This is Bloomberg business Week inside from the reporters and editors who bring you America's most trusted business magazine, plus global business finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Hi, everyone, Welcome to the weekend edition of Bloomberg Business Week. Carol Masser is off this week. We're coming off of hotter than hoped CPI and PPI readings, while August retail sales also surprise to the upside. And on Capitol Hill, a slew of tech titans, including Elon Musk and Mark Zuckerberg, met with lawmakers to discuss the potential risks of artificial
intelligence technology. Tech will be a big theme on this program, as we'll be talking everything from cybersecurity, space exploration, AI in the retail space, and crypto. We begin with the Ladder in this week's Bloomberg Business Week cover story about the mom and dad behind the man accused of one
of the biggest crypto related frauds ever. Bloomberg Business Week Call Max Chafkin and Bloomberg News Digital Currencies reporter Hannah Miller joined me and Simone Foxman to explain how Sam Bankman Freed's elite parents helped make the rise of FTX possible. Also with US is Bloomberg BusinessWeek editor Joe Weber.
We're a couple of weeks away from SBF's trial beginning October second. I think that Joe Bankman and Barbara Freed will have some revelations about them will come out at that trial. I think that they are have been an underappreciated element of the SBF story.
Max.
Why is that?
Well?
I think, I mean, one thing is that you know, this is a massive alleged fraud. You know, if prosecutes are right, it's one of the biggest frauds in US history. And I think you know, in some sense properly we're focusing on Sam Bankman Freed in his inner circle. The thing about the parents that is so interesting is tim as you said, they are these really towering figures in academia. They're sort of famous for being like ethical and they
both teach at Stanford Law School. There there it's almost like the least likely parents of an alleged crook, and that's kind of what makes them so interesting. The second thing that makes them really interesting, and the reason I think you played that clip is because they were more involved in this company than they have said that than Sam MCMANFRIEDE said, And you actually heard Joe Bankman's voice in that ad?
Yeah, hold on, I thought that was Larry David.
There was Larry David. But Hannah to walk us through what else.
Happened in there?
All right, I could not believe that Joe Bankman had been in that commercial. Right under our noses, we know that Sam bankman Fried's brother Gabriel requested a role for Joe in the commercial. I think it was kind of fitting that he played a founding father when he is the father of an FTX co founder. And yeah, he had that single line, but it was an effective one. So it just shows you that this was a family affair.
Well, take me through Max the details here. How exactly were they tied to this business in a true business way, because part of the story really focuses on how they were sort of these intangible help to SBF and then there are some actual clear ties.
Yeah, and I think those first of all, I think the intangibles matter here. And when you go back and kind of look at one of the big you know, enduring mysteries I think of this case is like, why did people go for this? You know, there were so many red flags. This is a guy who refused to wear pants, you know, was he was local. He's running this massive financial services company, you know, in a place that is kind of considered a tax haven. A lot
of his business was not allowed. And you know, one of the things that people would point to, including investors, including you know, in one case, for as we report in the story, a former Securities and Exchange commissioner would point to the parents. These were people with a big reputation. Now, the other thing that happened is that FTX and Alameda, which was like the precursor to FTX, It was Sam
Becinfried's hedge fund. They were both those companies were really operating kind of on the edges of what was legal. Right that crypto was is a novel field. They're walking, working across different countries, and Sam Megmnfreed needed lawyers, and his dad, you know, is a pretty good lawyer, or at least you know, was seen that way at the time. And his dad, you know, from the very beginning, as
we report in this story, was involved. And and what has been previously said is that Oh, well, he was you know, maybe helped a little bit and he mostly worked on philanthropy. But no, as we talk about, you know, he was involved in the issuing of FTT, which was kind of like the you know, funny money that Sam Magmnfreed created to raise money for FTX. The creation of FTX, this ad and you know, it's basically numerous other areas of the business people you know we spoke to, you know,
knew him. They they saw him in the office, and so you know, he was he was part of the team, uh, formally starting you know at the beginning of twenty twenty two, but going back to the to the very very beginning.
Hannah, can you enlighten us about another key element of the reporting, which is the importance that the parents represented in terms of just their reputations vetting basically Sam's idea for the business right Sequoia Capital played a huge part in that too.
Yeah, we know, you know that they were known figures both in the Stanford community and outside of it. You know, I live in the Bay Area. I came across many people who knew of them and interviewed them for this story, and they had influence, you know, they gave their stamp of approval, you know, to their family friend who then went to Sequoia and you know, gave the recommendation that you know, this was a company that they should be looking at. That he knew Sam Bank mcfreed's parents that
these were people who were well respected, well known. So yeah, they you know, they kind of helped pave the way for their son.
There's also the political element, you know, a big part of Sam bankman Freed. It's both his kind of like actual business strategy and when you look at like what's the mythology around him was as a political player. He was donating huge sums of money to especially the Democratic Party, but as we've learned throughout the case, to both parties. Officially he was trying to like for these like effective
altruism related causes, mostly around pandemics. But of course, I think all along there was a bit of a wink wink, hey, and it would be pretty nice if there were some good crypto policy too. Now, his mother, Barbara Fried, in addition to being this you know, famous ethicist, she's I mean, she's a really impressive person. She's written kind of like a seminal paper on the trolley problem, which is the if you've watched The Good Place, it's kind of like
a famous ethical quandary. She in twenty sixteen came this major figure on the left as a kind of Democratic Party fundraiser, funneling money from like Eric Schmidt and these big time Silicon Valley folks. That gives, of course, gives the family a bunch of connections. It also allows Sam Bankman Freed to kind of slot right in right. He starts donating money in twenty in twenty twenty and almost immediately is like on the inner circle of Democratic Party fundraising.
And it's in part by giving through this network. Joe Bankman also had and has, you know, real connections. He's he's worked, he's advised political figures on tax policies. He's he's done a lot of advocacy for tax reform. And so he knew people, you know, they were both Barbara's
networks and then and then Joe's contacts. I think we're helpful on both fronts and allowed Sam Bankment Freed to, you know, out of almost nowhere to be you know, really really on the inner circle in Washington, DC, where all of a sudden you have like major political figures taking seriously the idea that like this again, guy who refused to wear pants and you know, based in some kind of jurisdiction that no one really knows for sure, no one knows what he does, that he is going
to be like the guru to tell us how to you know, reform digital currencies.
A guy who said we should note who didn't want a yacht. Though, as the reporting shows from Max and Hannah, FTX and people associated with FTX did end up buying some sort of yacht. Hannah to that point, talk to us a little bit about how Sam BigMan Fried's parents benefited financially from their relationship with FTX and with their son. What did you guys uncover?
Well, we know that they frequently visited the FTX campus and the Bahamas, that they sometimes even flew private to get there. They would frequently stay at a sixteen million dollar beach side apartment that FTX had purchased. They considered it to be the company's property, not their home. But they also you know, really helped him gain footing. They you know, we as Snacks mentioned, you know, Joe would
go with him to meet with elected officials. You know, they got a taste of the nice life with their son, and it's it was very interesting to report about their presence at FTX.
Yeah, that house, by the way, I mean, it's so so they're what they say and we should we should say this is you know, they did not see it as theirs. They thought it was you know, company property. Essentially, there were a lot of wonderful perks to working for FTX, you know, like the people were flying private and they were in fact flying their Amazon packages private. But Bloomberg uncovered a bill of sale that has their names on it,
so so legally, you know, they own the home. And the other thing is they received quite a bit of money. And in early twenty twenty two, Sam mcminfrey gave his father ten million dollars. And the way he did that was, as we report in the piece, is he borrowed money from Alameda. Those are accounts that, according to prosecutors, contain customer funds, transfer to himself, transferred the money to Joe.
According to court documents, he asked Joe for advice on this, asked his dad for advice, and then sent this ten million dollar check. And court documents have alleged that they're using that money, you know, to pay for the defense, because, of course, a massive criminal defense is not cheap.
Our thanks to Bloomberg's Max Chafkin and Hannah Miller for breaking down the cover story with me and Simone Foxman for the entire conversation. Head on over to our BusinessWeek podcast feed and read the article in the magazine as well. It's on newsstands, now online, and on the Bloomberg terminal. Joe Weber will be back with us a bit later. Coming up, We talked to a man who's spent the past two years investigating SBF along with many other players
and ponds in the Crypto universe. Bloomberg Investigations reporter Zeke Fox explains the ultimate financial bubble and the gut wrenching scams it's helped to foster across the globe. You're listening to Bloomberg BusinessWeek. This is Bloomberg.
You're listening to the Bloomberg Business This Week Podcast. Catch us live weekday afternoons from three to six Eastern Listen.
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In twenty twenty one, Crypto went mainstream, with celebrity endorsements from the likes of Tom Brady to Matt Damon. Investment funds were buying it. TV ads hailed it as the future of money, and retail traders were making a fortune from dogecoin, which was originally created as a joke. Back in twenty thirteen, A new book from Bloomberg News financial investigations reporter Zeke Fox tries to help us decide whether there's anything behind these unusual alternative assets or if it's
all just a confidence game of epic proportions. Zeke's book is called Number Go Up. Inside Crypto's Wild Rise and Staggering Fall. He joined me and Bloomberg News Deputy team leader for US Equities Jess Metton in our New York studios to explain his motivation for taking a two year journey around the globe, chasing both true believers and outright fraudsters.
Ever since I was like a I wanted to write like a crazy nonfiction story like I loved like John Krackours Into Thin Air or Ben Mezrich's Bringing Down the House about the MT Blackjack Kids. But I never found a story crazy enough to turn into a whole book. Because the last thing I want to do is bore anyone.
And I got once. I was kind of resistant to crypto, but as once I jumped in, I started meeting all these like wild billionaires and hustlers and conment and scammers and like at some point, maybe when I found myself on one crazy crypto billionaire's yacht off the Bahamas, I was like, wait, this is the adventure, Like, you're on it right now, this is what you got to write about. And I've ended up spending two years going down this rabbit hole.
Yeah.
I don't know that the world will ever see a financial mania like this like ever again.
And we're still in the midst of it too. I mean, we see big moves in crypto, not like we saw a couple of years ago, zeek. But you know, we're we're not done talking about crypto at this point. There's a lot that sticks out to me from the book, but there's this one quote that I want to read to our audience. From the beginning, I had thought that crypto was pretty dumb, and it turned out to be
even dumber than I imagined. So even after spending years working on this book talking to crypto billionaires, diving into these cryptocurrencies. You still think crypto's dumb.
I think that if you anyone who's lived through like these last couple of years, I don't think we can just like memory hole that like all I went to. The one of the first places I went was Bitcoin twenty twenty one, this big conference in me at Miami, right after COVID.
Restrictions, the one where everybody got COVID.
Yes, not me. I became convinced after that that I was immune to COVID and I would never get COVID. But pretty soon after that, I did get COVID. But like I'm meeting, some of these guys were really legit at the time. Like I met Celsius's Alex Mathshinski. He was like talking to everybody and he was promising eighteen percent yields if you deposited your savings with his company.
And he told me when we met, somebody's lying. Either the banks are lying that they can only pay zero percent or Celsius is lying that we can safely deliver eighteen percent. And like a couple of weeks ago, he got arrested. Just like a huge number of the founders that I met are now facing lawsuits or bankruptcy or criminal charges. So well, I do think there probably is
some good cryptocurrency company out there. I'm not going to be the one to spend the effort to sift through like another giant pile of scammers to find it.
Something that struck me too, because you did travel to all these different hotspots, from you're in Manhattan to Miami, you're in Bahamas, like you mentioned earlier, El Salvador to the Philippines, and so you were talking about how that you did see a lot of empty hype and a lot of scams, And what struck me was this new kind of yesmind fraud that you found were it often started with a text and it was a scame called
pig butchering. Explain what that is and how that actually ended up happening to you.
So pig butchering is when someone approaches you with the spam text, like we all get them, and it's like, hey, Dave, did you get the milk for the cat on your
way home? Like they don't. They're like a little off right, But if you write back, they'll try to make friends with you and they'll often the person at the other end will pretend to be like an attractive young Asian woman, and they'll start dropping hints about they didn't have a rich uncle who's able to make these really profitable crypto trades.
And I started I got one of these texts and started playing along and developed a pen pal friendship with this person who was saying their name was Vicky Hoe. And she eventually told me, hey, buy one hundred tethers, which are like a mainstream stable coin you can get on coin base or Crypto or any of the like normal crypto apps, and send them to this other crypto
app called zbxs. And Vicky promised me that if I did that, she was going to introduce me to profitable short term node trades that would generate reliable thirty percent returns. And like, we all know this is nonsense, but in this like crypto world, like where for a couple of years it seemed like anything was possible, a lot of people were falling for this. People sent in hundreds of thousands,
millions of dollars. One expert that I spoke to estimated that ten billion dollars have been lost to these crypto romance scams. And the crypto plays two roles in it. One is It's like it's the story that gets people to send their money. And the other thing is that you can go on crypto exchanges, acquire these tether tokens very easily, and then zap them over and you'll never get them back. It's anonymous. There's no way for the authorities to trace them.
This portion of the book that Jessica it just is referring to is from was in the book, but we also were able to get you to talk to us about it. A couple of weeks ago, Zeke was featured in the August twenty first issue of Bloomberg Business Week. Excerpted in there, you also you know, I got to tell you. After our conversation and reading that excerpt, Zeke I stopped. I started thinking about those spam texts in a completely different way because it's really ugly the truth there.
I mean, you spoke to somebody who had escaped from essentially prison or slavery indentured servitude by cobbling together an iPhone, making an iPhone work by essentially hotwiring it.
Yeah, So that is the really dark part is that the people on the other end of these texts are often.
It's not vicky.
Yeah, they're like Vicky disappeared, never never found out who she was. But what I did find out is that a lot of the people sending these messages there are people from Southeast Asia who've been tricked into traveling to Cambodia and then trapped And like, legitimately sounds like a conspiracy theory, but I've seen it with my own eyes, huge like office towers filled with floor after a floor of people who are sending these spam text messages around
the clock. So that the person that sent you that
kind of nonsense text, like, it's not a bot. It could be someone who is being threatened with beatings of the torture, who would have who can't leave this job without paying a ransom And like you said, yeah, well, I spoke to Twee, who was victimized in this way and had raised money for the ransom from a YouTuber And when I spoke to him, he returned to Ho Chi Minh City and Vietnam and he told this crazy yeah mcguiverage story about how he was able to get
an iPhone and charge it using no tools and a fluorescent.
Lamp and he had to smuggle the iPhone in.
He's so His story was that he had stolen it from the guards, but not the charger. He had secreted it inside himself, a trick that he learned in prison, and that he when he was alone, he took this iPhone apart and peeled out the battery and then hotwired it to afforest lamp and so very respectfully. When we were together in Vietnam, I was like, tweet, I don't think you can do that. Like You're like, I'm very sorry for what you went through, but like, are you shit?
Is that really true? And he was like, I'll show you right now. We bought an iPhone. He took it apart with no tools, took apart a led lamp in my hotel room, wired the battery to this lamp, charged it and turned it right on. U. Yeah, I was floored.
That was Bloomberg News Financial Investigations reporter Zeke Fox. Pick up a copy of his new book, Number Go Up Inside Crypto's Wild Rise and Staggering Fall, And you can also get his thoughts on the poort Ape Yacht Club by just heading over to our podcast feed. Jess Menton sticking with us for the rest of the program still
had on Bloomberg Business Week. Even if you've been able to avoid crypto related fraud up to now, there are still some other to be aware of in the digital world, especially when it comes to AI.
Cyber professionals have to be right one hundred percent of the time, and bad guys only have to be right once in order to get inside of your defenses.
We'll break it down when we come back. This is Bloomberg.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Easter on Bloomberg Radio, the Bloomberg Business app, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa play Bloomberg eleven thirty.
The reason that I've been such a pretty cool AI safety in advance of sort of anything terrible happening is that I think the consequences of AI going wrong are our sphere, so we have to be proactive rather than reactive.
That was the voice of Elon Musk. He's been among the people calling for regulatory guidelines when it comes to artificial intelligence, and he was on Capitol Hill this past week to discuss the potential society risks posed by the nascent technology. The world's richest man was among more than twenty tch and civil society leaders attending a closed door
Senate summit on Wednesday that focused on AI. Meantime, many companies are trying to gauge its impact on cybersecurity in the workplace, especially since generative AI applications continue to evolve. Jess Menton and I have the perfect guest with us to help answer these burning questions.
Dana zimbercov chief Risk, Privacy and Information Security officer at a Point, joining us on Zoom from New Hampshire to explain why the cybersecurity industry isn't ready for the AI boom and what guardrails companies should use to protect their employees data. Thanks so much for joining us. As always, I want to get your thoughts on that, because when we are discussing, like Tim and myself about this AI boom, why is it that cybersecurity companies may not be ready for this just yet?
I think AI is just yet another obstacle in the road to looking for that perfect security solution that just
doesn't at this out there honestly so. Artificial intelligence and sort of the deep learning that is coming through technologies like GBT really puts cyber professionals on edge, because this is just one more ripple in the world we live in where cyber professionals have to be right one hundred percent of the time and bad guys only have to be right once in order to get inside of your defenses.
And there's a shortage of bad guys out there, Dana, as we as we certainly know. So what's the worst case scenario here? I mean, describe for us what kind of keeps you up at night, what makes you scared?
Well, I think that really the secret to building a good program and addressing this is really to go back to cyber hygiene basics, doing what we do every day, which is making sure that we have good data governance in place within our companies and across our partner ecosystems. Because if you know what information you're handling, if you know what it is, where it is, who can access it, and how it's being shared, then you can largely mitigate some of the risks that are associated with AI. It
does come down to people, policy and technology. So there really is no bad technology, just bad use of technology.
And when you're talking about cybersecurity, are there particular sub industries or companies that you think might potentially be more vulnerable than others.
Well, I certainly think that the ability for again those malicious bad actors to use AI to potentially perpetrate cybercrime take advantage of insiders inside of a company to really accelerate the process of cyber attacks. We've already seen through phishing and smishing where somebody receives a phone call or a text message saying that they are an executive that
need help right away. Just imagine that amplified with the ability to actually fake person over video, these deep fakes that we've been hearing about, where a person's image voice could be easily replicated.
H Dana, I'm you said phishing. We all know about phishing. Did you say smishing smishing?
Yes, that's smishing is using using a text message or some kind of social media. So whether it's WhatsApp, your own or you know, just pretending to be somebody that you're not and using technology to get to an intended target. And this is really common. We see it a lot both inside of our company, as you know, as we build our own cyber defenses, but also across our customer ecosystem where it really isn't just what you know, but who you are that makes you a target potentially within a company.
Yeah, I didn't know that what it was. That's what it was called. We had a great cover story an excerpt from Zeke Fox's book Number Go Up that talked all about where those text messages actually come from. I also encourage everybody listening who's interested to go check that one out. It was just a couple of weeks ago.
Uh okay, So, Dana, what about when it comes to I mean, when I think about the worst case scenario, I mean I understand, like I consider myself pretty savvy when it comes to uh not answering those phishing emails. And we certainly get trained pretty well here at Bloomberg, and I think a lot of companies do that in this day and age.
It's into some trick emails at times.
Just if we get caught, yeah they do. You got to you got to be vigilant. I think my concern, though, is is is how generative AI sort of changes that, and it makes it so it's like really not possible to distinguish what is real and what isn't real. So so let's say that the weakest link is always the person. Where do companies like as point come in to to try to stop that from happening.
Well, I think at the end of the day, it really is going to come down to not only identity, but also technology and what we allow individuals to do. So, just in the same way we've been talking over the last really couple of years with covid about now the borderless office, where employs are working really from anywhere in
the world, their home, Starbucks, you know, the office. That means that there's no perimeter around the office that you can protect, and so identity really has become that new perimeter to a great extent, and making sure that you know who you're talking to and who you are is
going to be critical. And limiting the ability for somebody to move either horizontally or vertically within a company if they are impersonated, is going to really help sort of fill that gap and protect against that kind of risk.
We actually did hear from z Scaler and I did report earnings and their forecast for EPs did beat estimates. But of course, when it comes to a cloud cybersecurity company like this, how does cloud play into this And when it comes to AI as well and some of your concerns.
Well, cloud is both an opportunity and a risk. That certainly a point as a as a cloud first company providing services to you know, millions of our customers around the world, takes advantage of a lot of the build in security controls that exist through our partners like Microsoft and others. There's also real opportunity with AI and the cloud to benefit from, you know, the kind of machine learning and intelligence that could also be used to fight cybercrimes.
So I think there are tremendous opportunities that the cloud brings are really at the end of the day at somebody else's computer, and so that good data hygiene data governance is going to be critical to making sure that whether you're in the cloud or on premise, that you're really doing the right things to protect your business and your data.
Is there a future for on premise or is it all in the cloud?
Well, hard to say. I think, you know, the cloud is certainly the future. It's the wave, it's the direction that we see companies moving more and more. I think that there will likely always be some hybrid environments, and depending on your industry, depending on the kind of information you have cloud is not always possible, but we'll see now. You never say never, and I think it's always good to head your bets.
Whenever you speak to companies, what is their biggest concern right now?
Well, again, I think it is knowing where that data is. It's that unknown, that risk of not knowing is never better. And so you know, the challenge for AI is clearly that you can have a machine outpacing you rapidly. We now see that our computers regularly are asking us to prove that we're human by answering thinks like captures when you go to websites, will computers outpace humans at some point?
Maybe?
I think again, for cybersecurity and privacy professionals, it's building accountability into the way that we use data, making sure that there's good transparency with our customers, and making sure that we're really, you know, doing the right thing to maximize the opportunity for businesses to do what they should be doing while protecting the rights of individuals and data subjects.
I don't know, just do you have any ever have a problem with those captures. I feel like they're they're already the captures have already outsmarted me. You know, I'm talking about wright those things.
Yeah, yeah, come.
On, I mean, I mean, I honestly like one time I got one of those Bloomberg emails and accidentally clicked it on something. Then I had to go back through and do all of the training. So I'm super vigilant now.
And not to bust it.
You only make that mistake once, I.
Know exactly, so never again after doing that.
Well, that's that's good.
That's good hyber training.
That was Dana Simbercoff, chief Risk, Privacy and Information Security officer at AFPOINT. You're listening to Bloomberg Business Week Up next. Apple just unveiling the iPhone fifteen this week, but not before Chinese telecom giant Huawei released its own advanced mobile phone that uses tech the US has sought to keep out of Beijing's hands.
They have been able to make some sort of breakthroughs to tech levels that the US was trying to avoid them to getting. And just to be clear, this isn't just so much that they don't want them necessarily compete with the iPhone or Apple or other US manufacturers or allies in terms of selling phones. It's really a concern
about economic security as well with military security. Worried that some of these tips and some of this technology that they could make breakthroughs on will be used in a way they could be quite competitive militarily insecurity wise.
With the US, we go from cybersecurity concerns at the corporate level to a technological arms race on a global scale. This is Bloomberg.
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The Bloomberg Business app, or watch US Live on YouTube.
The excitement surrounding the iPhone fifteen's unveiling this past week was palpable for Apple loyalists around the world. Accepted one key market, China. Officials there are claiming to have experienced so called security incidents with prior models. Bloomberg News reported this month that China plans to widen a ban on the use of iPhones to a number of state backed
companies and agencies. The White House says it's a retaliatory move against the US, and even before Apple's latest product launch, Huawei had already begun pre sales of its new Mate sixty pro phone, which uses technology the US has sought to keep out of Beijing's hands. Jess Menton and I spoke with Bloomberg News senior editor Ramsey Albercabi and Businessweeks Joe Weber for a read on the Chinese telecom giants' surprise development.
All this news came from a Bloomberg teardown of a Wadwei phone that revealed China had made significant advances on the chip front, and it put some attention on sanctions, which have been obviously a huge weapon that the US has used not just to perhaps try and slow China down, but also in Russia and in Ramsey, the thing that came to mind was just that perhaps the sanctions were an inevitable thing that would only work for a while, right.
Yeah.
The timing of it was really noteworthy to because it came just on the end of a visit by the Commerce Secretary Tina Romando and her department, particularly the Bureau of Industry and Security, are the ones that manage all of the tech control tech export controls that are put in place to try to keep this sort of technology
out of China's hands. So the day that she's taking off, they quietly start selling this phone, which they'll send a clear message that they have been able to make some sort of breakthroughs to tech levels that the US was trying to avoid them to getting. And just to be clear, this isn't just so much that they don't want them necessarily compete with the iPhone or Apple or other US
manufacturer or allies in terms of selling phones. It's really a concern about economic scurity as well with military security. Worried that some of these tips and some of this technology that they could make breakthroughs on will be used in a way they can be quite competitive militarily insecurity wise with the US.
Ramsey, I'm curious, how could this potentially escalate some of the tensions when we're thinking about what's already there right now between the US and China.
The thing is that I get back to Raymondo. She was on the tail end of a series of visits. There was Blinkeln had gone, Yellen had gone, John Carry had gone, There was there was an effort by the Bido administration to sort of ease some of the tensions.
And what happens though once it comes out, you're going to have a lot of pressure domestically to do more of the particularly in the House the GOP, with like McCall and gallagher calling for stronger sanctions, stronger reactions, the stronger response from the administration clamp down on some of the experts that are still allowed to some of these companies.
So that kind of uh can can kind of heat up those tensions again on the commerce side of things that I think the the White House is hoping could could uh it could keep a keep a lid on.
Okay, So what about uh uh the chips that came from like South Korea that ended up in the phone, what what is the what's the US feel about that?
Well? I think the the s K high next memory chip took x K hinex by by surprise too. I don't I think that they don't know how Huawei got a hold of those. Uh So that's a that's a question I have to look into, and the and the in the U S is you know, investigating the where these chips came from on the China side, on the on the Korea side, and we had Jakes all have been quite recently saying that a matter of time, they're gonna they're looking into this and talk to their their
They said, consult their partners. I'm assuming they mean South Koreans as well as the Dutch and the Japanese who who sort of who build some of the technology needed to make these chips and uh, and then they'll said, we'll make decisions accordingly. So I think, uh, you know this topic here. Yeah, they're trying to try to figure
out where, you know, what's out there, what's happening. And then they'll also try to hopefully wait for this domestic political heat to cool off before they decide their next step.
That was Bloomberg News Senior editor Ramsey Albracabbi with me and Jess Metton. Joe Webber will be sticking with us for our next couple of stories, and that wraps up the first hour of the weekend edition of Bloomberg Business
Week from Bloomberg Radio. Coming up in our next hour, we'll detail the remarkable true story of America's first women astronauts, plus the CEO of J. C. Penny talks renewal and reinvestment at the previously bankrupt retailer, and how MSG boss James Dolan turned his notepad sketch into a multi billion dollar entertainment venue in the heart of Las Vegas. This is Bloomberg Business Week. I'm Tim Stenovec. Stay with us. Today's top stories and global business headlines are coming up.
Right now, you're listening to the Bloomberg Business Week Podcast. Catch us live weekday afternoons from three to six Easter on Bloomberg Radio, the Bloomberg Business app and you. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa Play Bloomberg eleven thirty.
Tim Stenevic and Jess metting with you plenty ahead in our second hour of the weekend edition of Bloomberg Business Week, including the CEO of J. C. Penny on bringing the embattled retailer back from near extinction and James Dolan's ten figure bid to leave his mark on the future of entertainment. First up this hour, a bit of history. Back in nineteen seventy seven, more than eight thousand applied and six
were chosen. The six Sally Rye, Judy Resnick Anna Fisher, Kathy Sullivan, Shannon Lucid and Rhea Seddin were America's first women astronauts, and they're the subject of a new book from Bloomberg News space reporter Lauren Grush. It's called The
Six The Untold Story of America's First Women Astronauts. An excerpt of the book was published in the August twenty eighth issue of the magazine, and this past week, Jess and I welcomed BusinessWeek editor Joe Weber and Lauren into our New York studios to discuss the project, along with the author's unique background.
So, I'm actually a bit of a NASA baby. Both of my parents worked on the Space Shuttle program, which is you know, makes a big appearance in the book. My mother was the deputy orbiter chief engineer, and then my father helmed up the propulsion branch before he retired. And so I very much, you know, I grew up with the Space Shuttle. I lived outside of Houston. It really was like a full circle moment getting to report on it and go back to kind of my childhood roots.
The part that we wanted to talk about in the book was specifically about Sally Ride, and when you worked on that part of the book, like, I'm curious, like there's an element that still resonates today, and I'm curious, like walk us through why Sally Ride matters all these years later.
Absolutely, I think right now it's more relevant than ever. You know, NASA is working to go back to the Moon with its Artemis program, and one of the stated goals of that program is to send the first woman and the first person of color to the lunar surface. And I really think that is a first for NASA to actually have that a stated goal. Normally in their programs, they really don't specify who would go. It's really just we're going to get there, and we'll send the right
people for the job when we do. So this is a bit of a first, and so it's interesting that they're clarifying that before they go. And I think Sally's story is really pertinent right now because obviously, when Sally was going up to space, you know, it was such a novel concept for the country, even though you know it really shouldn't have been. You know a lot of journalists in the media, we're asking questions about her, and you know, we're just so curious how that women and
men could possibly fly into space together. So, you know, Sally kind of took on that burden when she was the first one, and so hopefully, you know, as we move forward and try to fix these you know, errors in our space history. By sending the first woman and the first person of color to the moon, those people have it a little bit easier. And the press will you know, I'll be a member of the press, so I won't ask those questions of those people when they fly.
Let's talk about the American competition, right, and that was like a fascinating competition because it was like a moment of equality and yet like was it.
Well, I mean, you have to understand when you have a group of competitive astronauts, as you had with the class of astronauts that Sally was in, you know, they're an extremely competitive group of individuals. So obviously their sole ambition was to fly into space.
I hear.
That is the sole ambition of every astronaut obviously, and so you know, obviously they all wanted to be the first, and I think with the women, obviously there was that added pressure of being the first American woman. And so the issue they had though was they really had no idea what the terms of this quote unquote competition, where obviously NASA wasn't saying there was a competition, but everybody was asking about it. The media all knew about it.
They were all kind of picking their favorites by who they liked to cover and who you know, they they thought maybe fit the best feminine architetye. You know, that was kind of playing out and the press before they were chosen.
Well, talk a little bit more about the press coverage at the time, and I kept having to remind myself, this isn't that long ago. I mean we're talking like just before the nineteen eighties, which you know, was the decade I was born in, Like, this is not that long ago.
Yeah, I mean even when they first came on board, when the first six women came on board, you know, a reporter asked during the initial press conference that announced them, you know, was Shannon's three kids taken into account? And it's you know, we've been flying with men who had children for many, many years by that point, and still, you know, they were concerned about whether or not a mother could handle this role. And so that was just
reflected in many of the questions that were asked. Sally probably got the worst of them, just because she was the first. You know, famously, she was asked if she wept in the simulator when it broke down. There were some other I mean there was another one. I actually have the video of that press conference before she would you have to watch in person because she her facial expressions are just so good. She handled it very gracefully,
but you can tell, you know, she's hurting inside. And there was another question that was asking her, you know, you know you quit tennis. She used to be a tennis player before she came to the Space program, and it was you quit tennis because you didn't think you had the ability to go pro? Would you have quit the Space program if you hadn't been the first American woman picked? So, you know, just kind of terrible questions like that. You know, they asked if she'd be the
first mom in space. One anchor asked if she wished she were a man? You know, just truly. You wonder how I keep saying during these interviews, you know, I apologize for our press ancestors because I feel like we've come.
A long way.
I'm with you.
These six women had a pretty diverse professional background. Talk to us about that.
Yeah, That's what I loved most about the cohort is they are so illustrated of how there's just no one true path to space. You know, we had two medical doctors, an astrophysicist and tennis player, an electric electrical engineer, an oceanographer and geologist, and a chemist. And not only were they diverse in the types of fields that they worked in, but also in terms of whether or not they always
wanted to be astronauts. You know, some half of them had dreamed about it their whole lives or had secretly harbored this ambition, while the other half didn't even think about it until they saw that NASA was opening up the selection process. And I just think that's a really great illustration of you know, when you make things more diverse and accessible for people, those who would be great in those roles would realize that they could actually do it when they wouldn't have before.
Okay, there's also this subtle thing that comes up in the book that astronauts seem to have a chemical attraction to one another. How many different relationships were there were?
Yeah, there was.
There were three of the women did marry other astronauts, and some one they married, you know, before they became astronauts, but secretly harvard that ambition. Others met through the program, And I think that's just it's indicative of the fact that they spent a lot of time together. You know, this was a very close, tight net group of astronauts, the tfng's you know, the men actually say this in
the book. You know, what was described to me is the women weren't exactly you know, the bestest of friends, you know, which you might think they were being, you know, very similar in how you know, how they were picked and the things that were asked of them, but it was really the men that they spent most of their
time with. For instance, they had to stay current in NASA's fleet of T thirty eight jets, and so since the women weren't able to fly the planes themselves, they had to be in the back seat, and so they spent a lot of time with male pilots, and so they would start to gravitate towards the pilots that they
like the most. So I think it just goes to show that when you put a lot of you know, very accomplished, good looking people together and you make them spend a lot of time together, you know, romance is bloom.
How are things at NASA today in terms of gender breakdown? Because if you look at the airline industry, it's still relatively rare to actually have a female captain.
Yeah, I mean, there's still quite a long way to go. While each of the astronauts selections since the six were chosen have had women, you know, they all haven't been equal. And in terms of the women who've gone to space, I think we're still below one six of the people who've gotten to space have actually been women, and the women of the statistics for women of color are just even more abysmal. We have such a long way to
go to really reach that equality. So it's that, you know, I just think that when you put up societal barriers in place, it takes quite a long time to break them down. So, you know, think of the criteria that it takes to become an astronaut. We had to really like encourage women and people of color to go in stem fields because they were discouraged from going into those fields for so long, and it just takes a while
to you know, break those barriers down. So and when it comes to space, things take a really long time. Developmental time takes, you know, it's we're talking on the order of years and decades. But to that point, it's probably safe to say that we could be doing more. You know, there's better ways to you know, encourage a more diverse set of people to get into the program. So it's just something to keep top of mind.
Our thanks to Bloomberg News Space reporter Lauren Grush, her new book is just out. It's called The Six, The Untold Story of America's first women Astronauts. You can catch the full conversation on the business Week podcast feed. You're listening to Bloomberg business Week coming up. While billionaire James Dolan has compiled a massive sports and entertainment portfolio that includes two New York sports teams and a variety of arenas in theaters, his latest project could redefine his legacy.
You know, some people call him Madison Square Garden, you know, the most famous venue in the world. Yet he has this idea he wants to disrupt I have entertainment.
Our BusinessWeek team takes you inside the sphere in the heart of Sin City. This is Bloomberg.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern Listen.
On Bloomberg dot com. The iHeartRadio app and the Bloomberg Business app, or watch us live on YouTube.
For the last several years, people visiting Las Vegas might have been puzzled as they gazed westward from the Strip. Looming in the distance was a three hundred and sixty six foot tall sphere. The Dark orb bore a familial resemblance to the Death Star, but lacked any signage offering a clue to its purpose. Devin Leonard is out with a new feature that delves into the convoluted history and
promise of what's known as the Sphere. It's in the latest issue of Bloomberg BusinessWeek magazine, available now on newsstands, online and on the terminal. Devin and Joe Weber are with me and Jess mett In to detail the one of a kind venue and the man behind the project, New York Nixon Rangers owner and CEO of MSG Entertainment, James Dolan.
He's actually kind of fascinating in that he has other interests. Music's a big one, and he saw this opportunity to basically build something in Vegas that had never been built before, and he had a vision that I think originated more or less with him and he went and like did it, and now it's like gonna open and there has never been a music venue like this, So yeah, it's really easy to hate on James Dolan and the guy may have pulled off like what's basically the perhaps a world
class music venue unlike any other. And it shaped like a sphere, and that's what it's called, right Devin, the sphere.
Yeah, I mean, I mean, look, you know this, this is a guy he embarks on this thing. You know, he's he's past sixty, he's got, you know, all the money he needs. He's the son of a son of a billionaire, Charles doll And, a cable you know, cable TV pioneer. His family controls, you know, some of the world's most you know, famous venues. You know, some people call Madison Square Garden, you know, you know, the most
famous venue in the world. Yet he has this idea he wants to disrupt live entertainment by building you know what's basically what is it? You know, it's around it's an orb like you know, sphere, and it's it's sort of three different things.
You know.
At night, it's going to be a concert hall where this sort of state of the art sound system and also this huge LED screen that's as big as bigger than I should say, three football fields, and you know the high they're calling it the highest resolution LED screen in the world. In the daytime, it's going to be sort more of a tourist attraction, immersive entertainment.
You've got to see pictures and videos of this thing to actually do it justice. I mean, you hearing about it is one thing totally, but this thing is actually really really cool.
No, I mean that. That's something that really kind of blew my mind was that when I went out to Vegas to go take a tour, I actually I stayed in the west and you know, which is sort of overlooking it, and I asked them, you know, hey, can I can I I want to look out at the sphere because it was it was one hundred and fourteen degrees.
I got to do it.
I'm not going to go outside. But but no, but but I got in there and just looked at it out the window. I couldn't believe it. I mean that that's when you know, again, as I say in the story, a lot of people, you know, were doubting of people were saying, this is you know, this is never going to work. This is the death star. And then they turned it on and you know everybody had you know, people just kind of went nuts.
So why is spear? What was the inspiration behind it?
You know, that's a really good question. You know, in twenty sixteen, you know, his family just sold Cable Vision. They just they just sold it for eighteen billion dollars, you know. And I make a joke in the story the guy plays in the band. I mean he could have gone off and played and played in the band, and he's like he drew a picture, you know, on on a notepad and you know, and told this guy, but the chief technology officer of a Cable Vision, this
is the venue of the future. Let's go out and disrupt the live entertainment is I don't actually know where, no where he got that idea.
But it turns out that from an engineering standpoint, it is incredibly difficult, No, it's insane to playing music in. So how did they go about solving that?
Well, it's an acoustical nightmare because everything just echoes inside of Speercally. They found a company in called Hollaplot in Germany that's that basically beams audio to using algorithms to different places, and you know, to where wherever you're sitting that the algorithm set up so they're basically measured. They're creating these beats, you know, sound and and and they're measured,
so everybody sort of here's the same thing. But that way, since you're sending the audio right to the people you're everything isn't just bouncing all around and echoing. And that's just one of the sort of crazy, crazy and and and I think ultimately expensive things they did, and and helps explain why this thing went from one point two billion dollars you know price tag to uh two point three billion.
That's the thing.
Who's counting?
So so wait, there's gonna be a big act that's gonna open this up. And because this is gonna happen, and I mean, it's already in Vegas, it's built. They're already doing weird stuff on the strip.
Who's opening a little band from Ireland called a You two of them?
Yeah, I think if you're gonna be there, yeah, if you're gonna make if you're gonna make a splash like launch with with with YouTube, how long are they going to be opening there?
They're good, they're they're gonna be playing for twenty five twenty five nights, and tickets are how much, you know, I think they started around one hundred and fifty dollars.
Yeah, but I mean I'm going, well, I.
Mean they're almost all sold out, so I think if you want to go, Joel, you're gonna have to look at them stuff up and those prices are right. Yeah.
I mean it's a good point though, Joel, that you bring up. If it's good enough for Bono, all right, then you know it's good enough for other musicians.
Right.
I also just think this is this is the future, right like live event We know that live events are where artists make their money. If you can make an artist a venue unlike any other what happens, you can get anybody you want.
Well, they don't have to travel, so so I mean, these these bands have like these caravans of trucks that you know they carry there. They're they're they're you know, all the equipment around all that, they take their led lighting around, they take their sounds just to surround all these concert halls and and and in this is from what I'm told with you too and other bands, they
actually have two sets. You know two caravans that you know that you know that that move in between in between venues, So when they're so the one to the next one, you know, they're setting up the next venue walk while they're breaking down the first. Anyway, I mean, it's it sounds, it's enormously expensive and it's a huge headache. And I guess if they can spend you know, a couple of months in Vegas, you know, some people are
definitely gonna want to do that. And some of the bands, by the way that they're talking about a cold Play and Fish, Harry Styles is.
All the relationship with Fish they're doing.
Yeah you packed that house?
Yeah, okay.
So there's also a possibility that Vegas won't be the only.
Place that has a sphere, not if Jim Dog can help. But yeah, no, they're they're, they're they're they're trying to get permission to build one in London and there's they're scouting other locations. But after spending two point three billion dollars, they want to change their plans to get partners because he's not going to want to do that again. Well he's already said he says he's not going to do that again.
Okay, So Joel, you mentioned that, you know, with live music in this day and age, the world of Beyonce, the world of Taylor Swift, people will pay for certain acts and certain experiences more.
Than one hundred and fifty dollars.
Oh for sure. Yeah, he didn't see me going to beyoncere Taylor Swift as concerts, even though I wanted to, Devin, it was hard to see this coming, like the post pandemic surge and especially the high prices that people would pay. Talk about the construction of this and the way that the pandemic derailed it, because this thing was in the works before the summer of twenty twenty three.
No, because that's I mean, that's the whole thing. They basically they least eighteen acres of land from from Las Vegas sands and they started to build this thing, and then in twenty twenty the pandemic hits and it just dry up the cost of you know, steel, computer chips, you know, basically, you know, just saying the story just about anything you need, you know, for a multi billion dollar development.
LEDs were more yeah.
Yeah, yeah, those.
Yeah, no, yes, especially for the inside and the outside of the excessphere but so so so that effect and also halted construction. They were initially going to open in twenty twenty one, so that set them back three years. But but but it was also just all this advanced technology, all these things they're experimenting with. They had to create an entirely new camera just to be able to capture
images large enough to fit, you know, that screen. They were stitching images together for multiple cameras.
Camera and they had to patent this thing because it's like the quality in size of this image is so big. And then like, I think this is like there's like some feats of engineering that they passed.
A lot of stuff. I came. I think there's I think the numbers on like sixty patents overall, and not just that the camera is just you know, like eight or something.
So our thanks to senior Global business writer for the magazine, Devin Leonard and once again the editor of Bloomberg BusinessWeek, Joel Weber. Still to come. On Bloomberg Business Week, we turn our attention to the retail sector and the resurrection of j C. Penny. CEO Mark Rosen stops by to explain the strategy and why it's paying off. This is Bloomberg.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Easter on Bloomberg Radio, the Bloomberg Business app, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa play Bloomberg eleven.
Thirty Tim Stenek along with Bloomberg News Deputy team leader for US Equities Jess Menton, Who's in for Carrol Master this week? Our next guest is a veteran of Walmart and Levi Strauss, who's facing perhaps his toughest challenge yet reviving the storied brand of j C. Penny, which dates back more than one hundred and twenty years. The department store chain filed for bankruptcy shortly after the start of the pandemic in twenty twenty. Then in November of twenty
twenty one, a new leader took the helm. Just last month, the company announced a one billion dollar reinvestment plan that focuses on digital and in store experiences. This past week, we caught up with Mark Rosen, the CEO of the now privately held Jcpenny. He joined us from the company's headquarters in Plano, Texas.
We are a private company, but what I can share is we now have sales that are over eight billion dollars.
We have just over six hundred and fifty stores across the country, and we also operate jcp dot com, So we're serving customers everywhere right now, and the business is really You mentioned that we emerge from bankruptcy, and we emerged with a very very clean balance sheet, in a strong, strong financial position with less than half a billion dollars, with less than five hundred million dollars of debt on the balance sheet, so really financially positioned to drive forward
and really reinvigorate this brand and re establish our relationship and our relevance with our consumers, which is really the core of America.
You might have heard just a little earlier talking about over the weekend visiting a mall, seeing a jcpenny that was no longer operating, and even having the conversation with his family about whether or not the store still exists. How do you change that narrative and let people know that yes, jcpenny is here and we've got six hundred and fifty stores across the country.
How do you do it?
Well, that's actually part of so you mentioned that we just announced an over a billion dollar investment back into the business, and that that investment is focused on remodeling our stores and reinvesting in the store platform, putting new technology, a new point of sale, in in revitalizing our online shopping experience and really improving THEJCP dot com shopping experience, and then also our supply chain. But I would say we're a retailer, and so it all really starts out
with product. And over the last couple of years, what we've done is reintroduce over twenty five of our brands, Brands like Stafford that ever customer knows and loves, and a lot of customers grew up with brands like Liz Clayborn and brands like Cooks in our homes, in our home area, and so we've reintroduced that product. And now what we're investing in also along with that a billion dollars is what we're calling a brand reinvigoration that is
centered around really helping our customers make it count. And when we look at our customer, I set our customers the core of America. It's the school teachers that teach our children it's the construction workers that build our homes in the buildings we work in. It's medical workers who
take care of our families. And that customer is looking for a sense of belonging there, looking for a place where they can find accessible fashion that they can still get at a great value, because that customer is making
trade of us every day in their life. And so what we're introducing also is a campaign to reinvigorate the brand, centering around how we help our customers make every moment in their lives, whether it's a big moment like their daughter's wedding, or whether it's a smaller moment like getting
their kids ready for school in the morning. But how do they use the products that we have at jcpenny to make that count but be able to make account but still have money left to put breakfast on the table for the kids.
Hey, Mark, whenever you're talking about middle income shoppers, and especially with this inflation dynamic, how do you sort of view that as far as how to get shoppers back in when they are trying to figure out where to sort of shift their spending.
At this point, right inflation is an issue for our customer. We look right now, we see that our customer is spending over seven hundred dollars a month more just for rent or mortgage, for groceries, for gas, and that means that every dollar is even more important to them, and it's more important that they make every dollar count. And that's really what we're here for is to help them
do that. And I think the unique thing that we can bring to the table is we can bring great fashion and great product at a really accessible price to our customers. And that's what they're that's what they need, that's what they're looking for right now in their lives.
When you talk about technology upgrades to some of these stores, kind of build on that. What more specifically are.
You doing.
Within the stores. It's a lot of it's mobile and it's point of sale or checkout technology. So we'll be within the stores centralizing the checkout, but we'll also be putting in the hand of hands of all of our associates in the stores mobile devices that will help them manage inventory better. It'll help them ship and fulfill online orders,
it'll help them check inventory and order online. For a customer or I've talked about centralized checkout, what it really will do is move check out anywhere so that they can mobile check out a customer anywhere in the store.
Sales of over eight billion dollars. Where do more sales happen right now at the six hundred fifty stores across the country or jcpenny dot com.
So it's about a seventy thirty split with stores the seventy percent and with the online business about thirty.
And where are you more bullish?
So both are actually growing, and we're focused on growing both. But I do believe that right now we've done a significant amount of of reimagining our online experience and investing in JCP dot com, and we think there's significant growth there.
So do you think that it is it growing at a faster rate in like yell eclips store sales with JCP dot com in a number.
Of years, the JCP dot com business is growing faster than the store business. I don't believe that it's ever going to eat clips. I think you could reach, like, you know, a forty sixty point or something like that. But the reality is what we're seeing is that customers
still want to shop in stores. They still want to come in, they want to have that try and experience, they want to get help from an associate to put together an outfit, and in important areas like we reintroduce beauty, a customer is looking to come in and get help and try product.
When you look at this portfolio, whether it's fashion, apparel, home, beauty as well as jewelry, where are you seeing spending the strongest and where do you see people pulling back the most.
It's interesting because if we look across the business, we're really pleased with the growth that we've seen in our home business and in our men and women's apparel business, and we believe we've gained share in all of those areas because customers are spending there. Our jewelry business is another one that continues to be really strong right now.
I think rather than seeing people reduce spending in particular areas, we're actually seeing that within an area, they're being a little bit more selective about what they're choosing, and we are seeing some more growth come from some of our private label brands. For example, in home, we're seeing products like Cooks, which is a private label opening price point, small small appliance think like blenders and toasters and things
like that, and cookwear. We're seeing customers choose that product in some cases because they realize it's great value and they can save money by going for that product.
So are you going to stay a private company forever? Is there an IPO on the horizon.
So right now we're really actually focused on just driving sustainable, profitable customer growth within the business and we're very fortunate that we have an ownership group that is aligned with doing that and focused on the long term. And right now the focus is building that relationship with customers, driving customers back to the brand, and then we'll see where it goes from there.
That was Mark Rosen, CEO of j C.
Penny.
You're listening to Bloomberg business Week coming up, we stick with the retail theme and examine how AI is increasingly becoming part of the shopping experience.
That's what lily Ai does. We are using AI to bridge the gap between retailers speak and consumers speak in retail, and this is the perfect type of problem that AI can come in and help solve. To understand the language of the consumer, use AI to extract those attributes out of the images of the product catalog and then help the consumer experiences.
The CEO of lily Ai breaks down her company's unique data driven tools designed to help streamline product discovery in the world of e commerce. This is Bloomberg.
You're listening to the Bloomberg Business Week Podcast. Catch us live weekday afternoons from three to six Eastern Listen on Bloomberg dot com, the iHeartRadio app and the Bloomberg Business App, or watch us live on YouTube.
Tim Stanibek with Bloomberg'sjess Mattin. Who's in for Carol and Jess. We've got yet another use for everybody's favorite type of tech.
So the hype in artificial intelligence, as we know is everywhere. But what about when it comes to the intersection of AI and retailers. Well, there is a company that is powered by AI that is aiming to bridge that gap and makes selling easier for companies, especially when you're talking about Bloomingdale's, Macy's, the gap back to school purchases obviously starting up right now and then also ahead of the
holiday shopping season. Joining us now is Perva Gupta, co founder and chief executive officer at Lilyai, joining us on Zoom from Palo Alto, California. Thank you so much for joining us. Talk to us about what your company is and what you do. Just to set the scene here.
My company is called lily Ai. We are working with some of the largest brands and retailers. But let me ask you a question. I'm sure you shop online all the time and I've gone through an experience when you're looking for something as simple as a navy blue sweatshirt and you are getting no results, or you're getting even
worse red lipsticks and slippers. It's not that they don't have navy blue sweatshirts, but the reason why that's happening is because the way that the products are described at retailers are in the language of midnight French terry at leisure like. That's why you're not finding it because it's not called navy blue sweatshirt. It's not labeled in the language that us as consumers use, and so that's what
lily ai does. We are using AI to bridge the gap between retailers speak and consumers speak in retail and this is the perfect type of problem that AI can come in and help solve. To understand the language of the consumer, use AI to extract those attributes out of the images of the product catalog and then help the consumer experiences.
Okay, so you got to explain to me, like I'm a five year old, how AI is being used here and how it's training itself. It's retraining itself. Take us through the basics.
AI is being used for years now. It literally started in nineteen fifties, and fundamentally AI is when machines are mimicking human intelligence, right and recently, generative AI is all the hype everybody's heart of chat GPD. That's one type of AI. There are so many other types of AI like computer vision, natural language processing, all of those types
of things. And so now coming back to your question around how we use AI, we have basically built we use a type of AI called discriminative AI where we have created a lot of clean training data where merchants on our team over the last few years have manually labeled all of the products and added a lot of the language of the consumer on every single product.
How long does it take to do that kind of process?
Seems very painful. It's a very very difficult process where you almost have to create the definitions in fashion in a very very clean mathematical way, where our merchants know the difference between boho and boho chic for example. Right, it needs to be really really clean data for AI to understand all of the different types of language that our consumers use or just over our consumers use. And
so it's it's not an easy thing. It's a very very difficult labors process that we've gone through to be able to create all this clean training data which we then fed to our AI engines which now which are now doing a really good job of predicting all of these attributes on these products, which is basically the images. So in short, we have built the technology that can extract attributes in the language that consumers understand out of images.
That was perfect good to a co founder and CEO at LILYAI. And that wraps up the weekend edition of Bloomberg Business Week from Bloomberg Radio. Thanks so much for joining us. Be sure to tune into Bloomberg Business Week Monday through Friday starting at three pm Wall Street Time on Bloomberg Radio and on Sirius XM channel one nineteen.
You can also watch your daily broadcast on YouTube just search Bloomberg Global News and we're simulcast on Bloomberg Originals available at Bloomberg dot com Slash Originals and streaming platforms like Roku, Amazon, fireTV, Samsung TV Plus and more. Find our Bloomberg BusinessWeek podcast at Bloomberg dot com, Apple, or wherever you get your podcasts. The latest edition of the magazine is available on newsstands now, at Bloomberg dot com and always on the Bloomberg Terminal. Have a good and
safe weekend everyone. For Jess Matton and Simone Foxman. I'm Tim Stenovic. Stay with us. Today's top stories and global business headlines are coming up right now.
This is the Bloomberg Business Week Podcast. I'll a little on Apple, Spotify, and anywhere else you get your podcast. Listen live weekday afternoons from three to six Eastern on Bloomberg dot com, the iHeartRadio app, tune In, and the Bloomberg Business App. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.