Bloomberg Businessweek Weekend-October 23, 2020

markets as investors awaited for another stimulus package. This week, Bloomberg's Paul Sweeney and I cut up with a group of disruptors and those trying to take disruption and make the world a better, more equitable place, and that included the new president of George Mason University, Dr Gregory Washington. We've been able to figure out different ways to basically invent a new normal. Plus you might say she's a disruptor as well. Often referred to as the woman who

built Beijing. My conversation with Shenjong, co founder and CEO of Saho China and how China is back to work post pandemic. Speaking of disruptors, we begin with the cover story in the magazine this week. It's Robin Hood, the online brokerage that is one of the COVID Economy's breakout successes. The question is can it be more than an addictive trading app dominated by millennials. Bloombergs Paul Sweeney, and I talked with Bloomberg News investing reporter Annie Massa, a Blueberg

Business Week editor Jill Weber. One of the stories of the pandemic is just how day trading became the thing that has been captivating people on their phones for months now, and it's made people be doing things that are sometimes a little bit crazier than what they would have probably otherwise been doing, simply because there's nothing else going on

that looks like an entertainment in the same way. And so it basically almost become robin Hood especially has almost become sort of part of this like financial entertainment ecosystem during the pandemic. And so we've been watching it um along the way, and any Masa has been breaking a ton of news, and we wanted to kind of put it all together and just say, like, look, this is a robin and is now officially a pandemic path time um. But the question becomes where do they go from here?

I think, what's the plane? How do you take something that you know, they popularize free training, trading, fractional shares of ownership now, but where do you go from from there? And Anny, what did you find out as you tried

to ask that question. Yeah, that was a major question we were trying to figure out because robin hood has proved so amazing at just getting people onto its platform like it spread like wildfire um, signing up three million users in the first four months of the year alone, and so we were kind of asking, um, what's the

next act for robin hood. And when you look at it the way that they're pitching themselves to be investors, they say, Okay, we get these first time traders in the door, and then the next step for us is to have them grow with us into all kinds of other products that robin hood doesn't offer yet, but things like one day they'll want us for mortgage lending or car and rental insurance or life insurance. Even so, they have much bigger, much bigger vision for what they want

all these customers to do on their platform. That's not just trading, but the catches um. If you're going to offer things like insurance and you know, retirement accounts to people, you really need their trust and that's a place where they struggled. So and he talked to us about the typical robin Hood um trader or account user. What's the profile. I think that there is kind of a stock image

in everyone's mind of typical robin Hood trader. I mean of their assets under management do come from millennial users. So it's absolutely a millennial product. But gen Z is in the mix as well. And I think, um, you know, the typical image that you might get in your head of a Robin Hoide user is maybe a coge age or um, you know, kind of twenty something uh trader, a lot of men. But it's that's not the only profile.

We We spoke to all kinds of bell who used this up um, including people who don't use it just for gay trading, UM who are trying to invest a little bit more long term. And so it varies that that millennial group is core for them. And Annie, Um, you mentioned some struggles. Let's talk about sort of the the pieces of the puzzle that robin Hood users have encountered. And you know, some of them have become frustrated about

what what are some of those main greats? Absolutely well, one of the more recent issues was around two thousand accounts um were compromised in UM, which they found in an internal review, and that's UM newsually broke a couple of weeks ago. And the main frustration I think around this issue and others that have come up with Robin hood over this year, they don't have a customer service phone number and a frustration. What it's like you just

stopped right there. It's like, what, yeah, that's right, so and I mean it's really like it's very Silicon Valley actually, like a lot of companies that use all the time, a lot of tech companies don't have a real customer service number. But this isn't like this isn't like Uber, you know, I didn't get my car. It's like I

have a question about my investments exactly. And like if you're worried that your account was hacked or if there's an outage, like they had a major day long outage way at the beginning of UM you know, right before the pandemic lockdown started on March second, that lasted all day.

So if you're sitting there with your phone, like no, either the app is totally down or I'm seeing you know, funds disappear from that account because I'm worried it was hacked, like there's no one to call, and that those tweaks people out. So it's this question of, like, can we move into a world where people are okay with that one thing. Robin Hood was really an early mover into free commission trading, and at the time I think it was kind of a wacky idea and out as the

industry standard. I mean, around this time last year, Charles Schwab moved to zero commissions and all of the other major brokerages did the same, and now you know, zero commission trading is the industry standard. So I mean, that's one way they offer fractional shares. That's something which is the ability to buy just a piece of a stalk instead of the right thing. That's Bloomberg News investing reporter

Annie Massa and Bloomberg Business Week editor Joel Webber. Check out that full story and more stories in this week's issue that's on news stands now on the Bloomberg and online at Bloomberg dot com. And as you heard, robin Hood disrupting the online brokerage space with more customers than some of the established players. Later on We're gonna check in with one of the first disruptors in the financial world. We're talking about the financial platform Wealth Front. Coming up next, though,

Robin Hood, you just heard surging amid COVID nineteen. We know cases are also on the rise again, but kids as super spreaders. Our next guest says, not so much. We'll hear from the CEO of Surgical Solutions. That's next. This is Bloomberg is Bloomberg Business Week with Gerrol Mazer from Bloomberg Radio. This week, some tough headlines on the virus as a second wave continue to make its way around the globe, with the U s, Indian, Brazil accounting

for more than half of all COVID nineteen cases. Well. A voice that we've reached out to several times throughout the pandemic is Alissa Wrap. She's CEO of the healthcare solutions company, Surgical Solutions. They provide equipment, people, strategies or capital to the healthcare community. She also teaches at Stanford's Graduate School of Business in Chicago's Booth Business School. Bloomberg's Paul Sweeney and I caught up with a Lissa Wrap,

who reminded us about the difficulties of COVID nineteen. It continues to be a complicated COVID landscape. On the one hand, we know the diagnoses are up in fifties, six thousand, Inia day and thirty one states they're reporting more cases than the previous week. And yet there's an overwhelming amount of intelligence now that COVID nineteen transmissions from children, and maybe the children are not to blame. So I think it's it's a tough tough to navigate, So a lista

on that front. You know, the children here, you know, the New York City schools or you know, obviously the largest school district in the country opening pretty well so far. Does that suggest that maybe children are not super spreaders, which was a risk as we reopened schools. Great question, Paul. So you know, there was an interesting article on this in The Atlantic just about ten days ago that schools aren't the super spreaders um from an economist at Brown University,

Emily Oster. And I'm certainly not seeing that they're the super spreaders where we are in suburban Chicago, and if children are in math and socially distant between that between that economist view and the American Academy Pediatrics literally also printed an article that's at COVID nineteen the child does not to blame, and the nice Landic study talked about

how children don't give it to teachers. I am not an epidemiologist, I said at once, I'll say it again, but to me, the data is compelling that children don't seem to be super spreaders. And I'm really glad the reopening has been less um vial and pun intended than than people anticipated. Right. We actually had Emily on and we did a great story in Blueberg Business Week about her and just kind of her background and her thinking. But we also had her on to talk about her

work and her research. Yeah, it's interesting. I just did a big discussion with a bunch of global real estate leaders, and you know, there was a consensus, especially when it comes to colleges and universities, a feeling of we've got to get those students back. I think, you know, the concern among colleges and universities has been the older professors and their exposure. Yeah, and I teaches you you may know at Stanford University and University of Chicago, and they've

been very conservative about zooming. Only for the fall out of not concern for potentially me or my age peer group, but older professors. And I think that's actually gone better than expected from a student learning perspective, at least at the graduate level. But I think we do, of course have to be most concerned about our most vulnerable population, and that includes age and other comorbidities or risk factors, and that those are the folks who will likely get

the vaccine first, as they should. But the question now becomes how do we learn to live with it until the vaccine is truly widespread by the middle of next year. And I'm a little bit hopeful in spite of the numbers. I sided in the beginning that if children aren't the super spreaders, and we can at least get kids back to school with masks socially distant and safe wave, even

if it's hybrid learning. Like my my two daughters who are under ten, both enjoy than at least civilization and society as we know it can start to unlock a little bit. Hey, listen, you're you know your company you have over to un employees are really on the front lines of this. In the healthcare system. One of the concerns or questions I guess people have is okay, we were we, being the U S healthcare system, was you know, fairly well blindsided by this back in March of last year.

What have we learned from a healthcare facility perspective? Are we in better shape for a potential second wave? I talked to our major hospitals. We have forty across the country in nine states, and they are better prepared operationally in terms of PPE and supplies and protocols um. But a lot of hospital administrators think about COVID right now

as a second job. It literally doubles their workloads. So I think the bigger risk is not operational prepperedness, but but burnout amongst frontline providers as well as the administrators, because this has taken a major toll on our on our people. Hey, I want to go back to if I may just to listen to education for a moment. I do wonder if there had been some consensus, some

you know, overarching guidance from government. I'm not looking to get political here, but you know, some rules from the government about here's here's some plans and ways to to reopen education on a national scale, so that we didn't have all these hybrid approaches. Would that been better and maybe helped get education open up and running sooner and

more and safely. It may have, But I heard Dr Fauci speak to the Economical to Chicago about six weeks ago in his response to that question, and was I thought the best I've heard, which is we should Our federal response should be one of localization. So it doesn't matter what states you're in. It should matter what locality

you're in and what the cases are. Are they on the rise if you're in a If you're in a state where it's on the rise, but your locality is no cases of COVID like some of our hospitals in Rule Kentucky, then you should be back open. Your kids should be in school and masks the social distance thing, no matter what the state situation is. Although I don't know if Kentucky is a rising state today. But what

I think his answer is the best one. If the federal policy had been its hyperlocal decision making on this, perhaps we would have had more nimble responses. Perhaps, So listen, I guess you know, as it relates to these schools and so on. I mean, it seems like the virtual is working. That's what I've a high school student with a kind of a hybrid approach that seems to be

one of the more successful ones. I think hybrid with with some in person and some virtual learning does to me also, Paul, seemed like the more successful approach if, of course, you can flex to pure virtual if there's an exposure and if the world is very different comes spring and there's a vaccine that's why widely distributed, then people could be back. But I am grateful we're back

hybrid as well. In elementary school. I think the biggest risk, because we know, is our college campuses or graduate schools where adult young adults are are in concentrated settings and maybe not taking as many precautions, and that where we see a spread. So we'll see you know, Listen, you did mention you are teaching. Are you teaching classes right now? I'm just curious if you are and how that's going. Yeah,

thanks so much, Carol. I did teach this spring in the beginning of the pandemic, and I just finished a course at Stamford Business School via zoom, of course, and it's going well. It's just a different art form when you're when you're a professor at a graduate level with forty to sixty people in the room, you read the room and their body language, as well as probing them with the Socratic method. All that can be done via zoom. It's just slightly different and it has taken practice, but

it's gone well. Thank you for asking. So what's you know you think about? I have to children in college. Thankfully it's their last year tuition wise. Um, but they both said, yeah, it's not ideal, but we're kind of getting through it. Um. The only thing, you know, labs are a little bit of an issue, but other than that, you know, they were doing a lot of other stuff kind of remotely anyway as to get through the later years of college. M I think it also depends on

the nature of the student him or herself. Right, if this is a self starter, who is going to do the work? And still it gets to be in an environment with peers, hopefully in a safe environment with peers, social distancing and masks wherever possible. I think that it can be still really successful. That's a lesser Raps thee of the health care solutions company Surgical Solutions, finding ways

to stay connected with her students despite the pandemic. Check out that full interview at Bloomberg dot Com or wherever you get your podcast. All right, you're listening to Bloomberg Business Week. We talk a lot about the dual crises of the pandemic and racism. Our next guest says his crisis list includes a third item. We'll check in with the new president of George Mason University. This is Bloomberg. This is Bloomberg Business Week with GARYL. Masser from Bloomberg Radio.

Common themes through many of our interviews on our daily radio show understandably continue to be about the two crises facing our country, talking about the virus and racial injustice. For some though, that list is even longer. Take Dr Gregory Washington. He became president at George Mason University in July. Dr Washington spent some time with Bloomberg News Higher Education finance reporter Janet Lauren, Paul Sweeney, and me and shared what it was like stepping into his job at a really,

really tough time. We were actually dealing with three crises and so uh pandemic in our crisis and racial inequity, but also we're dealing with a budget crisis because many states were struggling to support their state universities. And so we had a hundred and twenty four million dollar budget

gap that I had to manage as well. So uh, suffice it suffice to say, to take care of the racial inequity problem required money which I didn't have, right, So, uh, you know, we tackle the problem as I tackle most problems as an engineer, right, and in a methodical kind of way. Right. You you eat an allstand one by at a time, and uh, and and you tackle it by bringing groups of people together to help you solve

the problem. And so we establish a task force on Racial Inequity and begin and started that task force working towards coming up with solutions that we're going to help the campus and UH as are makes stud of pandemic. We've put together a separate Safer Return to Campus task force that's focused on that and and we've had tremendous results in both and and and that is propelling the

institution for at this particular point in time. So, Janet, you know Ductor Washington talking about the precarious finances which we're hearing across so many different industries, and that includes higher education. What's your reporting been generally about what some of these big colleges, universities, how they're trying to piece it all together. From an economic perspective, Well, it's a tough time, partly because revenue isn't what schools are used

to seeing about this time. Uh. Fewer enrollments means less money. Uh, Fewer students on campus means fewer students are paying for UM storms there there, fewer students are paying for dining services. UM. They've all had to many of them have had to offer refunds for housing when students left in March. UM. Now George Mason is bucking the trend a little bit

in enrollment. We just had some numbers from the National Clearinghouse data source which we talked about a decline of fourteen percent for freshman enrollment and overall enrollments were down. But your enrollments were about two percents this year with record enrollment. UM. And you talk a little bit about how you accomplish that and where those numbers come from, Well,

they primarily come from in state students. And uh, you know, we are the beneficiaries of a region, being at a part of the region of the country where uh, the population is still growing, and that helped us but because we actually brought students back to campus, and we did so in an aggressive way, students didn't uh you know,

feel the need not to come back. Right there was if if you could, if you could take all of your classes online, or if you were gonna hit be hit with exorbitant fees and costs in terms of going to school, people started to ask the question, maybe I should take a gap year, maybe I should take some

time off and not come back. Well, we made it advantageous, and we made it uh year to our students that we were going to provide an environment for them that was maybe not quite what they had uh two years ago,

but something really really close. So we worked really really hard, but providing all sorts of ways for students to congregate safely and for them to enjoy fast food through our mobile robotic food delivery services from and so we put a lot of different uh you know, students can go to movies together, they go to we have this large drive in movies where students actually can do that together. Uh. And and we did lots of virtual kinds of engagements

with students. We have Tiffany Haddish on campus and other kinds of things. So so we've been able to figure out different ways to basically invent a new normal, which is what I think institutions are gonna have to do because they're gonna be dealing with the virus in about forty five seconds. I mean, how much does this set you back? This the virus financially well, Love, the reality

of the situation is it sets inspectremendously. Um, We're we're talking about a average student twelve thousand dollars per head for room and board. And if you and we got sixty eight hundred slots, so you just do the mask, that's seventy eight million dollars loss and we don't bring students back to campus and the numbers just go up from there. It's a reminder that for all of us,

this has a deep economic cost as well. That's Dr Gregory Washington, president at George Mason University with Bloomberg News Higher Education finance reporter Janet Lauren. That full conversation, by the way, check it out on our podcast feed still to come. She has often dubbed the woman who built Beijing. How China's major cities are getting back to work with the CEO and co founder of Soho China. You're listening to Bloomberg Business Week, and this is Bloomberg. Is Bloomberg

Business Week with GARYL. Masser from Bloomberg Radio. This week, the Milk and Global Conference wrapped up virtually and this year's event included a panel that I moderated and talked about on our daily radio show, is entitled real Estate in the Eye of the Storm that included commercial and residential real estate leaders from around the world. One of them was Shin Jong. She's co founder and ce of

Soho China Limited. And while many of us in the US are still working from home, as we watched COVID cases creep up again, life in China, well, it looks a lot like it did pre pandemic. People are back to work, a lot of people wear a mask, but largely, you know, life has gone back to normal. Uh. In the earlier time that the first two quarters of this year, we were checking uh you know where we installed um infra camera infra thermal to just check uh temperature, body

temperature every every person come into the building. We don't even do that anymore because China now has almost zero virus, so that's not required anymore. Uh. And you can just see that. Uh. You know, working life has definitely gone back to normal, and I think that's very important to you know, once people feel safe and you know, it's it's not that hard to get back to how uh

you know, ordinary life is. Uh. I know outside of China, outside of Asia, people really wonder whether this is going to be a transformational change that would people ever go back to work? Uh, you know the old ways and you know people are so used to working on online and you know this is not the case in China because you can see that. You know, it's there are people just everywhere and this is a office building. Uh probably you know, just in the middle of the day,

people want to go back to work. And I uh, I don't know how permanent is to change if people wanted to stay you know, in a secondary cities or moving to secondary cities, or stay outside of city. Remember that just pre COVID, there were times we're talking about how people wanted to work in the much more much more close environment, you know, more less square footage per capita,

like the way worse like the share offices. And you know that was just the debate or the discussion that we had pre COVID and you know, I don't see how a virus uh slow down this process of people want to work together because that we leave that really encourages communication, encourages innovation, and young people just want to be together to work together. Uh. So I don't see how a few months or even a year staying more at home would change that fundamental human desire to be together.

So do you have any thoughts on that in terms of industry and variation is when it comes to the commercial property market, I don't see difference. You know, I think it's human nature. And you know, do we want to work with other people together or do we want to work alone? That's really the question I think we all feel. You know, this is a great thing about humans. If we want to be with others, we want to

be with our coworkers. And ideas you know, would come out from these interactions only were when we're in a team and in the group of people with the group people. So see, and I want to bring you in because what are you seeing in terms of the tertiary or secondary you know, cities when it comes to Asia specifically, but it hasn't really showed that much of a difference. Uh,

you know, like it's secondary. Tier two cities in China are have never been able to catch up with the Tier one cities, and even with a massive population in China and with the incredible new infrastructure in these tier two cities, but still I think talents and companies are large really attracted to Tier one cities. UH. In America that might be different, but in China that has been

the case. UH. And I also wanted to add one point is um what we have seen in China over this October Golden Week, a one week national holiday, is that there was so much pent up demand in travel. Hotels are fully booked, and you know, restaurants are fully booked, and you know, resorts are fully booked, and you know, you could not move on the bund in Shamghai without pushing people around. So there was such a pent up demand because people were so frustrated lockdown for a few months,

and they were desperate to get out. And I expect that's going to be the case for London and New York. You know, as soon as the vaccine comes out, people feel free to travel, feel free to interact with people. Hey, Shane, what about your properties because it's mixed use? What are you're seeing on the residential side of things. We don't do that much residential in China now. We only do

office now. And I wanted to mention just uh, you know, as you said that, you know, central banks have printed so much money and with all these rescue packages around the world, we are we are, you know, living in a prolonged low interests re environment. And I think that would have a positive impact on real estate because you know, capital would be you know, chasing after you know, assets

with steady cash flow. So I think that that would you know, as as fixed income allocation would be reduced, I think, and then you know, some of that would

be shifted to real estate. Uh, as we continue to live in this prolonged interest rate, low interest environment, I wanted to share One thing is logistics different from the other traditional real estates like commercial hotels or residential is the east warehouses are but one is very quick to build and two is there they're not as location sensitive, so they literally can build anywhere outside of the city.

Um So in many ways, I think it's a there's a greater danger of over supply of logistics, logistics and the warehouse than any other properties because of this nature. Here's an interesting question um college and university campuses foster a very important community and has an incredibly large amount of students, faculty, etcetera. Any thoughts or strategies and how real estate will evolve around campus. We've done a lot of stories here at Bloomberg just as colleges universities have

either shut down or everybody's at home. You know how it's affected certainly the local economy. It's not just the university and colleges being impacted. Anybody have any thoughts on that. Students are dying to go back to colleges and uh, you know, I have to college sons, and they're dying to go back and to be with their friends. And they're really they see many of their friends already contract

of COVID and then recovered. But I think the issues and not the students, are the professors, right, and the faculties they are the older ones. They need to be protected. And if the students get contracted them, what happened to the professors and faculties. Well, and I know some schools are doing where they're keeping the teacher sequestered, but the kids are together in a classroom, so that at least there's a social aspect. And there's a question I want

to ask UM for you. It's actually from Michelle or any of the panels exploring investments in AI technology in regards to health and safety. Will there there'd be a great relationship there, Shan, Well, we we went through stars, you know. I remember at the time people were so afraid of being indoor, and then we change our building windows, you know, to from curtain walls to at least one you know, every floor has a certain stage of openable windows.

That was then the technology of the building, and now I think it's about futuring the people entering the buildings. So we have all these in proa thermal you know, everywhere and then and and you know you but you need more than just a technology. You also need the you know, the environment where you're allowed to use the technology. And my understanding in the US is that you have the technologies, but you're not allowed to use them for tracing for future and that in chime and we don't

have that problem. The one thing another question that came in UM had to do with climate change. How will changing climate, extreme weather events, rising ocean levels, wildfires affect real estate demand along the coasts or other vulnerable areas. If ensuring a home from flooding or wildfires becomes unaffordable, well,

governments need to intervene. And I know we've had some programs in the US where local municipalities are actually buying up homes that are in just terrible areas only because it costs those cities to have to rescue people when their storms and so on, so they're just trying to take those homes off the market. Um. Climate change in real estate? Um, is that something that's kind of on your watch list? Or I'll share one story that we

had because this is to do with the climate. Uh So, two things is, you know, for a while, you probably all knew that China was filled with the air pollution, especially in cities like Reiginia and Shanghai. And then so it was so bad that we were thinking, as a developer, what do we need to do to fil through the air. So what we did is we installed a filtering air

filtering system to all of our buildings. And knowing that you know, humans, at least the Chinese in China and in the cities are you know, eighty percent of a time are indoor. So we can filter the air indoor. We're probably doing some help and so that's one thing

to do with, you know air. That's John co founder and CEO Soho China Limited, talking about really so many different factors impacting the real estate market right now because of the virus, but also you know, getting into some of those longer term trends, whether it's climate change and the things that are really going to be the real estate stories for years to come. Check out by the way, that entire panely you can search on Milken Institute dot org,

Slash Global Conference. I talked with several global leaders, including of course Shen Jong. Among them Richard Mac, co founder and CEO of Mac real Estate Group, David Warren, CEO and founding partner of DW Partners, and also Jonathan Goldstein, who's the CEO of k and International. Really a great global perspective on what's happening in our real estate market. Well, that wraps up the first hour of the weekend edition of Bloomberg Business Week from Bloomberg Radio. I'm Carol Masser.

Still to come more on real estate people saw it. We'll hear from Don Peebles, he's the CEO of one of the country's few privately held national real estate investment and development companies that prioritize inclusivity in all phases of each of their projects. Also the economists that found sixteen trillion dollars when she tallied up the cost of racial bias. Will also check in with the co founder of wealth Front on Robin Hood and his company's next gen automated platform,

and then Luxury amid the virus. We'll hear from the CEO of Watches of Switzerland. This is Bloomberg. This is

Bloomberg Business Week with Garrol Mazer from Bloomberg Radio. Hi m Carol Masser joining me this week Bloomberg's Paul Sweeney and coming up in this hour of the weekend edition of Bloomberg Business Week, We're gonna hear from wealth Front co founder and CEO Andy rack Left on fintech disruptors, plus Luxury weathering the impact of the virus, Watches of Switzerland CEO Brian Duffy on that brand's retail expansion plans.

We begin, though with what was one of the most read stories on the day it hit the Bloomberg about the economists who found sixteen trillion dollars when she tallied the cost of race bias. We do like to do the math on things here at Bloomberg, and this story definitely delivered. Bloomberg's Paul Sweeney and I got more from Bloomberg News e s G reporter Sagel Kishen and Bloomberg

Business Week editor Joe Weber. Sagel UM found a story that is this one of these stories that it's sort of like, how do you how do you find that story? I think UM, And it's about Dana Peterson, who is a City Group global economist. She tried to put a price tag on race bias in terms of what it actually means to the economy. UM, Sagel. How did she

come up with sixteen trillion dollars UM? Well, it took her something like three months to do UM, and she poured over I mean, she's a macro economist, so she's normally looking at sort of like big macro economic data, but instead she turned to micro economic data everything from wage levels by race too, debt levels UM by county for instance, UM and basically tied the cost um you know, saying that over the last two decades. UH, the the U s economy lost out um on sixteen trillion dollars

because of racism. So say, jee's this kind of I mean, we're what's the source of the lost economic growth? It's it taxes? Is it GDP output? Where is where do we see it in the economy? Where sure it's it's it's a g d P. That's that. That was her calculation. She looked at the overall economy, um, and did it that way and in sidral talk to us about where where should it's landed her? And this was a project that took months, um, not something that anybody had ever

tried to do. And what was the outcome? Yeah, I mean, you know obviously through her reports at a law of wide spread, widespread readership when it came out last month. Um. But you know, since doing her report, she's taken up a role um at the conference board where she's now

the chief global chief economist. It's what's great about a story like this is and I feel like, you know, Joel, I feel like this is a this is a number we're gonna be quoting in a a lot of Bloomberg events, you know, over the next year or so, virtually or other because it's just you know, when you put a number on something, money talks, and money gets people to

do things. I mean, there's another one in your story, Sagel, that talks about her calculations and that an additional six point one million jobs a year, thirteen trillion in business revenue could have been generated over the last two decades if black entrepreneurs had fair and equitable access to credit. This is a story. I mean, VC, the venture capital world. I mean there's just no money going there. Yeah, now absolutely. I mean that number also struck me, that thirteen trillion

dollars in business revenue. That that's a huge amount. Um. But you know, she she did the work, she did the calculations, and we've also you know, our tech colleagues on the West Coast have done some story is about, um, sort of the struggles of black entrepreneurs trying to secure VC capital. So you know, this is the number. You know that that she puts on that which is is

is the huge number. And I think, you know, putting or quantifying this, I mean, this goes beyond the sort of the social and moral imperative of sort of ending racism. You know, putting a number on these things, and you know, to take her word. She says, this is a way that you know, people in the world of finance and economy and the economy, which is our wheelhouse at Bloomberg,

this is something that they can actually relate to. So entering stage going forward, I was looking in your piece, You've got some numbers about even going forward, the cost could be just outstanding eight trillion dollar gain and gross domestic product by if we can close the racial equity gaps. That that's according to alter Um, a nonprofit in in Aurbora, Michigan. So that numbers, I mean going forward could also be

just compelling. Yeah. Absolutely, And we've done a lot of coverage about how black and Latin X and other minority communities in the US have been disproportionately affected by by COVID and economically as one much as health wise. And so you know, given where the economy is now at the moment, is not an significant number. I mean, Um, what Dana mentioned is like it's a growth opportunity, and

moneymakers always always looking for growth opportunities. So maybe UM investing in black run businesses, for instance, is a way to to not only help that community, but to get

the overall economy back on its feet. Another thing um uh stood out to me in the story, and it's just sort of one of those daggers in the heart was sort of, this is a person that worked a city for a really long time and never put her face into the system because she didn't want, you know, her colleagues bias to impact um or of her ability to do her job. Talk to him, talk to us more about that side of the story. Yeah. Absolutely, that was one of the most point in parts of the

conversation that I had with her. UM. I mean she's she's been on um you know, UM financial news networks, including US. UM, so it's good to see. But um, yeah, it was a really sad reality um that you know, she wanted to be judged on her work first rather than people judging her on her race and so UM yeah, not putting her photograph on the email system felt that she would have a better shake um or fairly fair shake um at being um you know, chosen to do

presentations or or write reports. UM. But yeah, it was a really pointing part of the interview. There are so many professionals out there who unfortunately, you know, do endure the same sort of racism. UM that everybody else does, and I think we don't pay so much attention to that, and her bringing and talking about her story brought that to life. It was a real reality check. Well, nothing like research and data and hard numbers to give us

the facts in really a reality check. That's Bloomberg News e s G reporter Sagel Kishen and Bloomberg Business Week editor Joel Weber. You're listening to Bloomberg Business Week. Coming up, our next guest in his company dubbed the term affirmative development, where inclusivity is a priority in all phases of each real estate project that they do. We'll catch up with Don Peebles. That's next. This is Bloomberg. This is Bloomberg

Business Week with GARYL. Masser from Bloomberg Radio. We're bringing you some of the highlights of our daily radio broadcast and podcast, and that included a guest who understands real estate politics, understands making a difference and creating a more equal and just world. We're talking about Don Peebles, founder, chairman and CEO of the People's Corporation. He also served

on the National Finance Committee of President Barack Obama. Bloomberg's Paul Sweeney and I began by asking about the state of US residential real estate s seeing a lot of tail winds for a single family real estate. I think single family homes are very strong interest rate stories at historical lows, and so it's propelling a lot of buyers who are able to do that and take advantage of it or out of the market buy So that continues to be a bright spot. I think we're seeing UM

in some places. What was very interesting is in Los Angeles, the condo sales markets is actually doing well and UH as a surprising bright spot in the marketplace. And UH and that's again because people want to get out of their cars, they want to lift closer to where they work, and UH in their economies to getting open back up. I think the challenge in the industry in real estate

overall will be the obvious, which is retail. Brick and mortar, retail and hospitality sectors are very challenge right now, and the office is kind of a wait and see right now. Hey, don As you're well aware, there's this existential discussion going on, argument going on about the future of New York City. Does it have a future? Help? Right? Is it? UH? What are your thoughts. Of course, I think New York City definitely has a future and it will always be a bright future at the city of eight and a

half million people. That being said, about a hundred thousand residents have left Manhattan, which is a significant number out of two million residents. UM. I think what we're seeing in New York though, is a a perpetuation and continuation of a trend that was beginning to happen before, and

it started with the salt. Once the state and local income tax deductions were taken away, it started encouraging more high net worth individuals to relocate to more tax friendly environment and then there was a diminishment of quality of life. The city got a bit dirtier, crime was creeping up a little bit, and then with this pandemic it is exceled rate at that so I think on the high end ultra luxury side, the residential market is going to struggle.

Their sales volume for residential condos is down significantly and vacancy rates are at you know, um, all time highs um Right now, vacancy rates for apartments in Manhattan or New York City as a whole over five percent, which is a very big number and uh and then and then there is about almost twenty million square fee of

sublet office space. And we're seeing a shift. And what we're also seeing now is millennials coming of age of having being married, having kids and seeking out places that are more conducive to that where the public school systems are more predictable and uh, a little better quality of life and lower costs. So I think we're going to see a shift of what New York City looks like. Um, we're gonna see that. That shift is happening now. And and I think New York is going to become real

become much more affordable for younger people. And I think it will, you know, among of the silver linings of New York, and it will attract younger and more creative people, uh there because it will be more cost effective. Well, so what does it also the mean for You've got the gateway cities and then you've got secondary and tertiary cities. I mean, is that where you want to be investing at this point? Maybe not the gateway cities so much,

or I don't know, how do you see it done? Yeah, I think it's very challenging right now to make any kind of strategic long term investment in New York City. I think if you look at the emerging markets, the ones that are the what would be the tertiary cities that are emerging, and they're going to become much more dominant players. I would say Charlotte, North Carolina, has significant

good news recently. Uh they just got a new corporate relocation that's going to spend about two billion dollars on the headquarters. UM. You have uh, Tennessee, especially Nashville continuing to do well. South Florida is on a great run, both of them single family side and attracting more entrepreneurial financial services firms down there, and some of the bigger banks are beginning to look at backup house down there

as well. So I think that those types of markets, uh, and then some of the other I think the VATA is gonna begin to pick up in Texas is you know, Austen doing very well, will continue to do very well. I think it's the New York that's in the Chicago's um that are in the city. The major gateway cities are going to struggle. Boston being an exception to that because life sciences and the strong intellectual capital in that marketplace, are saving it from what would be catastrophic results like

what New York is beginning to see right now. So don't just quickly tax You mentioned the tax policy. What can states like New York and New Jersey and some others do. I mean, they just simply try to get more efficient a combination of things. I mean I think that, I mean, were they New York has to recognize the New Jerse. He has to recognize that they are losing

residents by the moment. I mean, we just launched a new private club in Miami Beach called the Bath Club, which is a private beach club, and we are getting, you know, flooded by applications of people coming from New York relocating down you know, just kind of almost sur the moment. So they've got to so New York, New York, New Jersey have to recognize they've got to compete for residents. So they've got to be much more efficient and take a fresh look at what role the government has, especially

in New York City. What is the role of the municipal government. It can't be everything to everybody. It's got a right size its workforce quickly, um and it's and this administration has been reluctant to do that, and then I think it has to think about longer term tax policy. New York should be in the business of reducing taxes and spent advising a job generation and productivity ton. One thing I wanted to ask you is, and I just got done earlier today doing a real estate for milk

in and it was with global real estate leaders. And one of the participants was Jean Jin who is the founder and CEO of Saho China, and she made a point of you know, there's very few women when it comes to global real estate. And I know we've talked with you before. And there were other participants in the panel and all white men who said, you know what, there is no diversity when it comes to real estate.

Are we making any progress, especially with what we have seen over the last and the conversations over the last six to seven months in terms of racism and inequalities? Have we Are we making any progress on any of this? UM? I think you know, yes, slowly but surely. UM. If you look at it, think about this. The global head of real estate for a black Stone is a woman, and and I mentally qualified women woman, and I believe that. I mean women continue to confront call out um the

you know, discriminatory practice. It's a glass feeling that they can find. They those glass feelings get shattered. Systemic problems require systemic solutions. We hear that a lot. That of course was Don Peebles, founder, chairman and CEO of The People's Corporation. Check out that full conversation wherever you get your podcasts coming up. We talked about the cover story earlier,

robin Hood disrupting the online trading world. Well, one of the early disruptors of the investing in financial world was wealth Front co founder and CEO Andy Rackliffe. Weighs in on the up starts and more. This is Bloomberg is Bloomberg Business Week with Carol Mazer from Bloomberg Radio. This

mixed cover story we talked about it earlier. It's all about robin Hood, which is exploded in popularity this year as millions of American stuck at home, including throngs of millennials, have been looking to make some money during a pandemic that has sent stock prices swinging. Well, robin Hood is disrupting the financial industry and certainly disrupting trade eating, but one of the first firms to do that years ago

is wealth Front, founded back in two thousand eight. Andy rack Left is co founder and CEO at wealth Front, and he gave Bloombergs, Paul Sweeney and me an update on the company. Where our next gen banking service that helps young professionals manage their money. So we provide high interest checking and low cost investment management services all through a five star rated app, and our vision is to automate all of your finances. We call this self driving money and buy that. What I mean is you can

direct deposit your paycheck with us. We automatically pay your bills and then route the remaining money to the most appropriate investment or savings account depending on your situation and goals. So with that in mind, the thing I think that's effected us for most are I think there's been a bunch of people rather than wanting a diversified and managed portfolio. I think that day trading has really taken off this year.

And the other big thing that we've noticed is that with the dropping interest rates, people are more inclined to day trade or try to pick securities in order to make up for the fact that they're not earning that interest on their seats. So Andy, during this pandemic, I've upped my digital banking game pretty substantially, I must say, um, and I find it with a number of financial institutions.

So it seems like these big players, they're investing money in fintech, they're investing money in their front end platforms as they integrate with their consumers. How what's your competitive advantage going against maybe some of the big commercial banks or brokerage firms and things like that. Well, I would say that it's business model and technology. So first, let me talk about business model. Traditional banks use branches, and what most people don't realize is that the average branch

costs the average consumer two hundred dollars per year. So if you take the cost to operate a branch and divided by the number of people that it serves, it costs you about two hundred dollars a year. A cost the bank two hundred dollars a year to offer that branch. Well, they've got to pay for that, and the way that they pay for that is through a number of fees that most people don't like. Next generation banking services like

wealth front don't charge those nickel and dying fees. So you're gonna be far better off, first of all, just not from not having the fees. Second of all, we pay interest on our balances. We pay point to be five. I use Wells Fargo. They pay me zero percent on my checking balance. So the fact that they have to support branches is a real negative for young people who don't want to go to a branch. It's probably a positive for a baby boomer who likes that personally a action.

So it's a very generational thing. On technology, thanks are terrible at developing software. You know, uh JP Morgan Chase got quite a bit of attention a few months ago because they rode off your personal finance app called Skin. In contrast, Wealth Fund is the highest rated financial app in the app store. Just because both companies offer software doesn't mean that they're of comfortable quality. You know, and you have seen a lot of cycles in the financial industry.

You co founded where general partner at Benchmark Capital, You've been an investor in the likes of juniper Um Equinox. I mean, you see the world from a lot of different angles when it comes to specifically though the financial industry.

What do you make of something like a Robin Hood. Well, every once in a while something comes along that really just captures the industry's imagination, and Free Trading really did that, and they've done a superb job of growing the business as a result of offering something that people really wanted. It's interesting and I think, you know, we're all in the old enough. Sadly, I guess to remember the dot

com boom day trading that kind of thing. It turned didn't turn out very well for some of those folks, and it kind of signaled in hindsight that was clearly up peak in the market. Any concerns about that here or do you just feel it's different this time? No. One of the funny things is that every fifteen years or so there is a day trading boom, and it usually coincides with a market that's gone up by fort

in less than six months. Because when the market trades up very, very significantly, it's like shooting fish in a barrel. Any stock pick is going to go up. The mistake that individual industris make is they confuse absolute performance with relative performance. You know, if the markets up in Europe, you think you're a genius in actually terrible that's Andy rack Left, co founder and CEO at the Automated Investment Service.

Weal front making a pretty good point when it comes to trading, something to think about amid the pandemic and the volatility that we're seeing in the market. And you can check out that full conversation by going to our podcast feed at Bloomberg dot com, Apple Podcasts or wherever you get your podcasts. Still to come, we may be doing more online financially, we are also apparently increasingly going online when it comes to shopping in the luxury space.

We check in with the CEO of Watches of Switzerland, Brian Duffy. You're listening to Bloomberg Business Week, and this is Bloomberg. Is Bloomberg Business Week with Garrol Masser from Bloomberg Radio. We're gonna wrap up this week with a check on the luxury space. Recently, our Bloomberg Pursuits team posted a story they talked with Hilton's head of luxury Brands, who said that year end will be the start of

travels turnaround. He is betting on pent up demand. But in general, we know the luxury space has definitely seen its share of ups and sounds because of COVID nineteen. Plumberg's Paul Sweeney and I checked in with Brian Duffy. He's the CEO of Watches of Switzerland Group who was based in London, and we talked with him from there. That's a city, of course that we know that was once again in the midst of the coronavirus. We've taken

it very seriously. We've been very careful. London has really been impacted, um, you know continually throughout this uh that's period and has actually moved a bit backwards in terms of a traffic and behavior, so we'll see. UM. So, Brian, this has really been, you know, a disruptive time, not only to people's lives, but obviously two businesses as well. How has this pandemic uh impacted your business really over

the last seven or eight months? UM A lot, uh you know, bets of results and we have a could have predicted I'm sure you've seen a results for the um ten weeks of the quarter that we're currently in then what we're actually three getting a plus twenty in constant currency, which I never honestly am an optimistic guy at the best of times, but I would never have predicted that um, and it just seems that, you know, we're very fortunate with the products that we sell. We

have a very big partnership with Rolex. Uh we're hugely popular brand also protecularly, but with more PGA brands in which you know, we have waiting lists, we have supply not making the demand overall, so we are a very fortunate situation. Um. It seems that our clients, particularly in the US or a business in the US, has been very very strong, and it seems that you know, people have money, Um, they have accumulated money. The traditional things that they might have spent it on a travel and

hospitality and fashion really hasn't been available to them. So our category has been popular and within that category we've clearly done a good job. So surprisingly we're trading, we're trading very Um. Well, what I'm wondering though, Brian, I mean, go take us back to March and April. What was that time like, um, And I know you just gave us the numbers. I believe it was for the second quarter, and you did see growth, and that does sound really

good considering this environment. You're right, you have a certain kind of customer base, But what was it like in March and April. I mean you sell through stores, you do sell online, but I do wonder yeah, I mean leading into the lockdown, and it pretty much happened. So our business is all Yuki in the US, and the lockdowns happened initially and started in the US Vegas and New York and Florida, and then the following week in

the UK. So but the middle of March all of our shops that had been closed around the world, and obviously then then that that took of an impact and it was almost a year end. The year end was the end the vehicle, so that really impacted the last quarter under and the results. Over all. We had great momentum leading into that period over trading in the US plus very five UK plus ten, so we were trading

very very well. But obviously when the shop shut as well, there's not there's you know, a lot you can do. Um we did, we think, we you know, money the situation very well. During the lockdown. We kept all of our people employed, we kept them all paid, we kept them all training. You can never train enough in this category, so all over people were doing tons of training and

we held it together. And you know, I can't wait for the stores to start opening it again, which we did in the US and in the months of May UK was June the UK. We have a very very strong online business that doubled during the lockdown period and we've been trading about plus fifty five since. UM, so well, and we're you know, we're better equipped. I think the most were very very active on digital. We we've we're

very good on CRM. We've got a great database. We gave all of our store guy Zoom licenses and training so they could sell remotely with Zoom. Very active in digital. We did lots of you know, lots of social media. You know, what is the way forward? I mean, what changes in terms of how you sell. Like you were talking about how you guys quickly pivoted and set up some of your sales folks to be able to sell on zoom. Does something like that stay, Brian? Does it

make sense? Sure it does, Carol. I think, you know, we've all really learned Zoom and teams and the Webbex or whatever. I think we've all really learned how to communicate that way affect of it can be um. So for sure, I think that's days. I think everything digital has hugely been accelerated the importance of social media, the importance that wed be put a big emphasis on CRM so we can keep in touch with all of our

all of our past clients. UM. So everything digital has become very very important, I think for everybody, and I think we've accelerated a number of years and what otherwise would have been a slow development. So Frank as it relates to the digital in your in your digital sales and as part of your total sales, what was that percentage before the pandemic and kind of work boarding that's

going to be on the other side. Well, but the unusual thing that you might be surprised to hear is that the market online in the US is is pretty underdeveloped actually for a for new products. So there's a very active pre owned market in the US, but not so much for new whereas in the UK the market for UM for new products from as as strong and overall m share of our total groups around where was around seven during obviously during lockdown, it's uh, it's it's

shoes like accelerated in terms of that percentage. We don't the biggest brand that we sell as roat Legs, and they don't authorize us to sell online, so that will always suppress the potential it's there. But for the brands that we sell online, we do up to the business. So brands like like Carti, Omega, Brightling, Tagure, for those brands in the UK we sell a bit of the business online and it's a increasing proportion and we have big ambitions to do the same in the US. So

what does Brian. I'm always curious when we you know, we're hitting into earning seasons, certainly here in the US, and what we want to hear from is, you know, leaders about what looks like. Um, I think, you know, we're just kind of scrambling and reaching for some kind of ideas of what visibility looks like. What what do

you think one looks like for you? But I think for us and for the whole luxury market, the critical you know thing is particularly luxury market, actually less so for for us directly as the amount of luxury tourism that's going to go on, amount of travel that's going to going around the world, and I'm getting it and less optimistic about that. Actually, I think the earliest so that we will see travel get back to normal. Hill As twenty two and beyond UM, so I think that

that will impact the luxury market in total. UM. Everybody in luxury has included are very much focused on the domestic consumer, which I think the longer term a good thing UM and I think both in the UK and the US for luxury watches. For US specifically the domestic businesses,

you know, as we're proving very healthy. In the year before a lockdown, it was seventeen our of our total business overall, so it's by no means of dependency our focus both UK and US is on domestic but it was seventeen seven of the seventeen was a Chinese and ten was there's other tourists and it was predominantly around London. But since then it's been it's been nixt to nothing for the summer and we've obviously had to overcome that,

which we've done and still still growing our business. So, Brian, in this environment we founder in what is your primary growth strategy and have you had to change strategies here? Really? No, we are. We obviously are doing well. We've confirmed all of our UM, all of our investments, both capital, we've actually stepped up our marketing investment all on digital UM so we stay front foot. We relieve we think the US markets usually underdeveloped for for what we do, so

we see great growth prospects in the US. We're opening stores. We're opening Monol brand stores that are big partners, will open eight of them before before December. UM, So we are we are front foot, We're believing in what we're doing, what we are working our way through this positively. And I think we're going to come out even more positively when the when the world gets back to normal. So what up up at night? UM, I think we've Obviously you do worry that things could go you know, very

negatively wrong. If there could be a an impact on production of all of our product comes from Switzerland, and if there was and obviously there was a lockdown in Switzerland earlier this year impacting production. If that happened again, obviously would it would be a worry. We don't anticipate it happening, but obviously could. UM when we look ahead. Actually a biggest concern is the next quarter we're going into, UM, the threat of the impact of local lockdowns picking up

the momentum. Concerned about the election in the US. You know, I think it's creating instability and kind of look forward to that being behind us, but it could impact in this quarter. Um, but generally a sleep okay at night. That's good to hear from Brian duffy, Ce of Watches of Switzerland Group, especially since there are so many stresses on today's leaders amid the uncertainty because of COVID nineteen. Pretty remarkable that they were able to hold onto their workers,

amp up their digital strategies. But definitely still concerned about the luxury market, especially as that luxury tourist stays away. That wraps up the weekend edition of Bloomberg Business Week from Bloomberg Radio. Thanks so much for joining us. I'm Carol Masser. Be sure to tune into our daily radio show Monday through Friday on Bloomberg Radio starting at two pm Wall Street Time. You can also hear more of our conversations wherever you get your podcasts, and don't forget

the show is also on YouTube. Just search on Bloomberg Global News, and be sure to check out our Bloomberg Business Week Extra podcast. This week, it's with Jim Steyer, founder and CEO of Common Sense Media. He's got a new book out. It's called Which Side of history, how technology is reshaping democracy in our lives. It's a great collection of essays from many voices that you definitely have heard of, and they're all writing about how technology is

affecting our world. Bloomberg Business Week, of course, available on newsstands now, on the Bloomberg and online at Bloomberg dot com. Have a great and safe weekend, everybody. This is Bloomberg.