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This is Bloomberg Business Week Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy. Plus global business finance and tech news as it happens. The Bloomberg Business Week Daily Podcast with Carol Masser and Tim Stenebek on Bloomberg Radio.
Hi everyone, welcome to the Bloomberg Business Wee Weekend Podcast. Yes, it was a big, big week with the FED cutting rates as expected, but surprising markets as Fedhair J. Powell said another cut in December not a given. Also, earnings from five of the mags seven Alphabet, Amazon, Apple, Meta and Microsoft.
It was a lot, Tim, it was a lot. And so this hour what you need to know from the earnings of those megacap tech companies and on the massive AI build out and spend because that came Beryl is what moved to some of these stocks.
Totally, totally. That was the big headlines. Also, we always love to get a read on how consumers are feeling and spending their money. We got a view from the chief financial officer at Wayfair, Kate Gulliver. She gave us a post check on a certain segment of the consumer. Are we talking about women who buy pillows?
Well, more than just that, I mean people have the money to spend. Maybe some people who are actually moving right now, that's true, you know, trading in for bigger and better stuff, growing families. I don't know.
And women who buy pillows.
Okay, well you're speaking for yourself. You mentioned the pillows. It comes up. That's just a little tease for our chat with Kate. It actually does look like the US has a sovereign wealth fund. Now we're going to explain a little later.
Have you checked who is the third biggest shareholder in Intel lately?
It's interesting, Carol, because we also have a lot of debt. Yeah, and typically countries that don't have a lot of debt don't have a sovereign wealth fund.
So many questions. We're going to try and answer some of them and what's going on. Plus in our second hour, over fifty five thousand runners will be participating in the New York City Marathon this weekend, including can I.
Say, yeah, you can say it. You're not going to find her someone you know, someone I know? Really well, I'm not saying her name. She would not be happy about that. But our wife is running.
That's why I don't say her name either.
She is running the New York City Marathon.
All right, Well, we're going to be talking with the CEO of the New York road Runners Club, so looking forward to that. First up, though, we start with this past week's earnings from the companies whose stocks influence US market moves more than any others. And as we said, it was a huge week for big tech earnings, Microsoft, Alphabet and Meta and many more. Couple more in fact, all showing that the AI spend is on. With a look at some of the MAGS seven reporting this week,
we talked with Mark Mahaney. He's senior managing director and head of Internet Research at Evercore ISI. He's also author of Nothing but Net ten Timeless stock picking lessons from one of Wall Street's top tech analysts.
Mark, I think we want to begin with Meta Platforms. Is the stock down as a result of what it's said about KAPEC next year?
Yeah, that's the cappex and the total expense guidance that they for next year was more aggressive than the market wanted this company. Zuckerberg was very clear about it. He wants to be the AI leader. He's going all in on superintelligence, and investors are a little cautious and nervous about that.
Why aren't they buying it?
Well maybe for two or three reasons.
Tim, You know you're here asking asking a really good question, which is why aren't they buying it? Well, maybe we don't really know what it is, so you know, all of us are sort of scratching our heads because I guess we're not super intelligent. I'm not trying to figure out exactly what's what's going to come out of that, Like what's what's the product going to be, what's the offering going to be, and how you're going to monetize it. That's one reason we just really don't know what super
intelligence is quite yet. Second is it's very competitive. So Google's chasing it, open Aye is chasing it, and Metta isn't. There probably other companies too. I should assume Apple and Microsoft are too. And I think the market's just a little skeptical. It is skeptical that that Meta is going to be able to do this sufficiently effectively generate a good financial return. So that's why it's really those two reasons we don't know what that end market is, and
we don't we don't. The market maybe is a little nervous about metas odds against that against that unknown end market.
You know what's interesting too, and I've been thinking about this mark is and by the way, we're creating a super intelligence club right here at Bloomberg. So we would love for you to join in the next club meeting. Hey, you know, is part of it that, you know, the spend for Meta. It's not like they're one of the hypers, you know, they're not Microsoft or alphabet who can kind of offload some of the spending on other companies. Is that part of it?
Yeah, I think that's right.
I think I think you're right in saying that that Amazon sells super intelligence or can sell AI services to other companies. Microsoft does through Azure, they have cloud services, and so does Google.
And there's not kind of.
That obvious external you know, commercial enterprise offering. Meta doesn't have that, So the return is going to have to be on Meta itself. And so that maybe at the some level that maybe that's the third reason why the market's a little skeptical, and.
So skepticism smart as we should be in any environment, especially when there's a big spend out there, you still have an outperform on Meta. So time give it a little time, right to kind of watch and see how this plays out.
Yeah, I'm going to take up the opposite side of this. So this is what I've learned following Meta for a long time. But just in the last couple of years, this company aggressively invested in AI and they used it to dramatically improve their core products Instagram, WhatsApp, Facebook, And what's the evidence, Well, consumer engagement has increased materially over the last couple of years, and advertiser returns have increased materially over the last couple of years.
What's the evidence of that?
Meta has probably got the strongest advertising revenue growth, you know, twenty five twenty six percent at scale at two hundred billion, you know, revenue run rate. That's better growth than anybody else has in the direct competitor has in the sector. Maybe I'll be surprised by one name in there, but I doubt it. So to me, I step back and I think, well, they've actually shown a great ability to
deploy AI to improve their core products. I'm going to give the benefit of the doubt that they could probably deploy AI to create new products. And you know, they just start off with so much I call them the three c's, compute, capital, and cranium, that you know that there's probably going to be more than just one winner in superintelligence, and I think metas a decent shots of winning it. And by the way, I don't have to bet. I don't have to spend too much on this. The
stock trades it close to a market multiple. And this is so different Carol Vins. Three years ago when Metacore business was under attack existential risk coming from TikTok, and they were throwing money at this thing called the metaverse. This is three years later and there's no existential risk to Core Meta And in the meantime, they're throwing money into something or investing aggressively into something that some of
the sharpest other technology companies are. There's probably there there If Amazon, if Google, if open Ai, Microsoft and Meta are all betting on or investing in superintelligence.
I do think think about Metal Lot. You know, when they came out of their IPO and reception not necessarily so good, and the pivot in terms of was it mobile, that they needed to think about more and then the met and then you know, they moved quickly and then metaverse all in and then maybe that wasn't right, and they pivoted again, like there is something to be said that this company does. Look, you know, tim kind of what's going on and then making the necessary adjustment quickly.
Well on that, Mark Mahaney, the idea of the cranium part of this, and maybe this is not what you're referring to when you said cranium, but we got to talk about face computers, this idea of the ray band, metagen two glasses, the success, the runaway success. I was surprised to see how successful, or I've been surprised to see how successful Meta has been when it comes to wearables. Ro and Mark German loves these things when he tried them a few months ago. And the user interface is
the next You've covered a lot of cycles. Is the next platform for computing wearable glasses?
I don't know. I guess I'm skeptical that it is. It's possible.
I don't know why I doubt there's one solution out there. I think wearable glasses can be one solution. It's probably more than a niche, but I don't know that it's mass market, so I don't know what the something in the middle there. I guess I'm a little skeptical, but you know, they've certainly this is a heck of a lot of this product is a heck of a lot better than what I wasted money on with Google Glasses years ago.
But all the stuff feeds on and builds on itself.
Well, I'm just having trouble then understanding where superintelligence comes into this. And like you said, we haven't seen this before. But if that's what the big bet is and that's what all these companies are working on, how does that manifest in a product? Is it that Instagram just becomes that much better at knowing us and that our targeted advertising is that much better? Is that it?
I hope they's do it in that.
I think the vision that's been that Zuckerberger's talked about just as much as anybody else Sam Altman's talked about it is a personal digital assistant, so an AI system that would not only find information, do research for you, help you figure out how to buy a new car, what are the best running shoes for you, but also help you tasks like maybe buy that car or buy those shoes for you at the best price and get them, you know, with the fastest speed, and perform tasks for you,
like help you book that family vacation, not in the average three and a half hours that most families take, but in the you know, thirty minutes or twenty minutes or fifteen minutes, and do all these tasks, you know, kind of do them for you and you can come back and have them done. So I think that's how to think about it, you know, I'm hoping that all that comes together.
Look, I try, I spend a lot of time with Gemini.
I've spent a lot of time with you know, chat ept and and you know, I've run it through its paces and doing projects and tasks like that. They're not they're not there yet, but I see the potential and I see the ongoing improvement. So I think that's what we're waiting for, These personal AI assistants that are going to be able to research, find information and perform tasks for us and going to do it seamlessly and quickly. And you know, that's what we're all sort of hoping for.
That's Mark Mahaney, Senior Managing Director and head of Internet Research at Evercore ISO.
On Thursday, both Apple and Amazon reported results. More on that ahead, We started with a look at the numbers from the world's largest online retailer with Bloomberg Intelligence senior analysts for e commerce and ath Leisure Punum Goyle.
Sales were very get across the board, across all business segments, AWS, online advertising, even physical stores. So from a top line perspective, very very encouraging results. In fact, AWS was probably the bright spot here twenty percent gains. We haven't seen that in a while. On the margin side, I think AWS did really well, but then when it came to North
America margins, they were weaker than we expected. So it's the only one area that I saw some skepticism, and I think that's largely due to their ability to want to maintain low prices to make sure the consumer keeps coming back and investing in its fulfillment.
So you think that margins took a hit because Amazon is keeping prices low.
Why, I mean, they want to drive market share gains. Right, So, if you think about what's happening in retail this year, tariffs have clearly added to costs and many retailers have decided to offset those costs through efficiencies to try to keep an hold prices steady or raise them selectively, so
that could be part of the pressure. And then also, you know, Amazon has stepped up its game on shipping where it was the leader and it still is the leader, but they're continuing to invest there to get items to faster, same day, etc.
So what else can you give us in terms of color on the retail side of the business, which is something that so many of us right identify very clearly with when it comes to Amazon.
Yeah, I think, look, they're making all the right investments to improve profitability. In the longer term, Amazon's retail businesses finally break even too profitable. It took a long time to get here, and I think automation will be the
next leg of growth to drive that further. But as I've mentioned you know earlier, AWS is driving their EBIT margins, so AWS some compensate these investments to a certain extent, and so can advertising because the margins here are just so much higher than they'll ever be able to get in the retail business.
How is how is the advertising business during PUNAM It's doing really well.
Like Brow twenty two, percent in constant currency in the quarter, so right where we expected. And I think, you know, that's a high profit business. It's about seventy five to eighty percent profit margins by our estimates, and that's flowing right to the bottom line. We see it going to one hundred billion dollars. So there's a lot of improvement that they can build in advertising and really drive that business higher.
From here, where's that coming from? Is that coming from interstitials placed in Amazon Prime Video which cut a lot of people off guard when they started doing that. Was it last year maybe? Or yeah? Or is it or is it coming from like products that are paid for placement.
I think it's a combination of both. You're absolutely right, these ads are driving incremental revenue, but if you think about the base of this revenue base, it's still coming from product advertisements. The ads do help, and they will become a larger drive as the ad business grows in size, but the core of it is still product advertising.
That's Bloomberg Intelligence Senior analyst for e Commerce and ath Leisure Punham Goyle.
Still ahead on Bloomberg BusinessWeek. The Trump White House continues its investment push. This time they're going nuclear.
This is Bloomberg.
This is Bloomberg Business Week Daily with Carol Masser and Tim Steneveek on Bloomberg Radio.
The Trump administration is taking the same investment strategy it has applied to mining, steel and semiconductor companies to a new area, domestic nuclear reactors.
The US will be the initial buyer for multiple reactors from Westinghouse. That's according to Simon Maine, a spokesman for Brookfield Asset Management. It's one of the manufacturer's owners now.
Tim THATTT News comes just shortly after reporting that the White House is in early stage conversations with quantum computing companies to discuss potential financial support for an industry that's part of the growing race with China for technology supremacy. And after taking steaks, as you know, in a lot of other companies, we're talking about Intel, MP Materials, Trilogy Metals, and Lithium Americas.
To help us make sense of what some say is a push to create a sovereign wealth fund, we caught up with a Bloomberg News economic stakecraft reporter Joe Doe and Bloomberg News Senior White House correspondent Josh Wingrove.
Our reporting is that these talks are ongoing but preliminary. Remember Biden had his Chips Act and they sort of made all these pledges. Trump's administration has made clear that they are really redetermining, let's say, or reprofiling a lot of this funding. We've seen it, of course with the Intel discussions and then converting the Chips Act award into an equity stake. Frankly, Democrats wondered whether that was legal
or not. And now the question is what they do with other chips AC funding, in particular on R and D funding. And our understanding is that that is what is being sort of kicked around now, not necessarily limited to quantum computing, but early stage, preliminary discussions. You know, I don't want to, you know, find myself at odds with the Wall Street Journal, but our understanding is that this is not yet proceeded to the you know, hashing out of direct stakes and that kind of stage of things.
But I suppose time will tell. What is clear is essentially from all this reporting that there is a sort of a trajectory here, right the Trump administration sees quantum as a sector that it wants to bolster invest maybe add to its sort of strategic landscape, if you will, of industries that Trump is getting more and more involved in and you know, trying to support domestic development of and so whether you know how far it goes and
how far it is. You're seeing some conflicting reporting on it candidly right now, but the trajectory seems to be pointing in one direction, which is the quantum is something they're sniffing around.
All right, so Jojo, come on, and what you're hearing, But I also want to layer on top of that. You know, in essence, is the United States, via President Trump, kind of actually operating, if not officially, kind of a wealth fund of the United States as it continues to ponder taking positions in companies private or others, a lot of public companies already having taken stakes as well.
In short, yes, listen, I think look at this quantum computing article that we have out, and you add it to some earlier reporting that Josh and I had about a tungsten deposit that the US is backing a US private company to purchase ad on top of that intel
US steel imped materials. It goes on and on and on, and what we're really seeing is a United States federal government that is comfortable with having a pretty broad reaching portfolio that it is either taking active stakes in or financial backing to have some direction in terms of these companies that they believe are significant in terms of national security.
And I think if I can tie it to that question of the Sovereign Wealth Fund question, if you look at this quantum computing story, as Josh has, at the very least, it points out how broad reaching the administration's idea of what is nationally significant for security purposes really is.
Yeah, I think the question that I have is what happens, Josh or or yeah, Josh, I mean, what happens to the companies that do not get investments from the United States? What about competitors in the space, whether we're talking about quantum computing companies or we're talking about rare earth miners that we're talking about metal producers, like, what happens to those?
I mean, this is the question of the sort of handful of conservatives who are willing to speak aloud what a larger number of conservatives have along and always believed and probably do but still believe, which is that they don't feel comfortable with presidents of either stripe picking winners and losers. Right, This used to be something that the Republican Party, you know, this was not a tree that they were barking up all that often. And so Trump has changed the calculus in so many ways. So I
think there's a few things swirling here. Number one, of course, how far will it go? We just don't know. And it's also unclear whether Congress, including but not limited to Republicans, would start, you know, sticking its head up and saying, hey, wait a minute, in particular with how they're interpreting the Chips Act, which was bipartisan bill that, in the eyes of the lawmakers behind it, set out the rules of
what you can and can't do. And number two is okay, well, if this is the new reality, and if the Republican Party is really moving on this, where does it go from here? And if you know, if the next president's a Democrat, decides to take it further than this, you know, or even roll it back. It's just really up in the air right now. But President Trump has made it clear, as as Secretary Lutnik, that they're both interested in this sort of idea of like getting skin in the game
or getting something in exchange for taxpayer support. They call it, you know, they see it basically as a fairness issue. You do not get the support of the government if we're not getting something out of it ourselves. And so I think there's no sign that is going to slow down right now with this administration.
Joe, you cover economic stakeecraft. You've spent many years covering metals and mining. You understand rare earth. This is sort of the perfect cross section of what you've been focused on for your career. But if we think about now the Trump administration taking investment in many different types of industries, from tac to metals to rare earths, what are people talking about could be next everything? I mean, I mean thro Intel in there, right, yeah, I.
Mean this is the great experiment when you know, Josh and I and Ryan, we had the terrific scoop that Intel was suddenly on the map for an inequity stake, right. I think I think that really got the attention of investors in a way that like MP materials and critical
minerals had not. I mean, the kind of scale you're talking about with Intel shows you how big this administration is willing to think in terms of using the full force of the United States federal government to put into motion the things it thinks are important and where we go from here. I mean the phone calls that I sometimes have with Josh and others saying, hey, we should look at this thing is wild and wild is being reportable.
That was Bloomberg News Economic stakecraft reporter Joe Doe and Bloomberg News Senior White House correspondent Josh wing Grow.
And speaking of Nvidia, it's also partnered with yet another company. This week, the AI chip maker took a two point nine percent stake in Nokia, using its chips to boost Nokia's software for five G and six G networks. Bloomberg's Ed Ludlow sitting down with the CEOs of both Nvidia and Nokia following that announcement, and here is some of that conversation with Jensen Wang and Justin Hotard.
If we take advantage of this transition from general purpose computing to accelerated computing, from old types of all types of software to AI, we can take advantage of this transition of AI and six G for America to win back telecommunications again. It's been a long time since the American telecommunication network has been built on American technology.
National security, I believe.
For national security reasons, for economic reasons, our industry should be built on American technology, and for the very first time, we can do that. We have a brand new product line that takes advantage of computing, accelerated computing, and AI, and we have a great partner to help us deal with Nokia.
There was a time where Nokia was already looking to America. You've been in the role since April, then may I stop by asking you what role the administration played in bringing you both together? If this is indeed a strategic priority.
I don't think there was anything specific that the administration did other than they've created the environment to support innovation. I mean, Jensen's talked about manufacturing, but it's also about
R and D and innovation and technology leadership. And if you think about where this world is going, and all those incredible devices are going to be built on nvidio platforms, robotics, autonomous vehicles, augmented reality, virtual reality, we need a different kind of network in the future, and that's what we realized, and that's why we wanted to forge this partnership so that we're building a network leveraging AI for AI services, and that's really the big change.
And the technology is flowing both ways. I mean, what is it that you will be able to do with Nokia Jensen that you weren't able to do on your own.
Well, first of all, Nokia is in all of the world's base stations, and this air scale platform of Nokia's and millions of base stations around the world. If our computers are not inside that base station doesn't help. It's no different than videos tech computing platforms not inside of cars doesn't help. And so the first thing is we need a partner to get us into the world's base stations.
We also remember we're bringing AI to radio networks, AI to RAM so that we can make wireless tech communications a lot more efficient. Second, we're bringing AI for the radio, meaning on top of these radio networks and these telecommunication network we're going to be able to provide AI services, which is going to be able to make it easier for us to do robotics and autonomous vehicles and industrial automation and reach all of the different places around the world.
That's kind of hard to do with Wi Fi, cellular reads, everything. And so we now have this fabric that we can deploy AI computing services on top of it. It's going to be completely revolutionary.
That's in video. CEO Jensen Wong and Nokia CEO Justin Hotard speaking with Bloomberg zed Ludlow this week about their new partnership that has in Vidia taken a nearly three percent stake in Nokia.
Now, I think what's interesting too. This past week, we did have a big Nvidia event, the GtC event in Washington, DC that they held, and we heard from Jensen Wong, right, the CEO of Nvidia, about a lot of stuff and a lot of things that move certainly the share price of Nvidia to the upside this past week, but a lot about relationships that it is forging and continues. But he did also say that the government has not offered to take a stake in their company and Vidia.
Well, first for the moment, Carl, yes, can we afford it?
Well, that's a good question. I mean, who do this movie come from.
Obviously we could, we could afford it, but we're talking about a market cap company that this week hit five trillion dollars for the first time ever. It's also a little different than some of the other companies that the US has taken a stake in. It's not struggling. It basically prints cash. It has this incredible mote with its technology that AMD and Qualcom are trying to catch up with Right and others. So to me, it doesn't seem
like the type of target that the US like. It doesn't need the US's help.
Right doesn't need the support.
It doesn't need this.
It GE's doing. Didn't it hit five trillion?
Yeah?
Market cap this week? Yeah, I guess it's doing. Okay, Oh, you did say that. I just think it bears repeating. I'm just gonna say I do listen to you, Tim Hey. The other thing we should mention about when it comes to Nvidia, this was serious President Trump saying he didn't discuss approving sales of Nvidia's Blackwell chips to China with his counterpart, President xijimping. And that was one of the things that was part of the supposed to be part of the US China trade talks. But it was interesting.
It was a big thing that was missing from whatever agreement they seem to come to.
Well, speaking of trade, given the trade tensions between the US and many other parts of the world over this year. Some furniture makers have taken a big hit as a result of those tariffs, and the President says he does want to make more furniture here in the United States.
That'll be good. That means I can buy more furniture. I hope my husband is listening.
No, it means it's going to be more expensive, Darren. There is some beautiful stuff out of North Carolina.
Though there is there always is. Hey, listen, We've got a great look at consumers spending, at least when it comes to things like couches, pillows, rugs, and all that good stuff, you know, home furnishings. The CFO of Wayfair, she joins us.
Next, it still remains for us that the consumer is quite focused on promotional events, and so she you know, our consumers typically a woman, you know, mass market, and she needs those promotional events to really come in off the sidelines and get excited to shop. We've talked in the past about, you know, how the promotional events really work as a marketing banner to get someone interested in the category and to then bring them in to the site.
And that is still the case. Those promotional events are pretty necessary to get the consumer engaged and excited.
This is Bloomberg. This is Bloomberg Business Week Daily with Carol Masser and Tim Steneveek on Bloomberg Radio.
Assuming the Essential Bank would follow its second straight interest rate cut with another in December, that officials are divided about how much to ease as the ongoing government shutdown limits the economic data usually at the basis of the rates decision. It's not only that there's division, it's not even about how much to ease. Some think there shouldn't.
Be any easy policymakers did, though, receive a delayed report last week on the consumer price index and the whole reason we got this report, Carol, social security, cost.
Of living, Yeah, totally. I mean, these are employees go one off, well you know, yes, yes, but it's also like those folks are voters and so you kind of don't want to mess around with them.
Did that report though, did show that underlying inflation rose in September at the slowest pace in three months. Is inflation slow and consumer spending and is it affecting earnings?
Good couple of questions there. We've got a great look at one slice of how consumers are shopping. Wayfair reported third quarter results that easily topped expectations. On the call, company management gave guidance for the current quarter that topped consensus estimates, and they spent a lot of time talking with Allison investors talking about the company's efforts to use AI. We caught up with Wayfair CFO Kate Gulliver, who said that consumers are still spending money on furniture.
We're obviously quite pleased with the third quarter results and the subsequent reaction to them, and I do think it shows, you know, all the work that we've been building to over the last few years and the enduring strength in the model. And so you saw that top line come in pretty nicely at eight percent nine percent adjusted for the German business, and that really is compounding share gains there on the top line, and that of course flowed through quite nicely to adjusted EBITA gains.
We described the consumer, Yeah, you know.
It still remains for us that the consumer is quite focused on promotional events and so she, you know, our consumers typically a woman, you know, mass market and she needs those promotional events to really come in off the sidelines and get excited to shop. We've talked in the past about you know how the promotional events really work as a marketing banner to get someone interested in the category and to then bring them into the site. And
that is still the case. Those promotional events are pretty necessary to get the consumer engaged and excited. We do see relatively more strength than that higher end consumer for us, that's consumers that are transacting on our paragold site, which is our luxury brand or specialty retail brands. We've said that those are actually growing at a faster rate than the core wayfare dot com business. And you are seeing more strength in that consumer segment.
Are you talked about promotions? You mentioned them. You have to get consumers excited. Do you have to get them more excited now than you did any other part of this year. We're really trying to understand the economic environment out there.
You know what's interesting is this category in particular has been down for so long. So the category you know, obviously boom during COVID and then at a pretty significant significant pullback twenty two, twenty three, twenty four, So throughout you know, twenty four and twenty five for this category, promotions have been critical. You know, I would say what we have seen, you know, really throughout twenty five is there's also been some mix shift dynamics. In addition to
sort of higher end consumer and mass market consumer. You do see consumers that are shopping are shopping for, you know, things like decorative accents, decors, you know, maybe things with a lower ticket than you know, buying a new couch or a new chair. And I think that's the idea. Someone wants to refresh and is excited about that, but they want to be mindful of how much they're spending, and so they're looking for the smaller pieces maybe opposed to the big piece.
Well, you know, to that point, you know, Kate, I think about the pandemic. We realize that's the anomaly. I mean, I'm looking at your stock is up one hundred and forty two percent this year, which is quite a run, but it's still down about sixty nine percent from twenty twenty one. We know everyone was at home spending on their home. That's why people were working at at home, spending on their pets. There was a lot of stuff
going on. So I am curious about when you look at the third quarter growth, how much came from intrinsic share capture versus category stabilization. Because it does sound like we're seeing a lot of stabilization here.
It's a great question. We think the category itself is roughly flat to slightly down. So I do think the category has stabilized, and we see now we look at a variety of different data sources and you know, they're all slightly different, but they coalesce around a flatish category. This is in contrast to last year where the category was down maybe you know, mid single digits to high single digits. So that's certainly an improvement, but we don't
yet see the category is having returned to growth. So when we look at sort of eight percent growth, right, that's definitely us gaining share on a category that is say, flatish.
When consumers are buying from Wayfair, are they buying to replace stuff or is this trade up activity? What is what is the data telling us or telling you?
Yeah, that's a that's a great question. We're certainly starting to you know, hear that a bit from folks. You know, have we hit replacement cycles? And really to the conversation we were having around the pandemic, it speaks to so much of the pull forward and demand that happened during that pandemic. Period. You know, I think we see a few things that drive you know, purchase events. One is moving, and obviously that part of the category has still been
you know, quite suppressed. One would be life cycle changes. So you know, your kid, you had a baby, and now they're moving into a toddler bed, or the kids leaving the home and you're turning their betterment into an office, so sort of as your life cycle evolves, regardless of if you're moving. And then a third would be you know, replacement categories or sort of you know, juging up your room.
In replacement cycles, I think a lot of folks are eager to see if you know, what was bought in twenty twenty and twenty twenty one needs to be replaced at this time. And I think what's helpful to understand there is there's this very category by category specifics. So if you bought you know, opening price point outdoor furniture and you live in the Northeast, maybe five years is
you know an appropriate timeframe. But if you bought a you know, nice couch, you know you're certainly not hitting the replacement cycle on that yet.
I got to say, I love Jijing. I love buying pillows but I'm afraid if I bring any more pillows home, my husband's going to divorce me because he's like, I can't even fire is bad. I can't find the bed anymore. Hey, listen, you talk Kate about the higher end brands like Paragold. You're seeing some strengths certainly in that area. I am curious too about your retail expansion, the physical store retail expansion or your loyalty program, if that's adding incremental customers
versus shifting existing digital ones. What are you seeing on that front.
Yeah, great question. So on the physical retail side, we are adding incremental customers. We're actually seeing in our first large format Wayfare store that's been opened for a little over a year now, more than fifty percent of the folks who are transacting in that store are actually new to the customer file. We have a one hundred million customer file right so to be getting new customers at this stage is pretty exciting. So it's definitely acting as
a way into the brand Paragold. We actually just opened two stores for Paragold. So we open one in Houston in the spring or of early summer, and then we just opened in West Palm Beach in Florida a week ago. So it's very early days on those stores, but we do think that they should work as a nice customer acquisition channel. The loyalty program, which is about a year old, I would say that's acting more for existing customers to
get them to be increasingly sticky with us. So what we're seeing from loyalty customers is nice incrementality, meaning you know, if they were going to purchase, you know, six or eight times a year, and maybe they're buying one to two from us. Hopefully we're getting that next purchase that's second or third purchase as well.
Now, Kate on the layoffs that we've heard from other companies just in recent days. Amazon planning to eliminate roughly fourteen thousand corporate jobs. This as Andy jasse Warren that AI will shrink the company's workforce. You have a twenty five hundred person tech team. How are you thinking about headcount? Are you re allocating headcount toward AI applications or are productivity gains allowing you to do more with a similar cost base. What are the numbers there?
Yeah, it's a great question. Actually, our CTO, Fiona tan was on our earnings called this morning speaking to some of what we're seeing from AI, both on the top line perspective and where we're going with you know, personalization, but also on you know efficiency. Every employee in the company, not just in tech, is actually enabled with AI you know tools and AI resources, and right now what we're seeing is really nice you know efficiency and enhancements to
individual employee work. And then in different pockets throughout the company, including within tech, you know, as we use more specialized
dayye tools, you see you know, uptakeing efficiency there. I frequently actually talk about our legal team, so not a tech team, but a team that you know, has been able to adopt AI quite rapidly for document review and the ability for them to sort of manage, for example, increase lease load as we've been expanding the physical retail network without having to add incremental folks has been pretty impressive, and so we certainly are seeing gains you know, from that efficiency.
Internally, Hey, do you feel like, though, in this environment that you want to be lean and mean? I mean, I guess I feel like all companies want to be lean and mean, Kate, But I do wonder if you're seeing, you know, as you look down the road. We are in this funny environment funny not funny, haha, but funny difficult in that with the government shutdown, we're not getting data. So we're trying to figure out by talking to folks
like you, where we are in our economy. So do you feel like there's pressure to be leaner and meaner that maybe I don't know a month ago or so, or you feel more confident about what's kind of coming down the road here?
You know, I think you firmed it wellcome Beryl, and who said you should always feel you know the importance of being lean. I mean, we're a mass market retailer, right, We operate on basis points of margin, so we absolutely need to be men highly focused on cost at all times, regardless of the macro that we're operating in. And over the last several years you saw us go through a number of restructurings frankly to bring down that overhead cost
pretty significantly. Our most recent restructuring was actually March of this year. We're to the conversation on tech employees. We did lay off some of our tech team as we completed our replatforming exercise, and we're able to actually increase some efficiency on that team point in more of those resources, you know, towards AI, et cetera, as they have stayed. So, you know, we continue to be quite focused on efficiency
and efficiency gains. We feel good about, you know, where the team is right now and the efficiency that we're seeing from that operating team. But that comes on the heels of you know, several rounds of restructuring over the last twenty four months.
Well on AI. On the consumer side, when it comes to AI, I'm wondering about the traction from use and decorify the decorating platform the new pilot. How has that been with shoppers so far? Is it driving broader consumer adoption of AI lead design?
Yeah, so we've tested out a number of AI you know tooling as it relates to how the consumer can experience our website. We offer millions of different skews across thousands of suppliers, across a wide range of styles. So the holy grail is really personalization. And how do you know, all three of us maybe searching for, you know, the throw pillows for the bed that Carol was talking about, and we all may have a different aesthetic, So how do we land on the site and get to our
aesthetic as fast as possible to glorify. And you know, now we have a tab on the app called Discover. These are ways for individuals to sort of browse and engage in a way that should be more personalized for them, and we do see great engagement there. But even on you know, the main part of the app, so not using one of these specialized tools or the main part of the website, we were using generative AI to make
that experience better. We spoke on the call this morning about combining generator of AI from a merchandising perspective with actually human designers. And for folks that landed on those SKUs that were the combo of the boat, we saw a third uplift and sort of engagement with that skew. That's really exciting because that means that sku is probably far more relevant to you than where you were going to land before.
That was wayfair cfo K Gulliver joining us from Boston. After earnings, many financial firms raise their price targets on the stock, including Goldman, Sacks, JP, Morgan, Stiefel, City, Needham and more.
And that wraps up our first hour of the weekend edition of Bloomberg Business Week from Bloomberg Radio Ahead. In our next sixty minutes, Jimmy Wales, the founder of Wikipedia, on building trust in today's very skeptical world.
Plus where's the beef Next? Yeah, we catch up with the founder and CEO of the jerky company Archer and the New.
York City Marathon yep, it is running this weekend. An inside view from one runner and the individual behind the event. By the way, he's already were working on next year's. This is Bloomberg Business Week. I'm Carol Masser and.
I'm Tim Stenovek. Stay with us. More from Bloomberg Business Week Daily coming up after this.
This is Bloomberg Business Week Daily, reporting from the magazine that helps global leaders stay ahead. With insight on the people, companies, and trends shaping today's complex economy. Plus global business, finance and tech news as it happens. Bloomberg Business Week Daily with Carol Masser and Tim Stenevek on Bloomberg Radio Funny Ahead.
In our second hour of the weekend edition of Bloomberg Business Week, Including protein is the New nutrition fad, We talk with the founder of a grass fed beef and all natural Turkey beef stick company say that five times fast.
I was going to and then I decided not.
It's a tough line.
Plus it's one of the world's biggest races. The CEO of New York road Runners talks about putting on the New York City Marathon. It is how opening this weekend.
It is indeed first up this hour. Wikipedia has a unique place in online culture, before AI, before chat ChiPT if you needed a quick place to get an overview on almost any topic, you go to Google, and then you'd click on Wikipedia. It's almost too good to be true. In today's world. It is built on trust and community all online.
We talk about it a lot in media, in business with friends and family, and most definitely in politics. Jimmy Whale's founder of Wikipedia, knows a thing or two about trust. He's got a new book out. It's called These Seven Rules of Trust, a Blueprint for building Things that Last. We sat down with them this week in the Bloomberg Business Week Daily Studio, and we wanted to know why Wikipedia works in a world where so many people don't trust one another, and they don't trust what they see.
That issue of trust is something he's been thinking about.
It was a couple of years ago I had had some ideas around this, and yeah, just just started and it's obviously turned out to be quite timely, as we have a lot of issues around trust in society, and you know, I want to encourage people to let's get back to society of trust.
You know.
It's funny, Carolyn, I spent a lot of time talking about this ahead of the interview because Wikipedia sort of seems and look, it's had its challenges. Of course, it's had its controversies, but for things that are online, it's kind of as weird utopia.
In the sense that it's kind of remarkable.
It's really remarkable. I mean, we know anonymous people online are oftentimes are full of bitrio and hate. We can see that even when people use their names on social media platforms. We lock our doors when we leave the house. Why does trust work on Wikipedia? But kind of seems like nowhere else right now?
Yeah, I mean I think for me, you know, one of the seven rules of trust that is most meaningful in that regard is purpose. Like Wikipedia has a very simple purpose, which is to build an encyclopedia, and we may all our decisions around that, and the rules about participation and so forth. And that's very different from social media, where there isn't a clear purpose other than free speech and openness, and therefore that toxicity really creeps in quite
a lot in social media. You know, people say outrageous things because they get rewarded for it. They get more followers, they get more engagement, and they algorithms love that.
You talk about clickbait all the time.
Clickbait all the time, And you know, that's very different from the world of Wikipedia, where I mean, thank goodness, our headlines are so boring.
There's no clickbait.
You know, it's like the erical on Thomas Jefferson's called Thomas Jefferson, you know, but it does what it says on the den. You know, that's a that's a very British expression, afraid. But but yeah, I mean, I do think that that having a simple purpose is a part of what keeps us focused and keeps our community focused.
How do you describe facts? How do you determine facts? And I am amazed in I mean, I've been doing this a few years and I felt like when I started, it was very clear fact versus ficion in terms of reporting and doing stories. And I feel like there's a lot of great area and I just feel like a fact is a fact. So how do you guys determine what's a fact in an entry?
Yeah, I mean we're really old fashioned, Like what we look for are reliable sources. So we want, you know, sort of academic research or quality newspapers, quality magazines, quality books. Really old fashioned and you know, the idea that we should treat you know, the New England Journal of Medicine as the same as social media influence our line is obviously just wrong. Like you really want facts, and that's what people want from Wikipedia.
They don't want.
Sources matter us.
Sources really matter, Like having a good quality source is what it's all about.
But why don't sources matter to everybody? And other people will say, Okay, I believe this source is reliable, so like you know what I mean, like when we're living in like.
Different worlds, I think, I think, and I think that's a huge problem. I mean, I do think, you know, it's really important. I mean one of the problems that we've seen is that a lot of the media, in response to the changing and very difficult financial model for journalism, they've chased after a really partisan audiences, and so, you know, sometimes you read something and you're like, yeah, that was that was interesting, that was good, But I'm not sure
I got both sides of the story there. I live in the UK and we have a just an example, two quality newspapers, the Guardian and the Telegraph, left leaning,
right leaning. They're both great newspapers. But I often read one and I'm like, oh, but and then I go read the other and I'm like, yeah, you probably should have been somewhere in the middle, both of you, and it would have been I think a better story had you said, well, you know, we got one side of the story, but we actually had to go out and find somebody to tell us a little bit about the others. And you know, you can't be to like the moon is made of rocks or is it cheese?
Who knows?
I don't mean that, but seriously hopefully geez. But but you know, like seriously thinking about like who are we talking to and are we are we getting to the bottom of this.
With media, with trust and media here in the United States declining and having declined over the last few years, in your view, is there something that we can do better that the media can do better that it can borrow from what has worked at Wikipedia, what has worked with the trust, the methods of trust that you've studied, that can make us build trust again with our audiences.
Yeah.
I mean, well, the good news is that the financial press, like Bloomberg, is still among the most trusted. And I think that's because by the mandate of what you're trying to do informing business people and investors, you have to be like ruthlessly objective. You're not chasing after partisan audiences and things like that. But I do think we gets
up data, big data. Data is important transparency. I think, you know, realistically, you know, one of the things that Wikipedia does that's kind of odd is we'll have a you know, at the top of a page the neutrality of this article has been disputed, and I we've all seen it.
Yeah, we've all seen it.
And I always say, you know, I kind of wish sometimes the New York Times would put a banner up just saying, you know, we had a big fight.
In the newsroom.
We weren't quite sure, so we decided to this. But yeah, yeah, but here's a little bit of their inside thinking, like we did want to report this, We're not sure we've got the full story yet, because that pretending to be perfection all the time. People see through that, and they know, of course, and I think they're willing to say, yeah, like, actually, journalism is quite hard, you know, so a little more transparency is always good.
Do you get pressure a lot from companies, politicians, individuals to like change an entry?
No?
Not really.
I mean people, Uh, you know, I meet a lot of people and people often are like, well, you know my Wikipedia entry, what about this?
What about that?
Yeah, send us an email, like you know, we'll have somebody look at that. That's all fine in general. Note and actually we're.
Very you really to say, just send them an email and I'm not going to do anything about it.
Kind of yeah, okay, but no, sometimes people have a legitimate point. They're like, oh, well, you know I did this thing and it was in the press, and you know it's like, okay, well maybe we just overlooked it, and that's that's great, But you know they at a deeper level. One of the things that's really important is, you know, we aren't funded by governments, we aren't funded by sort of major donors. We're funded by people giving their twenty dollars and that makes a big difference for
our intellectual independence. We're not worried like if we've got something negative about whatever, then we might lose our donation.
How is how is the fundraising going? Because I feel like I've gotten a lot of messages from you throughout the years, through the from Jimmy Wills on Wikipedia, We've all seen it. We're all is it going okay? Is funding going? Okay?
It's okay.
Yeah, We've we've been h you know, we're stable, We're very cautious with money, so we always try to build our reserves and so on. And then you know, recently, I don't know, Elon tweeted defund Wikipedia. I think we were about five million dollars that day.
So you know, so you can text us.
You know, you guys have been in touch you and say, tweet about us again.
Well, you have had some convers raise money. You have had some conversations with Elon over the years. All right, we're continuing at Jimmy Wales, founder of Wikipedia. He's got a new book out, it's out tomorrow, The Seven Rules of Trust, a blueprint for building things that last. Elon Musk, You've had an ongoing relationship or text relationship with him.
I've known him for years.
Actually, now anything old, aren't we all? I like to think, like a fine wine just getting better. But he has talked about defunding Wikipedia, and you said, you know that has brought in a lot of money, So thank you, Elon. What are the conversations that you've had with him back and forth?
I mean, you know, he believes Wikipedia has become Wikipedia, which is not true. And you know, I encourage him to sort of a better messages.
To say, if you feel like Wikipedia.
Has got some bias, encourage people to come and participate people who agree with you. Don't paint us as like, oh they've gone their crazy left wing activists or something we aren't. And by the way, he's so encouraging crazy lifting activists to come and bother us, and that's not good either. So you know, realistically, I can't predict what Elon's going to say or do. He's Elon. You know, he does what he likes.
Well, what's he like? One on one? You were and work to be fully transparent. We listened to a podcast and I think you brought up something about like Elon one on one versus Elon. He's always been per former.
Yeah, he's always been very nice to me in private and you know, civil and so forth. And I've met him in person a few times, and yeah, and then he's a huge public persona and a huge public character, and sometimes I just I slightly ignore that because I'm like, oh, he's just being elon in public. If I ran into him, I think we would have a very friendly chat.
You know. Over the last twenty plus years, Wikipedia has had has kind of lived on despite massive changes with technology. We're undergoing one right now with AI and the way that people are using lms. You have said that you are building Wikipedia to last one hundred more years. How do you ensure that you do that when you don't even know what technology will be around?
Well, it's true, we have no idea.
So all we can do is preserve our intellectual independence, keep an eye on the finances, to make sure we're not vulnerable, uh, you know, be open and keep our community's mind open and active to say, oh, how do we adapt to new technology? Is there things here we could use? What can we do to preserve our mission, which is free knowledge for everyone?
That was Jimmy Wales, the founder of Wikipedia, on his new book, The Seven Rules of Trust, a blueprint for building things that last.
You're listening to Bloomberg Business Week coming up. Got to get the protein in as many ways as possible. Everybody's talking about protein.
I don't know.
I grew up with my family like you always had protein, Like you knew that that was part of a healthy diet. But anyway, did you see we got what protein? And pop tarts?
Yeah?
Well I don't even get that.
Okay, we did, sorry pop tarts. But there's all that, like the even the nice like organic quote unquote organic fig bars have protein. They have a new version out with extra protein. It's all about the GLP ones. What is I know exactly we want their protein?
Anyway, on this we had a great conversation. We caught up with Eugene Kang. He is founder and CEO of the meat stick company Archer Meat. I ate actually a meat sticky.
You didn't get you a conversation. I went upstairs. I got meat sticks for everybody?
Did.
This is Bloomberg.
This is Bloomberg Business Week Daily with Carol Masser and Tim Steneveek on Bloomberg Radio.
Protein. In the words of Derek Zulander, so hot.
Right now or Paris Hilton, that's hot.
We don't know if you saw this last week, Carol, but I know you did. Actually, I know you saw this because you mentioned it earlier. I did the protein and the pop tarts. Yeah, yeah, bizarre, listen, but I protein pop tarts.
But I do feel like we're turning around products and we're looking for some key things like fiber or protein or you know what I'm saying, Yeah, some vitamins or something. We are doing that by protein and everything.
What PepsiCo said they have plans for a higher protein version of ritos.
I mean, come on, come on.
Okay, Elsewhere protein is being outed to popcorn, pasta, bread, cookie dough, ice cream, and macaroni and cheese. I kind of want to go old school though, the original source of protein.
We talked about this a lot in the newsroom today.
Ganga is all about this. He's found in ceo of Archer. It makes meat sticks from grass fed beef and all natural turkey. He joins us from LA talk about timing, Eugene. How are you leaning into the protein craze right now? Is this what people?
Yeah?
Thanks for having me on, Tim McCarroll and yeah, absolutely protein. Look, it's been around for a while, and particularly meat snacks and protein is the hottest sort of trend right now, and we're really we're really proud of the fact that, you know, meat snacks is kind of an original kind of source right of protein, and you don't have to add necessarily protein to it like some of the other innovations that you guys got to noted earlier.
So we we know you are the official meat snack partner of the La Dodgers. You're a Dodger fan. Dodgers are playing tonight Game one of the World Series. Ellie Dodgers at Toronto Blue Jays your startup though, How did the partnership come together like this?
Yeah, you know, we there was a couple of other consumer brands that were partnered with the Dodgers last year, most notably health Fate Kombucha, which is one of the largest kombucha brands in the country. So we had kind of reached out to the Dodgers saying, hey, look, we're looking to build potentially a bigger production facility in LA. We're growing our business pretty rapidly, doesn't make sense to kind of partner up, and they absolutely loved it.
Thought it was a great idea.
So I got to work quickly on a partnership framework earlier in the year around spring training, and you know, kind of summit to it right before the season starts.
Do you guys pay for that or do you offer a deal on like Like I've always wondered how the finances of this stuff works. Take us into the numbers.
Yeah, yeah, I know, we do pay for it, but in return, we obviously get you know, advertisement throughout the stadium, products sold in the concession stand, available in the clubhouse. So I think there's a few notable Dodgers that are probably eating our protein snacks as well. And you know, we also get to use sort of their collateral or their assets on a lot of more collateral for the broader Southern California market, whether it's displays or any kind of retail programming.
Hey, talk to us more broadly, because you guys are in Costco, Whole Foods, Walmart, Starbucks, Targets seven eleven. I mean, if we're on a road trip, I mean that is certainly one of the snacks people pick up. Talk to us about the growth that you are seeing in the marketplace.
Yeah, the growth has been incredible.
What's incredible. We love numbers here.
We're growing one hundred percent year every year. You know, you know, we're approaching close to over five hundred million revenue in the next twelve months. You know, we were a little over one hundred million two years ago. So growth has been absolutely incredible for us. You know, the category,
obviously because of US, is doing incredibly well. You know, PREMI sort of better for you brands have really just taken over sort of the zeitgeist with consumers, and you know, we benefit not only from the premium better for you side of it, but also the fact that we were a portable, dense protein pack snack.
You know, I'm I'm how do you? How do you do this? I'm wondering about funding and bootstrapping versus raising money. The growth the new facility that you are opening soon in Vernon, California, the one that you just opened excuse me earlier this month. Did you take on external funding for this?
We took on debt, but I mean we are we're cash flowing, We're you know, we're profitable. So for us, it was you know, we weren't We didn't have to necessarily raise equity or anything.
Like that.
We do have a private equity growth investor that wash that came in early on in our life stage. Okay, no institutional funding as of.
The private equity investor. So how much do they own?
They own a minority stake in the business. You know, my partner and I still own majority steak, but there they are kind of shoulders shoulder in terms of like sort of ownership structure.
I'm curious in a world of GLP one drugs and people you know, looking to lose weight, they are losing weight thinking about their diet, how is that impacting you if at all? And I'm looking at you know, you've got a grass fed beef jerky, a classic zero sugar, So I'm just curious how you're adapting and just talk to us little bit about the impact if there is any.
Yeah, you know, we haven't seen an impact in a negative way. If anything's been positive. We're not able to quantitatively tie our brand performance to GLP one, but will we Studies have shown that, you know, folks that are on GLP one adopt to meet snacks at a much higher rate because they're just i think seeking a bit more protein in general on their diet. Post GLP one. So for us, we feel like it's a it's a major tail wind for our business.
Got to talk beef prices. US beef prices have skyrocketed to record levels. It's challenged the President's pledged to make groceries more affordable. Earlier this week, the President attacked US cattle ranchers over their criticism of his plan to slash record beef prices by importing sydniafinitely more tara free meat from Argentina. How much have your prices gone up? Not the prices that you reflect to consumers, I'm like talking the prices you pay for the for the beef product.
Yeah.
So we we kind of knew early on that the beef prices were going to be as high as a were. If you look at we look at cattle reports a year out and this time last year, it was clear that the domestic cattle herd is actually kind of thinning out, just given all the record droughts that we've had in the last few years. And so if you think about you know, cattle herd thinning out, you know, potentially a
trade war, it's all being going to spell disaster. Right, So we were able to hedge our commodities for the full year, so we were somewhat not going to say completely insulated, but somewhat insulated. And obviously we did see his spike in pricing for sure on the beef price. But anyone that would tell you that the beef price is from an industry respect it was coming out of his left field, is I would be very shocked to find out. I think everyone knew that this day was coming.
I don't think the average consumer knew was coming, but I think most folks that were in the industry about a year ago knew that this was kind of coming down the pocket.
Can you give us an idea of how much your rop costs would have gone up had you not hedge? Though we're talking record prices right now, so I think, wow, that's pretty amazing. I mean, kudos for hedging.
Yeah, yeah, I'm curious about the process, Like, so you're doing this all here in the US, correct all of it?
So?
Is it robot robots? Is there humans involved?
Like?
What's what's involved?
They not robots?
No, I know the cares are not yet, but tell us, like what the process is because I'm just figuring out your costs? Is it is beef the biggest or give us a little bit of what the business is.
By far the biggest. So we have manufacturing plants that we own, and then we also have co manufacturing partner STRUFF that throughout the country as well. I'd say there is labor involved, for sure, there is some automation depending on part of the process that I think about. We're bringing in raw beef, right, We're not doing any kind of slaughtering or anything like that. It's all just raw beef that comes into our processing plants. Everything is either
grinded or cut. It's cooked in a big, big oven that you can imagine, and then from there it's packaged out, whether it's individually wrapped like a beef stick or a beef trikey that's in you know, bits and pieces in a sort of receivable pouch. You know, parts of the packaging.
Most of the packaging process is automated. I would obviously say that the raw kind of processing handling of the product is still somewhat requires it' required labor, but that's also got a lot of efficiencies in machinery there.
So okay, all right, interesting, you know, it's interesting, you know, as we hear you talking you talk about your growth rates. I mean there were go back a few years even before GLP one, that people were trying to cut back on their consumption of beef. And I think, you know, people even you know you shouldn't have it too often, and it feels like people are really into your product. You know, what's changed? Do you think?
You know?
I think I don't think anything's changed. I think it's accelerated. I think our thesis from the very beginning was, you know, we are sourcing high quality premium beef, right, so it's all one hundred percent grass fed, pasture rays. And so for us, we had this thesis like, look, if you're gonna eat protein and beef, please make sure you're you're
eating the right highest quality of protein. And so I think that trend line has converged where the consumer is today, and I think folks are realizing, like, you know, hey, look there's nothing wrong with feeding animal based protein, but if you're gonna eat it, make sure you're sourcing, you know, the highest quality, because we think that's better for you, whether it's antibiotic free, free range, grass fed, et cetera.
We're speaking with Eugen Kang. We're speaking with Eugene Kang. He's the founder and CEO of Archer makes meat sticks from grass fed beef and all natural turkey. Joins us from LA. What's the product pipeline look like beyond turkey, beyond beef.
Yeah, Look, I think we launched a really cool bison pasture raised bison jerky and whole foods and sprouts nationwide.
Kind of Beisenberger. They're kind of good.
Bison's really fun. Not not a lot of source for it, so, you know, harder scale. Look, look, we're exploring other protein alternatives right other animals in whether it's the stick or meat or beef jerky or jerky format. I'd say for us, given the growth, we actually feel like a lot of
our sort of white space is still in distribution. I mean, convenience channel is you know, roughly thirty to forty percent of the overall meats in that category, and we play in less than one percent of it today, So we think there's big white space there, a lot of you know, despite all the store counts that we're in today, we actually think there's still plenty of distribution to go get in our current format and then continue to innovate on
the pack format, right, Like, this consumer is completely new to the category despite it being a category it's been around for twenty years. Like our consumers that we brought in through this like premiumization, this better for you position is entirely incremental, and so for us, it's like, Okay, how do we think about new unique platformats to meet the consumer where they are given the US education And that's kind of our view right now.
Just very briefly. Competition, there's no shortage. You've got Chomps, You've got Vermont, that's just a couple country. You got other ones as well. I mean those are the two on the tip of my tongue. How do you stand out?
Yeah, I mean we're the fourth largest in the country. You know, we are right behind the big conventional stalwarts like a jack Link's like a slim Gym. Those are more conventionally positioned and they're like legacy brands. Chomps is a phenomenal brand as well. I mean we are kind of neck and neck in terms of like size and scale and ultimately driving a lot of the growth.
Frankly in the category. I would actually argue that.
If you removed us in Chumps from the ecosystem, the category wouldn't be growing as fast as it would be, So.
Eugene, that's really quick ten seconds. You're going to go it alone? Or are you looking for someone to buy you guys out?
Like the company has been built on scalability and sustainability, and for us, you know, we're always open to options, right.
That was Eugene Gang, founder and CEO of the meatstick company.
Archer still Ad on Bloomberg Business Week. Over fifty five thousand runners we'll be pounding the pavement for the New York City Marathon this weekend. We talked to the CEO behind it all.
This is Bloomberg.
You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from two to five eastering. Listen on Applecarplay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
This weekend, more than fifty five thousand people from all over the world, we'll take to the streets of New York City to run the more than twenty six miles through the five boroughs of the city.
You know someone who's going to be running in it.
My wife is doing it this year. She's wanted to do it for years. Really she is.
Yeah, that's so much, is it?
Kid's gotten the way of planning for this over the last two years, but she's finally making it happen. We're excited to cheer for her, and you guys should all cheer for her too when you see her running. We've got with us Rob Similcare, CEO of New York road Runners. It's the nonprofit that puts on the TCS New York Marathon. He joins us from New York. Rob, good to have you with us. The Roadrunners. You guys do stuff throughout
the year, but no question. Do you pretty much start planning the marathon the Monday after the Sunday of the marathon.
No, we don't wait that long.
We've already been planning the twenty twenty six marathon now for several months. So yeah, we get out more than a year ahead because this is a massive operation, as you can imagine, more than fifty five thousand runners going from Staten Island to Central Park, and we've got hundreds of staff, thousands of volunteers involved in this, so it's really like a military operation.
And the planning begins more than a year out.
It's pretty remarkable for anyone who has not seen it. It's I think it's actually one of the best days to be New York City.
It's pretty cool, right, Oh.
I mean I always get I get like goosebumps when I watch because it's like everybody is so happy, even though some of them look like they're in pain. It's pretty well, we just never see. It's the way that New Yorkers come together in a way that I can't believe I'm selling this thing, but I mean I find in every year a friend who comes in every year to do it, and he runs marathons all over the world, and he's like, there is nothing like the New York City Marathon.
Rob, Why do you think that is the case?
I just think that, you know, he said it in a way, it's a day that New Yorkers come out to cheer for total strangers. You know, you don't see that every day in a city like New York. We're known to be pretty tough. New York can be a tough place to live, and you know, we're obviously all really tough people in New York City.
That's part of what makes this New Yorkers.
But it's the day that we come out, we cheer for strangers, whether they're from down the block or across the world, because I think everybody respects what it takes to run twenty six point two miles, and everybody wants them to succeed. You know, we're not rooting against anybody. We're rooting for everyone. And we may be out there to see our spouse or our colleague or our friend, but every person who passes, we're rooting for them to succeed in their goal or reaching the finish line.
So fifty five thousand people all over the world, how many people like actually reach out to be a part of this. I'm assuming that there is a number that you guys just don't want to exceed.
Yeah, that's right. I mean this year we had over.
Two hundred thousand applications to our drawing, so that was a big number. We also have a countless number of requests coming in for people to run for charities or other organizations in the marathon. So the interest level, if you add it all up, is probably close to half a million people who would like to run the marathon and reach out to try to.
Do it every year.
We obviously want to keep the number to a number that we think is manageable. So this year we're going to be in that fifty five thousand plus range to make sure that everybody has a great day. But we're always looking for ways to get more people into the marathon, and the application window for next year is already open. You can already apply to be a part of our Team for Kids charity team for twenty twenty six on our website and YRR dot org.
We also have a sweepstakes going on right now.
You can enter to buy a chance to get free entry for you and a friend into the marathon next year, and the proceeds from that go to support our nonprofit mission to get kids and adults running in New York.
Yeah, it is really it's really hard to get into, Carol. I mean my wife did because we live in New York. She did the New York road Runners. I think it's nine plus one, Is that right? Rob?
That's right?
But do you still do this?
Do you still do that?
Or yeah? We do?
Okay, explain how that works for New Yorkers.
You're in the Yeah, if you're in the New York area and you run nine races in a calendar year, plus volunteer at one of them, you are guaranteed entry into the next year's marathon.
So that's one of the most popular.
Ways to get in and obviously favors New York City area residents.
And yeah, we had a lot of people get in that way.
Okay, so let's talk economic impact here, because I got my buddy coming in. It comes in every year. This time, he's not coming in solo. He's bringing his two kids, he's bringing his wife. They're staying at a fancy hotel in Midtown. They're gonna make a vacation of it. He's going to drop some serious coin to do that. I imagine the New York City Marathon has a huge economic effect on the city.
Yes.
In fact, we just completed a study about a month ago on the economic impact of the marathon.
And New York Roadrunners across the board on New York.
City, and we found that the marathon contributes just about seven hundred million dollars a year to the economy of New York City. All year, New York Roadrunners, with our other races and events, contributes close to a billion dollars. And so that's actually more economic impact than all of the Mets and Yankees home games, Wow combined and.
The story of your friends a big part of the reason why.
Right, You've got people from all over the world who are coming to New York. They're bringing their friends, they're bringing their family. A lot of them are staying in hotels multiple nights. About forty percent of our field this year will be international. So those folks are coming in
for a sustained period of time. They're staying at hotels, they're eating at restaurants, they're going to Broadway shows, they're doing all the things you do when you visit New York And so running the marathon is just kind of the centerpiece of a big trip to New York City. And let's face it, November is not peak tourist season, right, So we're bringing in a huge number of visitors to the city at a time that otherwise would be pretty quiet.
Wait, Rob, how much of that spending is the car bload before the marathon?
Right?
Like all those restaurants offering up pasta, I mean there's a lot of that going on.
Too, right.
Oh yeah, this is a good week to own an Italian restaurant in New York City, And we know that they are all dialed up their pasta menus, their prefigs menus. So absolutely it's a very good week for the pasta and rice too.
Rice is also good carbs.
You know, Carol and I travel the week in the two days after the marathon every year, and one cool thing about New York is you see everybody who completed the marathon on the subway on the way home, they wear they're wearing the metals then throughout the week and I I just remember the lastew years because we've we're going to Schwab Impact next week, Carol. Right, it's always
around this time of year. We fly on the plane, there's always people wearing their medals at the airport on the plane with us, and you know, there's this cool like moment that you have with these people who are like, congratulations, that was a lot of work you did it.
It's like such a community feel. It is pretty amazing.
Right, So it's not New York the New York that Rob was describing, right, like the sharp elbows, like give me some room on the subway.
Here, it's really really sweet, like in a world where it feels like there's a lot coming at people. I don't know what year are you guys in doing this.
Next year will be the fiftieth anniversary of the Five Borough New York City Marathon that started and starts in Staten Island and ends in New York City, So the original race was just lapsed in Central Park in the early seventies. But next year will be really a big, big anniversary because that's what people think of when they think of the marathon is crossing the Arizona Bridge, running through all five boroughs, So next year.
Will be a big year with that fiftieth anniversary.
I just love it. How much has the race I mean you said how it started, you know, laps around Central Park? How often? How much has the route changed over the years.
It hasn't changed very much since they started that race, covering five brows. Minor changes here and there, but it
really has not changed very much. That start line on the Staten Island side of the Arizona and Hours Bridge, and that finish line right a tavern on the Greens, So you're running the same course that people have been running for decades and decades, And I think that's one of the things that makes it special because you can compare your times to the times of your friends years ago, the times of yourself if you've run it a lot
of years. So that's one of the things that runners love to do, is compare times, and it's you know, it's stayed pretty constant, so those comparisons hold true.
Yeah, I'm wondering how much the Athletes with Disabilities program has changed in over the years, because that, to me, is one of the most special parts of the marathon. And I know that there are different physical impairments that make athletes with disabilities eligible to run in the New York City Marathon. But seeing those folks, whether they're visually impaired and they're guided by another runner, or they're using hand cycles because they've lost the use of their legs, well,
that's actually a separate race, we should note. But it's pretty remarkable to see. Rob.
Yeah, thank you for bringing that up.
I mean, we do have a significant number of athletes with disabilities who enter our race. There are a number of ways for them to do that. They can enter directly with us. We have our own AWD as we call it program. We have a great partnership with Achilles International. I think if you've run our races or stood on the sidelines for a lot of our races, you'll see the Achilles athletes going by. They always wear this highlighter yellow shirt and they always are I think some of
the stars of the marathon. People will yell out, go Achilles when they see these athletes go by. You'll see them with you know, one or sometimes two guides on either side of them, just to make sure they stay safe. And I think that's what the marathon is all about. It's what inspires people, is folks overcoming these incredible odds.
You know.
We just released a film that's on YouTube actually out today called twenty six point two. I recommend everybody check it out. It's a short film about thirty minutes long, and it tells the story of four runners who ran the marathon last year, and they each had significant challenges. One was overcoming cancer, one had had a stroke, one was you know, basically having to walk the marathon, you know, and they're incredible stories, and I think that's the thing that makes the marathon special.
Yes, we love the fast.
Runners, we love the ones who win and who run it under three or even two and a half hours, but it's those stories of overcoming struggle and challenges that I think make it really special.
That's pretty cool. Yeah, a documentary, right, and just to kind of show you're right. It's the people, right, and some of them who are struggling physically and maybe even emotionally, right, but they all come together and with this common goal. It's a pretty cool thing. Rob, Thank you so much. Good luck fingers crossed. Really good weather. We've had some good weekend weather, so let's hope it continues this weekend. And good luck to your wife.
Yeah.
Uh, she's training, she's been training, she's excited. She's wanted to do this for years. I mean we've lived in New York for like, gosh, close to twenty years at this point. Yeah, and this is finally the year she's making it happen. So really cool. Rob Similcare CEO of New York road Runners. He's also a two time New York Marathon finisher as well. See the medals there behind him. The New York road Runners is the nonprofit that puts
on the TCS New York Marathon. Rob joining us from New York, I do seriously want to encourage anybody who has never seen the marathon. It is one of the most special days here in New York. City. Go check it out. We have friends coming in from Westchester County. We have friends coming in from New Jersey. Everybody makes a day of it. They're not just coming to watch my wife. They're like, yeah, I mean I haven't done it a long time. Great thing and a little secret.
Where bring the kids bikes as the last runners go through, sneak onto those closed roads and bike through.
Rob.
I probably shouldn't say I see Rob. He's probably don't say this to stay away from the New York City sanitation trucks that are coming to clean up everything.
But the kids can just ride the roads, right, Yeah, the kids can just ride their roads.
This is a special day in New York.
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