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. It was a very busy autumn week for markets that saw the latest federal reserve rate decision, with the FOMC holding firm for a second straight policy meeting as expected. We also got the October government jobs report and quarterly earnings from Apple.
And speaking of earnings, the increasingly high tech agricultural equipment maker Agco gave its quarterly update. Coming up this hour, the CEO explains how the interest rate environment affects his capital intensive business. Then the head of the family owned car rental company Enterprise Mobility as it's called now, stops by with some key insights into the health of the consumer. There is a ton, Carol, that you can learn when you analyze the rental car.
I feel like both of those conversations gave us a nice little peek into the economy. And then a bit later on the North American CEO of alcoholic beverage Giant Perno recard details, key trends, peanut butter, whiskey anyone, Maybe not, maybe not, I've heard about this, although there was a topic that definitely plays to you. We also talked about consolidation driving the global market for premium wines and spirits, a sector valued in the area of a quarter trillion dollars.
All of that to come. We begin with a story in the finance section of the latest issue of Bloomberg BusinessWeek and what we love to talk about the Fed's impact on the treasury yield curve. It turns out there's another group of investors that seem to be playing a role.
Interesting story with more and how hedge funds are driving volatility in the creator in US bond market. Bloomberg Market Senior editor Mike Reagan and I turned to our colleagues Daniza Sikova and Liz McCormick. Guys, so great to have you here with us. Denis, let's start with you. I'm curious about the conversation in the newsroom. Joel has a tendency they'll kind of walk around the newsroom and like kind of poke all about stories. How did this story
come about? What was the conversation or did you know one of you say, like, you should see what hedge fund guys are up to, So tell us how this came to be.
Yeah, so it came back to that theme. We've talked a lot about price sensitive and price incensitive buyers, so we wanted to look into who are really those new buyers, and hedge fund's a big part of it. And obviously, like if you think of just generally trading treasuries and think of it as the safest market and kind of a little bit slower moving market compared to I don't know, compared to equities, currencies, I don't know. So the conversation came,
how has the day of those people changed? And this is what we asked them, so won't tail alpha the year's day is very different. You know.
The first andingcdote is he wakes.
Up every two two hours to check the prices, and you know it's being there on your Bloomberg terminal or whatever. You check your prices all the time, and following every little move and then every small data release is very important and potentially it can make you move things. And obviously, like some of those traits are voice trades.
Sometimes you have.
To be in the office and look at all those releases together decide where you have to make moves.
And you can imagine this is.
Very different than I don't know, five years ago, when the FED was such a big important buyer and prices maybe weren't as sensitive to those things.
Yeah, this is why I'm not a tail risk hedge.
From that that.
Well, I want to bring listen to this conversation, Liz, because we talk about the extreme volatility that we see in the US bond market this year. So are they playing our hedge fund guys and gals, if you will, playing a significant role in that volatility?
Well?
Yeah, right? Is it circular?
Right? And they like the volatility, they come in, they create more volatility, right, So it kind of feeds on itself and then more becomes and I have to do a shout out. I know Tracy Allowood at some point did a story Treasury is Trading.
Like a memest, so we have to book that one up. But that it becomes like, you know.
What was it?
Oh, I think Mike Reagan must have edited one of these stories we did where there was other things that were like the hot things that was crypto and now look at this treasuries even today, look at the yields across the curve, it's like down, you know, over fifteen bases points.
It's crazy.
So I think hedge fund's coming in because there's more volatility and trading than that adds to it. But they do kind of on the flip side say hey, we're adding to the liquidity, we're you know, making markets. And Deniza knows. Today we had the refunding today and they had their barring committee, which the Treasury always does look into different things. One of them was like the demand base, and they brought up things that were in our story, not that it was from our story, but that the
buying base has changed. You know, you have less commercial banks, foreign central banks, you have more households and hedge funds you know, involved in the treasury market. So it's kind of interesting that they brought that up today.
Mike did call it a memestock by the way, early.
Yeah, I really wanted to take credit for that, but of course was Tracy's way ahead me as usual. But Liz, you know, one of the sort of standard bread and butter hedge fund trades when it comes to the treasury market is something known as the basis trade, which basically looks to profit between discrepancies in the price of bond futures and the actual bonds trading in the cash market.
That seems to be kicking into high gear this year, and there's a bit of a backlash to that from the government and some scrutiny about what hedge funds are doing. I know it's created its own backlash to the backlash, Ken Griffin coming out and saying, why do they care about this? This is sort of an innocuous trade that actually helps save taxpayers money in the bond market. Walk us through the basis trade and why there is scrutiny of it right now.
Yeah, in fact, you're front running another story. I have get it out before you do. But yeah, it's been interesting. Like you said, we've had the FED the BIS, A lot of regulators say, hey, we'll worry the side of the size of this basis trade is gotten as jig as it was like in March twenty twenty.
And we know what happened then.
But yeah, normally this is kind of like you say, picking pennies up under steamroller. You're shorting the futures, you're buying the cash. If you take it to you know, to expiration of the futures, they should converge and where they see some discrepancies, some price discrepancies, that's why you'll do that trade. Where the risk comes in is that most of that is done using leverage, meaning using the
repo market to finance the treasury side. So you have the risk that's what happened in like twenty nineteen, that repo rates go crazy for whatever reason and you just can't keep funding this trade. On the flip side when volatility picks up, as you know in futures, you tend to get margin calls. It's just part of the metrics. And so if you started getting margin calls on the short side, so you know, things can just go awry on both sides and all of a sudden, you know
you just can't keep in this trade. Then there's a mass exit. That's the way that there's a problem when everyone's running on the same way and no one can get out. And remember Mike, in twenty twenty, we had people saying, Hey, I had a good trade, I.
Couldn't even get out of that. There's just no liquidity, right, well, that's.
What I wanted to ask. Don't we want it to be a little bit of a sleepy market that you know, foreign central banks and the FED and others you know, use and can count on to be kind of trade a certain way. I mean, don't we to some extent the need to care about the composition of buyers or are we just glad that there are buyers in this market?
We do care about the composition for sure, and obviously, like just to give perspective, so those big traditional buyers, including the FED, commercial banks, foreign buyers used to count for seventy five percent of the ownership of the treasury market. That number now is fifty five percent. So this is
a very big drop. And speaking to different experts who've been following this for a year, a lot of people saying that in a case where there's a little like a slightly bigger shock, probably there will be very sharp moves and the market is more fraud to those moves that and it was in the past. Because obviously hedge funds are a big part, they're very price sensitive, but mutual funds are also growing fast. Pension funds are growing fast.
They're not necessarily moving as fast as hedge funds obviously, but are sensitive.
To macro events.
So all those different participants are a lot more likely to react on who knows the next banking news or oil prices or any of those little things.
But hedge funds have always been a part of this market, right it is now there a bigger part we know, percentage wise.
Yeah, they have tripled in the past year. So currently they own two point three trillion, which is close to ten percent of the treasury market.
Which makes me wonder if you get sleepy again, Mike, do they just run in the other direction right to make money?
Yeah, and it makes me you know, the dirty word in macroland is are you a tourist in this market?
Yeah?
Now, are you really a macro fund.
Who's used to this trade and knows what to do? Or are you taking rescue yourquity manager? You know, I've seen a few headlines out this week Bill Ackman with shortening treasuries.
He's changed his mind, He's.
Now covering that short Stan Druck and Miller are a very wealth known hedge fund manager used to work with George Soroz without saying he's very bullish treasuries. So is that at least the tourist sort of mentality. Does it seem like the consensus is we've seen the peak and yields, it's now time to back up the truck and start going along the treasury market?
Do you think?
I think the peak is for sure, very important, but it's also very important that for a very long time it was the.
Direction of trouble was very sure.
And obviously like the FED is likely to continue rowing off its balance sheet, so them being a smaller portion of it guarantees more volatility, whether those trades are whether short bonds will still be a successful trade. Obviously this is going back to the debate where we've seen the peak, but the fact that they're more say relative value trades or or you know, basis traits or things where you can exploit that volatility, uh, stace, no matter whether we've reached dot peaks.
I wondered too, Liz, come on back in. I mean, what you make for someoney who's also followed this, you know, for a long time in terms of the bond market and treasury trade. To see a greater role of hedge funds, I do wonder. Listen, they love volatility, right, They want things to move that's how you make money and quickly for investors. But I do wonder does that potentially, you know,
or could it spell trouble. We always talk about right these changing rate environments, and you know, as the tide goes out, like we get to see all the problems and we you know, could it create some kind of crisis many or otherwise in the future.
Well, I have to say, and I wouldn't be doing a good service. And maybe Treasury Department will still talk to me if I do mention that. John Josh Frost to the Treasury Department Assistant Secretary for Financial Markets publicly in a press conference. Listen, we still have a very diverse buyer base. We're not relying on any one type of investor or group of investors. So they're saying, hey, we're doing fine. But to your point, Carol, I think that is why regulators worry, like they're.
Zoning in on leverage of things.
But you don't want a massive positioning and with one group of investors, who if they go the other way, you just create this groundswell of movement and they take everyone else out in the process. So I think that's the risk when any trade gets too big especially when it's leveraged.
That's a problem. But like I said, Treasury saying.
We're okay, we're looking at all this, but we still have enough folks that want to buy our stuff that we're not concerned. But like, who knows, We're going to see what happens for now.
How Yeah, yeah, Well, let's I wonder you know that that expression crowded trade comes to mind with a story like this. I mean, is there enough diversity in sort of the trades going on or is there a risk of crowding in certain trades, especially know where you look at how the yield curve has really steepened pretty aggressively
in the last couple of months. You know, is that potentially a crowded trade or you know, are there any pockets of crowded trades we should think about in this market right now?
Well, I would say I think the biggest one is the basis, even though some people argue there's reasons it's not as big. But I keep saying, like Denisa says, it's this debate have yields peaked and that I think people keep getting burned.
You know, I mean, we've.
Seen a massive fall today, but that yields have peaked, let me just load up, bring up the truck and buy them.
And then yields go up again. And so I think that's.
Where the risk is that people are trying to just can't seem to time this market right, you know. So that's creating the extra volatility, not just from the hedge funds but just regular macro funds, et cetera, thinking it's time now. Maybe they're okay in the long run because this will come back. But I think that's the risk that people just can't seem to get a clarity for sure where rates are going.
Yeah, right, exactly. The crystal ball is really muddy right now, Deniza. Just to bring it back to how you guys kick off this story and the founder of long Tail Alpha and talking to him, does it feel like it's a trade he plans to be in for a long time or is it something he's like, yeah, this is maybe a one or two year thing, or I don't know.
Yeah, I think this is not including the story, but he actually said that probably the best time for this trade is yet to come. As as cliche as that is, but this is something we've also heard.
We talked to people.
Of course, I mean, what else could he say. But we also talk to people like who are selling trading algorithms and who are very you know, have a very good perception where the basis trade is growing, and they're saying that in the past three months they've seen the most demand they've seen for these type of things, and obviously they have interested in saying that this will continue to be strong. But this is this is a thing
we're saying. So for sure, there are numerous players in this space that they're saying that as long as there is uncertainty of peak heels, his longest the fit is rowing off his bounce.
She heets haven't heard peak keelty.
As long as we see that volatility, there may be more appetite for those things.
Feels like we could see some more volatility, guys. Thank you so much. Bloomberg News process at reporter Daniza Zakova along with Bloomberg News. She correspondent for Global Macromarkets Liz McCormick. This story in the new upcoming issue Bloomberg Business Week, on newstands tomorrow, already on the Bloomberg and already online at Bloomberg dot com.
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.
Well shares an ad co. Check it out, everybody. They're up for a third day. They're at more than six percent in that time. Company reported earnings yesterday morning, of which third quarter just at EPs was a big beat. Third quarter net sales in line with expectations, and the maker of tractors and combines also said it still sees fiscal year net sales of about fourteen point seven billion, slightly above estimates, with fiscal year just ADPs of about
fifteen dollars seventy five cents a share. That's fifty cents above the company's earlier forecast. Three analysts nonetheless cutting their price targets on the company by an average of three and a half percent since it reported yesterday. So let's get to it. We have a great guest. We have the CEO, chairman, president and CEO at Aco. He's Eric and Eric Hensotia and excuse me, Eric Hensotia, He's on Zoom from Duluth Georgia, and he joins, us, forgive me,
forgive me. I'm trying to race to get to you, So I apologize.
Eric.
Oh good, no problem.
Really great to have you here with us. First of all, how are you? And I do have to ask you about the FED? In an environment where the FED says, you know, we could still continue raising rates, we're still worried about inflation. Does that kind of mesh with the outlook that you see?
Well, your first question was how am I doing great?
Just couldn't be happier with the progress that our company is having rel into our strategy.
We're going to have two billion more in sales this year.
We're going to grow margins significantly relative to the and it's all in line with our high tech focus on being the industry leader and smart farming machines relatively to the FED. You know, interest rates do weigh on farmers' minds. These are big as the carry a lot of technology. They're expensive machines, many times half a million to a million dollars, and so they often finance those machines, and higher interest rates are part of the part of the decision.
I'm expecting that we're you know, at a high plateau, and that we're more likely over the coming year to have rates go down then up, and that would be welcomed by our customers, you.
Know, Eric, I'm looking at the revenue growth of i CO over the years and really some impressive growth there. Twenty twenty one is up twenty two percent, twenty twenty two up fourteen percent, sixteen percent. This year it does, at least according to analyst estimates, look like you might be in for a dip in revenue last year, and I'm wondering what's the what's driving that? Is that entirely an Interra straight story or is there something else going on.
It's actually very little related to interest rates.
Agriculture often is not connected, not correlated highly with the regular GDP growth. It's more tied to the aggricultural agricultural economy.
So the price of corn.
Wheat, soybeans, and that's a function of how much green there is in the world. For the last two or three years, there's been green shortages and so grain prices have been high. That means more profit for our farmers. Now they've had a great year this year in terms of harvest, and so there's a little bit more stock prices have come down a bit, and that's really more what drives farmer profitability and in turn their interest to purchase equipment.
Hey, Eric, what I wonder is longer term how you guys think about the business, how you plan, because I wonder if things like weather, climate change, demographics globally, is that more significant in terms of how you think about the growth longer term? And if so, what does that maybe indicate to you.
Yeah, that's a great point, Carol.
So we see three macro tailwinds plus this weather factor. So let me touch those real quickly. Number One, we're moving from eight billion people to ten billion people between now and twenty fifty. Number two, emerging economies are adding more meat to their diet as they do that. That's a multiplier on the demand for green chicken is a two to one multiplier, beef is a ten to one multiplier. And then third is renewable fuels, so ethanol in the
United United States. But now the next one is renewable diesel. Ethanol consumes forty percent of the corn crop today. Renewable diesel is likely going to grow to that same kind of proportion over the next few years. Those are all macro tailwinds that cause the farmer to have higher yields, more pressure on higher yields, and then weather is another one. We're having more severe droughts and more severe floods every year that reduces.
The overall global global ability to produce cream.
So you add those four factors together and the farmers are pushed to have higher yields while using less inputs, less fertilizeder, pesticide, chemicals and things like that, and so
there's a big squeeze for productivity. Using our technology, we're using artificial intelligence on our sprayers now to be able to use vision systems to identify the difference between a weed and a plant as a machine's going through the field and spray only the weed, saving like seventy percent of the chemical and a lot of automation of features throughout all of our products.
Eric, you say, I'm assuming you've been using AI for a long time though, right.
Yes, we have. Across many of our machines.
We use AI to understand the variation in soil or crop and have the machine learn over time to be able to optimize itself real time in the field.
It's amazing because when you think of AI, the last thing I think most people think of is farm labor.
Do you think of machines though, I think a machine.
Well, Eric made a great point and I wanted to ask them about this. Is right at the beginning, you said that technology aspect of your business is so important, and again, if you're not really familiar with aco, you might not.
Think about that.
But one thing I wanted to ask about, Eric, and full disclosure, I'm not an expert on tractors. In fact, I hire a kid to cut my own grass, so I'm really.
I've driven a tractor, a big one.
There we go.
So I'm coming at this from a pure ignorance state of mind. But I would think that self driving technology would be easier to implement on the farm with a tractor. But from my understanding is it's not really I wonder if you could talk to us a little about where you are with that type of technology. You know, we we see it anytime soon, or is it just, for whatever reason, too complicated to have self driving tractors.
Oh, it's a great topic.
It's at the heart of our strategy is putting technology on machines to have the machine be smarter and be able to do more things for the customer. I talked about the sprayer. We're automating all our functions on all of our machines. We've increased our engineering spend by sixty percent over the last three or four years since we started a strategy.
We've bought six tech companies.
We just announced the biggest ag tech deal in history with Trimble agg where is over a two billion dollar deal to bring those to their technology and our technology together. So technology is a big deal. Now let's talk about the autonomy question. Already, guidance, which Trimble is one of the world leaders in, is used by farmers once they get into the field. They get into the field and they already turn on auto steer, which is a satellite driven guidance. Tip the steering wheel out of the way
and the machine steers for itself. Now it's still supervised today, but most large AGG has is the machine is doing the steering for itself. We've committed when we were in Wall Street last week last year, we committed that by the end of the decade, so twenty thirty, we would have the full crop cycle, meaning planting spring, tractors harvesting all a ton with no driver in them and by twenty twenty five, we'd have a retrofit kit that would be able to be put on an existing machine to
make it autonomous. So it's a more contained environment. There's not so much other traffic and other things in the way, and you can stop. You don't have a lot of other traffic around you, so you can. If it runs into a situation that hasn't seen before, the machine will just fail. Safe mode is stop, and then you can remotely view into it and restart it.
It's like a boat, right, there's lots of move there's a lot of space around you. Autopilots work really really well. Hey, in twenty twenty four, what do we expect for your company? Do you see higher prices due to inflation continuing?
Yeah, prices are going to moderate.
You know, these last couple of years we put a lot of pricing into the market, more than our a little bit more than our cost. We expect to still put more than our cost into the market because of all this technology we're bringing in the value it generates. But inflation is coming down pretty significantly for us, and so we think it'll be.
Much more normalized. You know, we haven't given guidance.
But it'll be more in the mid to lowest single digits than where.
We've been before.
Any any kind of peaked in terms of the ag machinery market, do you see any kind of peeking out?
Well, we've still got strong demand going into next year. Our order boards are out six or seven months on large. Egg were sold out for our seasonal products were all through bodyear twenty four, so we still see twenty four as a good year, although getting more normalized.
All right, love it, listen, come back soon, So appreciate it. Eric Hansodia. He is chairman, presidentco at AGCO on Zoom from du Luth. George is so appreciate your time.
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 shares of Hurts closing out a record low today, This after the company last week mister earnings estimates amid Tesla price cuts in the high price of repairs for those evs really eager to hear from our next guest about all things when it comes to the car rental industry here in the US and around the world. Chrissy Taylor as President and CEO of Enterprise Mobility. It's the company Carol that until recently was known as Enterprise Holdings.
That's right. They own National car Rental and Alamo. Chrissy, by the way, the third generation of the Taylor family to run Enterprise. Her grandfather Jack Taylor founded Enterprise back in nineteen fifty seven, and his son Andrew was CEO before Chrissy, so it really is a family run business. Enterprise, by the way, has a fleet of two point three million vehicles and ninety thousand employees around the world. And we are so delighted to have Chrissy here in our
Bloomberg studio. Welcome, Welcome, welcome, Thank you so much.
I'm great, Thank you so much for having us. And we're excited about this announcement. Once Enterprise Holdings and now Enterprise Mobility.
Why the change.
Yeah, we have been moving Enterprise really has been moving mobility forward for sixty five years, and we are excited because all of our business lines like Daily Rental are gigantic and our huge opportunity for for us. And so over sixty five years we have involved in terms of geography, customer segments, and products and services that we offer. And so when my grandfather founded Enterprise as a leasing company, we're now known as the world's largest rental car company.
We now have we have car.
Sales, a retail car sale operation, We've got car sharing, we've got vanpooling and commuting, We've got a truck rental business. We have global operations, we have hourly, we have luxury, we have a variety of technology solutions with partners, and so Enterprise mobility better fully represents who we are and what we do today.
I don't you drones they're going to be doing.
There aren't drones, but we are definitely leaning into the future about what's next.
So you're prot you're private company, so we don't get a good look every quarter. You know, under the hood, so to speak of the company. But if you think about the whole pie, what portion of that is daily rental versus everything else you just mentioned, Because I think it's fair to say a lot of consumers no Enterprise for its core business.
They do the world knows us as rental car and it is a majority of our business today. However, the original business that my grandfather founded, which is today Enterprise Fleet Management, has six hundred and seventy five thousand vehicles, where daily rental in North America has one point two million vehicles. So fleet is half the size of our
of our rental business. We've got ninety thousand vehicles in our Truk rental operation, and we continue to grow our footprint with retail car sales with over one hundred and fifty dealership locations. So when we look across the enterprise mobility portfolio, there is a ton of opportunity, not just in rental. We love rental, but we are way more
than a rental car company. And when we look at the future in growth, it really is in a lot of these other business lines where people have opportunities to develop careers.
And stay with us for the long haul.
It's great, Well, what is the most profitable part of your business?
So when we look across our entire business, all of our businesses contribute to the bottom line and revenue. And so we had a phenomenal fiscal year, a record breaking fiscal year, and so we measure that in terms of employee engagement has never been higher. Customer satisfaction around the globe has never been better, and those two things drive business results.
We look at our internet.
The economy also drives absolutely.
The traveler is back on. Yeah, no question, Sorry, I didn't mean to cut you off.
No no no no, no, go go go, But I'm just we Tim and I were talking and kind of getting ready, like we love companies like this because it does give you a great snapshot of the economy at a time when we feel like Chrissy. We get such mixed data points from day to day, week to week.
So the traveler is back on, and we see that at the airport and they want to travel. The business traveler is back only thirty percent when we talk about our daily rental business happens at the airport. Seventy percent of our business happens in our suburban market.
Who are the people who are renting in suburban markets.
Do have leisure customers.
So when somebody's going away for Thanksgiving, they might drive from Saint Louis to Chicago. But a majority of that business is long term contracted business. So Bloomberg, when you're traveling for business, you go rent a car. We have many of those business customers that rent in the home city. And then we also have a large part of our business.
If you unfortunately get an accident, you then your insurance company will refer you as the rental as we are the replacement vehicle, and so it's long term contracted business that we are helping the communities move.
Let's talk evs. How do evs fit into the future of mobility.
So we absolutely embrace the responsibility and the opportunity to transition our fleet, and we want to make sure we take a long term perspective on that and strategic look and put the customer at the center of everything that we do. There are three things when we talk about electrification. One customer experience. We want to make a positive difference in that experience for the customer because it is new technology and they don't understand most people don't understand charging.
The second thing we focus on is power in our communities and infrastructure. So where are you charging in all of our local communities, And then we want to make sure that that charging its equitable and accessible because we have ninety five hundred locations not just at airport, but in a variety of communities that people need access and
so for us, it's not about the numbers we're putting in. Yes, we've got electric vehicles in our fleet, but it is about making sure the customer has a great experience and we are a trusted, valued partner in that transition.
Are you slowing the other purchase of EV's and we're asking because it does feel like there's some momentum behind kind of a slow down.
And talked about it just last week consumers.
Yeah, we have thousands of vehicles in EV's in our fleet, both in Europe and in the US, and our buy is a continuous buy and so we will continue to add evs, but it will be at the pace of our consumer and also our fleet management business.
It's really important.
It's not just about adding vehicles into our rental fleet.
Our fleet management business. We help small to.
Medium sized businesses with their goals. Domino's Pizza is a great example. They are an awesome partner and they are electrifying their delivery fleet. We are the fleet management company behind that, and we are a trusted advisor and we love to play that backseat role to help Dominoes achieve their goal of delivery, which is great. So it's about buying evs, but it's also about being a partner and a trusted advisor.
Well, how many evs do you guys have the in the you know, traditional rental car fleet right now?
So we have thousands.
So we have probably about five thousand vehicles in traditional rental and we will put them in the We put most of them in our suburban market where people live and work.
And do you see that number growing? How do you see that number growing over the next.
Few years as our fleet grows and as the customer demand grows, we will continue to add those vehicles into our fleet.
It's just like a start serment twice about it, though, after what we saw from Hurtz where they're saying, okay, you know the value of teslas have gone down, so that's hurt us as a business, and then the repair costs are more expensive than we thought. Does that make you think differently?
So when the customer demand, we will continue to move at the pace of the customer we get.
So that's what we're Tipheria is our consumers demanding them less.
The demand for consumers and evs is very low right now. That is why it is important that that customer experience is on point. So we have thousands of them. We do transactions. People do ask for evs, right, but it's not to the point where someone is asking. The difference would be or the example would be a suburban rental over the holidays. We know everyone wants minivans and suburbans. They're loading up the cars, they're going on holiday. Some people want an EV. That's not to the point where
we're at. And so fleet plans are very, very important in our business. We look at it every single day. We want to make sure that we.
Have just like I look at the numbers, I look at the numbers.
We want to make sure that our fleet is diverse and represents consumer demand so that we can meet their expectations and provide a great experience. And we have a huge role to play that. So we need to be on point when we're renting an EV. It's not only just it's electrified.
These cars. Have you all driven an EV?
Yeah?
Their technology is this is a techno culture.
It's off the hook, very getting and driving it for the first time.
It's a rental, it is very complicated and the average age of the vehicle from the road is eleven is eleven years. They are fast, there's a lot of technology in it, and it's electric and so we need to be very mindful and thoughtful of what is the customer experience. So I know I'm a broken record, but it is really important that customer experience is high and we do the right thing by the customer.
Top of mind. When you look at the next six to twelve months, does recession ever come into your mind right now?
We are very optimistic. We do not see travels slowing down right now. And in all of our business lines with truck rental is a good indicator of the holidays because their last mile, they're delivering products and services that are coming for the holidays, and that business is doing very very well. And we see a strong holiday daily rental. We see a strong holiday and throughout the beginning of next year. So we are very optimistic about the next twelve months.
Cool come back.
This was really fun. We can talk so much more. No, it's like such a fascinating space and between cars consumers, it's a lot of stuff. But we've got to do some news. Thank you come back soon, Yes, thank you very much.
Chu ch up.
Yet we're so delighted Christy Taylor. She's president and chief executive officer of Enterprise Mobility. Joining us here in our interactive broker studio.
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.
So let's get to it. Max Chafkin writes about it today's edition of.
Those were his words, Taylor, I was just reading, right.
Don't blame me for He's to me at his desk and he just chuckles his way through these things. It's the BW Daily, the Bloomberg Business Week newsletter. It gives you the power Business Week in a handy dandy form. Sign up at Bloomberg dot com Slash Newsletters. You can also read Max's story on the Bloomberg. He's here in our studio. Who ever thought.
Wikipedia, well, you know, it's one of these.
It's like a part of the Internet that I think we all take for granted that I, you know, have I've been only been thinking about this over the last week or so because Elon Musk has spent a lot of the last week attacking Wikipedia. He's in something of a tiff with the founder.
I just tell you he's ticked off at everything.
Well he's a tiff prone, we should say.
But in any case, you know, Wikipedia is super interesting because you know, it's been around since two thousand and one. People who are about my age, you know, I'm forty one, will remember that. You know, college professors, high school librarians were very down on Wikipedia when it was launched in its early years, but over the years there's been basically study after studies showing that it's very accurate or compares
well to traditional research sources. And I think, really importantly, as you said in that intro, tim it's doesn't it doesn't do a lot of the stuff that we've come to associate with the negative parts of the Internet. There's no ads, there's not a lot of rage bait, and there's a real care about the truth. And what's super interesting when you look at sort of recent research about Wikipedia is it's actually gotten less fringy over the years.
So our normal thought about social media is it sort of tends to suck people into these far right or far left or just weird and kooky rabbit holes. Wikipedia has actually become less like that, which is which is super interesting and I think, you know, maybe worthy of acknowledgment, if not outright celebration. So the question is is how Yeah, So what's a couple of things. I Mean, one one
big reason I think is the business model. You don't have this engagement driven BIS model that depends on getting people to stay there for a really long time. So if your goal was to like maximize ad spend, what you'd probably want to do is have lots of controversial articles about you know, about the wildest topics you know, so conspiracy theories or just like friends stuff. Wikipedia doesn't
do that. The other thing is there was a conscious choice made by you know moderators, these these people who work essentially for free to maintain Wikipedia, to favor you know, mainstream news outlets and academic journals over kind of what you might think of as the do your own research
school of a fact finding. And that, of course is in marked contrast to the trend that we've seen not just from Elon Musk right, who's been in this kind of long running battle with the mainstream media as he sees it, but also Facebook and all of the other social networks, they've all moved away from news. They've all moved towards this kind of like favoring influencers essentially over you know, academic papers and mainstream news organizations.
And I think that's had a.
Negative impact on the sort of truthfulness of what you find on the Internet.
Not going to name names, but I think it's fair to say that people in the media business, maybe a few on air, you know, anchors and talent, occasionally are like, oh, Wikipedia, I've just been jammed a story, like, let me quickly look there. Having said that, is it accurate? Is it reliable?
So and when you talk to people who have studied this, the answer broadly is yes. It compares well to you know, traditional news and information sources. That said, it kind of depends what you're looking at. So well trafficked Wikipedia entries are extremely accurate. I talked to an academic, Amy Bruckman at Georgia Tech, who said it's the most accurate information source ever created in human history for topics that are
sort of well trafficked, and that includes controversial topics. So if you look at the page for like the war in Israel right now, you will see a you know, a thorough, fair minded, very fact filled entry for stuff that's more niche, where you maybe only have one or two editors, mean it's a lot less reliable.
I don't even have I don't even think I have a wik vie. Well, either you're gonna have to change that. Maybe someone one of these you know, tens of thousands of editors can go and do that. But but it actually brings up a good point, Carol, brings up a good point, Max, is what happens when maybe a previously unknown presidential candidate wants to jump into the spotlight and uh, you know, hires some interns to go and try to you know, kind of edit the Wikipedia entry a little bit.
Yeah, you know, Vivik Ramaswami got caught out essentially hiring somebody. This was actually disclosed on the Wikipedia page. I love so totally above board. But but I think this is a good example because he was called out number one and number two it essentially called attention to the thing that that he was interested in, you know, kind of affecting the Wikipedia entry on which which was this fellowship
he had received from a Soros connected uh nonprofit. And and I think this is this tends to happen a lot. People will actually get caught trying to manipulate Wikipedia, and it sort of does a Striisand thing where where it essentially calls attention to the ways that the truth is.
Being manipulate effective.
Yeah, and that's the idea that when you deny something or you try to cover it up, but it only calls more attention.
Barbara Streisand try to do it with one of our homes, you know, years ago, and then everybody was like, oh, barbar Streisand's home, let's go find it.
And so yeah, so rich guys and powerful people are constantly stepping in it, either trying to edit their own Wikipedia pages that's like kind of amateur hour, or like hiring someone to do it, which is the case that happened here. And again I should say this was disclosed and that's part of why we found out about it. But Wikipedia has a very transparent system for showing you how stuff is edited. So one thing that's great is that if some false fact or conspiracy theories shows up
on Wikipedia, it'll be taking care of. It'll be disappeared very quickly. That's the opposite of social media, right where you see these kind of engagement. Eight headlines and so on just circulate widely, even after they've been debunked on Wikipedia.
They go away and you have this paper.
Trail essentially where you can go back and see what happens, so you can see was it deleted appropriately? What is the truth of it? And so when you get into you know, well trafficked topics such as presidential candidates, you're not necessarily gonna get the most the best written article, but you're going to get something that is likely to be mostly factually true, relatively fair and balanced, and importantly something that you can kind of audit yourself. Right, they're
these citations. You can go through it, you can decide, hey, how true is this? How much do I trust them?
It's like amazing, right in this kind of mess of policing when it comes to social media that there's kind of the spuritans or API.
I don't know if that's the right, right.
I know it non paid, very idealistic. Yes, it's a throwback to the to the way the Internet was in.
Surly Max doesn't have a Wikipedia page, but he cited many times on Peter Thiel's Wikipedia page. How if you knew that.
Not notworthy enough, and that's a whole that's another big debate that happens on.
In our minds. You're noteworthy enough. That means we also read his book about Peter.
Tele's good, we could write. What all I'm going to tell you is you also have to check out his story. Either go to ex or Twitter or at Chafkin, or go to the Bloomberg or Bloomberg dot com because there's just one thing in there, because this is a family show, but about Elon offering a billion dollars.
But there was a name.
Changed what it would be called. So we're going to leave that on the table, shall we.
Sounds good, it'll make you chuckle though.
All right, we're going to run nex chef in Yes, you deserve a Wikipedia page and so much more. He is calumnist for Bloomberg Business Week, also.
The author of the Contrarian Peter Teale and Silicon Valleys Pursuit of Power.
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 exploration of America's culture wars from our team at the magazine, specifically when it comes to schools, brands, and political candidates.
Plus the digital fundraising tool that helps kids raise money for school athletics clubs, and more. We speak with the CEO of Snap.
Mobile first up this hour. We've got a woman with some serious credentials in the consumer good space, including stints in management with the likes of craft Foods, PepsiCo and sc Johnson.
And mccurjee now serves as CEO of Pernoul Ricard North America, and this week she sat down with Carol and Bloomberg Market Senior editor Mike Reagan to offer her insights on the consumer trends driving a global spirits industry worth well over two hundred billion dollars.
Well, I want to start big. Broadly, the global luxury wines and spirits market is driven by factors such as the growth and interest in premium and unique products, the rise in demand for organic and sustainable products, and the popularity of experiential, and it generated more than two hundred and twenty nine billion in twenty twenty one, anticipated to generate nearly four hundred and fifteen billion by twenty thirty one, a compound annual growth rate of about six point two
percent from that tier time period, or from twenty twenty two to twenty twenty thirty one. That's from Allied Market Research, So big market. We know we all drank a lot during the pandemic. We're still kind of figuring out what normal is post pandemic. So let's get to it, because we have a perfect guest who is a front seat to this industry, delighted to have with us, Anne Mckergey. She is CEO of Preno Ricard North America and as I said, joining us here in studio, welcome, welcome, Welcome,
great to be here, Carol. I love your background. I didn't even know this term FMCG fast Moving consumer good space. So you've worked at Craft Foods, Sales Marketing, General Management, PepsiCo SGSC Johnson. Excuse me, really, Senior Roles, Global Chief Marketing Officer, Global Chief Commercial Officer at s C. Johnson, present Global Snacks and Global insides of PepsiCo. What the heck makes some a fast moving consumer? Like I get it with alcohol, babet, but what makes it that?
Well, what's interesting is alcohol is actually not at MCG. It's just CpG. Fast is like stuff that just flies off in a grocery store, like lazed potato chips. A thousand units per store per week. That's fast.
Oh my god. So it's how do you then think about like something marketing sales that kind of a good? Or do you even have to because it just moves so quickly.
It would just move so quickly, yeah, whereas it in spirits we don't move a thousand units for store per week. But you know, but we have very high price points. So even we might move not that fast, we make a lot of money.
Yeah, and I got to cut right to the chase. Ye screwball whiskey, I'm fascinated with you. For those who are unfamiliar, it's peanut butter flavored whiskey. I picture commercial. You know you've got whiskey in my peanut butter? You got peanut butter. Now, I know you guys acquired the brand.
I can't help but think though, if R and D person in your company had come up with that what your reaction would because it doesn't sound like something that would be a success, kind of a surprising success exactly.
It's like nobody thought people needed wheels on suitcases, but here we are, we're all using them. So you know, Screwball whiskey. First of all, it's what an incredible gem, right, it was before we bought it the third fastest growing independent brand behind Tito's and Casa Zul. That's it's amazing.
Yeah.
And the founders, who are amazing people, right, They gave their heart and soul into that brand. And the reason that the brand even existed was the founder Steve. He is from Cambodia and came through refugee camps, etcetera. I'm gonna make a long story short.
No, No, it's a really funny thing touched.
Into it because God is some beautiful story. So it comes from Cambodia. He has polio. His parents do everything to get him here. They live in refuge refugee camps. Finally they come to Houston and the very first thing they give him is a peanut butter sandwich. It and for him, peanut butter represents freedom and so he has this passion about peanut butter, and you know, then he gets into the restaurant business and he just he takes jamison coincidentally and takes peanut butter and like puts the
two together and creates screwball. And this thing is it's it's electric. It went on fire and if and the reason why is because the United States consumer a loves flavored whiskey number one, number two. We have a very sweet palette versus the rest of the world.
Agree.
So when people drink peanut butter whiskey with screwball, they're like and then they put in their mouth and they go, oh my god, that's amazing.
That was my action.
You hear about it and you're like, wait what and then you try it and it's like, oh, we had.
We have the founders that have Duke and Dame salted caramel whiskey and the same thing. We're like, I don't get it. They actually brought us some liquor. I'm just going to put it out there. No, no, no, but it was really interesting. I taste it like no, no, no, no no. I don't like whiskey. I like bourbon, but I don't like whiskey. And like that just what it did to the tone in it. That's exactly what you are talking about. So people are playing is it easier to acquire versus play around in a lab?
You know, we do both, right because the other you know, flavored whiskey that's been a huge success for us has been Jamison orange and this whole trend around old fashions and citrus and whiskey, and unlike other kind of flavored whiskeys, Jamison is very whiskey forward. But when you smell it, you smell the rind of the orange put in your mouth. You taste that whiskey and that orange after to it's just heaven. So there's becoming more kind of I would say, artisan,
more invention around flavored whiskey. So we do both.
What's the premium on acquisitions right now? Because I feel like these specialty liqueurs and people who are experimenting coming up with something different they're in People want them, Companies want them.
They really do. And I will tell you it's kind of all over the board. And I would tell you because Tequilas have exploded some of the recent.
Acquisitions, am I it's too much no offense. Celebrities love you George Clooney loved you. But I mean it feels like everybody's creating a tequila.
They are, and what's really matters is quality tequila. That's where we are now, right, That's what's going to win in the end. So we just bought Codigo, which is a very high end, super premium. It's got this rose believe it or not Rose tequila. Oh wait till you put it in your mouth. So it's it's now about.
It doesn't have to go to margarita.
No, it does not. Actually, I'll tell you about what could go into a margarita that you wouldn't expect. But I'll come to that in a second. Peanut butter, No, No, it's mescal. Oh dell mgay mescal, which is the number one moscal capazaars. But you make a margarita with it and it's got that little extra smoke. It's unbelievable.
I have to get it from my brother. He's a great margarita make.
Oh thiscility listening, yes, and so so I will tell you now is the time for I mean, people just love to experiment. I agree that's post COVID right, because people like they were, you know, making areas at all experiential. It's all about the experience, and so having that right portfolio, making sure you're on the trend of all the things that are growing is really really critical, you know.
And over the years, consolidation has been such a big theme in the beverage industry. You know, all the beer companies getting rolled up until we have two majors. I'm kind of surprised to see this Brown Foreman news today. They're selling the Finlandia vodka brand.
How do you want it?
Would you want it to know?
Okay, we have absolutely no.
I'm just going to say, but are the big is the big deal making in this space? Has it run its course? Have all the big deals that can be done have they been done? And now it's it's looking for these new growth, small batch type of things.
Well, no, I think you're going to see it in both areas. So it did not surprise me about the de today with Coke. You have to understand both Coke and Pepsi, right, having worked at PepsiCo, you know, these are much narrower margin businesses. A lot of the carbonated soft drinks business is declining, so these people are looking for new profit pools so you're seeing a lot of
these companies try to get into the alcohol business. And you know, Coke went early with Tapa Chico and you know, and so Pepsi's gone with Mountain Dew and so there.
Now it makes sense to you to bold on liquor onto a soft drink company.
So Lin put it this way. I love competition. Okay, We're about to do absolute Ready to Drink with Ocean Spray. Like it's it's like the biggest thing every retail I want Ready to Drink.
I want to talk about that when we go back.
But here's the thing. The reason they're getting into it is because they need more profit, they need more margin. And what's interesting about vodka right now in the industry is it's declining. The only thing that's growing as teams,
it's declining. Anything that's white is declining. Jin vodka, rum all declining, okay, And so what's happening is you've got the Spirit company saying, oh, I don't want to be in there, and so but you got these these you know, software companies are like, I want to get in right. What I would say, because I am about to take over as chairman of Discus, which is the Trade Association, and I've said this to some of my friends of PepsiCo.
Do it responsibly. I cannot tolerate, under any circumstances brands coming in, you know, and using kid packaging, advertising in the kids aisle. It's unacceptable. And you know, we have a responsibility as an industry.
We've seen it with electronic cigarettes. Right, come on, folks like own it app do the responsible thing. Talking with Anne mccergey, she is CEO Pronovcard North America. She's in our Bloomberg Interactive Brokers studio, and I was thinking about, I mean, your brands.
I had a.
List here and I should just have you do it. Absolute Jamison, Koalua, hard liquor, Spirits, Champagne. I mean, I'm leaving out a lot. I think there's two hundred and forty brands overall. We just talked about Screwball, super premium peanut butter flavored American whiskey. How do you think about changes to the port folio and whether it's expansions, getting rid of how do you think about it?
So you know what's great about our portfolio is it's very premium and we have and you want to keep that and we want to really keep that because if you look at two backcheck no, well you know good for trade jos. Okay, So, but what I tell you is when you think about consumption of alcohol, right, we all don't drink the same thing every time we drink. When we want to celebrate, we want to drink champagne. Right, we want to just relax and unwind. We might want a glass a bourbon.
Right.
When we want to impress somebody, we might want to take out a very high end cognac.
Right.
Nobody drinks the same thing. Why they drink is the context in which they're in. So when you have the right premium portfolio that goes across all these different occasions, you actually have an advantage. And our strategy for no recard is literally to activate more brands than our competition with the same cost to serve. So, but you have to do that if you know the science behind the demand, which brand belongs in which occasion, so you don't cannibalize yourself. So that is certain.
Brands are really out front and center at certain times of the year, if you will.
So, for instance, during Saint Patrick's Day, it's Jamison. Right in the summer, you're drinking Malibu, right. So there are seasons, there are occasions. Sometimes some occasions are year long, right. So you have to then devise a portfolio, and that's how you decide which brands you buy and which ones you sell.
Your business model. It's like that Chumbawamba song. You know you got a whiskey, drink avoca, drink us my freaking But at the same time, you know, we all do drink different drinks at different times for different occasions, but also just in general. I get the impression that liquor consumers are a fickle group. You know, one year it's craft Beers the hot thing, the next year it's Seltzers, the next year it's fine whine.
So how do you get ahead of that as an executive.
In this industry.
So we actually monitor the trends around how people are drinking in segments. So on average, in any given month, a consumer will drink about forty five drinks. Okay, that includes everything. Okay a month a month, right.
So now I am mega No, I'm a mega lightweight.
Go ahead, But what we've seen this is on average, right, some people drink wait less. So what you see on average is before the pandemic, forty five of those drinks were twenty of them were beer. Okay, after the pandemic, they've lost two whole drinks. There's only eighteen of them now for beer. And what gained was your spirit RTDs, spirits themselves, wine also longs.
Ready to drink.
Yeah, it's on fire. It's on fire because people are walking away from beer. Then they went to malted RTDs. But they're like, eh, taste isn't so great.
How much is that growing the rtd Oh my god, for you guys, for us, it's it's exponential growth.
It's like fifty percent like it.
It's huge over a year.
Yeah, it's huge, but off a small base, off a small base, small base, Okay, could it be a bigger base? Very much, a bigger base. I mean, we have RTDs and Absolute. We have it in Malibu, Jamison and an Absolute. We're just about to launch are ready to drink with Ocean spray? You know, So you think about you know, we were talking about the you know, the wonderful cocktail that you're all used to, which is the Cosmo. And so it's here's the big thing consumers post pandemic want
cocktails conveniently period. That's what it is.
Yeah, I'm not a good I know people who are really into it and they get the gear and they're like love it. I'm like, just give me the bottle, let me throw it over some ice.
I'll tell you a great example. So this helps you understand the occasion. Women will get together, call it once a week, they'll have book club whatever, They'll drink their glass of Chardenay. And that's fine because it's easy to pour. You know, after week, after a week of Shardina, you're like, I really want a cocktail, but nobody wants to make a cocktail. So we launched Ready to Drink Altos margarita and literally all you do is pour it like you
would wine, and it's an instant margarita. And I'm telling you, this thing is bar quality. And so now we're sourcing from wine as a as a tequila.
It's pretty wild, Like you just get your head around it. But I've I sampled some over this summer and was really surprised at how good they were. Listen, we'd be remiss, We're Bloomberg Booze. Great leading indicator, especially because you play into the premium side. Of things of how the luxury market is going right now, how are the numbers in terms of this economy, and then going into next year, how would you describe it? How are you seeing it?
Yeah, so you know, well we're getting past COVID, right, and COVID was a big boom. People were stocking up, et cetera, et cetera. The economy has been tough. We're seeing retailers actually bring down their inventories a bit because it's the cost of capital with interest rates is really really hard.
That's interesting.
We have the whole we have that whole global supply chain crisis. Now that's over. So what's what's happening is we're seeing resiliency in consumers drinking so you know, to sell out and what people are consuming. But now the inventory situation is kind of you know, kind of settling out. So when you look at the numbers, you know, from a net sales or a shipment's perspective, it's lower than actually what people are buying because there's a little bit
of over inventory in the industry. But if you ask me long term, you said, those numbers in the beginning of the program like about six percent Kagger right, right, pre pandemic. That's we were going four or five percent every year. In the pandemic, it was double digits.
Right.
This is now the post COVID kind of shakeout, and I think as you move forward, you're going to go right back to that forty five percent.
I love hearing about this. You've given us a snapshot on the economy. You and I and Mike. We're talking the break about drinking responsibly. You guys have a campaign. We have about forty five to fifty seconds left here. Just talk to us about that.
Yeah.
So I feel like you can't do one without the other.
Yeah.
So we believe on return on responsibility as much as return on investment. Everything from working with the government to get the Halt Right Act, to get breath lizers in cars so you cannot drive if you are drunk. We do a safe Night's program. We actually donated something called Engage Responsibly to stop hate online. And you know, we're trying to do everything that we can to be responsible. And you know, this call out to all my other competitors.
Let's we're working together. Let's work together. Let's make it the right thing. I love it.
So cars are going to be equipped you cannot start your car if you have alcohol. When do we get this?
It's a law and now the car companies are trying to figure out.
Come on, get it done exactly. Got the uaw out of the way, Let's get this together. I know that that is a very important issue for you, and we so appreciate you coming in. This was fine.
Thank you.
Come back so I promise with champagne or you got it.
Next time will be I'm kidding, I'm kidding.
This was a great way to wrap up in you guys. It's been so far a pretty crazy week. A mckerzy. She is ceopronover Card North America in our Bloomberg Interactive Brokers studio, Carol Master, Mike Reagan, this is Bloomberg.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from read a six Eastern Listen.
On Bloomberg dot com, the iHeartRadio app and the Bloomberg Business App, or wants us live on YouTube.
Well.
Recent years have seen an explosion of boycotts and pressure campaigns aimed at everything from consumer companies think Disney, target bud Light. That's a little hint, everybody. Two Tech giants including Google, Facebook, and X to big banks and money managers, Black Rock, JP, Morgan City Group, a lot of targets.
Yeah, it's actually kind of hard to keep up. There are so many boycotts and pressure campaigns. It's what Josh Green writes about when it comes to the polarizing cultural fights that dominate American public life. Also how they've poured into the consumer world, turning corporate America into a new battlefield when it comes to US politics. Check out his story. It's can be found on the Bloomberg terminal at Bloomberg dot com Slash business Week. Josh as national correspondent for
Bloomberg Business. He's also the author of Devil's Bargain, Steve Mann and Donald Trump and the Storming of the Presidency. He joins us on the phone from Washington, DC. Also here is Joel Weber, the editor of the magazine. He's in our Bloomberg Interactive Broker's studio back in New York. Joel, there's a man who's got a company helping to navigate the culture wars, and he's got an interesting past. Didn't
start the artist? Yeah, President Donald Trump's first presidential campaign. Yeah, didn't he saw the twenty sixteen election coming.
Well, he was, as Josh writes, and this is part of this culture Wars package that we've been working on
this week. And I thought from the minute Josh started talking about this that this was sort of a maybe the most important story in the package, because it showed that, you know, this person who is a top data scientist for Donald Trump in twenty sixteen took those lessons from what he saw and why the public underestimate or the press especially underestimated Donald Trump, and then turn that into
something that he could talk to companies about. And so I was just really curious about what that looks like, because you're right you mentioned but light there earlier target like all of these the culture wars have come to corporate America, and yet there was someone who saw what it was all about before anybody else. And I just thought that was a really interesting insight. And those insights are actually incredibly valuable and something that I want to
talk to Josh about. So Josh shy Trumpers who found them.
So the guy we're talking about here is a data signer Republican data sign is named mattis Kowski, who has actually appeared in BusinessWeek magazine before in twenty sixteen, because longtime readers will remember that I was deeply embedded with the Trump campaign and during the twenty sixteen race, in a few weeks before the election, everybody expected Trump to lose.
Me and a colleague got invited down with the only reporters allowed inside Trump's big data headquarters in San Antonio where he was doing all his kind of you know, Facebook data cooking and all that kind of stuff. And I met Matt Oshkowski on that trip. He was the head of Trump's data team, and he was the guy who was pushing the idea that was really laughed at at the time that there was a hidden tribe of Trump voters. You know, some people call them shy Trumpers
or hidden Trumpers. But Matt, in his data was seeing that there were a lot of people who didn't ordinarily vote Republican who were really turned on by Donald Trump. They didn't care about taxes and you know, financial deregulation, they cared about immigration, wages, law and order. They tended to be rural, they tended to be older, and they
were very, very angry and loyal to Donald Trump. And on the night the Trump won that election, me and my colleague pulled an all night or We got Matt on the phone at two am on election night and he sort of explained this all to us. Became a Business Week cover story the next day, and basically what I did in the story is kind of pick up the thread because Matt had a fascinating career since then. In the week after the election, obviously everybody wanted to
know in politics, how did you guys do this? But his phone started blowing up, he told me at the time, not so much from political people, but from corporate brands and ad agencies and even professional sports teams. You know.
He spent the.
Next few months sort of circling the globe giving these talks about how it was he'd sort of identified this group of people and whether or not the kind of insights that he'd had about what he called voters cultural
consciousness could be applied to the corporate space. And Matt thought it could and started this company that we write about in the issue at this time, taking those same insights and explaining how they kind of manifest themselves in the consumer arena, especially lately, and especially in terms of these kind of culture war boycotts we've seen around brands like Target and bud Light.
Okay, so that's the thing that as you write, we saw what Trump was able to accomplish in the political realm, and even during his presidency we started to see it trickle over into into the corporate realm. What we've seen post Trump presidency is that has gone to eleven and if you're a business leader in this country, it just feels like you and your company could end up, you know, stepping in it again and again and again. So where does how does Oskowski help corporations?
Now?
Well, you know, his big insight with Trump and the motivations of voters was that what like normy political consultants didn't understand Republican and Democrat, was that it's really kind of values and morals driving people's behavior, kind of cultural consciousness that people just kind of come to the decisions in their lives through the lens of politics. And it's not just political decisions that they bring that lens to,
it's also increasingly kind of consumer ones. So what he told me at the time was he's going around talking to these companies and ironically, one of the companies he talked to is Anhigh Bush, which which makes bud Light, But what he was trying to tell them was that, look, you your customers are kind of coming at the marketplace in a different way than maybe they did of before. This is something you should pay attention to. So I think his insight this year has has proven itself over
and over. You know, back in March, bud Light launched this very controversial ad campaign with a transgender influencer. I mean, I remember talking to Matt at the time saying, you know, this doesn't make any sense because if you look at who bud Light's consumers are, and this is the sort of thing he studies, you know, they are a lot of them are you know, white male football sports fans.
You know, the furthest thing you could get from the type of people who'd be positively influenced by a transgender Instagram influencer. And sure enough, you know, it blew up in right wing circles. It became viral on social media of you know, angry kind of trumpers going in and smashing up displays of bud Light and bud Light sales cell fairly precipitously kind of in the week's half for that.
So I think it goes to highlight this sort of factor that he studies consumer's corporate sorry, consumers cultural consciousness and how that applies itself to different brands. And it's
important to point out this isn't just Republicans. A lot of the boycott activity, and especially the political boycott activity, emanated on the right long before bud Light, and ironically enough, the real catalyst for that was Askowski's old boss, Donald Trump, who, once he got elected president, as we all remember, drove all kinds of corporate boycott's, you know, liberals pressuring companies to denounce Trump and really kind of upended the way
that corporate brands deal with the political space.
So josh Oskowski launches data intelligence company Human Behavior Now, and that's the main vehicle that he's using to like look out at corporate trends and consumer behavior.
Right.
And I'm curious, like when one thing that you read about here is that there are obviously the two extremes on both the left and the right, but actually the thing that drives change is that moderate middle talk to us about what he's observed there.
Yeah, I mean, one of the things we had him do for this piece was to kind of go out and give us like a deck like survey research. Okay, who are the people actually boycotting? Like, who are they, where do they live, what are their motivations, and what effect are they having? And he came back with some really interesting information. First of all, the people boycotting and the conservatives are not necessarily all the kind of Trump supporters we remember from the campaign. By and large, they're
not rural the way Trump supporters were. They're suburbanites, and the liberals are tend to kind of cluster in cities as you might expect. The other thing was, and this reminded me of kind of social media. There have been studies showing that the political content on Twitter is mainly produced like ninety percent of it is produced by people on the far right and the far left. Everybody else just kind of, you know, get gets hit with it
when they log on. Very much the same thing with these consumer boycotts, that it's really driven by activists on the left and the right. But there was this large what he called movable middle of people who don't really care initially, you know, whether they're soap or their beer, has a political view on this or that, but eventually end up getting pulled in once this stuff gets picked
up by the media. And we have a guy in the piece of FedEx driver who I talked to, big bud Light drinker, really hadn't been involved in politics, really hadn't cared about some of the fights like Target and Disney. But when the bud Light transgender influencer thing came out, he said, you know, that was the last straw, and he quit drinking bud Light. And I think that's a
good example of kind of what's happening nationally. You know, a lot of people aren't waking up in the morning wanting to think hard about, you know, what political stances their brands are taking, and yet it's become enough of a hot button issue, especially in the political arena, especially in the Republican press eventual race, that people are noticing and we're having more and more evidence now that they're responding to it.
What I love about this story is Josh, and it's in the piece too, is it's like, when the heck did Republicans get so angry with business? You thought they were so kind of hand in hand. So it's really if you think about a kind of big picture in terms of what's happening, it's like what the heck happened? So spin it forward for us, or take it forward for us, because it does make you wonder about what
does come next? And I know you, you know, he this individual talks specifically about a parallel economy, so I'm curious about some of that.
Yeah, well, the idea of a parallel economy is that it's the idea that you know, just as American politics has kind of polarized between liberals and conservatives, so too will the kind of conservative or sorry, will a consumer's sphere. And you know, a little bit of evidence that this is happening. There's a you know company went public a few years ago called Black Rifle Coffee, which presents itself
as kind of a conservative alternative to Starbucks. You know, BusinessWeek we've written about like Razor because there's a conservative Razor company. I've written about conservative exchange traded funds that are anti EESG. So there's a little bit of basis for thinking that I personally have a hard time believing it because you know, we don't have any big conservative brands that are you know, Disney clones or you know
ge clones, or even like a bud Light clone. Frankly, but what seems indisputable is that politics has inspected the corporate consumer sphere in a way that it's really hard
to kind of untangle from. And the real catalyst there, I think was George Floyd's death in twenty twenty, where a lot of brands, almost every brand, kind of came out and made these statements about social justice that aligned very much with Democrats, and that caused a lot of pressure on those brands, both from the left to continue speaking out about political issues, and also a backlash from
the right. We've now seen risen up with these campaigns against Target and against Light for taking you know, quote unquote woke positions on a lot of these issues. And it's also become a vehicle for presdential candidates like Florida Governor Ron DeSantis, who didn't really want to take on Donald Trump directly, so what he did was to start a lot of big cultural fights with companies like Disney and to try and have these culture war debates that
would raise his profile as a presidential candidate. So I think activists on both sides, but especially on the Republican side, have realized that there is utility in politicizing the consumer space and that's why we're seeing more and more of this.
I mean, is this something that ends after the primaries or is this something that goes into the general election where we have you know, whoever the nominee is continuing with this idea of attacks on corporate companies in the context of a culture war.
You know, it's a great question. I spoke to Professor and the Piece who works with business leaders and surveys the min issues of politics, and the answer seems to be that a lot of CEOs have become a broiled in politics and now are having second thoughts about it, like maybe we don't want to be in the crosshairs, maybe we don't want to be subject to kind of these boycotts. But once you've gotten in, it's tough to
get out. And one example of that is the pressure that a lot of these companies feel themselves to be under to speak out about the October seventh Hamas attacks on Israel. Not something that a lot of people want to do, and yet it's hard. It's hard not to weigh in.
We got to run. Josh and Joel, thank you.
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.
As conservative politicians bring the rhetoric and beliefs of the evangelical right into mainstream classrooms, reshaping American public education, liberal families are using the rights hard won homeschooling protections to give their children a secular education in kitchens and living rooms across the country. This is from a story from the Bloomberg BusinessWeek team.
Yeah with more on how culture wars here in the US are leading to another deep blow to public education. With us right now is Charlie Locke. She's Bloomberg BusinessWeek freelance contributor joining us on zoom from Portland, Oregon. Her story can be found on the Bloomberg terminal and at Bloomberg dot com Slash BusinessWeek. Also here with us in the Bloomberg Studio, the editor of Bloomberg Business Week, Joel Webber. Joel, good to have you with us, Charlie, good to have
you with us. I love this story because when you think homeschooling. There's this image of who the typical homeschooler and homeschooling is in the US, and this is sort of up, you know, puts that entire theory or image on its head.
Story is kind of changing a little bit. So we were working on this package of stories around America and culture Wars, and this idea of homeschooling came up. Homeschooling has long been a thing that conservatives have fun for mainly.
What we're seeing though, is as the politics, especially around education, have begun to change in conservative strongholds, We've seen a stronger intervention in classrooms to even change curriculum in states that how our conservative, we're seeing mostly liberal leaning parents begin to take advantage of the homeschooling kind of push that was championed by especially evangelicals. So, Charlie, bring us, bring you in here, tell us how this story came to you.
Yeah.
So I write about kids and education a lot for a number of different outlooks outlets, including Bloomberg, and I have noticed over the past few years just more and more families that I have talked to in the course
of my everyday reporting. We're considering homeschooling, particularly families in Red states where there is this increasingly conservative politicization of public education, whether that is in terms of what it's like for kids of color or trans or gay kids to go to public school, or in terms of curriculum and how kids are learning about American history or what
they're not learning. And I've just talked to more and more parents who were kind of at their wits end about what to do, and it made me really curious about, Okay, is there this movement of is it really changing what it means to homeschool your kids and who's taking advantage of that, particularly because, as you mentioned, the history of homeschooling in the past thirty or forty years has really been built around the evangelical right, who have pushed really
hard for the rights of homeschoolers, and particularly a certain type of homeschooling that really leaves it all in the hands of the parent without a lot of oversight, and so in in states with big evangelical communities like Florida, which I focus on in the story, there are a lot of rights and a lot of resources for homeschoolers because it's been pushed for from this particular graphic background, but now because of how public schools are changing and
how politicians in conservative places are kind of adopting the rhetoric around a parental bill of rights or kind of a run school choice, picking up all this rhetoric that the home the far right homeschooling movement has used for a long time, it's pushing liberal families out of public schools.
Well, Charlie, can you talk a little bit about some of the most I don't want to use the term egregious, but the anecdotes that you found were kind of what pushed these parents over the edge. You said, what they're teaching or what they're not teaching when it comes to American history. I was so surprised to reading your story some of the things that did motivate these parents to move them to homeschool their kids.
Yeah. Absolutely. I mean, one that was really striking to me is one mom that I talked to in Florida whose twins were in sixth grade in public school in Florida last year, and their history teacher taught them that manifest Destiny referred to Native Americans who decided to move west because they wanted to try somewhere else and have more space, and she the mom looked at the curriculum
and looked at the slides from that day's class. She really thought maybe her kids had misunderstood the lesson and the slides had nothing about the trail of tears, you know, really presented manifest destiny as this happy choice that Native people in the southeast made. I mean, there are other parents.
I had talked to one mom who's all of the books were removed from her kids elementary school, in classrooms and in the school library, and for I think six months last year, there were just no books at school and kids weren't allowed to bring them because books hadn't gone through the Florida approval system yet. And she felt like, I can't send my kid to a school that isn't allowed to have any books in it. I mean, pretty egregious.
Yeah, this is America today. What's interesting, too, is I feel like I wonder about the people Tim and I were talking about this actually before we got going, is these people were they nervous about talking to you? And we're curious about how you've found them. Was it difficult to find them?
Yeah, a lot of the families were quite nervous about talking to me, and we do grant anonymity to a number of the parents in this article. I mean there's a real risk. I think that for a lot of these families, there's a real risk both that you know, in their communities that they would be ostracized because of some of the choices that they're making, and also in
terms of the support that they're getting. States like Florida actually give money to homeschooling families to support them and support homeschooling, and some of the moms in particular in the story talked about how they really feel this tension between wanting those finances from the state of Florida or other states to be able to support their kids' education, but also not wanting to take away money from public schools, and so they don't want to have their name in
there to jeopardize the funding that's enabling their kids to
learn at home. But you know a lot of how you know, building a story like this takes a really long time, and I spent about six months building relationships with people who run communities like the Sea Homeschoolers group on Facebook and kind of building community with people who who are educators of homeschoolers and then a lot of it is word of mouth, talking to one mom who connects me to her local group, who connects me to someone else will.
Talk to me.
Charlie.
I'm interested from the especially from the mothers. You talked to you and you made it. I thought a very clear point in the story about how mom centric all of this is. I am curious, like, does this feel just like a permanent shift for them or are they contemplating moving because of this?
Like what's the what.
Are the long term implications that you get a sense of from here reporting.
Yeah, it's a really good question, and I think it's a very family to family question. I think a lot of these parents this is not an ideal solution for them and for their kids. There's a lot that they're having to sacrifice. Particularly so many moms who we're working in professional workplaces before this and felt like their only option was to step back and full time homeschool their kids.
But it's not very sustainable financially for their family. It's not really what they want in terms of their careers and time. And some families are trying to figure out how to move out of state. I mean, it's hard to uproot your life and do that right, and other families who are kind of hoping that things will get better and hope that by the time their kids are in high school they'll be able to send their kids
back to public school. But it's kind of trying to make the least bad decision for a lot of these families.
You know.
The other thing that your story explores is as people leave public schools, that creates this downward spiral. And since twenty you signed one point two million k through twelve students have left public education in the US, the same people who once celebrated the institutions. Once they leave like this, it means that the schools end up taking a tax hit too, right.
Yeah, yeah, it means pretty substantial and honestly pretty scary hits for public school both because public schools are mostly funded by taxes within communities and by allocations federally based on how many students are enrolled in public school, and so when a bunch of families pull their kids from public school, it means the schools get less money federally because they have less students enrolled there, and it also means that they get less money locally because there's less
support for taxes. If you're not sending your own kids to the public school, you don't care as much about
about supporting those financially through your taxes. And then there are also all of these kind of softer effects too, or a lot of these parents, the parents who are able to step back from work full time and homeschool their kids are also parents who previously were really involved at the public school in terms of being on the pta or running fundraising drives or leading field trips, and so there's a lot of kind of the ways that public schools provide a lot of social services for families
to need them. They will be less and less able to do that as more and more families who can opt out.
The side doots.
So many aspects of this story just you know, the trend and parental rights, the implications for moms and working women, and what it means, you know, Joel, for public school systems going forward does not.
Look good, but you know, there's there's What I think it shows is the commitment of families, right and the fact that they saw what was happening and tried to do something about it.
Incredible story that, of course is the editor of BusinessWeek, Jil Weber and Charlie Locke wrote the story Bloomberg BusinessWeek Freelance contributor. You can find it on the Bloomberg terminal, of course, at Bloomberg dot com slash BusinessWeek.
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 you.
When I was a kid, Carol, Yes, and I needed to raise money for you know something at school. We did walk a thon's for charity. We did school trips. I did it the old fashioned way. Okay, this was the nineties. Keep that in mind. Okay, yep. I went door to door with a clipboard. I ranked doorbells. Actually wore rollerblades so I could do it quicker. It's nineteen nineties, so southern California, nineteen nineties. I should have skateboarded. Actually, well,
it was, of course, before smartphones. Kids these days have other options, such as the one developed by our next guest, Cole Morgan, the founder and CEO of Snap Mobile. It's a digital fundraising tool that high schoolers can use. To raise money for schools, teams, clubs and more cols here with us in the Bloomberg studio. Cole, good to have you with us this afternoon. I should note you raised seven hundred million dollars for one hundred thousand plus groups and teams.
It's a lot, it's a lot of money.
Yeah, we're talking about some serious money here. Talk to us a little bit about the platform and also I'm interested in the business model here and then take great.
Yeah, so we uh so, I would just say thank you for having me. When I called my mom and told her the idea for the business, I told her we were going to raise a million dollars for schools.
How old were you?
I was twenty eight at the time, thirty eight now and now and I we're actually approaching about eight hundred million dollars giving back to school so far.
Wow.
So yeah.
So we've we started a few years, started ten years ago. We're in about half the schools in the United States. We focus on financial transparency in schools and helping groups of people raise money for a common cause, where a lot of the crowdfunding platforms online focus on individuals raising money. Come in quickly sign up, We help groups of people with that require oversight. So the school, you're a club organization, you know, where somebody actually needs to oversee the financials
of the of the group. We help that group raise money and so the money goes directly to the organization or to the school, to the nonprofit or whatever it is, rather than the individual.
So how does it work?
Kids log in, they send send out emails, text message, social media. January first, we're launching mobile apps. We'll have over a million kids download our mobile app next year.
So there's no mobile app up to now.
No, it's all been a web app. Wow, because a web apps really, a web app was faster a web But we had we actually had a mobile app and we very first started. But it would show up. You'd try to get all these kids to download a mobile app. It would take too long. But that was ten years ago, and kids weren't.
They kept thinking they were down Snapchat.
That had happened. That's happened. Yes, yeah, so they so they now they log in, they download the mobile app, and they go through the flow. You know, they send out their emails to friends and family. I'm sure you guys have actually probably gotten an email from a niece or nephew to donate to a but it's a Finity program. No, nope.
So it'll take you to a site that shows you that it is Snap Mobile.
It's yeah, we'll show you so that that part of the platform is called Snap Raise, and it'll take you to that. It'll actually take you to that kid's fundraising page, because what we know is that people want to support kids and the causes that the kids care about. So it's not about supporting the actual football team directly, it's about supporting the kid who's a part of the football team.
So it actually will take you to when my son starts using the platform, he's only two, it'll take you to Luke Preston Morgan's you know, football page, and you'll Luke will have a goal and then the team will have a goal above that. So it's a hierarchical structure that allows the team to raise money. So all one hundred kids on the football team are raising money at the same time for the same cost.
You do live in Texas. You're already thinking about football and your kids only two?
Yeah, yeah, well I played football. We live in Texas. This is the whole company is surrounded by it, it.
Seems so logical. Yes, So what was it that? What was the idea initially that you said, Okay, this, this, We've got something here.
Yes, it is very simple ideas. It looks more simple on the surface than it actually is underneath. So we have an entire organizational database that connects school administration all the way to the communities in which they live and that support them. So there's a lot of data and infrastructure, financial transparency, oversight, security compliance, right, But on the surface,
it was really simple. I was selling discount cards and cookie dough in schools after I got done playing football, and a coach said to me, we love that you're here, but we hate why you're here. So there's got to be a better way. This is the honest to goodness story. It's on our website. I said, what do you mean, He said, our kids. You know we need help, We need to raise money, but we don't want to do the things that you're making us do, which is sell
these things. The school doesn't like that we take cash. The kids don't want to sell things. The parents don't want to buy things. They just want to support. So I said, okay, just like my whole life, I've taken coaching. It's like what do I do? So I looked around the school and I saw every kid on their phone, and I started asking friends and family and people at bars and restaurants. I said, do you care about supporting kids? And they would say yes. And then I would say
do you have cash in your wallet? And they would say no. And I would say do you have your phone? And they would say yes, And I would say you have your credit card? They would say yes. And so I just put together the idea of the phone, the credit card, and kids asking politely for community and family support.
So what's your take rate?
Our take rate is twenty percent?
Wow, Yeah, that's very high. That's much higher than I thought it would be. So of every dollar that is donated, Yeah, your platform takes twenty percent. Yeah, yeah, I was expecting two or three percent.
Yeah, it's a it's a high take rate for what we for. You know, what you think of in the world of crowdfunding, But if you look at, you know, some of the other individual platforms, they just tacking on in a different way. We don't do that. There's a service based model for us. So we help organize, coordinate, promote,
maintain and manage the entire online fundraising event. So we're not the cheapest thing in fundraising, but we are the cheapest thing in school based fundraising, which is a very different thing because when you sell discount cards and cookies, you're only making fifty percent.
That's one hundred and sixty million. I was just doing some calculations here. One hundred and sixty million dollars.
But that's a big difference because you think about yeah, you know, whether it's Girl Scout cookies or what have you. You're saying that the kids only get fifty.
Percent, Yeah, sometimes less, sometimes less?
Yeah?
Are you because there's a product involved?
Sometimes yeah, but you can hide behind the you can hide behind the fact that the product is there.
But I'll be honest with you, having done that for nieces and nephews and buying wrapping paper and stuff that I really don't want, I'd rather have just given them money. That's not the way it was set up. Are you going to only stay with schools, I don't mean only, but.
No, we were, I mean we are the largest, you know, youth organization fundraising platform as well. Yeah, it's just our main focus is schools, but we grow into the we grow into the youth side as well. Yeah, one of the other things that we provide for the twenty percent take rate is f financial oversight and compliance for every
dollar that comes into your school. So there's a school actually locally that an athletic secretary absconded with some of the money, and because they were a SNAP client, this just happened a few weeks ago. Because they were a SNAP client, they were actually going and have a full audit trail of every one of the donations and the dollars that came in, and they were able to help find out that what that athletic secretary.
Had done, what happened. Are you profitable?
We are not.
Where are you spending all the money you've raised eight hundred million If eight hundred million dollars has gone to schools, which means one hundred and sixty million dollars has come to you, guys. If we're geting twenty percent, where's the money.
Going investment into the technology. We've acquired a couple companies as well. We've acquired three businesses so far. We've also raised capital.
As well, ninety million dollars in a series b led by the investment group that owns the LA Dodgers. Yes, Aldrige twenty twenty one. Yep, yep.
Yeah, So we've hired, we invest in hiring outside salespeople. So our salesforce we have one hundred and fifty boots on the ground that actually serve the communities in which they live.
Is such your highest overhead or is it that in technology?
It's that in technologies. We've also scaled up our technology team as well.
Thirty seconds left here. What's the endgame? Is it to go public?
The endgame is to build the transformative platform that supports teachers and students. It's teachers and athletic directors and coaches the way that they support their kids. You know football background with me, so I focus on the process. If we build a great company that serves the needs of all of our customers, then who knows what happens, But.
You're going to stay within like helping for the most part, schools or ken it expand.
Schools, youth organizations, colleges. Yep, Yeah, it can grow quite a bit.
There's a little bit of a growth runway there.
Big market and imagine a mode too with getting the schools signed on. That's a hard part.
Yeah, it's incredibly hard, and it's one of the reasons you have to invest the way that we're investing.
Come back and let us know how things are going. I promise really interesting Cole Morgan, founder and CEO Snapmobile, joining us here in our Bloomberger studio. Good luck, We'll talk to you soon again.
Thank you.
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