Bloomberg Businessweek Weekend - October 15th, 2022

got too hot inflation prints. We're talking about CPI and pp I as well as the latest minutes from the f O m C, and all signs point to the Fed staying hawkish for the foreseeable future. Better reserve officials committed to raising interest rates to quote restrictive level in the near term and holding them there to curb inflation. We're going to talk about the policy and the risks involved throughout the next hour because it just hits and

impacts everyone in every business. Meantime, it looks like Elon Musk's four billion dollar deal for Twitter. It is on track and the social media giant could be in for a rough fraud once it's official. That's the subject of the cover story in our special double issue. You a Bloomberg Business Week all that to come. We begin with

the Remarks section of Bloomberg business Week. Bloomberg Markets magazine editor Christine Harper writes about Paul Vulker's inflation fight during the nineteen eighties and how it hints at what lies ahead for Jerome Powell. Bloomberg business Week editor Joel Webber and Christine are here to break it down. Christine also co wrote Keeping at It, The Quest for Sound Money and Good Government with the late former Fed Chair. Well. I can tell you when he was writing his memoir

back in eighteen nobody was paying attention to inflation. In fact, if they were at all, it was in an effort to get more inflation right, So he was quite concerned that people were underestimating the risks, and so part of the mission of the book was to remind people of how important the central bank's role is in in keeping inflation down and maintaining that credibility that he fought so

hard to maintain. I mean, he had been involved in getting the dollar off the gold standard, and after that the dollar was not it was not connected to any actual value, and so when inflation took root, he had to drive interest rates up to unprecedented levels. Caused all kinds of pain for people financial institutions, and the result

was there was more credibility in the dollar. Some people talked about it when on the Vulcar standard from the gold standard, but you know, that's something you can't squander because he fought so hard. So it's kind of like having gone toward, you know, to win a battle and then discover that your future, you know, commanders are allowing you to give up the territory again. So he he would have been very upset that inflation was allowed to get to where it was. You got to know Mr

Vocal very well. I'm curious what you think, if anything, Powell might have learned from him, and if not him directly than the book. Oh yeah, well, I mean, you know, as you and I have discussed, I mean, one of the things that's so interesting is how often FED Chairman Powell invokes not only Volker himself, who he says he's a great admirer of, but but the book. I mean, he's talks of out everybody should read it. And he has used this phrase keep at it, which people see

as an echo of the title keeping at it. And you know, I mean one thing that Vulgar made clear was when I was speaking to him, was how much he supported Powell as FED chairman, because he liked the fact that Powell had this similar to Vulgar had this experience of having worked in the finance in a private financial institution and also working at the Treasury Department. So understanding markets, understanding the government is really important to being

practical in the job and not just being an academic theorist. Christine, how tough was it for Vulcar to hike rates? Like what were some of the conversations that you all had about that? Which was going against what everybody wanted, but it was necessary in order to write the situation well to that point. I mean, he he said that when he came into the role, it was clear. I mean, the reason he he was brought in really was to do something about inflation that his predecessors hadn't really succeeded

in bringing down. Even so at that point, the economist at the FED were forecasting recession, so he had to sort of ignore that and just say we're gonna raise rates. There was a split on the on the Federal Reserve Board on the second time they voted, and so the

markets didn't believe there would be any stronger action. They thought the FED was going to lose their spine, and so he turned to this monitorist approach of just targeting the money supply, and that essentially told people, we're tying our hands and we're gonna let interest rates go where they have to go. And they went up to like what pent Okay, So I gotta ask a question because this this book almost had a different title. Oh yes, and we got to talk about that, because it's just

this little easter egg. Can you talk to us about thet sure? Of course. Um. So he opened the book with this very funny joke about a wise parrot who's known as the Chairman. He went so far as saying he wanted to title the book the wise old Parrot Speaks Now. The marketing Department and I all agree that was not a great title for this book. So we spent weeks trying to offer him other ideas, all of which he rejected. So we were really going back and forth.

It was very It was one of the most difficult things of working with him because he was so stubborn on this. And so finally one day I was going through this long list of titles I'd come up with. You know, I found a phrase from the FED sustained commitment, and he looked and he stopped and he said, keeping at it. And it was great because that really was him. You know, he believed in speaking plainly and uh, you know,

so he took the kind of jargony phrase and translated it. Hey, Christine, I just want to talk a little bit, a little bit about his legacy. Given what we know about the nineteen eighties and what markets did and what inflation did after he raised rates so significantly, what's in stored this time around. I think everybody is seeing that interest rates are going to go up. Policymakers are making it very clear they're not going to back down on this um

if they show any signs of, you know, weakness. I think people understand what will happen is kind of what happened to Paul Wolker's predecessor. So I think that is an example of where Powell sees he has to be steadfast.

But the chapters that follow the inflation fight are a series of financial crises that m. Paul Wolkers FED had to deal with in the wake of the interest rate increases, and so you know, when you hear these experts talking about something might break, I think, you know, what we saw back in the eighties was a lot of things broke, A lot of risks were built up, everything from the Hunt Brothers speculation on silver to Continental Illinois Savings and loans,

all these different banks that when when belly up. The ultimate one was the Latin American debt crisis, and that was so bad that in a D two, I think that was really what caused Volker to say, Okay, we've got it, back off and and stop the inflation fight. So ultimately, it is often that something breaks, that there's a financial crisis. That was Bloomberg Markets editor Christine Harbor,

along with Business Week editor Joel Weber. Coming up, we'll look at a sector highly influenced by monetary policy, real estate. How the world's largest donor of commercial real estate is adapting to higher rates. The cohead of Blackstone real Estate is up next. You're listening to Bloomberg Business Week. This is Bloomberg. This is Bloomberg Business Week with Carol Masser

and Bloomberg Quick Takes Tim Stenovik from Bloomberg Radio. This past week, Bloomberg Live hosted invest It's an annual gathering of the leading names covering areas from crypto to credit markets and everything in between, anything that's investable. And it was in person for the first time since the pandemic. It's a time of market volatility and uncertain Yeah, I mean you can say that again, right, This is global central banks continue to raise interest rates in an effort

to bring down inflation. One area of the market we're watching closely as these conditions evolve as real estate. And Carol, you caught up with an executive from the largest owner of commercial real estate globally. That's right, Tim, we're talking about Blackstone. Kathleen McCarthy is the global co head of Blackstone real Estate, which has a five hundred seventy seven billion dollar portfolio and three hundred twenty billion dollars in

investor capital under management. I began though, with asking her how things are going against all these macro concerns. It is an exciting and interesting time because, as you can see, there's different signals coming through, and I think we are better positioned than anyone to know what's really happening. We have six billion dollars of real estate. We're in thirty seven different countries portfolio, though that's highly concentrated into four

key themes. Eight percent of our capital is in warehouses, rental housing, lab office and hospitality investments. And what I'd say we're seeing is actually very strong fundamentals in those sectors. So when you talk about property performance, particularly for rental housing, that continues to be strong, partly because of the pressures on the for sale market with rising interest rates, logistics demands.

So warehouses in the US today we are at record low vacancies, less than three percent vacancies in the markets we operate in, which are the densest, most urban kind of areas. And we're also seeing very strong rent growth. And so I think when we're thinking about the real estate market, we continue to see a lot of strength. Notwithstanding there are pressures around us in terms of interest rates and persistent inflation, but we feel really well positioned

for that. And i'd also highlight that I think this moment in real estate, this cycle is quite different than others we've been different. That's a good different, I mean good different. When you think about what kind of lad to real estate downturns in the past, they're really two primary factors It was too much capital, generally in the form of debt, creating greater leverage, fueling new speculative development,

and it was too many cranes, too much development. And really, when you think about what happened in the years following the financial crisis and leading up into COVID, we really never saw those excesses come into our market. And so as we head into um, you know, period where there may be more economic headwinds, real estate actually is really well positioned from a fundamental standpoint. Economic headwinds are recession.

It's very hard to call, and I'm not so hard I think, you know, I think part of it is what we're seeing and and some of the things that I think the central governm us are trying to combat, which is just this continued strength that they see low unemployment, strong rent growth, and that is part of what the big challenges ahead. So I don't know if we're gonna

have a recession. I'm not an economist, but I would say we've been planning for a long time, and and this comes through in the portfolio we've constructed for an environment that might have been like this in terms of higher interest rates, higher inflation, and so we really focused on trying it to be in those high cash flow

growth assets. And again i'd say today we're still seeing those stronger than inflationary cash flows in our portfolio, but certainly we are always trying to position for environments that change. We've been doing this for thirty years. We've seen a lot of different environments. We thought we had seen it all and then COVID hit and hotel revenues went to zero. I'm telling you, no one underwrote that where we had

a pandemic. But the great news is our portfolios are built really to try to withstand any kind of environment, and the higher than anticipated rent growth we've experienced again may kind of come down modestly, but we're we feel really well positioned for that and distressed for you guys can be opportunity big time. We saw that after the

financial crisis in terms of housing. I would say, uh, environments with distress, with volatility, with a pullback in capital markets activity, and you know we're seeing in particular much more constrained capital markets today. That tends to be a great environment for us and really for any investor who is well capitalized and who has real strengths to lean on. So we have a data advantage. Our portfolio gives us

more information on what's really happening. And then I'd say the combination of deep experience from a large team and capital makes us well positioned to really support situations where others may be needing to sell assets, others might need liquidity, and we were able to then get in and buy high quality real estate. I want to ask you this week on Bloomberg Grende Economic Form, sam Zel commenting retail is still very much a falling knife and that the

office market will see a lot of downward repricing. And then you had Verry stern Lit at the robin Hood Investors Conference, Um of star Wood. Of course Capital in Usters says he sees incredible opportunities to find distressed investments in the real estate market. First, retail falling knife? Do you agree? I think retail has been under pressure for a long time, and that's a big part of why we have not bought a shopping mall in the US

in over a decade. There are pockets that are showing greater strengths, so grossery anchor shopping centers in dense urban areas, but I'd say overall it's one of the asset classes can more under pressure. And you know, in our business we played the counterpoint of that, which was warehouse investing, so retail brick and mortar, the movement of goods online is really what started that challenge was against a backdrop of over supply and a lot of places and so being.

But there's always kind of other opportunities and for us, it was, okay, how do we invest in the warehouses that are benefiting from the retail activity moving to a different format. But I'd say yea continuing continuing to see pressure in an area where we are more cautious. But like India, retails a different story because you guys are global, remember that, and I'd say there's overall been a consistency in the themes where we invest in globally. I think

a market like India is a differentiated story though. So in India, we're now one of the largest owners of shopping malls in the country, but there are i'd say overall, relative to a population that has one point four billion people, there are very few of them, and so um it's

a very different story. It's a country where the growing middle class, greater consumption, people looking to more toward organized retail as a place they want to go not only to shop, but eat out and have experiences and and and again not so dissimilar to what are the formats of retail that are going to thrive anywhere in the world. It's something offering more more than just a place to

go buy something. UM. It's got to offer that kind of you know, experience, community, UM and and you know, a whole variety of things that will attract people to those stores. So our our investment in India has been very successful. UM. We've made it I think at a great time also where there was a lot of change happening in the retail sector. More international retailers were able to access that more market UM. And that really led to a lot of strong leasing velocity for the assets

we were in. So a little bit different UM. And that's one of the great things that's so fun about our business is we have teams all over the globe and while certainly there as a classes like retail where we we have a more cautious posture, we have the opportunity to dig in and understand what's happening, regardless of whether we know at the time it's going to be kind of an area to really dig into and do more.

That was an example where the team kept at it, kept thinking about standing the problem and the challenge and the opportunity on its head and said, you know, this is a very different market and I feel really proud that we have an investment committee that keeps an open mind to that and says we know where we kind of want to go, but where the other opportunities present themselves and we can invest in scale, we're going to activate that. That was Kathleen McCarthy, she's the global co

head of Blackstone real Estate. Still ahead on Bloomberg Business Week while the Russia induced energy crisis and the inflationary fallout is putting the White House in a high stakes catch twenty two. For this president, it's really a matter of balancing these geopolitical concerns a very real domestic economic concerns,

the growing wave of so called resource nationalism. Explained. This is Bloomberg broadcasting from the financial capital of the World Bloomberg eleven Frio in New York to Washington, d C. Bloomberg to Boston, Bloomberg one oh six one does San Francisco Bloomberg nine six to the country, Sirius XM Chado one nine team, and around the globe, the Bloomberg Business app and Bloomberg Radio dot Com. This is Bloomberg Business Week.

High energy prices are stoking inflationary pressures around the world, you know that. And here in the US they are putting the Body administration in a really difficult position. This story in the Economic section of the new double issue of Bloomberg Business Week that explains why the president is now walking a tightrope as the world hungers for US oil and gas while American consumers fret over sticker shock at the pump. For more, we turned to Bloomberg News

Energy and environmental policy reporter Jennifer de Loewe. Well, really, we're seeing this kind of resource nationalism across the world as countries look to meet the needs of their own consumers UH and amid UH inflationary pressures and then also take care of other geopolitical concerns. In the case of the US and the Biden administration, really, UH, the concern is around energy. UH. The President is feeling tremendous pressure to help European allies UH deal with energy needs, especially

ahead of this winter and next year. Because of the Ukraine crisis and energy concerns that have been exacerbated by that situation. But at the same time, he's also trying to deal with domestic needs and concerns by American consumers that the price of food and energy is going up. Of course, they're dealing with, you know, gasoline prices that are increasing, and in the Northeast US there are concerns

about home heating oil this winter. So you know, for this president, it's really a matter of balancing these geopolitical concerns with very real domestic economic concerns. It's a you a story, but it's also a global story. I think about India bands and exports of wheat, you know, citing a risk to its food security, partly due to the war in Ukraine because it was earlier this year. I mean,

this is commodity is or fossil fuel. People who remind us it's a fixed amount, right, at some point we're all going to be competing for the same stuff unless we shift to alternative modes. Right, That's absolutely true. You know, other examples palm oil Indonesia, you know, beans in Mexico. It's far bigger than just energy, energy, just happens to be in America and the United States, that happens to be just such a big political and economic pressure point,

a big contributor to inflation. And of course, you know, America is an energy superpower. We are a large supplier of oil and gas to the world, and right now, that puts the President in a really unique spot. Interestingly, some of the bid to control the exports and the outflows of these products might not necessarily have the economic impact that American consumers want. But that's part of the

calculus that the White House is weighing right now. Can you talk a little at bit about that, like what difference it would actually make if they were to curb some of these exports, right So the consideration is curbing really petroleum product exports gasoline or diesel, not actually crude oil, And that's that's a live discussion right now within the administration. It would have a mixed impact and it would not necessarily reduce prices across across the country. In fact, some

areas of the country would see gasoline and diesel price increases. So, uh, the Gulf Coast and the Midwest, which is flushed with with priani rees, would end up being flushed with product. UH, So gasoline prices would likely decrease if you were to

clamp down on exports of that product. But some areas of the country that are really restricted and and don't have enough domestic supply coming in, who are reliant on imports to meet their needs, which includes New England as well as the West Coast, those areas would likely see price increases. That's something that we're hearing universally from analysts

and UH and energy experts. So, you know, this might look good, it might be a positive UH moved to some constituents, but the economic realities just don't seem to support it. All right, So what's likely because this is tricky, right, UH. Certainly the United States when it comes to energy, has to think about its own citizens, but it's also got some allies out there that are very important. What's the

strategy that the US is likely to pursue. Well, we know that the administration is going to continue to turn to the Strategic Petroleum Reserve, UH, where they have already tapped you know, US stockpiles of crude in a bid to keep the market imbalance and to keep prices down. The Biden administration started unleash an unprecedented release of those crude reserves in spring of this year, and still has some latitude to draw down barrels and release those onto

the market. So that's something we're gonna keep seeing. UH. And they're gonna keep exploring some of these other creative options, whether it's limiting exports or perhaps we're crying requiring refineries to hold more stockpiles in the US, and that's really a bid to UH to deal with not just the price concern, but also very real concern about stockpiles of domestic stockpiles of fuel being at incredibly low levels heading into winter UM and and particularly in New England where

home heating oil and diesel supplies are at historic lows. In the meantime, we see gas prices right now at three dollars and cents on average. That's coming from the Automobile Association of America triple A UH, still though higher by more than six percent from the lows and earlier this month than or I'm wondering about these continuing to climb higher just before the midterm season. Yeah, the huge political concern and headache for the administration. UH. You know,

prices hit their high in June. But but the fact that they're going up, and they're going up significantly on the West Coast, it's a real political concern for this White House big Thanks to Bloomberg News Energy and environmental policy reporter Jennifer de Lowie, be sure to check out her story in the new double issue of Bloomberg Business Week. Find it online and also on the Bloomberg terminal. You're

listening to Bloomberg Business Week coming up next. Despite a brutal two for digital assets, financial heavyweight are now offering crypto services to clients and delving deeper into this space. Executives from t ro Price, Citigroup, and Susquehanna joined him for a special Bloomberg invest panel. They talk bitcoin, blockchain, and the broader business of crypto. This is Bloomberg. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg

Quick Takes Tim Stinovich from Bloomberg Radio. This past week, Bank of New York Melon launched day digital asset platform in the US. It's gonna allow some clients to hold and transfer bitcoin and ether. It's just the latest example of traditional financial firms waiting into the still nascent crypto industry. I mean, we're talking about the oldest bank in the US now offering crypto custodial services, which is wild and

says a lot well. As we noted earlier, the Bloomberg Live team hosting our latest Bloomberg invest event this past week, and as part of the festivities, Tim hosted a panel discussion focusing on the wider adoption of crypto among asset managers and institutions. Yeah, we three great voices on the panel, Blue Machalari, she's head of Digital Strategy at t ro Price, Punet Singhvi is City's head of Digital Assets Institutional Clients Group, and Bart Smith is the global head of Digital assets

strategy for Susquehanna International Group. Timm, you began by asking Blue whether the latest crypto crash should be looked at differently from downturns of the past. With investors in the space out more than two trillion dollars collectively this year, you know, I've been in traditional finance and I left five years ago to go to a crypto native startup, and I started right at the beginning of the last

crypto winter. So our first track record day was January on and within months, the whole space had just kind of a lot of it had evaporated. There were desks that were closed to banks. Um institutions pulled back dramatically. What we're seeing this time is that even though we're in another crypto winter and we've obviously had this big drop in market cap, the institutions are still committed in

moving forward with plans. And we saw the announcement yesterday from Bank of New York melon which you know, everyone knew that they were working on this, but the institutional commitment is there in a way that it wasn't in and I think it's no longer an existential question. I'm like, well, will crypto cease to exist? Why is that institutional commitment

here now? And it wasn't here in it was such a new technology and a new space, and we saw, you know, would look like it was a significant bubble, a run up um and when the bubble burst, and we like the floor back then was like we're talking like six thousand like as a price point for bitcoin. So it's a huge drop. You know a lot of people who were already skeptical said, okay, this is it, Like,

you know, crypto is going to cease to exist. I think that institutions and the market more broadly have embraced this and continue to stick with it. And I think that there's a real generational piece that people are starting to recognize as well. Bar jump on in here, because you started in the currents that you're in, which is Global Head of Digital Assets Strategy at Susquehanna December one.

So right as the air was started to come out, what were the conversations that you guys were having about sticking with this versus say, wait a second, this might not be something we should do. So I was involved in kind of seventeen phase. The firm has been involved in in in bitcoin in particular for a long time,

mostly just buying it proprietarily and k Um. You know, we did have a build out in of a desk that was you know, providing liquidity for retail platforms and and some limited institutional customers, the limited few that they

were there. Um and and really what we've seen is this infrastructure being built out right, So there's a lot of institutions, pensions and downlands foundations who don't want to or can't practically use crypto native infrastructure, right, So even something like coin based, which is a very well known name. It's listed, you know, on the equity market. The you if you work at a pension or you work at an endowment, getting that on as a custodian is like

a Herklean task. And so when you see firms like Bank of New York, Melon and State Street, uh, you know, with black Rock announcement that they're going to have it on the Aladdin program, which the vast majority of the institutions use as a critical piece of infrastructure. I think that's the piece that in Blues comments that is different now it's I've wanted to invest in it, but I don't want to have to set up new vendors a

new fixed line connectivity. I don't want to have to get new software I can't use, you know, a non you know, brand name custodian and all of those solutions, while they haven't fully fixed themselves, you can see it on the horizon of that infrastructure being usable. But bar where's the drive coming from? Is it coming internally or is it coming from clients externally? Like clients clients and then of course their clients want access to it. Is

that what it is? I think that there's I think you're seeing from our perspective because we're like we obviously

trade in the spot markets. We traded in equities, but you know the kind of bread and butter Susquohannah is derivatives, right, futures and options, and you're seeing a world where, you know, when you get to like a real kind of bona fide prime brokerage solution where I can not only you know, cross margin my collateral for different crypto products, by as the class and by you know, investment type like options and futures, where in the equity markets or traditional markets,

they're all fungible. Now you're talking about real scale and you're seeing real institutions who can do strategies and it has liquidity that they would need for like a Brevin Howard to run a macro fund or a D. E. Shaw and these brand names. They they're not gonna messing around in an asset class where they can get like fifty million dollars in liquidity when they needed billion dollars in liquidity. And there's partners out there now ex. Susquehanna

who can provide that. And so as these infrastructure things continue to get built out, you will see the the types of strategies that people can to run right now are growing, and like the whole world is driven by macro right every headline, whether it's interest rates or central

bank activity, it's just driving everything. And like, what a great high beta way to express your opinion in that space than trading bitcoin derivatives and options and running strategies that you would typically run for commodities and currencies in this asta class. It's just it's a it's an amazing asset class as far as efficiency to express a view that way. And now you're seeing firms like ours who can provide liquidity that provides the infrastructure from them do it.

How are you thinking about this at the city? I mean, this is you've been at this firm for what twenty years in many different roles. This is a relatively new role for you. It's very fascinating kind of how this brings everything together, from payments to trade, finance, to foreign exchange or custody and very uniquely just from a capability perspective, So one whole site, I mean obviously the whole size of a trillion dollars the global financial markets a few

hundred trillion dollars. So when you think of pure capability lens of it, does it provide new set of capability which could actually enable additional efficiencies functionality into traditional markets? So do we expect, like the scripture to run in parallel do we actually see some level of overlap between the two. So you're talking about underlying technology that helps tratify as one of the components. What does that look like? So if you think of traditional component here, do you

think of etherea? This is one platform where you have money, You have different forms of assets in traditional markets, we have different systems and different infrastructures supporting different components of the financial markets also, which is very distinct between different forms. So if you have one platform which could actually bring money together with securities and could actually enable new ways of settling, a new way of communicating between different institutions,

that could be pretty unique. Now, obviously we're in the early stages of all of this technology. Scalabilities an issue because it is not as scalable as someone the centralized infrastructure is. It is not as robustly tested as some of the current infrastructures. But we're in the initial stages of a multiple pocs, which I call atkenization to organization

of collateral organization of private funds. And you saw the announcement kk ON made recently very initial days collateral organization of real estate and a lot of real estate assets are tied up an illiquid form. Could we actually have a way in which we can drive decority in that so the bonds and typically bond sizes are very large, could we actually fractionalize them in a more efficient fashion for retail customers to access all of those are use cases?

Is the government gonna let you do? This? Obviously has to be in a very well regulated format. The the risk tolerance of regulators when it comes to value transfer networks is very low, and it will be very true for issuers and investors. They want to ensure that they're really not worried about the the risk which is underlying in the infrastructure. So it's very critical that all these pieces are done in a very well thought of passion.

Hey Blue, Um, you were at a crypto shop for five years before this, and now you're at a firm that's eighty five years old trying to you know, make it more digital first, focused on digital assets. Um, how do you do that. UM well, I mean I think that one of the things that sort of core to TRO D n A is growth and innovation to growth, like investing in in growth strategies. UM. So well, blockchain is a new technology. Technology itself isn't new to tros.

So you know, for the past three years, we've had UM analysts who have been really building out robust foundational fundamental research across the ecosystem, try trying to understand the different pieces and how how everything comes together. And I think UM recognizing the crypto markets have gotten to a size where they will impact and interact with aditional markets is part of what led to the creation of this

role UM. We have. We have one of our analysts, m. Dante Peterson, who does amazing work in this space, and the way that he sort of explained it to me is that we need to be looking at everything in the early early stages. We can't show up when something goes public and be like, let's cover it right. You have to understand how all these different pieces fit together. UM. And and that fundamental research that like drive to understand things is very cord to the way that TIRO approaches

things UM. And I think that that's something that's where there's a lot of overlap with crypto, and I think it it is the right way to think about and approach crypto, right like you shouldn't start with answers, you should start with questions. That was Blue Matlari of tro Price, Pnvi of City, and Bart Smith of Susquehanna. Catch the full panel and more from some of the world's top financial executives. You can do that by going to blue Berg Live dot com and searching our Bloomberg invest event.

That wraps up our first hour of the weekend edition of Bloomberg Business Week from Bloomberg Radio. I'm Carol Masser and I'm Tim Stanoback. Ahead in our next hour, we're going to dig into the state of the retail sector. We're gonna do that with Viry CEO Joe Kudla and the Torrid Company president Kenna Tory, and the CEO of Sound Exchange explains how his company uses data to get music creators paid. Plus, we've got our cover story. No matter what happened, you know Twitter, the company is going

to look and feel very different. The trouble path ahead for a social media star war. This is Bloomberg This is Bloomberg Business Week Inside from the reporters and editors who bring you America's most trusted business magazine, Plus global business, finance and tech news as it happened. Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on

Bloomberg Radio. Plenty ahead in our second hour of the weekend edition of Bloomberg Business Week, including the CEO of Sound Exchange on shaping the future of the music industry and the way in which creators cash in. Plus enough close look at the retail sector with the CEO Joe Kula and the Tory Company President Kenna Tory. First up this hour. This week's cover story the Tale that Keeps on Giving and it isn't over yet. Elon Musk's pursuit

of Twitter. Business Week editor Joe Weber is back and Bloomberg News tech reporter Kurt Wagner joining us as well to explain why the platform faces only bad outcomes if Elon's four billion dollar deal closes. I think it became abundantly clear that no matter what happens, you know, Twitter the company is in for a crazy ride, and you know if Elon gets Twitter as we are starting to expect you know, that's going to lead the layoffs. Cost cuts are going to rescind a lot of the rules

around speech and and misinformation, is the expectation. So you know, suddenly this service's incredibly important is going to look and feel very different, and the company is going to look until different. Now, for some reason, this deal falls apart. Suddenly you still have a company that you know, has in the last six to nine months just in total chaos, and they have to kind of pick up and try and pretend like nothing ever happened. And I just don't

think that that's realistic either. So you know, the story was meant to kind of give people a glimpse into what the Twitter employees are feeling right now, which is a lot of which is a lot of chaos. So, Kat, we've been talking about this for months. You know, it's obviously probably the one of the biggest business stories of the year, and I'm curious, you know, one of the things that you hadn't here was even some new stuff about, you know, what the employees really felt about their potential

new boss. So take us there and sort of these slacks that you were able to get well, there's there's two scenes that are in the book. The first one is from early Elon showed up at the Twitter off site with the entire company and he complained about bots, and um, you know, at that point everyone kind of just sort of shrugged it off, like here's just a popular user who has an issue. Fast forward two and a half years and suddenly Ellen is still complaining about bots.

But now, you know, when he addresses employees in all Ends in June, the vibe is very different, right. It's it's no longer here's this outside kind of tech celebrity showing up to give us advice. It's here's the new boss starting to you know, lay down the future of the company. And employees were not happy. You know, he alluded to layoffs, he alluded to other cost cuts, maybe getting rid of remote work, which a lot of people at Twitter have really come to enjoy, and so on slack.

They're basically mocking that there soon to be boss as he's speaking to them. You know, there's things like, hey, is it too early to get a drink? Like this guy doesn't know what he's talking about, and you know that just gives you a sense of like how unhappy a lot of Twitter employees are with this, right that they would openly mock kind of the new boss during

the opening Q and A with with staff. And I just think there's only going to get worse from here, because there's a lot that's happened in the last couple of months to make him even less attractive to a lot of Twitter employees. Okay, so let's say he has to cut this check forty four million dollars, right, like he's becomes you know, owner of Twitter after all of this, what chess moves go down from there? Do we think? Yeah?

I think there's a few things. Um first and foremost, I imagine he's gonna put in or probably put in his own executive team. He's he's been pretty open that he has, you know, no faith in the current leadership at Twitter. We expect that CEO Prague Agawal will probably be out. Also, the top lawyer of Vigid Gotti will probably be out, So you know, there's gonna be new

new people at the top of this company. And then I think the other thing is, you know, he's talked a lot about wanting to bring quote free speech back to Twitter, right, and what does that mean? Well, for starters, it means reversing permanent bands. So we might see President Trump back on Twitter quite soon. We might see other

people who have been banned back on Twitter. But I also think he sounds like he plans to get rid of a lot of the rules around harassment and hate speech and misinformation that Twitter has been building over the last couple of years. That's going to have a huge impact on just the vibe of what it feels like. The scroll for your Twitter timeline right. And I don't know exactly how quickly all that stuff can be on rattled, but I imagine, um, you know, Twitter might feel very

different to people in the next couple of months. That's a really interesting point her, And that's when I really wanted to hit on because there is a you know, there's got to be a portion of people who think that this is a good thing. I've seen it play out on Twitter, and you see a lot of people say, wait a second, this is a good thing for Twitter, because you know, this is going to be more about

quote unquote free speech. So what else does it look like on the other side of this If this does go through, does it actually attract more people, does become a more attractive platform, or do those protections that must potentially takes away or could take away, does that hinder

people's experience on it. Well, you know what's funny is, um, there was a time, probably three or four years ago when Twitter was still very much struggling with all of this hate speech and Haraftsman stuff, and there were people leaving right like, Hey, I don't want to be on this health site. I don't wanna you know, people were saying that they were leaving right. And then Donald Trump got a band and people said, well, now everyone's gonna

lead Twitter because they banned President Trump. And in both cases, the numbers didn't really reflect either of those things. Right, Like it was, it was mostly people complaining about this, But the majority of us are stuck around now. In this case, I think that's probably the same thing that's

going to happen. Right. There will be people who are happy to see some of these rules rescinded, some people will be very sad, but for the most part, I imagine most people will probably stick around, at least in the near term. Hey, Kurt, one thing I'm curious about too, though, is you know, Elon Musk has a lot on his plate. Well, the ultimately how you know, have a deputy really you know running things that Twitter? How do how do we anticipate in my play out? Yeah, this is this is

still an unknown. Um. You know, I mentioned that I think the current executive team is probably going to be out the door. But who does he bring in to run the day to day It doesn't seem really feasible for him to do that considering his responsibilities that SpaceX and Tesla as well. Um, but one thing he did tell employees in June, and that we mentioned the story, is he said he doesn't really care much about titles like is he the CEO, is he something else? But

he wants to make the decisions. He wants people to listen to him. You know. So I do think he's going to be pretty involved at least in the direction of where this company is going now. He is he the one who's going to be, you know, answering emails all day about product tweaks? I don't know, it seems unlikely, but he does claim he wants to be heavily involved here. That was Bloomberg News technology reporter Kurt Wagner. He wrote the cover story for this week's special double issue of

Bloomberg Business Week. Joe Weber with us once again as well. You're listening to Bloomberg Business Week coming up, rethinking wealth creation in the multibillion dollar music business. The CEO of Sound Exchange joins us on the other side, This is Bloomberg. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick takes Tim Stinovik from Bloomberg Radio. It is the only organization designated by the US government to administer the

Section one fourteen sound recording license. Listen, listen, you'll learn more Now profit Sound Exchange collects and distributes digital performance royalties on behalf of five hundred seventy thousand music creators, and that number is growing and it's big stars names, you know. Yeah, they've got to get paid. And to help us understand that, the company helps artists collect royalties for the work that they do and the business model that supports it. Caroline I caught up with the president

and CEO Sound Exchange, Michael Huppy. Well, we're a very we're a very interesting billion dollar company that a lot of your listeners probably haven't heard of, but we make a lot of the services they use work better, uh. And a big part of what we do is help connect thirty six hundred streaming services like sirius, XM and

Pandora and I heart online. On the one hand, connect with them and collect payment from them for use of the recordings and the data, and then we take care of all that bad data, clean it up, fix the airs, combine it with the other thirty six hundred services, and paid out to over six hundred thousand creators. Basically, if you are an artist or a label or a studio producer who has play on any of these services, you get a check from us. Why does it have to

be a non profit? Doesn't have to be a nonprofit. We were actually created by the industry to do this very thing. We are purpose built. When you say the industry who got together and created you so, uh, kind of the entire recorded industry is what came together were well. So we have major record labels, indie record labels on our board. We have the Artist Union SAG after a FM.

We have artists themselves, artists, managers, trade associations. If you are an entity in the music sound recording space, you're you're represented on the board. You you did mention that. Um, you did not mention a couple of big names. You didn't mention Spotify, you didn't mention Apple Music. Uh. Those services are on demand streaming platforms that were interactive. Right. There's two two types of streaming platforms. One is we call interactive where you lean forward you make playlists, um.

And then there's lean back, where it's just a stream of music to you. Uh. And we operate a lot in the non interactive space. We do to other things. We you know, we're we're music tech companies, so we have data services that we provide some folks, we administer certain settlements. But for the purpose of this discussion, it's the lean back, non interactive services that we we spend the most of the bottom one. It's tracking, you know, services that are tapping into artists content and making sure

that they get paid for it exactly. And and to give you a sense of scale, Um, it's it's exploded. I mean the music industry, especially the streaming part is taken off. When I first came to the company, you know, fifteen years ago, we were paying out maybe twenty million dollars a year. We now pay out regularly over one billion dollars a year and we pay it out very quickly. We pay every month of the money we get in

the door is out within forty five days. You know, as I said, thirty six hundred services, we process thirty five billion performances a month. So it is a serious, high tech, high data operation. So if artist is getting paid by because their music is being played on Serious x M, are they only getting paid because of sound exchange?

Are they also getting a check from Serious x on for the sound recording part of the business that generally comes from us, um there are other licenses in the music industry as well, so very very it's very complicated. You know, There's there's a whole another music publishing side of the business, and Serious XM has to deal with other organizations for that. But for the sound recording, the

featured artists get money from us. And another interesting thing, we also send money to a fund that pays all the background vocalists and musicians as well. They get now they now get some downstream revenue and your proprietary technology to make sure that everybody who is creating content at whatever level is getting paid. But I'm thinking about conversations we have, couldn't the blockchain do this well, one day

the blockchain may or may not do it. I mean, technology is not trying to replace you in your but I wonder how you think about you've got proprietary technology, how do you take it to another level that maybe even makes it purer, more direct. So I will tell you for us, all technology, all platforms, they're just tools. Right. Our job is to work on behalf of creators to

make sure they get paid fairly and accurately. And if blockchain becomes the next thing, you're still going to need a place where there's authoritative data about who owns the rights and what recordings and where do they own those rights. So even if you have the blockchain and smart contracts, we would very likely still be a part of that as well. And it's something we're considering for our future. You know, where are we going to be in ten years?

And the blockchain and web three is very much something we're thinking about. Do you see what is the trend when it comes to the lean back versus interactive experiences? I mean, is it? Why aren't Why isn't Spotify and Apple Music? Why aren't they part of your platform? Well, because they they do have leanbacks experience, but they also have more interactive and for that they have to go to the record labels to get to get the rights. Will they ever be be just? Will they ever be

part of your platform? Well, look, we're We're happy. Would you like them to be? We're happy to work with anybody, you know, if you think about it, we are a trusted resource with as you say, state of the art, cutting edge proprietary technology and the best data music data in the industry. Um, And we would be open to working with any of these companies to help their back office, saves them money, helps us, you know, serve the industry better. So we would be very open to working with anyone

who wants to make it take advantage of that. What's the impact of musicians selling their music catalogs, um, Phil Collins, Bob Dylan, Springsteen. I mean, the list just continues to grow. So what impact has that had on you guys? Um? And kind of on the growing monetization if you will, in the music industry. Well, I will say it's a fascinating development. Um. You know, looking at this as an asset class now and having these institutional investors invest in

an asset class, it's great for the industry. It shows interest, it shows the future and what people expect. From our perspective, it just means, look, well we'll we'll send our compulations now, like does that help me in terms of our payments? Very much work into the valuations because we are you know, we're a large part of the revenue stream. Sound Exchange alone is ten to fift of the u US recorded

music market. So when these when these artists go to sell their catalog, the investors are going to look at the history of the revenue and we are very much a part of that. And from our perspective, you know, we'll pay whoever the artist tells us to pay. If they want us to send to the studio producer, we do. If they, you know, tell us to split the money this way among their bandmates, we will. And if they say, hey, I just sold my catalog to this pe firm, then

that's where the check goes. So do you know an up and coming artist before they are an up and coming artist, because you have this data, we we do have a little bit of insight into trends, maybe before they hit the mainstream. So I won't name any names. Are trying it to play favorites, But there are big artists now who we knew and we're friendly with. Who your favorite one, my favorite, my favorite artist, favorite your favorite artist, favorite artist. I would say else Costello or

Billy Joel Nice. I didn't expect you to answer the question. It is not like he's going to get them a better idea all because of are you um really interesting? And I think a business that we all just take for granted in terms of how it works. So great to get some insight. Come back soon. I appreciate you having Carol always tries me to get me to sing a song on air, and then I'm like, I can't because we don't have the rights to it, So don't get me in trouble. That Sound Exchange President and CEO

Michael Huppy still to come on Bloomberg Business Week. We look at a different type of content creation this time around. In the fashion world. Live streaming is really the way people shop in many parts of the world, most notably China and throughout Asia, and we're excited to launch it here. Kenda Tore, the president of The not Tory Company, on marketing, innovation, the strength of the consumer, and the cost of doing business.

This is Bloomberg Broadcasting from the financial capital of the world, Bloomberg Eleve in Frio in New York to Washington, d C. Bloomberg to Boston, Bloomberg one oh six one does San Francisco, Bloomberg nine sixty to the country Sirius XM Chado one nine team and around the globe the Bloomberg Business app and Bloomberg Radio dot Com. This is Bloomberg Business Week. Well, for this last half hour, we're going to get to two firms in the retail space, one catering to women,

the other all about activewear. First up, when we cut up with our next guest earlier this month, he was literally minutes away from launching the very first live stream on his fashion company's website. We're talking about Kenda Tory. He's a former Bloomberg colleague who is now president of the company created by his mom, Josie Newtry. The new Tory Company's new digital platform allows customers to engage with designers and stylists and to feel more connected to the brand.

We asked Ken about his firm's for a into content creation, as well as the macro environment, with inflation and a tight labor market still posing challenges. It's been easier in the past that certainly the last couple of months have been a number of headwinds, whether that be inflation, whether that be consumer spending getting hit based on you know, the stock market being problematic, and customers frankly just having

spent a lot over the past year. So you know, us as a company, considering where we were in two thousands money when the world felt like it was felling falling apart, we certainly feel fortunitate in terms of where we are, but certainly in the last couple of months has presented, you know, a good number of challenges. That's what I wanted to ask you, Ken, like, how are you like what life was like pre pandemic? And then as you said, the pandemic was just so tricky for

anybody in your space. And then kind of where we are today, are you back where you were you know pre pandemic? Yes, we are, so, you know, we all we started our our direct business early, but we headed into the pandemic, you know, more than wholesale. We planned for good growth for our website every year and plan for wholesale to kind of be flat, and we felt like we were ahead of the curve then. Obviously covid Um was very problematic for our wholesale business, but it

really lead to tremendous growth for for online. So all in all, considering where things were in two thousand and twenty, we do feel, you know, we feel very fortunate. But as I mentioned it, certainly there was there was such a high in two thousand twenty one that you know, companies like us, we felt like, wow, we made it. Consumers expending, everything's great. But then you know, reality has

certainly started to hit a little bit. It's interesting to hear your your what you see as consumer strengths in weaknesses right now, what about when it comes to actually operating and running your business. You know, we've been very focused on you know, employee retention um. You know, even before covid and I honestly feel like, you know, our efforts there really helped us get through those very difficult years. And certainly, you know, we've been blessed. You know, we've

had great employee retention even throughout the great resignation. So uh, you know, we feel very invested in our team and that has helped. But certainly, you know, we've seen which pressures go up inflation and really sort of crimp margins across the board. Hey, just trying to get inside your head. We were just talking about um our read picker who follows the Fed in the economy and can this whole

is concept of labor hoarding. In other words, you'd rather a company would rather hold onto a worker because it's so it's been so hard to get workers in this tight labor market, so they would rather hold onto it a worker rather than let them go, even if maybe they're starting to see a company that is see some weakness out there. Do you buy into that? Do you do that? I do buy into that. But once again, you know, we've been blessed in terms of, you know,

really having great employee retention throughout all of this. You know, to the degree we have added jobs, it has been more difficult than ever. You know, I'd say that was especially an issue kind of the first quarter of this year when hiring was just impossible. Um. You know, one benefit of the economy getting software has been it has been a little bit easier over the last couple of months as we have continued to you know, to add to the team. Um but certainly I think you know,

issues in terms of employee retention. Um, and really we feel like that this environment is here to stay and that's really, you know, a big focus for us going forward. Can you give us any sort of numbers how much costing you or what percentage you've had to raise wages or just the challenges that you're seeing and how it's

affected the bottom line. You know, it's hard to quantify, but you know, in terms of you know, our ability to to fill jobs before COVID compared to what it was, you know, towards the end of last year and towards the beginning of this year. I mean, we've had job searches that have lasted months and months and you know

we're fortunately just about full now. But um, it's a major issue and so you know, we certainly in terms of the cost of training, costs of searches, it's something that's sort of more cognizant, um in top of mind than than it's been in the past. All right, tell us about what you guys are doing in terms of

live streaming. Yeah, absolutely know, we're very excited. As I mentioned, you know, our our website you know, has been a tremendous source of strength both before COVID and certainly through it um and we're actually launching live streaming from not tory dot com. Um. Live streaming is really the way people shop in many parts of the world, most notably China and throughout Asia, and we're excited to launch it here.

And I think, you know, more importantly than ever fashions about making stuff, but really customers don't just want stuff, They really want to know, like, who are the people behind this? What does this company represent? So, especially as an independent business, um as a family business, the ability for us through live streaming to really talk to our customer, for our customer to have that direct interaction and to feel that closer connection UM to you know, not just owners,

but to employees as well. We think it's really going to be, you know, a big change in terms of the evolution of nottry dot com. Well, speaking of the evolution, I'm wondering how you're thinking about different ways to showcase your products, and how you're thinking about the metaverse and web three and if there's anything there for you. Yeah, you know, that has certainly been top of mind as well. You know, metaverse has been a big focus of ours and we have a partnership and maybe I'll come back

next month when when we're able to announce it. Great, but let's suffice it to say, you know, you guys know if you've been great to have me on when we've had new collections, we're gonna have a new collection coming out that's going to be available and it's really gonna help sort of push us into into three point Oh. That's kinda Tory. He's the president of the family owned not Tory company. Coming up, another company in the retail space. This one focuses on what to wear when you are

out and about and being active. Our conversation with your a founder and CEO Joe Kula is up next. You're listening to Bloomberg Business Week. This is Bloomberg. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovik from Bloomberg Radio. Just one year ago, the Southern California inspired active where brand Viewery got a

four hundred million dollar investment from soft Bank. At the time, it brought the company's valuation up to around four billion dollars. Joe Coudla founded the company back in and he still serves as its CEO. We wanted to know how his team put that funding from soft Bank to work and

where the business is today. Without question, we are dealing with complicated macro economic issues on a global scale UM, but we do feel there's a bifurcation between you know, best in class brands that are leaders in their categories, that are innovating UM and folks that are maybe called middle of the pack, more legacy mass market brands UM that are seeing you know, growth really slow as a

result of this inflationary environment that we're in. You know, we feel very fortunate to be UM, you know, experiencing dynamic growth this year. I feel our our customer, our relationship with our customer has never been stronger. Work cited about Q four and holiday. When we look towards we are being optimistic, but cautiously optimistic. We are planning for another year of dynamic growth. We're going to continue to expend our fleet of retail stores, but we're not trying

to swing for the fences. We want to lock in a number that we're that we're really content with, not overinvested in the business UM, and be be responsible with our growth because there are some macro factors that we're watching very closely, and UM, we just don't know how things will go. No, And you know it's interesting too. I think at the time about a year ago of that soft Bank investment, which was just about a year ago, UM, it was reported that you plan to open more than

a hundred stores in the US over five years. So as you look at those macro concerns, has that number been reduced or that plan that forecast been changed? You know it hasn't. Actually, you know, the performance of our stores UM today has never been stronger. UM. We're still very bullish on our vertical retail expansion UM. You know,

four wall contribution payback still best in class. And you know, we're in the unique position because you know, relative to the size of the market, theory is still very much early stage. You know, we're in our seventh year of selling in market UM, and there's a lot of opportunity to gain market share UM as we grow into the years to come. So while we might be in a more challenged macro environment, I think that will be counterbunts by the growth and taking market share from some of

the other more established players. So talk to us about growth metrics where Bloomberg we're Nerdy, we level these numbers, UM, so talk to us about top and bottom line growth. Give us an idea same store sales growth. What have you guys been seeing. Yeah, I mean this year where we're seeing, you know, the business is going to grow north of between seventy and top line UM at at a pretty sizeable scale. It's a number that we're very

proud of. UM. You know, our same store sales are still comping very strong over prior years, UM, demonstrating you know that. You know, it's still very much early in our awareness curve. People are experiencing the brand, We're converting them into loyalists, they're shopping with us for years to come while acquiring more new customers. So we see really great year over year growth in our existing fleet UM.

And then you know, as we expand the network across the country, you know, we're leveraging e commerce data so we can be really intelligent about where we go UM, and we tend to open strong and I think that that trend is really accelerating as the brand builds more and more awareness. Joe, how are you doing with inventory right now? We saw inventory challenges of course from Nike just in the last couple of weeks. Not to mention, you know, companies that we can't necessarily compare you to

like target, for example, how are you managing inventory? Yeah, a great question. You know, we have definitely seen impacts from this complicated supply chain environment um, although we are seeing it begin to normalize, especially on the logistics side of the supply chain. You know, getting your product in containers, getting it on boats, and delivering on time. That has become much more normalized. The cost of a container, you know, from Asia to the West coast of the United States.

You know, pre pandemic was you know called three thousand dollars. It went up as high as eighteen thousand dollars. Now back to pre pandemic levels or materially close to pre pandemic level. So the logistics aspects of supply chain have normalized, where we're still seeing a lot of challenges in the ability to source raw materials um and get them delivered to your factory partners on time. So what happened to the larger marketplaces, you know, your spring deliveries delivered late.

That created promotion as we transition from spring and summer into fall, and then you sell the same thing happened, you know, and it was it was a double whammy with the deliveries of fall being material delayed for a lot of our peers, and that's putting a lot of pressure on inventory levels. That's why a lot of folks anticipate highly promotional holiday coming up. Viewer. While we're not immune to these challenges, We've stayed very close to our

supply chain. We've dealt with delays, but nothing that's been catastrophic, and we've been able to maintain our full price business, which has been a goal of ours since we launched in the spring of two thousand and fifteen. And we don't anticipate in overly promotional holiday. So you probably you probably know better than anybody else the competition that's out there, whether it's you know, those giant brands including Nike, You've

got Lulu, Lemon, you've got under Armour. I mean, it's a super competitive market that could be on track for some slowing growth because you know, what we're seeing is people are going back to the office. I've stopped wearing my yoga pants during work. You know, I'm back wearing you know, what I would call grown up close was um in a big way. So tell us, you know how, what's the competitive advantage that gives you the optimism that

you can continue on your growth trajectory. Yeah, I think those Yeah, it's a great point, you know, And it's it's interesting. When we launched the brand, we were facing this competition and we saw nothing but open space. And I think it's due to our product positioning, our brand positioning, the ethos of the brand, which is built to move

in style for life. And it all comes down to building product that will support you in a workout, but it will transition and work across multiple aspects of your life. And so we prioritize fabrications that are have performance at their core, but they're incredibly soft. We design all of our products with a more modern athletic fit that works

across multiple aspects of your life. And we design our product with an aesthetic color story um that is sophisticated that identify you as somebody going to the gym, are going to compete in a sport, but it just again works across multiple aspects of your life. That was always the premise of the brand, and we applied it first and foremost to activewear product that you would move and

sweat in. But the brand has really evolved, and when you look at our assortment and where we're growing, it's evolved from core fitness into Outdoor, which is rooted in outerwear. And the fastest growing segment of our brand is travel commute, which is taking the lessons those technical fabrications and constructions that we applied to activewear and applying it to everyday sports where and that's one of the fastest growing segments

of our collection. And those are the products that you're wearing to the office, you're wearing to travel, you're wearing on the golf course. And so I think our vision to build a more well rounded collection that speaks to multiple aspects of your life is really benefiting us as you see the preferences of the consumer change. And so there are a couple of different directions that it seems like the company could go at this point in terms of traject or eight. One of them is the Lulu

Lemon route where you go public. Another one and forgive me, but this has happened before. I think of a company like Outdoor Voices, which you know, five years ago was the talk of the town of the town and has gone through several CEO Transitions and a New York Times profile that essentially said that it imploded after raising about fifty million dollars in funding. How do you avoid the

fate of a company like Outdoor Voices. It all comes down to your people, incredible leadership, alignment of your people, but higher talent to people that are much better than yourself. That's been our ethos from day one is building an incredible, incredible team that can see around those corners, you know, and prioritizing making incredible products. You know, we are maniacal about our products, our level of service. You know, the the NPS scores in our stores are off the charts,

and I think that's the most important thing. You know, it's hard comparison you look at a brand like Outdoor Voices in theory. You know, I wasn't great at raising CAPPA in the early days. Admittedly, um I didn't have a background building an apparel business, and so the little capital that I did get, I had to make it

stretch a long way. And so we prioritized, you know, the basics of business, the fundamentals of you know, acquiring customers profitably from day one, and we built a business that was profitable from early stage, and we never had to sacrifice that profitability for growth over the years, and I think that's why there received, you know, one of the highest private market apparel valuations ever is because we've been able to demonstrate a commitment to growth, doing it

profitably and also responsibly with our commitment to E s G and making decisions that prioritize the planet um as we're as we're building, which is an important part increasingly for consumers. We know that they look at what a company stands for their impact on the environment. Hey, Joe, just before we wrap up, So what's the endgame here? Is it ultimately to go public at some point? I think that could be a viable outcome. Right now, we're

very heads down building the business. We're having a lot of fun. I'm a young man, I've got a lot of energy for the business. We've got big plans for growth both here in the in the US as well as abroad, and so today that's what we're focused on. But you know, we want to optimize the business and provide the best return for our shareholders. A public offering could be a viable option down the road. That was Joe Kudla founder and CEO of the active fashion brand Viori.

And that wraps up the weekend edition of Bloomberg Business Week from Bloomberg Radio. Thank you so much for joining us. I'm Carol Masser and I'm Tim Stanibek. Be sure to tune into Bloomberg Business Week Monday through Friday. It starts at two pm Wall Street Time on Bloomberg Radio. You can also watch our daily broadcast on YouTube. Just search Bloomberg Global News and check out our Bloomberg Business Week podcast. You can find that at Bloomberg dot com, Apple, or

wherever you get your podcasts. Bloomberg Business Week is available on newsstands now at Bloomberg dot com, and oi's on the Bloomberg terminal. You can also see me on Bloomberg Quicktake available on Bloomberg dot com, slash qt, and streaming platforms like Roku, Apple TV, I'm Sung TV and more. Have a great weekend, everyone, Stay safe. This is Bloomberg m