dynamic changes, there really isn't gonna be

any change at least coming from Washington. Just heartbreaking and just unbelievable to see this over and over again. Um, Josh, thank you so much, really appreciate your input. That was Bloomberg Business Week National correspondent at Josh Green. We should note that Michael Bloomberg, owner of Bloomberg LP, the parent company of Bloomberg News, is a founder of and helps fund every Town for Gun Safety. It's a nonprofit that advocates for gun violence prevention and other gun safety measures.

All right, coming up, we're going to turn our attention to markets and the outlook for a global hospitality with the CEO of Hyatt Hotels. You're listening to Bloomberg Business Week. This is Bloomberg. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stinovik from Bloomberg Radio. Earlier this month, Hyatt Hotels came out with quarterly results that were better than expected thanks to strong demand for leisure travel and adjusted loss of thirty three cents a

share in the first quarter. That was narrower than analyst estimates and revenue per available room, it's a key hotel industry measure known as rev par. It grew by a hundred and seven percent year over a year worldwide and a hundred and twenty six percent in the US and Canada. Meanwhile, last week's spate of week retail forecast raised questions about Americans willingness to spend big on travel, at least in

the near term. Bloomberg News senior markets reporter Kitty Grayfeld and I asked high AT President and CEO marcopl Masian whether he's concerned about softening demand with the summer travel season just ahead. The connection point UH over a longer period of time to our consumer, which tends to be a higher end UH traveler at the higher end of each of the segments that we serve UM is if there's a I guess very long and persistent sell off in UH in public equities, because many of the customers

that we serve are invested in the marketplace. But I don't think day day in and day out volatility actually changes M the booking behaviors on a real time basis. Right now, I think that there's a scarcity issue. People want to make sure that they've got their bookings for the holiday periods. Um, we're seeing booking levels across all of our hotels, not just for resorts now for the summer holidays up between twenty for UM Labor Day, fourth of July and Memorial Day, and so I think that's

one of the drivers. The second thing is corporations and associations, which is a significant part of our business, are coming back to meetings in a meaningful way and the booking levels there are also rising. So UM we do see booking levels maintaining at this point. And you know, I would say if there's a very long and drawn out bear market or recession, then of course it's going to

affect all businesses. But I think our customer base, being relative at the relatively higher end of of the you know, income scale, are more resilient and less subject to volatility in terms of their travel patterns, especially for leisure and mark I want to dig into that final point because obviously after the week of earnings that we've had, the consumer is definitely in focus how they might be shifting their spending, spending more on staples, less on sort of

discretionary purposes. And you mentioned the bookings obviously for the summer months up across the board, But I'm curious, have you seen any indications that revenue spending on vacations could be slowing down or shifting. No, uh, not at all. On the contrary, I would say we've had, Um, we've had a significant increase in spend. Our rates are up significantly from twenty nine. A lot of this is really driven by penop demand and by a really really strong

human desire to reconnect with people. So um, I think it's you know, people are making their decisions based on what they're going to be most fulfilled buy and what matters the most to them, and that is reconnecting with with friends and family. Mark. I know that you do serve a higher and clientele, but everybody has their limits when it comes to to spending. And I wonder about air fare prices. They are up double digits from last month, double digits from last year. Uh. I don't know if

you've our listeners are familiar with this. Checking the price of flights right now, it's kind of mind boggling to see how much it is to fly a short distance thanks to you know, huge demand lack of supply, and then of course oil prices as well. How do you think about that in the context of what a consumer spends when they do visit one of your properties. Yeah.

It First of all, UM, I woul just note that we UH we now own the largest tour operations tour operator platform in the UH in North America, so it's called a LG Vacations UM back in they handle over three million passengers and it's mostly doing selling packaged UM travel, so airfare included UM and so we tracked we're tracking this extremely closely, UM, and I would say that there's no question that we have seen a significant increase in airfares and I think that will persist for some period

of time until supplying demand starts to balance out a bit. And the supplying demand I'm talking about right now has to do with schedules, how many planes are are in service. UM. I would note that the air the air traffic, the total lift capacity into Cancoon and Punta Kana, which are too very large markets for US UM in a l G dcations are up UM as compared to twenty levels. So it's clear that the airlines have have definitely clued

in on where demand is and they've added capacity. UM. It is also true that air fares are up in that they're under some inflation reprecious. So I think that they're The dynamics for them have in part to do with energy prices, you know, get gas for their their aircraft aviation guests. And for US UM we look at how total unit value or total package prices are increasing,

and they are. But again I think UM. I think as things start to stabilize in the oil and gas markets, and as we see supply being brought back with more schedules, more aircraft and more pilots UM UH back into the industry, we'll start to see a rebalancing. And that may that may take a number of months to do, but I think that that's the that's the inevitable outcome. And I want to talk about all inclusive resorts because you acquired Apple Leisure Group last year and UH seems to be

very popular, especially in UH the Caribbean. Do you have any plans to bring that model to your US hotels? Yeah? Actually right now, I would say that the focus remains in Mexico, UH. In the Caribbean, UM, we've and are some of our key markets are Mexico first and foremost, UM, the Dominican Republic in Jamaica. We also have a large operation in Europe in the Balieric Islands and in the Canary Islands and in the southern coastal areas of Europe.

UM we just UM, we're just now engaging with owners and developers in the Middle East and ultimately in Asia. We think that all inclusive is a great format and

can be extended across the globe. UM. The the particular arena that we're playing in his luxurial Inclusive UM, which a LG, the Apple Leisure Group actually really created from about twenty years ago, and so we are now the largest player in the world in luxurial inclusive and the the guest proposition is very very compelling because Um, you take a lot of the transactional elements that you might experience in a European plan hotel where everything is all

a cart Um, You're you're taking a bunch of transactional friction out of the equation and it serves its purpose when you're on holiday. That was Highatt Hotels president and CEO Mark Hoplmasian. He spoke with me and a Bloomberg's Katie Greifeld back on May eighteen, We'll still ahead on Bloomberg Business Week, we break down the business of intelligent data. We're going to do that with the CEO of Informatica.

This is Bloomberg 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. Well,

our world today is increasingly about data, right. We talked about this tim so much on air and the technology being used to harness that data more effectively to help leaders make better business decisions, intelligent decisions. Well, Carol, you and I paid a visit to Informatical World twenty twenty

two in Las Vegas this past week. We got a close up look at the publicly traded enterprise software solutions company Informatica, and we asked the company CEO on it, Wallya, what his customers want most Right now, with market conditions changing so rapidly. Whatever is happening in the current term will come and go. But the fundamental things that are

changing is every enterprise is going digital. Every enterprise is trying to become intelligent using the increasingly coming off the pandemic, Coming off the pandemic and the two years of pandemic, just completely exponential growth in in in digital and in fact, the point that we made is that digital is no more a differentiator, that's a given. How do you get intelligent? And for that, how do you become data driven? And that's what we're all about, and that's what we're seeing

increasing day the winds and demand for that. Everybody wants to like, hey, how do I harness the power of data. I have to manage customers, childing and environment, likeness, managed supply chains, managed drug discoveries, so those become important and without data that would not have happened. And and and look at during the pandemic, the vaccine development happened in

the shortest time possible. Why And we were part of that process bringing the best data, rapidly, looking at trial data, getting infidence out of it so you can say, well, this vaccine makes sense to go out, that's what is happening, and that's what we see. What specifically are you hearing from companies about the macro economic environment? And you know, we get a good view of it, not just with the analysts we talked to, but with the CEO as we talked to. What we see from earnings reports. We're

in the midst of earnings right now. We're starting to see inventory levels, for example, come up at retailers. They need the data to sort through those inventory levels to help understand what consumers are gonna buy, when they're going to buy it, and control those levels. What are you hearing from customers about what's going on in the macroeconomic environment. See, there are two things behaving. Number one is everybody is definitely cautious looking at the economy. Kind of it does

does give you what's going on. But at the same time, you know, we have so many great customers who spoke here and I'll give you an example, American Airlines during the middle of the pandemic, and they basically invested in our platform and I'm like, what are you doing? But the whole I mean the whole air lines But they realized that look, ultimately, pandemic will be over. This macro will be over when we come out. What do you need to do manage your customer experience better? How do

you do it? Understand your data better, government better? I want to give it to every user across the enterprise. So I think that's what I'm hearing from customers. Are things that are the data related foundational things are here to stay. Now. You may stagger it, but you cannot avoid investing in it. But yes, the current macro does

not get away from you. You've got to look at that every day and it gives you a little bit of caution, but these are fundamental things that you have to invest you know what I think about I always think about our investor audience, very smart audience, but they're trying to be like, Okay, I understand we talked about data all the time. We talk about the cloud all

the time. What is it that you an investment audience has to understand about, you know, kind of the sophistication of data, how it's becoming more intelligent, Like what does that mean? And what is the you know, potential top and bottom one, especially for publicly health companies. So I'll give you a couple of examples and I hosted a panel. We had three customers, you know, one from g Digital, one from Freddie Mac and one from Texas Health and Hospitals.

And you know, and I'll give you other examples like Kroger and all. So Kroger as an example, just start to their CEO. There you go. So Kroger is an informatic customer, and what they were using us for is egg How do I get the right product at the right shelf at the right time. It has multiple benefits. It's a lost revenue opportunity that you want to wait. Plus also, if you get the wrong product and the right shelf, you're basically waste it, which just makes means

that more cost. And then you're managing a supply chain that but if I'm a customer, I want gratification, So it really goes from the revenue to cost to obviously managing customer expectations. Weren't companies doing that before like that?

That to me is kind of mind blowing. You would have thought that if you look at it retailer, the margins are the thinnest, right, how do you manage your supply chains so you basically make sure that you're not losing products on the shelf at some point, right, if you get the right product, if you have you know, perishable goods and you throw it away, that's cost or if you have an empty shelf then you basically lost revenue. How do you get better at it? And how do

you do more and more just in time? Look at the supply chain problem at dealing, right, you go to all the other end. Healthcare is a huge thing in there. So when when John was talking from Texas Health and hospitals, right, how do they look at patient care to make sure that when somebody is coming in they can provide the most personalized care in time for that reduces again the supply chain of healthcare cost but saves lives. So there are so many applications like that that when we talk

to customers that they apply dat or too. Okay, listen, UM, got a couple of minutes left here, and I do wonder you know you're talking about supply chains and helping other companies and your clients manage that. When you look at some of the big macro issues, whether it's higher prices, supply chains, labor constraints, what's type of mind? What what of those big macro issues are affecting you guys at inform America. You know, we obviously look at customers uh

to front industries end up operating differently. I look at obviously dexperin Yeah, carefully, I look at business priorities very differently. Which business priorities are getting optimized differently? That was Ahmed Waliah. He is the CEO at Informatica. You're listening to Bloomberg Business Week coming up next, tackling systemic inequity in the world of finance. This is Bloomberg. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim

Stinovich from Bloomberg Radio. This past Wednesday mark the two year anniversary of the murder of George Floyd, a tragedy that's set off another round of soul searching and discussions around race relations and inequalities in the United States, and to be fair, really globally, we continue to struggle with taking the right actions and turning all of the discussions

into action. This includes the financial sector joining us now to discuss our Bloomberg News New York Deputy Bureau Chief Shartilla Brantley and Darren Dodson, Darren's managing partner at a Lumen Capital. It's an impact fund of funds with the goal of addressing systemic in equity by reducing racial and gender bias in investing. We had an opportunity to conduct research ourselves with Stanford University and some of the leading

researchers in the world on this topic. And one of the things that blew us away is not only would investors we secretly tested a hundred and eighty of them systematically choose white lead funds consistently over black lead funds, but as we increased the performance, they did it more often. In other words, they were living ready to leave money on the table before they would invest in top performing

black lead funds. So this was a kind of shocking finding because many of those we tested managed the largest pools of capital in the world, including sovereign wealth funds, pension funds, university endowments, etcetera. And they weren't necessarily going out to um you know, kind of uh select one

group over another because of race. But nonetheless, all of us in the industry have a fiduciary duty, and they were sort of going right past that fiduciary duty to choose the best investments in systematically choosing people because their mind was clouded with bias or overlooking the best opportunities. So Tea, I want to ask you, does that buy surprise?

You know, because often when you are um a person of color, any type of investment your viewed as being more risky as someone who is not a person of color and maybe not a woman. So I'm not totally shocked, but you know, it is surprising that, you know, investors look at data and if the data shows that we're leaving a lot of money on the table lot of upside is is disheartening shock that we're allowing that bias to you know, standing between returns is just boggling. I

know you have more questions for Darren jump it. Well, you know, Darren, I want to talk a little bit about your your tenure bias reduction program um that your firm has in place. Um, what are you seeing and what does success look like at the end of this Well, well, thanks so much for the question. And when we look at implicit bias reduction curriculum, it's uh scattered in terms of its overall efficacy, in terms of its ability to

drive people to reduce biases. So part of the reason why we partner with some of the leading institutions in the world is to really set out to create a curriculum that we measure rigorously the impact year over year. And what we expect to see if that curriculum is successful is the increase in women and people of color that are chosen through the selection processes. By reducing bias and board so i action of the companies that we

invest into. We expect to see the fund managers that we invest in to higher promote, retain and attract talent at higher levels, with higher levels of placement of women and people of color within the firms. And then ultimately we expect to see the portfolios of those companies led by more women and people of color when we reduced

the biases. As you might know, it's one point three percent of sixty nine trillion dollars in capital managed by women and people of color collectively, and even less managed by under represented people of color. So we've got a lot of work to do. Hey, Darren, I'm wondering the conversations that you're having with LPs about this and what they're pushing for and the type of transparency that that

they want to see from firms that handle private capital. Yeah, I've been somewhat encouraged by the intentions of many LPs across the country and around the world old UM in the post George Floyd Um kind of killing contexts. A number of them have made announcements about moving forward and marching forward initiatives around racial equity. I think where so many of these falls short is that in almost every

area of financial analysis, we apply the scientific method. So we look at applying things like modern portfolio theory and many of the things that I learned when I was at Stanford Business School, Like many of the listeners here are thinking about the accept in the area of looking at the returns hidden by behind women and people of color, we don't look at that scientifically, which is exactly why we applied UM that research using a team of sovereign

wealth fund portfolio construction theorists, theorists and implicit bias social psychology collegey theorists, and we set out and and literally found that they were missing this massive opportunity within the investment ecosystem, and that that massive opportunity if we are able to train people like uh, like our LPs or other LPs across the system to identify that and go after it and UH invest in these overlooked and underestimated entrepreneurs.

There's a massive amount of value creation there over the next decades to come. So I guess what makes you hopeful? Because you have this program and we're having the conversations, but we're still not seeing the numbers move one. It's embarrassing, It's very embarrassing. It's upsetting Darren. So how do we get people to move from acknowledging to actually acting, you know, allocating those funds to women and and and managers of color.

How do we get them to that part that point? Well, well, part of what we do is UM implicit bias production is a little bit more like UM learning tennis or a martial art. A lot of people think they can sit through a day long training and then they've they're

they're they're cured of it. UM when we spend our whole life developing these biases, and many leaders within the global asset management business have them in fact in economen when the Nobel Prize in Economics UM showing these biases that show up in behavioral decision making within investing UM, and what we're doing is really extending that type of research to the overlooking of women and people of color and taking this ten year approach to really training people

to reduce them. Now, ten years is a long time if there is not a massive amount of uh A value accretion on the other side of doing all of that work. But we believe that uh you know, without bias, about thirty trillion hours will be managed by women and people of color, about half, because we don't see any reason to believe that women and people of color are

less talented than others within the global financial markets. In fact, um if given the opportunity and chance to execute, and when given the opportunity and chance to execute, the National Association of Investment Companies has shown that for the last forty years there's at or above performance of these types of funds on average. So we've got a lot of work to do to really fine and capitalize on this important area of overlooked and latent value in our economy.

All right, I have a question for you, Darren. I mean, if the numbers are there that shows the performance by being more diverse and inclusive in terms of investing, If the numbers are there, and yet we still have you know, smart institutional investors turning away. Is it just that racism is so entrenched in our society and how do we

how do we write above that? Because I remember start and I like at the beginning of the pandemic and we're talking after and George Floyd like we all did feel like things were going to change, and yet kind of here we are. It's a great question. So what we find is that, um, you know, within the science, of course, there is structural racism, just to put that to sleep in case there's anybody that doesn't believe that

there is. But what we see and people that uh, you know, have spent their careers on Wall Street trying to make as much money as they can and make prosperity for their investors, there's actually this legal threshold to live up to within their you know, ethical value set, and a number of people I believe are trying to live up to that and not diminish their own returns. But they kind of, um uh sort of trip themselves in a way because their mind makes these quick judgmental decisions.

And we've a number researchers have proven in brain science and brain data that our minds make these jumps and leaps, so we you know, it's been documented well in various different books, and to lose returns in order to do what you're familiar with is what we see in the

vast majority of these decision making processes. In fact, in many experiments where we look at education disparities or health disparities, what we find is that people that are well intentioned, that will take a test on prejudice, for example, and score they're not prejudice, will will go forward and make investments where the result is uh, you know, succumbing to systemic racism, of course, but they're actually trying to make as much money as they can. That was Darren Dotson.

He is managing partner at a Lumen Capital and Bloomberg News New York Deputy Bureau Chief Shartilla Brantley Short, by the way, also a senior editor for Bloomberg Live, one of the driving forces behind our Bloomberg Equalities summits Well, that wraps up the first hour of the weekend edition of Bloomberg Business Week from Bloomberg Radio. I'm Carol Masser

and I'm Tim Stenovic. Ahead in our next hour, we're talking tech from all angles, including our cover story on the crumbling big Tech monolith, and a feature on a medas plans to beat TikTok and has to do with copying TikTok. We talked about technology, big tech in particular a lot this week. There was a lot going on. Plus we've got the man who helped invent the iPod speaking of big tech, The man who helped invent the iPod breaking down the hidden dangers of so called device

addiction and social media. 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. Its Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stenovic on

Bloomberg Radio. Plenty ahead in our second hour of the weekend edition of Bloomberg Business Week, including why Meta's planned to combat TikTok means taking a page right out of its rivals playbook, Plus a warning on the dangers of social media and device addiction from a man who knows a little thing about devices. He helped invent some of the most habit forming electronics of all time, including the

iPad and the iPhone. Yeah I heard of those things right, all right, First up this hour, let's get to the cover story of our double issue of Bloomberg Business Week magazine. It's a broader look at the tech sector and the mega cap stock route unfolding during the first half of this year of firms including Amazon, Tesla, and Meta have pushed the SMP five hundred to the brink of a

bear market. With us now to tell us all about it is Jeff Muscus, Senior Features editor for Bloomberg Business So he's with us in the Bloomberg Interactive Broker studio along with Joel Weber, the editor of Bloomberg Business Week, who's with us as well. Joel, So, all good things must come to an end, and it certainly seemed like that's happening in Silicon Valley. Yeah, we kind of called the bottom and now it's coming out, you know, to NAZAC two days it's creeping back out since we kind

of put the finishing touches. Uh, it'll regress, I'm sure, um, But basically, you know, we do a Tech issue every year, and what we really wanted to talk about here, and I think it just became impeccably unfortunate timing because every it's like the world caught up to the ideas that we had in this package. Is everything has started to change.

The VC backed funny money when money was free, led to a lot of uh, you know, exorbitant ideas and investments and SPACs and crypto and we're seeing a aggression to the norm I think or and what Jeff really set out to do and as the architect of this package, and brad Stone and was thatte like you mentioned, wrote the cover story, which really sets the table, but there's a lot of other things in this package that helped

kind of amplify this idea. So Jeff being the guiding hand that put all of these stories together, Like what were you what were you setting out to accomplish? Sure, well, like you said, Joel, we sort of started out from the position of okay, well you know here we are sort of um returning to varying degrees of a new version of normal as people returned to their offices and that sort of thing. And so for the first time really in in two years, we're taking a sustained and

marginally less COVID inflicted. Look at where is the tech industry now? Where are all these you know, big name companies that you know, a lot many of us haven't. I haven't been looking that squarely act for the past couple of years. And what does the tech world look

like now? And where is it going? And with that in mind, you know a lot of our best writers and reporters here at Bloomberg News and on the Tech team UH took a look at some of our our biggest, bold faced name targets from Instagram and TikTok uh to Google and all the way down, and then you know,

sort of looking forward to where tech world going. We have a bunch of interesting looks both that things like prediction markets that are sort of on the bubble of regulation and biotech stories like this look at what they're called better Odds Babies, the science of pologenic risk scoring

that might well just be the next big thing. So one of the things that I loved about the package was like, they're serious stuff, but then there's like the perfect encapsulation of everything that just talking about is remember the scooter craze. Want to start to feel a little bit like a segue now, uh it survived the pandemic mostly, Jeff. But why why why was it like such a perfect

story to include in this context. Well, like you're saying a minute ago, Joel, that you know, right before the pandemic, the bottom started to drop out of this wave of basically decade long cash burning as a means of not just survival, but as the main strategy for a huge

part of the venture or backed tech industry. And uh so the scooter craze was well suited for that moment where the whole deal was Okay, well you know this or that mega fund is going to give you guys nine figure checks on the regular to go out and

build an explosit monopoly. Now go do it. Um and coming out of the pandemic for for a variety of reasons, or you know, as people start to to need things like scooters again, we come back to find these companies sort of clinging to life to varying degrees and without the easy access to capital that everybody got used to. Jeff. I feel like one of the things that I feel like we every guest and you often hear like pets dot Com, pets dot Com, like, are we lining exactly?

Are we lining like this tech route that we're seeing, is it similar to what we saw in two thousand? I mean, are those comparisons fair or is it different? I think we're still ways off the sort of industry wide carnage that we saw at the end of the dot com bubble, But Brad and Lazette are smart to draw the comparison, at least in terms of the hype machine between you know, the sort of infamous pets dot com super Bowl ads and the Super Bowl ads we

saw this year with all those crypto celebrities. Yeah, the crypt the crypto Pets comparison. My favorite was the Larry David one because I'm just a big Larry David. There's some other ones that are pretty good too, But U So, you know, what does VC actually had to say about this, because that figures into bradon was that story to bring it back to today's big take, right, like because they're

undaunted really right? Yeah, for what it's worth, most of the sort of mainline VC types that you would want to talk to you and that Brandon Lizette went out to for for this kind of piece, you know, kind of said well, the next next thing is coming, like this is going to expose the businesses that aren't ready for the next moment for what they are, and the people who have done the to prepare for a storm

like this, they're gonna be just fine. That was Senior Features editor Jeff Muscus and Business Week editor Joel Webber on the cover of this week's special Tech issue. You're listening to Bloomberg Business Week coming out the secrets out about a hidden gem in the Heartland, while the mayor of a fast growing Tennessee hub says his city has a chance to be America's best. This is Bloomberg. This is Bloomberg Business this Week with Carol Masser and Bloomberg

Quick Takes Tim Stinovik from Bloomberg Radio. We are talking some big macro global issues right now. You know that we talk about it all the time on air, which is why we also need to remind ourselves that it's always important to check out things from the ground level up. For an inside look at a market that's fast becoming one of America's most desirable, we turn to Chattanooga, Tennessee, and the mayor of that city, Tim Kelly. Chattanooga is home to the kind tree is the fastest and most

pervasive internet service. It's unemployment rate is hovering your three percent, and it's becoming a haven for people who have the option to work remotely. In fact, it's so popular among people looking to leave bigger cities that local sphere they could be priced out of the housing market. It's getting there, and so you know, we've jumped on it pretty quickly. UM announced a thirty three million dollar allocation of a city budget, which the city that has Chatanoo is a

pretty good chunk. Uh. And then I'm gonna use my UM experience in the philanthropic world to really work with our local foundations and national foundations to try to raise a hundred million total and then also contribute a lot of city property that we have towards the effort. But but it is um, it's a form of inflation, and you know you have to get on it early and often. So we're we're where where there's a lot of buildings going up. Thank god. You know, the suplat chains issues

seem to be slacking up a little bit. But UM, we we are going to have to be very intentional about increasing supply. What is typical cost of the house uh for a family or housing for family, and how much has it increased in the last two years. So the stats I've got, I want to say, the median household price five or seven years ago is like one fifty nine and it's gone to I want to say, to seventy nineties somewhere in there. So that's a pretty

meteoric jump. So mayor Kelly, you know that there are people in the New York metro area saying, Okay, I'm packing up and moving to Chattanooga. I mean, that's the thing that's going on, right the perspective of exactly, I mean, that's part of the appeal. It's sure, it is right, there's no question about it. That plus plus the Internet, plus all the green space, it's not really that complicated. But but the trajectory has headed on. I mean, that's great.

That's what we're here to do, or I'm here to do, is to try to sell Chattanooga and push economic growth. But but again, my job is a Goldilocks problem, so I have to have to have to push hard. You know, I wanted to talk to you about Roe V. Wade because it's a business store and Tennessee is one of about a dozen states I believe they're thirteen that have a so called trigger law, so abortion would be illegal

if the Supreme Court overturns Roe v. Wade. We see companies speaking out about this, especially that companies that have employees and states were so called trigger laws could take effect. What would you say to somebody who's concerned about moving

to a state where abortion could become illegal? Well, I am concerned about it, right, I mean, the break on economic growth could be significant the flip side as a as a city mayor, right, I kind of try to live by the old serenity prayer and worry about what I can control and not worry about what I can't control. And that one is is well above my pay grade.

But but I am concerned as I think the most most business minded people in the state of Tennessee are um and I'll leave it at that, Okay, but I am going to follow because you said you're concerned about it being a break on economic growth. You could see something like that slowing either companies coming to this, coming to the city, or expanding within the city. Yeah, yes, of course, right, I mean, I think history has shown that companies and workers, particularly the knowledge economy, want to

be in diverse progressive cities. That right, and and that is sort of antithetical, uh to running the opposite current from from from overturning Roy wade Um that said, you know, Tennessee has always been a very pro business state and has has pro business leadership. I will will see how it all plays out, but it is it is of

concern for us, you know. I do want to point out, as full disclosure, Chattanooga among the first AID cities selected for a nationwide initiative to improve government performance and transparency through civic data. We're talking about Bloomberg Philanthropies, What Works Cities and which is providing support and training for midsize cities, including your city. I mean, what does it mean to be a modern city today? Well, again, I guess I'm if I came at it from business and philanthropy, not

from politics, And is that an advantage. I think it's a huge advantage. I mean again, Mike Bloomberg of candidly is my hero, right, I mean like I come at it from the same direction that he did. You know, executive politics is a very very different, non ideological exercise than legislative politics. My job is to run the city like a Swiss watch right to to to really have

the machinery of government work. And I don't think that's a trivial undertaking because we ran in my whole campaign based on filling potholes, which seemed really probably a bad analogy but pedestrian. But what occurred to me through the course of the campaign was people want to know that government can solve their problems. And if you can't solve their simplest problems, they're not gonna trust you to solve

more abstract problems. I mean democracy. I think it's fair to say as an institution is under is under threat. And I think cities are where we can prove that democracy works and that government can still solve people's problems, but all people, all people's problems. How do we make sure of that? Because that's that's the world we are in. Here. We come off as two year pandemic, right uh, and

we see the gaps have just widened absolutely. And so the thesis of my campaign not to get too political, was, you know, one Chattanooga, I published a forty page strategic plan that's basically relies on two tenants. One is, you know, creating government that works better for all Chattanoogan's. But the other one, very frankly, is getting the difficult topics on the table and talking about them until we fix them.

And that's racial equity, right, And it's not. As Raphael Bostick eloquently said to the Atlanta Federal Reserve, racism is is expensive. It doesn't work. And so you know, the gaps between the black and the white community and Chattanooga are are worse than they are nationally and it has to change. Right. So that's that is a very explicit goal for us, is to close the gaps in average income and network between our black and white communities. And again, look,

I'm a startup guy, I'm an entrepreneur. A lot of it will be focused there, a lot of it's focused on workforce development, adult learners, and and of course good old fashioned education. We need to fund from early childhood to post secondary. We need to fund our educational institutions better.

All Right. So I'm gonna say, I feel like we've been having these conversations and I'm not I'm I'm targeting you because you're here, but I mean it more broadly, and the same thing, you know, after George Floyd, like

these were not new conversations. So what is it? So many people say, well, the people who are most impacted don't have a seat at the table, right, So so what would you say if you could pick one or two things that you think would change some of the inequities that are out there, whether it's black, white, whether it's you know, well, look, I mean it's to some

extent it's an attitudinal thing. A good friend of mine ran against me, is mayor, a black man, and I won, you know, and um and I if there was a consolation, we're you know, we're still quite close. You know. Racism is a problem for the black community, but it's a problem with white people. Right. So I think as a white candidate can can do some things to help close those gaps that that a black candidate might not be

able to do. And that's what I try to do on a daily basis, right, just to keep having those conversations in a very very intentional way, and again not in a political or polemical way, but in almost a utilitarian way. Right, this this doesn't work, it's it's not working. That was Tim Kelly, mayor of Chattanooga, Tennessee. We should note that Chattanooga was among the city's elected for a nationwide initiative to improve government performance and transparency through civic data.

That initiative by Bloomberg Philanthropies. It is founded and supported by Michael R. Bloomberg, the founder and majority owner of Bloomberg LP. Still to come on Bloomberg Business Week. Mark Zuckerberg is so worried about TikTok that is blowing up Instagram, which of course he owns. Right Yeah, Facebook bought it about a decade ago for a billion dollars. It looks

like probably the best investment Facebook ever made. This is Bloomberg Broadcasting from the financial capital of the world Bloomberg eleven Frio in New York to Washington, d C. Bloomberg to Boston, Bloomberg one O six one to San Francisco, Bloomberg nine sixty to the country Sirius XM Chado one nineteen and around the globe the Bloomberg Business app and

Bloomberg Radio dot com. This is Bloomberg Business Week. At Middle Platforms annual shareholder meeting this week, CEO Mark Zuckerber and founder, of course of the company said that the company will lose a significant that was Zuck's word amount of money in the next three to five years as it builds out the metaverse Meta. The company formerly known as Facebook also wants more people using its short form

Instagram video feature. It's called reels. You've probably seen it if you've been scrolling through your feed lately, and it's copying its biggest social media competitor, TikTok, that appears at least to be the game plan. Bloomberg News Big Tech team leader Sarah Fryer and Business Week editor Joe Weber explain, it's not like that that strategy that has kind of helped um, you know, Facebook reached three billion people around

the world, always works. But they have ran up against a competitor the likes of which they have not really had this much of an existential dread about. And that competitor is TikTok. And part of what makes TikTok go so well and has taken off during the pandemic is

that and its ability to capture this youth culture. Is this algorithm that really surfaces people who who maybe you have never even used the platform before, and it harnesses it is this drug, and there's a sense of discovery and when you tap into what Facebook has it maybe doesn't feel the same and the you know, as Facebook here tries to pivot into the metaverse. Reels is the

Instagram product that Sarah Fryer has written about here. Facebook is putting meta, is putting a ton of weight on reels, this feature within Instagram to be the thing that takes on TikTok. How is that going so far? Sarah, Well, it's really a big gamble. I mean, what they're doing here, it's hard to oversee how much is changing Instagram. Instagram teams to prominence based on its aspirational lifestyle photography. You know, the stuff you would go and you'd scroll and you

see people on their vacations, they're having their nice meals. Um. This this reels experience. It's all videos, short form video, and they're forcing it into every users speed. So when you scroll through those nice photos, you're going to get these videos of sound, right, and if you quick on them, you're in in real you can't. It's like hard to get out of it. I I've you know, watch people try this um and and just get really confused and like, okay,

what's happening to Instagram? And it might even get more redesigned in that direction, you might eventually open Instagram and it's all the short form videos basically essentially TikTok. So it's not just that they're trying to copy TikTok, it's that they are basically completely reinventing Instagram in the process because they're so desperate to bring back that teen demographic,

which the Zuckerberg sees as the future. I mean, these people, they develop their habits, and they have their habits, they have their communities, they've established it, and he wants them to be establishing it on his platforms. And Instagram is his It's become like his Swiss army knife to the team demographic, which has made Instagram incredibly confusing and packed the features. And um, you know it's a risk. It's

a big risk because it's such an important property. It's it's the main revenue driver for Facebook on the main revenue growth driver, I say, and you know they're they're risking it to tibet the farm on becoming TikTok. Walk us through that confusion that that users are are confronted with when they now launch Instagram, which used to be this well curated, square boxed uh platform. Right, Um, and you could curate it and it was awesome and very simple.

What what does it look like now and what could it become? Because you have some interesting reporting on that well, and in the way I described it in the story, it's just like it's like you're you're cruising to required art gallery, neutral in the corner, and you're in a dance party. It can be very jarring if you're in the mode of silence images and then you go into sound. Um, your brain is just working differently. And so I think

that what people come to Instagram for um. You know, people have spent years, spent more than a decade curating who they follow on Instagram. Now when you go to Instagram, the top thing you are going to get it suggestions. Your feet is going to become full of stuff that you didn't say you wanted, and a lot of it is going to be experimental and not based on what you've been following before. And that's that's a huge bet for Facebook at large. They want to become more about discovery.

For the last fourteen years, since the invention of the New Seeds, they've been really good at showing you what they already know you want to see. Now it's about showing you stuff that you never even knew you wanted to see, which TikTok is really good at and Facebook is really not yet. That was Bloomberg News Big Tech team leader Sarah Fryer along with Business Week editor Joe Webber.

You're listening to Bloomberg business Week. Coming up, lessons from a life in Silicon Valley from one of the inventors of the iPod, and the warning from him about the device addiction that comes with many of the popular social media platforms that we have been talking about. Former Steve Jobs advisor and the creator of Nest joins us. Next, that's Tony Fidel. This is Bloomberg. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. Tim

Stinovik from Bloomberg Radio. Our next guest is credited with creating the iPod. He's actually created a few companies, also with building out the iPhone and founding the smart home company Nest. He spent more than nine years at Apple, including being advisor to Steve Jobs, of course, then the CEO and co founder of Apple. He's also warned us about the dangers of device addiction and Silicon Valley's responsibility to fix it. Tony Fidel is now principal at Future Shape.

It funds early stage companies and invest in what he calls quote deep technology. This was an interesting conversation. Tony's out, by the way, with a new book. It is entitled Build an Unorthodox God to Making Things Worth Making. We began our conversation by asking him about Apple's recent announcement that it's discontinuing the iPod. It's bitter sweet, obviously if

you see your baby go. But you know, at the end of the day, the march of technology, the drumbeat of technology never stops, right, And I've been in this business long enough to know that you can't get to you know, too wedd into any one thing because you know, you might have to eat your own And that's exactly what the iPhone did. You know, the iPod um created the conditions at Apple to be able to make the iPhone. So without the iPod, there would have been no iPhone.

So it feels really good to know that what we did in the iPod and brought Apple into where it is today. You know, it's yeah, it was last week. I guess the most valuable company on the planet, and that was because of the iPods. Wells really really wonderful to know. Well. And I talked to us about your journey because that's so much a part of this book, um build and and who you wanted to read this book and what lessons you hope are what you hope people would take away from reading it? Well, I think

you know. I stepped back and I thought about the mentors that I've had over the years. And that's the reason why I'm able to talk to you today is those people helped me. And if I didn't get that help back in the day, maybe I would not be here.

And so when I thought about those mentors, most of them had died, and I thought, oh, it's now my turn to be mentor, And so how can I do that at scale and take the journeys through companies like General Magic and Phillips and Apple and Nest and all the lessons learned on building transformative technology and really the books about human nature, so which so I'm trying to really go for you know, what were you if you were in high school or if you're in college or

a new grad. What do you need to know? What you look behind the scenes of the product that you probably grew up with and and how those were developed. But not just like from a technical point of view, but from a human nature point of view, building your career, building products, building teams, companies, businesses. So it's all about trying to give back to help those those those people with their careers um and and hopefully one day they'll change the world as well well. So how did Steve

Jobs help you? One by giving us an environment to actually thrive to be able to create the iPod That was the first thing. But the other one is really to learn about storytelling in detail. And what happens is is you really need to not just create technology for technology's sake. That's what happened to General Magic, and that's what I learned so painfully up the disaster that was

that company. And so watching him masterfully tell a story, a non fictional story, through marketing and through the products that we created and all the customer touch points, you know, you get to see a master at work. And then we were able to then take those lessons and create a company like nest and and change the world there with a small, tiny team because we learned how to do it right. Tell you. What I wanted to ask you is what's worth making in today's environment? Yeah, how

do you? How do you make things worth making? So I always start with the pain. I'd much rather go where customers have pain. I don't want to give them vitamins customers who some people like vitamins, not everyone needs them. When you have pain, you need to, you need to,

you know, just squash that pain down. And it's even better if you if you give them a pain killer and a superpower at the same time, so they can do things with the product or service that they never thought possible before, and they feel like there's they have new new superpowers. And so you really have to focus on the pain and do it in a way that

people feel really amazing about it. Okay, so it's clear how you did that at Nest with the Nest Learning thermostat, a product that continues, I think to solve a pain point in many consumers lives. We both had them, Yeah, we both have them, and um, Tony, but but where's the pain? Where's the pain today? Because I look around and I see the innovation at a company like Meta Platforms, for example, and that's the metaverse. Or do we feel pain in the real world and need to be in

the metaverse. I feel real pain from the climate crisis we have, in the health crisis we have, and our social crisis is we have that we're generated out of disintermediation between humans. It first started with text and video and photos. And now we're gonna say we're going to go in the metaverse and we're going to get connected and dance and have meetings. To me, that's toxic. We've seen what it's done in the past. You're not going

to get into the metaverse. People are not going to want to go and live in there and dance in there and and connect. We need to have controls on that stuff before we ever. You know, we've been talking about controls on text and Twitter, all these other things, these social platforms. Why we want a new environment where disconnects us even more and allows more toxicity to grow. Let's fix the social problems we have on the with the technology we have, Let's not create even more of them.

So let's go and also let's fix the problems in the real world, the climate crisis that we have. There are so many things that we need to address right now, and this these these goals that we have are coming so quickly. If not, we could lose it all. It's it's, it's it's it's absolutely astonishing to me that we are diverting incredible, smart, brilliant brains and resources to things that

are not solving the real problems that we have today. So, you know, you talk about social um and the social universe, do you think Elon Musk is someone who can fix Twitter to some extent um and some of the downside of that social media platform. And I don't think I'm saying any thing subjective. I think many would argue that it can do a lot of good, but it can also do a lot of harm like other social media. Absolutely, it's not just Twitter, there's so many things. But could

he could he fix it? He could fix it if he wants to fix it in the right way. I think what we have to understand here is we can't just go putting people back onto the Twitter platform if we don't change the environment at which they come back onto it with. If we continue to drive revenue based on amplifying um, misinformation and and and these kinds of things, then we have not done anything to fix Twitter or fix these social networks. We have to divorce the amplification

mechanism from the revenue mechanism. If we don't do that, the toxicity will only grow. And we can't just let anyone on to say free speech, free speech in the in the town square was never amplified. He should not amplify that for revenue purposes. Do you think some of these big tech companies have just become too big and kind of too controlling in terms of the narrative? Uh?

And the trend of where technology is going. I think with great power comes great responsibility, and if they can't rain themselves in, then they're going to need to be reined in by the government or what have you. The inequity is growing so dramatically and the concentration of powers growing so dramatically, not just then the people who use the products or are used by the products, but who also the ecosystems they create, and they continue to extract

so much revenue from apps or what have you. It needs to be rebalanced. If not, we saw this in government. When there's an equity, there's revolution. They're going to have a revolution against them if they do not ring themselves in. So I do see the power growing too strong and they're going to have to modulate down otherwise they will

be they will be forced to do so. Tony, last time you and I spoke was I believe back in and you were at that time pushing for controls on Apple products, specifically monitors monitoring how much we were using those products to give Apple customers an idea of just how much time they were spending on their phones. Apple has since done that. In each week I get a really depressing report that shows how much time I'm spending on Apple devices. Are you satisfied with with that type

of disclosure that you're seeing from Apple right now? And and what have you learned after taking on that project? Well, you know that was that was something that they implemented based on public reaction to you know, this this social or this screen time addiction. Um, I think we're only of the way there. It was a good start, but there has been really no innovation and continuing to take

it to the next steps. So I think still need not just Apple, but Google, all the different platforms, you know, PlayStation even, They need to go after and and start looking at this the what they can do for the screen time limitations and the information. So not just the tools and the control tools. That also the information by which we disclose what these apps can do, not just

to kids, but also to adults. And if you look at it, you know we now they now added over since that they added privacy labels to tell you what are the privacy things that these apps do and don't do. Why don't we have um a digital nutritional information about what these apps can do to kids or what have you when you do consume them? You know, do they have toxic ads inside these free to play games? You know, sure they might be might be get games that kids can play. The ads that pop up. I've seen it

with my daughter. They can be very toxic and my daughter comes to me, you know, screaming, going what is this, Daddy? So I think we need to be much more on what's going on and what we're consuming. Just like nutrition labels on the side of a on the side of a food product, we need to have that for our apps. Dad's Tony Fidel. He's principal at Future Shape. His new book Build, an Unorthodox Guide to Making Things worth Making

is out now. You can catch the entire conversation. Just check out our podcast feed 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 Tim Stanak. 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 our daily broadcast on YouTube. Just search Bloomberg Global News and check out 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 on the Bloomberg Terminal. You can also see me on Bloomberg Quicktake, available on Bloomberg dot com, slash Qt, and streaming platforms like Roku, Apple TV, Samsung TV, and more. Have a great weekend. We're just everywhere, aren't we. We are all right, everybody, Stay safe. This is Bloomberg