Bloomberg Businessweek Weekend - November 17th, 2023

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.

The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.

Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast. A very busy few days in global markets on Capitol Hill and in geopolitics in the US, we got data showing inflation easing and growth softening, and we also saw Congress coming to terms on a temporary funding measure to avert a government shutdown.

The agreement delayed a partisan clash over federal spending until the new year, well leaving out emergency a to allies Ukraine and israel I had this hour, we'll look at the Warren Gaza through an economic lens and then discuss what hundreds of global leaders fear most as the two hot wars.

Ray John Overshadowing all of that, however, was the San Francisco summit between US President Joe Biden and his Chinese counterpart Ji Jimping, And that is where we begin.

After an hour's long meeting Wednesday, she dined with business leaders alongside the Apex Summit and made some welcome remarks, saying China wants to be friends with the United States. He also stated that his nation won't fight a cold or hot war with anyone. It was one of his clearest remarks yet, proclaiming a desire for peaceful ties between the world's two largest economies.

President Biden meanwhile said the talks yielded progress and repairing strained ties between the two superpowers, while reiterating that he considers you a dictator in an apparent off the cuff from Mark. But keep in mind, apparently it's not the first time he has said that, basically making the distinction between how the Chinese government is run and how the US government is run. Well, a lot to digest here and to help us interpret what we saw and heard

That's exactly right. I'm not denigrating the photo op. That's an important part of diplomacy. But I think some important things have happened here. I think a floor has been put in the relationship. I think things stop getting worse, and I think we have the building blocks of recreating at least a functioning US China relationship, which is very important for us, for them, and for the rest of the world.

Well point out what in the past couple of years has not been functioning, and what you think now that there is a floor in the relationship will start functioning soon.

David Well, the most dangerous thing is ongoing disputes in the South China Sea and in.

The Taiwan Straits.

You may remember that China lost an international court ruling that they ate where they lay claim to most of the South China Sea all the way to the borders with the Philippines and Vietnam and other allies of the US, really saying that that is essentially part of their country and no one should pass through it without their permission. Also, the Taiwan Straits, they've determined that that is what they consider an inland waterway which is part of their country.

That's something that's gone really wrong.

Trade policy, other things about rhetoric in both political systems have been troublesome but real. The danger in the South China Sea and the Taiwan Straight has been my main concern.

So, like a relationship that goes bad, you can have where the two individuals don't talk, or at least they're talking, and so you get to a better way.

Is that kind of where we are with the US and China right now.

That's exactly right, and they're talking at every level.

You know, it's important that Biden and She sit down, but it's also important that the high level officials, sit down, middle level officials, people up and down the trade and commerce arena as well as the military arena. So communication and connection at every level is critical to avoiding a problem.

Panda diplomacy that is going to go there.

We lost the look we.

Have had the pandas leaving the US been here for decades now maybe coming back.

Are we right to laugh? Or that sharing of something that is native and unique to China so important and a big deal.

You know, I'm reminded of how important it was during the nineteen seventies when we were first establishing contact with China what they call ping pong diplomacy. And you can, you know, you can sort of nicker at the idea of ping pong players founding forming the basis of a relationship between two great, two large, very large economies like this. But it is important to have those person to person connections and that sort of sentiment.

Pandas are a part of the of.

The the quiver of resources that China has, and I am glad for one to see them using it.

But let's look for other ties.

Ties between students and researchers and scientists and so and so forth.

That's what really can help.

That's what helped build the original relationship and can rebuild it now.

But where are we with the panda diplomacy Because what happened recently was China took back it's pandas, and now we had she yesterday talking about potentially sending them back to the US. It seems like, I mean, was he using this for leverage that recently?

You know, I think that the pannas are always on loan as you know, our pieces and so and so forth between different countries, so it is their right and progative to take them back.

I'm not exactly sure what's burred that.

It might have been a moment of national pride or something that led them to do that last year or just a few months ago. But the idea that he's opening back up to sending other panda, sending more pandas back to US Zeos, I think is an important next step.

Hey David, what does the narrative or headlines get right about this relationship?

What does it get wrong?

It's super complicated and very synergistic. We both need each other. We need them for large workforce, the ability to produce things like iPhones and other pieces of technology that are in all of our pockets and on all of our desks. We absolutely China for that. They need us to be part of the group that it consumes their products and

We need each other, you know.

I believe it was Arshinelli Bask in our conversation with Citadel's Ken Griffin this week who where he basically said, just imagine if TSMC just cuts off its supply of chips to the world, everything shuts down, Every production line shuts down. You know, we talk about Apple the close connectivity between the two nations, but you think about TSMC, It just you know, provides chips for everybody.

And that is actually absolutely the most critical part of the US channel relationship going forward. Taiwan and what happens there. You know, we have stuck to a one China policy where we recognize just the government in Beijing and don't have official recognition of the government Taiwan. We don't recognize China's claim to Taiwan, but we just don't talk about that.

Of the world.

Speaking of tables, there are a lot of people who shared a very important table with President g last night.

Yeah, well, certainly a who's who of executives there yesterday, not just at the dinner.

Right.

Elon Musk wasn't there at the dinner. Mark Benioff wasn't there, but they did sort of a drive by greeting during the cocktail hour. We had Sander Pichaya b Alphabet City's Jane Frasier. Larry Fink was at President She's table. Tim Cook of Apple, of course, who didn't know, by the way, Carroll, if he was actually going to bet.

He didn't think he was going to come on.

He was in China.

Twice this year.

He was there.

He's going to be explained to us. You know, the takeaways from who was there last night, and who wasn't there last night, and who was at at she's table.

Well he is the.

Interest saying that how important financial services were in that. That actually struck me how many financial services people were there because that's an area where US banks were involved early. Some of them got burnt. But it's a growing part of the of the Chinese economy, and of course a huge part of US services exports into China, so that's a important balancing part of our of our good goods deficit with China is our services. So I keep an

It's like I think I can move my schedule around.

Yeah, of course, I'll make it happen. I'll make it happen. David, Thank you so appreciate it. David Reedel, President of Retal research on zoom in San Francisco.

You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern Listen on Bloomberg dot Com, the iHeartRadio app, and the Bloomberg Business App, or watch us live on YouTube.

Master Low with Tim Stanevik life here on Bloomberg Business Week Bloomberg News. You might have caught this story over the weekend talking about the cost of the war between Israel and Hamas. Obviously the cost to lives, no way to measure that, no doubt about it. But it also has an economic cost, and Israel's war gets to mass costing the economy about two hundred and sixty million dollars

We have with us near Barkad right now for Israel Minister of Economy. He was the mayor of Jerusalem from two thousand and eight to twenty nineteen. Before that, served as a member of the Jerusalem City Council. He's got a background in tech, though, having founded an antivirus software company back in the nineteen eighties. He was also the first chairperson Carol of Checkpoints Software Technologies. It's the American Israeli IT security company that's listed here in the US.

On the next deck, mister minister, thank you so much for coming with us. Tell us how I think we're going to get your mic on for you. There you go. First of all, welcome, welcome, Thank you for being with us. You do have to be thinking about there are some nervousness, certainly among investors in terms of the Israeli economy. What can you tell us about it today and where you see it going from here?

Well, thank you for hosting me. I think we have to have the perspective.

First. We imagine you have a neighbor.

That goes and rapes your wife, takes your child and puts it in an oven, and then it takes your children hostage. This is a neighbor that wants to wipe out Israel off the map. We have fourteen hundred people killed, murdered, and two hundred and thirty nine abducted and now are hostages. Okay, so Israel has made a decision They're going to wipe these monsters off the map, off the face of the earth.

By the way, the.

Radical Islamic jihadists are not only threatening Israel, They're threatening all over the world. We're on the same line, Israel and the US, as this is a big Satan where the little Satan and Europe is also in the same line. So we're not just fighting our own battle. We're fighting a battle between good and evil, between the West, civilized world and radical Islamis jihadis that want to kill everyone else. I'm saying this because this is the perspective. We're going

And let me forgive me, because you know, second, that should have been like our second or third or fourth question, because obviously our hearts and our minds go out to what's been happening and the conflict on both sides, and it seems like we've had many conversations about trying to figure a better way forward for what's going on there.

Well, we're taking time because we don't want collateral damage. We have to deal with.

We's already been collateral damage well.

And the reason and no, there's no collateral damage on our side. It's an intent to kill Israelis and wipe us off the map. We don't want to target innocent civilians. We deal with Hamasa hiding behind you know, in our shelters. We put our citizens in Gaza. The militants use the shelter and they don't care about their civilians.

They don't care.

Actually they're using as human shields. We hide our we protect our civilians they don't, and so entering Gaza, focusing on the militants that are by the way, using the hostages as human shields. It's a challenge. So we're taking our time. We want to make sure that we only hit the militants and enable the people to leave the northern part of Gaza, you know, their quarters, helping them

That's why we're taking our time and the war. We will win this war. There's no doubt in my mind.

What happens, what happens to Gaza when, as you say, you win that war, who ends up ruling Gaza.

Anybody that says that in its charter is not to wipe Israel off the map. Hamas will not be there after this war. We're waiting to see. You know, Israel struck a peace deal with Egypt, which was our biggest enemy at the time. They recognize the State of Israel our right of existence, and we have forty years peace with them. Similarly with Jordan we have twenty five years piece. I remember I was seven years old when they attacked us in sixty seven, okay, but we came to terms

What is the economic way forward?

And no one would dispute hamas terrorists, right that must be put to an end, not Palestinians that are there in Gaza. So what is the economic way forward for Israel and Palestinians to exist economically we're both thrive because many would argue that that's not the situation for many in Gaza right now.

So see, there are good examples of how we collaborate. Until October seventh, we had one hundred and twenty thousand Palestinians that used to cross the fence every day and work in Israel, Okay.

And we've had tech entrepreneurs who have talked about working you know, Israeli tech entrepreneurs who have worked with individuals in God right.

We believe in civil separation, they should manage their lives, and we believe in collaboration on the economic side. At least we did until October seventh. Now it's much more challenging because there's a deep concern between ISRAELA.

We don't trust our neighbors. We don't trust our.

Neighbors, and it's a could you imagine going through what we did in October seven and trying to go back to before October seven, It's not going to happen. And so what we were more optimistic on economic collaboration, they it's very difficult to work well.

In an economic situation where both sides benefited as well, of course, and there was thriving because many would argue, we see it certainly in the US and not apples to apples, But you know when people feel like they're economically left behind, that's when chaos candidates come out. So that's what I'm trying to understand. Many would argue there needs to be two states where two separate states can thrive economically on their own.

Let me give you a statistic.

Jeans really average salary is fifty four thousand dollars on average. The Arabs relies is probably close thirty five to forty thousand dollars average salary the Palestinians they used to cross the fence every day was sixteen thousan dollars. The pedacedes of the work and collaborate in Judean and Samaria with the Jewish cities and.

Towns was about eleven to twelve thousand.

In the Judean Samari the Arab side was about seven thousand, and Gaza before the war was three thousand dollars a.

Person a year.

So that demonstrates that the more they collaborate with the Jewish state, the better off they are. And we want to collaborate. We wanted to collaborate, but they have to decide. If they want to wipe us off the map, we will fight them until we take them off the face of the earth.

It's their decision to make.

Our hands are always open to collaborate and create peace, and we have peace with the Arab countries. It's their decision to make. If they want to fight, they'll lose. If they want to collaborate, we will.

Mister minister, I want to ask about these art.

You're not talking homoster dragon, Palestinians right to collaborate talking.

Anybody that wants to wipe us off the map of the Earth will haunt them down until they raise the white flag.

In the economy, I wanted to ask about the coalition funds, this discretionary spending that's earmarked to the five parties of Netanyahu's government. Do you think those should be scaled back to make more room for war financing?

Right now, we have a unity government, and I think one of the biggest challenges we have is expanding unity government throughout the war and after the war. One of the biggest challenges we have is unification. And when you have unification, people make concessions to each other to a degree that we all agree on how to create the budget. So I think that you were going to see in twenty twenty four we're restructuring the budget to focus on

These are pretty controversial payments, three point six billion dollars worth of transfers. They were approved last May. They're partly going toward religious schools, some of those schools are exempt from teaching subjects like English and math. Where do you fall in this debate?

As I said earlier, there's no doubt in my mind that we will expand the coalition.

We need to expand the collision.

And when you do that, there's more collaboration, more consideration, and you do things with wide acceptance.

That is what's going to happen.

In other words, we'll agree together on how to focus the funds on the necessary challenges Israel has.

How complicated or how is this become complicated? If I think about the cost to ensure Israeli bonds right, sovereign bonds against a default more than double what it was before the war began, So how is that complicating the mission? As you think about the economy after well.

I think smart money understands that after a war there's usually thriving entrepreneurship. Extremely if you look at the past wars, people when they go to war, they become very creative.

You'll see an array of.

New companies, not just in the defense side. I think Israel's mastered the defensive and how to come up with new creative ideas. We've tested the new space war and a couple of other things. And I think you're going to see a lot of interest around the world on

Is that because of soldiers who are being deployed.

Both soldiers, schools were out, so parents needed to stay with their children.

But what is the effect on the economy when you know you have hundreds of thousands of Israelis are who are fighting rather than working.

So I said, short term, it's probably going to cost us two to three percent of the GDP, so our debt to GDP will go from sixty to sixty three. We have buffer, We have the capability to deal with this because of our tech sector. The tech sector in Israel is sort of an isolated, independent sector and usually we don't lose a day of delivery on the tech side, so the companies are used to having some of the

Money can make.

I've just had a few meetings today with some entrepreneur investors and they all understand that this is a good opportunity to buy.

Do they feel differently about investing in his real because of stability.

No.

On the contrary, they understand that if you look back at the history of Israel throughout the wars, no one has liver, never lost a day of delivery.

It does feel a little different though, And forgive me, I haven't been there in years, but you know, when I visited is Reel years ago, there weren't rockets that could reach Tel Aviv. And then in the beginning of this and Tel Aviv felt totally cut off from areas of conflict. That's not the case right now.

Well, I was in Tel Aviv a week and a half ago. Two weeks ago, there was sirens. We went into the safe room and came back and everyone's used to moving on with their lives. I mean, we're Israelis. We understand how to get you know, how to challenge. We have a challenging neighborhood, a tough neighborhood, but we're tougher than them, and we know to be good with the good guys and extremely aggressive with the bad guys,

Minister Barcott ask you, though, when Prime Minister Benjamin Netnah who says he's committed to paying whatever economic price this war exacts on us, though it does that though give people pause when they get a little concerned about some of the instability, and we've certainly seen it play out in the markets.

Does that make it a little bit more complicated?

There's full consensus payment in Israel.

Everyone understands the mission and doesn't question that. But when he says whatever economic price for investors, they have this ability to make a dividing line between maybe what they perceive is what's right and also though what what makes sense from an investment perspective. I hate to be so black and white just got tight five seconds here.

Where if there's no security, there's no economy. So security is one step before economy, and that's why we're willing to put all of what would need to do to bring security back to the to the southern region, and then we have to deal with the northern region and other threats.

Thank you so much, appreciate it. Near Barcott He is the Israel Minister of Economy.

You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern on Bloomberg Radio, the Bloomberg Business app, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg eleven thirty.

Well, we want to switch.

Gears to a story that's in the upcoming new issue of Bloomberg BusinessWeek. It's about the smuggling networks that ferry migrant over the US Mexico border. They've long relied on vulnerable Americans to do the driver, figuring that they are the people most inclined to risk criminal charges for quick cash. After all, drivers can be paid thousands of dollars per passenger.

Yeah.

In fact, in such cities as Tucson and Corpus Christi, Texas, recruiters troll homeless shelters, welfare offices, and secondhand cell phone shops for prospective drivers. But real world recruit is time consuming and tedious, and now those recruiters have turned to a more efficient tool carol social media.

They have.

Indeed.

Julia Love is a technology reporter at Bloomberg News. In the new issue at Bloomberg Business Week on newsstands tomorrow, she writes about the cartel backed networks that are using Snapchat, TikTok and some other apps to entice drivers into transporting migrants. She joins us from our San Francisco bureau. Jill Weber is the editor of Bloomberg Business Week. He joins us

A bit of a sober story, a real story.

Very much so. It's actually kind of a sequel to a story that Julia wrote earlier in the year, which was just a magnificent feature about an American coyote. And we kept in touch because we really wanted to see what else she could find and loan and behold, this one connects directly to her beat and and it shows that, you know, the tech companies that are the platforms that so many of us use to talk with one another are also a way that cartel back groups are recruiting coyotes.

Essentially, human smuggling networks need a lot of drivers to transport migrants after they cross into the United States on the last light of the journey, and they have long recruited vulnerable US citizens to do this work. In the past, they would recruit people in person at bars. They would also go to homeless shelters, you know, places where they knew they could find people who were in a tough spot. But now social media is enabling them to do that with much greater efficiency.

How do they.

Find, Julia, these people on social media? You highlight a few of them in your story. It's again incredible recording. I really encourage our body go read it. But how do these orchestrators actually find these people on social media?

It's a midst of different techniques. Sometimes they will post ads that appear briefly that users respond to. The post might say something like want to make quick cash, message me drivers needed. Other times they will reach out to people proactively. There's certain types of users who they seem to target. Young Men are a desirable demographic. They see them as a little bit more impulsive and willing to

Did he do it?

Tell us about the process, like how he found out about, you know, kind of what it was all about, or what he thought it was about, and then maybe what it really was about.

Yeah, so he gets a message on Snapchat, you know, asking if he wants to make some easy money, and then he expresses interest, and the conversation is then shifted to WhatsApp where it becomes clear that he will be transporting migrants and he has some reservations, but he ultimately decides to do it, you know, under under some pressure from the recruiter. And Yeah, he sets out on a trip and he's he's arrested on his very first drive, which is often how these.

Trips end, which is, you know, such a sober way for this to go. But I'm curious because he even thought about maybe not doing it as he was considering it, right, and he was appro you know, some of his friends were approached too, right, and so what drew him to ultimately do this.

So what defense lawyers have really understored to me is that, you know, these smuggling networks are ultimately they operate with the permission of the cartels, their criminal groups, and so you can't really back out of this work. You know, they often desert desert pressure.

You know, there's a.

Huge power and balance between these young people and the folks who are recruiting them. And so that's that's what happened to our main character. He did have second thoughts, but the the recruiter, you know, send him his address and just indicated, you know, you're going to go through with this.

I mean, how do they find like it's it's kind of scary stuff here because one, you're dealing with the cartel or cartel backed group, I should say, Julia. Two they already know this identifying information about someone. So in that case, he certainly felt pressured to move forward with it. Your technology reporter too, so and this is the story is much about technology and the way that that's certainly

So the tech companies stress that this issue is a priority to them, that they do not allow human smuggling on their platforms, that they're working closely with law enforcement and doing everything they can. But workers tell me that behind the scenes, you know, these trust and safety teams are tasked with so many big issues elections, child safety, and so it's tough for them to find the resources for a problem like this, and it can be a

Well, and you know what I thought was interesting is and you include this in your story, Tulia, is that you make a point of like this stuff we post on social media can actually make you a target for recruiters.

Talk to us a little bit about that oversharing.

Right, Yeah, yeah, So one story that we feature in the piece is a young woman in the Phoenix area who she was a single mom going through a very tough time, and she's approached by an acquaintance on Facebook who asks if she wants to make some extra money. And so I think that's just an example of how, you know, young people can kind of unwittingly make themselves smarts.

What about the companies and all of this, Julie, Because obviously the a company like Snap or Meta like I mean, and you could almost use any messaging platform to you know, post, you know, and lure people into this kind of underworld. What are the companies capable of doing? What do we know about what they have I've done? And how are they limited?

Yeah, so the companies can certainly moderate content. They filter by emoji and keywords. So one emoji that's often used in these cases is an emoji of a little chicken, which stands for poytos slain for migrants used along the border. So there are some tools they can use, and yet the posts really seem to be proliferating. Law enforcements frustrated. They do feel like there's more that the companies could be doing, and lawmakers have been done to pay attention

Right, And while Kim Kardashian probably doesn't have to be worried, there are some influencers that are out there on social media that have been targeted as well well and recruited.

Talk to us about this, yes.

So there it does seem that the networks are interested in having their message boosted by people who already do have a large following online. And so there's one case we know in the story where there was a young rapper in southern Arizona who had a big following on social media and he was ultimately hired to be a recruiter and to you know, post and coordinate these jobs on on social media. And you know, his defense lawyer maintains that he was targeted like anyone else that the

Yeah, thirty six months sentenced in federal prison.

So what's it like when you go down to you know Arizona, and I mean you did spend some time in the courthouse there, like, how how many of these cases are coming through and what kind of luck is law enforcement having in actually cracking down.

Yes, so I spent about a week in southern Arizona. It was really striking to be in the courthouse. It felt like, you know, at least half of the judge's calendars were filled up with these tases defendants being indicted and sentenced. And I also went for a ride along with a local sheriff's deputy who was trying to catch

Hey, can you talk Julia a little more about how how you reported this story. I mean, don't give away all your secrets here, but how you reported it and how this got on your radar post the American coyote story that you wrote earlier this year.

Sure.

Yeah, Well, so I was previously a foreign correspondent in Mexico and one of the big revelations of my time at the border was just realizing that the operations of these human smuggling networks extended really deep into the United States, and so I just became really fascinated by that shadow economy. And I have spent a lot of time looking through court cases and those became kind of the seeds of my reporting.

Juliet.

One thing I wonder is it working though?

Are a lot of individuals ultimately getting smuggled in a lot of immigrants or and you get into this in the story too, that law enforcement there's some really easy red flags when they know someone is doing it, like out of state licenses. But I'm just curious if it is, though, ultimately successful and bringing word they even know or if they even know right.

Yeah, it's a tough problem. I think law enforcement feels like they only apprehend a tiny fraction of the cars that are transporting migrants. And yet for these young drivers who you know, don't really know their way, you know, there is a good chance they'll get todd especially if they if they go out on multiple drives. And if you're offered, you know, the chance to make a few thousand dollars, well, not only will you be enticed to do it once, but you might very well decide to try your hand.

Editor again.

What are the.

Economics here, Julia? When it starts with the person who's paying to be smuggled across the border, they these people certainly save money for a very long period of time. Who are they paying? How much do and to what extent do the cartels sort of take that and I'm kind of wondering, like how it ends up being a couple thousand dollars per person when it gets to that actual driver.

Yeah, so prices for the journey to the United States have really skyrocketed. It all depends on where migrants who you know, are departing from those who are coming from outside of the Americas pay a lot more. But the the money is kind of, you know, partitioned out along the way. Typically that there's a fee that goes directly to the cartels in order to cross the border, and then the drivers ultimately will be paid a certain rate. Oftentimes it's per passenger, and I've seen that really run

We've been talking about the border forever and I just think that it's so interesting that there's this little wrinkle in it, which is, you know, how does technology fit into this? Well, listening maps that you use for everything else are the ones that are being used to basically bait people into making a couple bucks. And you know, also that side of this of like less about the migrants more about Americans being drawn into this is also super interesting.

Yeah, exactly, and right taking the risk, right to make some money.

As this whole new generation of Kent.

It's funny that you said about the apps I've seen about WhatsApp, right, because a lot of times the conversation switches to that and I think about, okay, so what's their responsibility encrypted in all of it?

I understand write, but it's just it's interesting. Julia.

Thank you so much taking us to a place that many of us will never see or understand, but you.

Certainly have shed a lot of light on it.

Till you live love excuse me, of course, technology reporter of Bloomberg News in our San Francisco bureau are thanks to Jill Weber, the.

Editor of Bloomberg Business Week.

Cool.

You're welcome.

Yeah, thank you, Thank you. The story and the new ish. It's on newstands tomorrow.

It's already online at Bloomberg dot com slash business weekend of course, always on the Bloomberg terminal.

This is Bloomberg.

You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern Listen.

On Bloomberg dot com, the iHeartRadio app, and.

The Bloomberg Business App, or watch us live on YouTube.

Former US Secretary of State Hillary Clinton criticized Chinese President Jijiping's decision to keep power for longer than the two terms of his immediate predecessors, while Citadel founder Ken Griffin slammed the US for excessive debt and spending at the Bloomberg New Economy Forum in Singapore, which just wrapped up

What time you're on right now?

I know what the clock says. I'm not sure. My body feels the same way.

Just getting back yesterday, four hundred and fifty leaders from across the region, the public and private sector.

That's right.

Tell us about this event.

Remind us, you, guys, bridge the divide between East and West, as you like to say, and so much.

More, not just between East and west, global North, global South. It is our flagship event, the biggest event, the most high profile event we at Bloomberg hold every year. It was, as you say, in Singapore. We've had it in Singapore four times now, in Beijing once, and there's a possibility we take it back to Beijing, but obviously the conditions under which we would do so are quite challenging. At the moment. We spent a lot of time talking about

Hey, Eric, you mentioned you know certainly US China relations being a focus, not just there, but certainly for us this week with potentially I think you know it's actually going to happen all but happened already President Biden and President chijiin Ping meeting on Wednesday in San Francisco. But it also happened against the backdrop of Israel and Hamas and Israel's war against Tamas and vice versa. What did you hear from leaders around the world when it came to Israel.

Well, I would say this, a year ago, we were talking about the war in Ukraine. We're still talking about the war in Ukraine. It's still happening. Tragically. What the attack on Israel by Hamas and Israel's subsequent offensive against Tamas in Gaza has done is complicate the geopolitical backdrop. It has made geopolitics are always unpredictable and always unmanageable.

Was there a feeling or takeaway in terms of tone of nervousness, concern that this does kind of get out of control? In terms of the geopolitics that are there are feeling that you know, smarter heads figure it their.

Way, would say, just lots of questions.

The point around which there seems to be little doubt is that there is a greater chance of things getting, as you put it, out of control than perhaps at any point maybe since before maybe since before the Second World War. Certainly, you know, if you look at global relations since then, you know, maybe since the Cuban missile crisis. It feels as uncertain then now as it perhaps did at any point since then.

We have had more guests who talk about a World War three than I feel like I've had in a loge so much rational people. Yeah, just because of there's so many kind of flashpoints around the world.

What Ken Griffin told me, and I think sums it up, is that the peace dividend is at the end of the road. This period of time that we enjoyed since the Second World War, the so called Pax Americana, where US hegemity even during the Cold War, made the world a relatively safe place.

Right.

If you look at the continuity of human history, very rarely have you had a seventy five year period in which there were no major wars. And in his mind, all of the benefits that we enjoyed of that peace dividend are now very quickly coming to an interest rates arising. For example, geopolitical risk, as we've discussed, is intensifying. Globalization is in reverse. All of these things that were features of that post war environment are now changing, and they're

How should we be looking at the meeting later this week by President Biden and President Chijin Ping at San Francisco, I mean.

That has to be It looks like progress on the surface.

Yes, the best I think the best way to look at it was through the lens that the Singaporean Foreign Minister actually described, which is the lens of whether believe it or not. He said, the weather is improving, but the climate is not in terms of US China relations, and so it feels better, but on the underlying trend

Right.

That era is over and we're not going back there is simply nowhere near enough trust between the United States or the West and China for anyone to feel compelled to rely on that unidirectional, effectively flow of trade that we had after or at least at the moment of peak globalization. Whenever that was twenty sixteen, twenty seventeen, twenty eighteen, it was certainly prependem and I think many.

Would argue President gi has also got his sites on a different way forward.

Well, China is changing, right, the Chinese economy is changing, and in fact, Chinese companies. I don't know whether this is necessarily a reflection of Chinese government policy or just a reality for Chinese companies, but China isn't waiting for the world to come to its s door step any longer. You know, Foreign direct investment is into China is plumbing, and it's the Chinese companies that are actually being able to invest, whether it be here in the United States.

Well, certainly gives us a lot to think about, and you just put it all together so well, and I highly recommend for folks to just head to the Bloomberg or Bloomberg dot com and check out some of the interviews from Bloomberg New Economy. Welcome back, Thank you, Bloeberg New Economy editorial director Eric Shatsker.

You're listening to the Bloomberg Business Week Podcast. Catch us live weekday afternoons from three to six Easter on Bloomberg Radio, the Bloomberg Business app, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa play Bloomberg eleven.

Thirty plenty ahead in our second hour of the weekend edition of Bloomberg Business Week, including an MIT scientist who's developed a playbook for the brightest minds looking to innovate their way to six and who.

Aren't afraid of being labeled as geeks.

It's kind of okay, yeah, it totally is the geek way. Plus, we delve into the secret history of women in the Central Intelligence Agency from the Cold War era to the hunt for Osama bin Laden.

Leave it to women to get it done, all right. First up this hour, the cover story of the new double issue of Bloomberg BusinessWeek magazine, It's on newstands now on the Bloomberg Terminal, an online at Bloomberg dot com slash BusinessWeek. It's the culmination of an eleven month investigation into a secret of London hedge fund manager who doubles as a deep sea treasure hunter.

The financier has a marshal to high tech operation to recover lost pieces of history spanning centuries and entire civilizations from oceans around the globe, and he's managed to keep in this remarkable enterprise a secret until now. For more, let's welcome in Bloomberg News senior writer Kit Schillell and once again the editor of Bloomberg BusinessWeek, Joel Weber. Joel, I couldn't put this story down. It's got everything. Anonymous billionaire,

Kind of started there and look like Kit Chillil and company on this one. Just incredible team.

Uh it does.

There's so much mystery in this and I think Kit, as at his best, is like a heat seeking missile for these mystery mysteries like this.

Everything happens underwater.

Here.

Mostly there's a few things that have ended up in courts, which I'm sure we'll talk a little bit about. Uh, there's rivalries, Uh, there's treasure. But here's the name that you'll never heard of before, Anthony Clake, and he's a forty three year old hedge fund executive in London. How did he get into the space and how much does he like, uh to get in the water kit?

Yeah, hi guys, Hi, Anthony Clake. There's actually a bit of a history in the city of London of adventurous business people, bankers, hedge fund types going after sunken treasure in the pursuit of profits. But around the turn of the century, an ingenious asset manager came up with an idea of not only having fun looking for treasure at the bottom of the sea, pulling out Spanish coins and want to RaSE they could find, but they could also get a nice tax break as well with the British government.

Is it clear how much money has been made at the bottom of the ocean, but these.

I meaning nothing about nothing about any of this is clear. You know. One of the things the if you're a wreck hunter, everyone wants to know what you're up to, because basically, once you find some valuable stuff on the seafloor, it's kind of yours to do what you want with really, so if you find it, it's top secret, you know what, anyone to know where it is. You want to be able to come back later and collect it. So they go to great lengths to kind of disguise what they're doing.

Okay, but it's not like he's jumping off a ship and diving into the water to find these things. The way he's doing it is extremely technical. It's high tech. It involves some very expensive gear. Kit tell us how he does it, Well, I'd.

Kind of assumed he was a yacht guy who he's one of these people. He's always out on his yacht or a sailing boat. That's not him at all as far as I can I can tell, and speaking to people who work with him, he doesn't even really like the sea, doesn't go out on the boats. He sees this as kind of a tech game, a data game. He sees getting to the bottom of the ocean as a technical and data challenge that he can solve better

But not every.

Exploration kit turns out to either find something or you know, create a lot of money for him or returns if you will, or even if he finds something right, it doesn't necessarily means he owns it.

Yeah, it's contentious stuff this.

You know, governments don't really like it when rich guys with expensive boats come pushing around in the you know, outside their terwial waters looking for old shipwrecks. You know, in anoised people, you tend to get attracted, You tend to attract the attention of the local coastguard to come out and ask what you're doing. So Claque's guys have

To keep it.

Okay, well you got my attention there with gold at the bottom of the ocean. What's an example or or multiple examples that you uncovered in your reporting about what kind of stuff Click is looking for down there?

Well, he runs the gamut.

Really, you know, of course, there are three millionship wrecks in the ocean going back thousands of years, so there's all sorts of good stuff down there. He's found ming vases down there, He's found like Spanish to balloons, jewelry.

And more straightforward.

You know, cargo of cut silver coins from the Bombay Mint that sank in the Second World War and just you know, was just left untouched for years. You know, you can pull those to the surface and smelt them down and sell them, and you've got let's say, twenty million dollars worth of silver. So there's a whole range of different things.

Okay, So.

No one's known this guy, but you managed to find him and get him to talk to you. What did you learn and how did you get him to talk to you?

Actually, how did I get him to talk to me? You know, he's spent a long time avoiding scrutiny. He works really hard to keep his name out of the public domain.

You know.

The kind of invisibility that he has is an act of will. He has chosen to remain in the shadows.

You know.

We came to him and just basically said, look, we're writing about shipwrecks and your business. Would you like to explain sort of the complexities to us? And so we had an interesting brief conversation where he talks me to through what he's been doing over the last few years. But one thing he wasn't really able to answer. One thing I still don't really know, is you know, why go to all this trouble. He works at a sixty two billion dollar hedge funds. He doesn't need extra money

You've been there in the Ocean Infinity control room. Is that correct?

It was one of my colleagues, Olivia got a tour. Yes, it's an amazing high tech facility. It looks like a sort of an e gaming areader. There's his giant shairs and sort of Xbox style controllers, and it's from that room they can they can remotely control under what's a vehicle's robotic submarines. They're even building a fleet of new ships now that can be completely unmanned, that can just be at sea controlled from their HQ.

Hey, Kit, he told you that he thinks the world has reached peak shipwreck and come out the other side based on your reporting. Do you think that's true? Do you believe him?

I mean, look, people have been doing this for hundreds of years and the tech is just getting better and better and better.

Do I think that.

If one of his robot submarines uncovered a very interesting looking shipwreck that he thought might yield some interesting material, do.

I think he'd go for it? Yes?

Absolutely, I do. It's irresistible once you get the once you get interested in this stuff, once you get hooked, it's treasure fever. You have to go back.

Okay, Kit, So any sense of what might be on his wish list for the next treasure hunt.

That I don't. You can play an interesting game with Ocean Affinity, which is his company. Those vessels used the AIS satellite location system, so you can actually see where they are in the world, and we played this game with a couple of ships that are charted by Ocean Affinity or owned by Ocean Affinity, and sure enough they were running ladder search formations in places where there are lots of shipwrecks. You now, we don't know what they

Their client copy and chelte very seriously.

So they could have been there just looking for undersea cables or you know, looking for oil and gas or something as simple as that. But you know who knows.

It's an unbloo pirates, really cool, unbelievable story. Bloomberg News senior writer Kitchillell joining us on Zoom from London. Kit thank you so much for being here with us. Angel Webber, of course, the editor of Bloomberg Business Week, joining us in studio.

You're listening to the Bloomberg Business Week Podcast. Catch us live weekday afternoons from three six Eastern Listen.

On Bloomberg dot com, the iHeartRadio app, and the.

Bloomberg Business app, or watch us live on YouTube.

We want to talk AI. We want to talk innovation, kind of talk the next big thing.

Yeah, we got a great guest to do that. Andrew McAfee as Principal Research scientist at MITS. He's out there of a new book, The Geek Way, The radical mindset that drives Extraordinary results. He's also the visiting a visiting Fella or the visiting fellow, the only one in tech and society at Google, where he's working with Google on research related to the societal impacts of generitive AI. The book is called The Geek Way. What is the geek Way?

The Geekway is an upgrade to the company.

It's a better set of philosophies and practices for running this thing we call a company. And I decided to write the book because I kept on seeing in industry after industry the disruptors were beating the incumbents at their own game. And I thought that was a really important phenomenon and I wanted to understand it. And it turned into this book.

Hey, listen, the word geek Like you're such a geek. Oh, i'ms being so geeky, you know, like we kind of toss it around.

But what exactly do you mean? I know, you've got four norms to.

Talk about the geek Way. I mean, is that how you define it no.

And this is a really important question because when I was a kid, geek was an insult, and it was usually when somebody who was way too into computers. So I was guilty of that. And the thing that makes me happy is that the definition has broadened out and I don't think it's an insult anymore. A geek is somebody with two characteristics. They get obsessed with a really hard problem. They're tenacious, they can't let it go. And if their solutions are unconventional or outside the mainstream, they

So elon musk A geek, geek, big geek, not perfect, not by any stretch, but a here's deeply to a couple of these norms that I talk about in the geek way.

Well let's get to those norms. There's four of them, speed, ownership, science, and openness. Speed you're talking about not doing necessarily something fast. But you do something, create it in a meaningful way, and then you get useful feedback on it. I feel like it's every time I get like, hey, an iOS update or something i I'm helping with that speeds.

That's exactly right.

And of all the norms, Elon and his companies epitomize speed the most. For me, Tesla is willing to blow up rockets. Now, no people are on those rockets, and they don't have any loss of life yet, but they will iterate and get feedback and learn from reality and learn from physics and blow things up. And their results

What about Tim Cook? Is Tim Cook a geek?

Tim Cook is a geek.

Apple is a very secretive company, and in some ways that are a little hard to penetrate. But one thing that I learned about Apple, in addition to being very fond of this iterative approach, they also followed the norm, the great geek norm of science and what I mean by that is not do a bunch of fancy statistical ab tests or anything, but settle your arguments based on evidence.

I love that one. You write about a lot in the book, which is really interesting.

The other thing I like is openness, which you know, you've got to be able to share.

Be open to.

Well, wait a minute, maybe we should do something a little bit differently, or and maybe we have to change. It's so easy to be defensive with, you know, with anything you do.

Talk us a little bit more about this.

Yeah, and maybe I'm wrong, and maybe we need to pivot and maybe this thing that I've invested a ton in and this thing that I'm hanging my reputation on is not the right answering we need to change. So for me, openness is just about exactly the opposite of defensiveness, of clinging to what you have and never letting it go. And that defensiveness is very clearly tied to an attitude inside a company of winning all the time, of just winning,

One of those maybe that I don't know if we can consider it a failure at this point, but one of those that wasn't a failure was AWS and the guy who was charged and tasks with building that out is none other than Andy Jassey, who's now the CEO of Amazon. Okay, so Andrew, tell us about some folks who maybe aren't geeks that you've come across in your research, who are high profile and we've heard of.

I mean, you can look at the unbelievable lyee short lifespan of Quibi, which was this short video streaming quickly launched with fair.

We all watched it from our homes during the pandemic, but go ahead.

No, we didn't. That's why. That's why it is.

We didn't watch it.

Tube and Hit took, but not Quibi very much.

But think about that. Jeffrey Katzenberg, who's the founder of it, is an actual Hollywood vision area, a huge string of tape measure home runs in that industry. He drafted a recruited Meg Whitman to be the CEO of Quibi. They raised coming on two billion dollars to execute Katzenberg's vision of short form entertainment. Now, they didn't do geeky things. They didn't listen to a lot of evidence, they weren't very open to changes in direction. They didn't build a

Fascinating.

Is there some thought in terms of AI, we're all like, agog it feels like over artificial intelligence.

Yeah, my John Tucker's looking at me. Yeah, a guy, thank you. But how do you think about it? Especially?

Is there a geek to follow when it comes to AI that you think is going to be on it.

Well, I think first of all that this period that we're living through of unreal science fiction progress with AI and in particular this latest chapter of Generative AI. These are some of the most powerful tools we humans have ever invented to help us accomplish our goals. We're living through an astonishing period of innovation. Now what kinds of companies are going to be successful at harnessing that technology. I think they're geek companies. This technology is so new,

I'm so dyna ask you about metaverse, but we've run out of time. You're going to have to come back. This was fascinating.

Andrew McAfee, Principal Research signs at MIT. His book is called The Geekway, The radical mindset that drives extraordinary, extraordinary results, extraordinary work, extraordinary too, really fascinating right in terms of how you look at things.

You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern Listen.

On Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business or watch us live on YouTube.

We've got a great interview before we head into the weekend.

Yeah, I'm really excited about this one. I think when people think of the work that the CIA did, you know, in the second half of the twentieth century, they probably think of the movies that they've seen, you know, spycraft carried out during the Cold War. A lot of the main characters, perhaps all of them, were men. I mean, think about the network of the men at the top good point of the CIA, Alan Dolas, White, Vandenberg.

Then at the top not women.

Well, let's get to our next guest. Actually, because she discovered that there was another network at the CIA, one built by women.

Here's what she wrote.

Quote.

These women, like the men, were manipulators and operatives by instinct and training. During the Cold War and into the modern era, women worked alone and together, laboring in secret, running operations against the adversary as well as striking. Often the organization they worked for love.

This please to have with us, Liza Monday. She's the author of the new book The Sisterhood, the Secret History of Women at the CIA, as well four other books, including the New York Times bestseller Code Girls.

She joins us on Zoom from Washington, DC. Eliza, so great to have you here with us.

You know, women have been a part of the CIA since its inception in nineteen forty seven, just after World War Two. They've been around. It's funny, though, that we really haven't heard that much about it. Tell us how you got kind of turned onto this story.

Yes, and thank you so much for having me.

Women have been around in American intelligence and espionage, even since before nineteen forty seven, when.

The CIA was created.

My book, just as you said, my last book, Code Girls, about women who came to Washington during the war to work as codebreakers. There were more than ten thousand of those women. That's really what turned me on to this next book, because there was a parallel cohort of women who came to Washington and then faned all over the world during World War Two, the most famous of them

After the war that that would morph into the CIA.

So there were women building our intelligence capabilities during World War Two, which was very very important, women working in Europe, women working in China, women working back in Washington, d c. And then and then when the CIA was created, the architects of the institution knew that they needed women to.

In some cases to run the vaults. They were called the vault women.

People forget that when you're out, when spies are out collecting intelligence, all the intelligence has to get passed back to headquarters and it has to be kept track of. And now, of course the CIA has a remarkable database of intelligence information going back for decades. So that was that that was sort of where they thought they could

What were the ways that women came into spying, like how did they get recruited or how did they join the CIA and then sort of rise through the ranks.

Yes, that's a great question. So during the Cold War era, women, even college graduates, were often hired as clerks as GS four. So one of the one of the principal women in my book, Heidi August, was hired out of college as a clerk. She was handed the same pamphlet she had been given as a kid when she wrote the CIA at age eleven, So even at this point she was

You know, she was in Cambodia, she was in Libya.

She watched the uprising, the coup by more Marcadafi in Libya. She was the first American officer to see that. But it took her ten years to battle her way into the spy ranks at the CIA, to convince the old boys to let her flip from being a clerk and essentially doing the work for her bosses to being an

Yeah.

What surprised you so much in doing this book in terms of as you found out and kind of unfolded all of these different stories.

It surprised me how many stories there were. It surprised me how essential women had been to American spycraft during the Cold War, when obviously the contest was with the Soviet Union and nuclear war was at stake, and the resourceful mass of women working, you know, often in very lonely, lonely places where you have a lot of you know, sort of decision sole decision making power over your operations and the way you're going.

To proceed the ingenious way.

I will say also that one thing that surprised me was the was the importance that wives played during the Cold War. There's a chapter in the book called Housewife Cover.

And many of the.

Male spies who were sent overceives to places like Moscow, which were very difficult places to operate because CIA officers are suspected. CIA officers were being surveiled all the time by their KGB counterparts, and so a lot of the work of spycraft was simply shaking the surveillance, and wives were absolutely critical. Wives could pick up what's called a dead drop, a message that's left in some you know,

And then she would sweep up the dead drop to help out her husband. So I assist for her husband, right, yeah, yeah, full partner. Really it was.

And again you're incosbituous. They think you're just a housewived. I think you're an important well you're not being in.

General, though, do spies know Do spies spouses know what their spouses are doing?

In general?

I know these women did, but yes, sure, yeah, a spouse would know that you're that your spouse is a CIA officer. You wouldn't know that, you wouldn't, necessarily in in sort of safer postings, the spouse wouldn't know where where their CIA officer husband or now wife, husband.

Or wife was was going, you know, for days at a time sometimes.

So that was one thing that surprised me and and the the book also talks about some very famous female led teams. The team of counterintelligence officers who pinpointed al Rich Aims Rick Ames as the mole who was giving

Are there common traits that make a certain a woman good for intelligence work? Is there something you know about women in particular? Is it just that they're unassuming, that you know, kind of out in the world that people just don't think that they're going to be doing intelligence work. Is that what just makes them generally good? Or is there a trait that women are very specialized? I guess that that makes it even better.

Yeah.

So, so inconspicuousness is helpful when you're moving around the streets, but also arguably uh women's caretaking experience. People forget that that when a CIA officer recruits an asset, someone who will pass the secrets, this person is going to be doing it regularly over a long period of time, and they might have, you know, difficulties psychologically or in their personal life, and so they have to be what's called handled.

And the women that I.

Interviewed felt that they had certain feminine skills of empathy and instinct, the ability to tell if someone was in a good mental state or not. And so I think it is arguable that those kind of female traits, along with the ability to, as I said, to spot potential assets that that that your male colleagues might not have it might not have noticed. So I think both of those traits can be very helpful. And also learning how to play certain roles. Some of you know case officers

The verb that they use is elicit. That's your goal is to elicit information.

And so the women would definitely invite man's plaining as a way of eliciting information about all sorts of you know, rock weaponry, like the oldest.

Trick in the l No.

No, it's like the Barbie movie right where the Barbie movies like, how do you like, you know, kind of get the men off course, it's like, could you.

Explain how the remote works? Like exactly, and it really does work? Does work?

Hey, Liza, tell me about the reporting process here. You've spent years as a reporter. You've written four other books in addition to this one. Talked to about the reporting process, who you spoke to, who you weren't able to speak to, and how you got the information.

Well. I interviewed a lot of women's spies from different generations, women who started as clerks or were recruited in the nineteen sixties, even in the nineteen fifties. So because one of the things I wanted to show was how the women over a course of generations did build a network, did build a sisterhood. The CIA is a very clubby place. It always has been. It runs on networks. It's an institution where there's a lot of you have to watch

It was a predominant least.

It was a strikingly female team of targeters who pinpointed the location of Osama bin Laden that led to the successful raid on the compound. And I did interview women who participated in that hunt who are still at the CIA active office.

That's a perfect segue of what I wanted to ask was how you navigated around stuff that's still classified versus stuff that's not classified. I mean, you spoke to people who are still at the CIA, so they couldn't tell you everything.

They couldn't tell me everything.

But I had an extensive interview in the presence of a public affairs office and officer, and they knew what they could tell me and what they couldn't. And you know, and that's twenty that's getting to be not old news because I don't think the CIA considers anything old news. And certainly some of the officers are involved today, you know, in the counter terrorism effort. But they could they could

Hey, Liza, just have about a minute left. How dangerous were some of these women, you know, the situations that they were, they found themselves in.

Very dangerous and they were working in you know, the counter terrorism effort is a very dangerous one.

These are jobs in lonely outposts.

One of the young women case officers I interviewed who worked in Africa, she was one of her assignments was to help bring home the Nigerian school schoolgirls who were captured by the terrorist group Boko Haram. So it was the humanitarian mission. And when she was stationed at a lonely outpost, you know, she had a glock and she was given fifty rounds of ammunition and they told her, you know, forty nine or for the enemy, and then the last one would be for you.

And so it was.

It was she it was extraordinarily difficult work and lowly and she describes it as being the most important work that she's ever done in her career.

What an amazing book, What an amazing you know, just the stuff that goes on that we're just not aware of, just really really fat fascinating.

Eliza Quickly next book what's it going to be?

Where do you go?

I've got some I've got some envelops at home that are the results of some Freedom of Information Act requests that I placed two years ago before the pandemic.

So I just want to open them and see what's in them. Love it, Love it.

As we said, come back when it's out in paperback. We'd love to continue this conversation with you. Eliza Mundy, her new book, The Sisterhood, The Secret History of Women at the CIA, joining us on Zoom from Washington, d C.

The whole Contrull Control Room, which was just like on that last response that the last answer.

Was like what yeah, really cool stuff.

All right, this is Bloomberg Radio.

You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern on Bloomberg Radio, the Bloomberg Business App, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa play Bloomberg eleven thirty.

Our next guest is actually working to change that and make financial services more accessible to recent immigrants, in addition to minority owned businesses and individuals. Kate Howe spent more than a dozen years on Wall Street before she left us start Happy Mango, a company that's doings that. Kate, who's also CEO of Happy Mango, joins us here in the Bloomberg Interactive Brokers studio.

Kate, how are you very good?

Thank you for having me.

I want to get to your journey to start Happy Mango in a few minutes, but first I want to just get an update from you on what you're seeing out there, if you're actually starting to see improvement here, and tell us a little bit about what Happy Mango does.

Sure, so, Happy Mango is a technology company. We provide technology to financial institutions that include banks and not for profit financial organizations, and many of them are considered CDFIs, which stands for Community development financial Institutions.

So is it a B to B or are consumers actually interacting with Happy Mango?

Yes to both questions. Okay, So it's a B to B to see kind of technology platform where we serve and provide technology to the financial institutions which use Happy Mangal's online platform to make affordable credit accessible to individuals who struggle to get access to credit.

So to Tim's question, what are you seeing that among those consumers are they strapped are in terms of their financial situation? Just helps us give an idea maybe with this sector is seeing in terms of the economic outlook and market outlook.

So actually, well, I you know the market out look, there's a lot of bad news out there right now, but what we're seeing on our platform is actually kind of encouraging. So when we first started Happy Mangal in around two thousand sixteen, our target consumer borrowers were the low to moderate income markets, people who have no credit or have very low credit, who are struggling to get

So financial identity of sorts right.

Yes, exactly, how do you?

How do you help them though?

Help me understand make the jump for me in terms of what your platform does that makes a bank or a credit union feel comfortable to lend to people who don't really have a financials If you will.

That's a great question. So when we first started, our first client was a bank that was based in the Bronx Spring Bank. You might have heard of them. It's a very small community bank. But what they're trying, what they saw in their community is that a lot of their depositors, a lot of their customers are struggling to get access to credit. They have to go to payday lenders or rent to own right they pay three hundred

To say, OK, crks, Oh wait, can I say that?

Come on?

The rates are crazy, but anyway, please continue.

So in lead or technical terms out maybe correct in both. But so our client Spring Bank, saw there is a need. They want to change that. They want to get their customers out of these dead traps, and they want to start a loan program for their customers, a small dollar

This is something we talked about like home ownership. A lot of individuals don't have homes, but they rent and they consistently pay their rent. Better metric for folks who are on bank or underbanked.

That's true, that's true.

There are so many There should be so many ways to measure someone's credit worthiness, right, but conventional way is just a credit score. So that didn't really have help Spring Bank.

That's how it first started.

We helped h them to develop a way to measure someone's ability to pay, not just looking at their credit score.

How does your business work? How do you make make money?

So we our clients are the banks and credit unions or so our clients would pay us for a subscription fee, and then then the user is completely free for their customers to use Happy Mangle.

When when somebody is on the platform or once a bank using your particular platform and or credit union and then give someone a loan or what have you, what's the I guess default rate or I'm trying to figure what's the metric? Is there a metric that you guys can say, we do we measure default rate default rate? What will be your guest fault rate for someone who doesn't have a.

Credit score.

Less than less than for somebody who uses these traditional banking services quote unquote, and.

What would that them or be goshi.

It's less than five percent. It's like these individuals who don't have credit scores, they work really hard to build up their credit.

Is it less than their bank counterparts or perhaps people who do have a credit history.

Yeah, I think if we use credit card default grade as a proxy, the credit card you fault grade right now is higher than five percent. So it's really about the customers you work with and the relationship you're building in this process. And if I were lender, Happy Manga is not a lender. We provide technology for lenders, but if I were a lender, I would lend to the kind of customers we lend.

How all day long? All right, we get twenty five seconds. Why is it Happy Mango?

Oh?

Real quickly?

Okay, so Happy Mango it's really the nickname of me and my husband.

And guess who is happy and who's mango?

Lootes?

Sound good?

I love it?

Yeah, that's good. We need to be a good story there.

We had to ask Kate really interesting, come back and let us know how things are going well?

Do thank you Kate?

How she's found her and chief executive officer of Happy Mango, which we now know the origin of her company. Here in studio, you're listening and watching Bloomberg BusinessWeek, and this is Bloomberg.

This is the Bloomberg Business Week podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from three to six Eastern on.

Bloomberg dot com, the iHeartRadio app, tune In, and the Bloomberg Business App.

You can also watch us live every weekday on YouTube and always on the Bloomberg journyalone