Bloomberg Audio Studios, Podcasts, radio news.
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 Stenebek from Bloomberg Radio.
Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast. Well that's it. Summer is officially over, though Carol Masser is out taking a nice September vacation. The kids are back in school, the leaves are starting to turn, the presidential campaigns are in a full sprint until November. The August payrolls report has come and gone, and the US Open is wrapping up after another exciting two weeks. And we were reminded early in the week that September has
traditionally been a terrible month for traders. Will this September prove differently. We're going to have to wait and see. We begin, though, with news from the chip space. This week, Bloomberg reported that the Department of Justice subpoena chip giant in Nvidia over the company's acquisition of run Ai and other aspects of its chip business. Nvidia has since said that it's been in contact with the Justice Department, but
has not been subpoenaed. The story still developing in other chip news, the Biden Harris Administration's big bet on Intel to lead a US chip making renaissance is in grave trouble. This as a result of the company's mounting financial struggles. It creates a potentially damaging setback for the country's most ambitious industrial policy in decades. We're talking about the twenty
twenty two Chips and Science Act. Under the Act, Intel was set to receive eight and a half billion dollars in grants and eleven billion dollars in loans, but only if the chip maker meets key milestones. For more on Intel struggles, Emily GRIFFEO and I turned to Mackenzie Hawkins. She's Bloomberg News US Economic and Industrial policy reporter.
So President Joe Biden to Intel's factory site in Arizona in March and announce this massive grant and loan package from the Chips ACKed and what could be and would
be the program's largest award. And Intel, like more than a dozen other companies that are supposed to receive US government subsidies, is in the middle of a pretty intense due diligence process that comes after reaching that preliminary agreement earlier this year, and once the company signs a final term sheet and hits milestones on each of four projects that Intel's Chipsacked award is supposed to support, they could start to receive funding from the government in the form
of a reimbursement for companies spending. But Intel has resisted certain due diligence requests from the Biden administration and had a pretty disastrous financial report early last month that calls into question whether the company will ever be able to reach the milestones that would trigger that disbursement in the first place.
So what is the US really looking here when it's examining these milestones, Like, what exactly are the milestones that Intel has to meet?
So the government has been actually pretty quiet on the milestones. They're very bespoke arrangements that go on not just a company by company basis, but a project by project one. So in Intel's portfolio, for example, you have everything from an R and D facility in organ to a small packaging project in New Mexico, and each of those facilities have different timelines, different milestones and different portions of Intel's
grant that would fund those projects. But across the board, one of the key metrics for the Biden administration is general commercial viability, and the best way for a company to demonstrate that is by lining up major customers. So if you compare Intel to a company like Taiwan's TSMC, which is widely regarded to have the world's best semiconductor technology and has orders from pretty much every major tech name in the books, Intel doesn't actually have any major
customers lined up for its US facilities. It has some interest from companies including Media Tech, Broadcomm, and Microsoft, but none of them have reached full production yet. The Commerce Secretary herself actually reached out to executives out in Nvidia and AMD and asked them to consider manufacturing it Intel's oh Hiho facility, which could become the world's largest chip making factory if it's fully built out, and neither company plans.
To do so.
Hey mackenzie, how did this story change just in the last month. Because of the beginning of August, Intel reported earnings and it was the worst single day in decades. As you note, two major credit raterers downgraded the firm's debt to just a few notches above junk. The chip maker also slashing about fifteen thousand jobs. How did this story change just in the last month.
The process that Intel's going through right now, which is the preliminary agreement followed by months of due diligence ahead of a final award, was always the process that the company was going to go through. But of the entire chipsack portfolio, which includes companies like TSMC, Samsung, sk Heinex, Micron, Intel has perhaps seen the biggest change in the company position in the industry from when that preliminary agreement was announced to now. And so we're in a bit of
a holding pattern. The Biden administration and just about everybody else else are waiting to see what the company will do, and they're set to evaluate options at a mid September board meeting. So if the company does something like split off its manufacturing division or scale back its global factory plans, that could have an impact on its negotiations with the
Biden administration. And to put a finer point on it, if and there is an indication yet that this is happening, but if the company does decide to pair back any of its US plans specifically that would almost certainly cause a reduction in its overall chipsack.
Toward I'm wondering if maybe we can zoom out, just for people who are just tuning in now, why has Intel not been able to kind of capture that frenzy that there is, at least in the market for semiconductors, you know in videas the top performing stock in the S and P five hundred. It's been a huge theme this year, and yet we have Intel, which is a very well known name, and it just hasn't been able to ride that wave. The stock is down something like
sixty percent year to date. Just get us up to speed on exactly what they're missing.
So you know, Intel is an American technological giant. This is the company that gave Silicon Valley its name, but there have been several years of strategic and technological blunders. That CEO Pat Gelsinger came into leadership of the company aiming to turn around with a massive bet on Intel's factory division for factories that are known as foundries in
chips peak. But the foundry business has struggled. They posted a seven billion dollar loss last year and they missed out on a big AI wave that companies like TSMC have been able to ride, and so now Intel is sort of playing catch up against foreign competitors and their technology still lags several generations behind the cutting edge, and they've struggled to convince major other players in the industry, who get the bulk of their orders for AI chips
from the industry leader TSMC, to take a bet on their factory processes. So it's a bit of a spiral for Intel right now as they're trying to convince investors, convince the gu government, and convince industry that their technology is worth taking a bet on.
McKenzie on the US side of this, the US government side of this, the support that Intel was set to get from the US government is set to get from the US government. What does the US government want to see? Is this about jobs? Is about security? Is it about both?
So if we go thirty thousand foot and look at the Chips Act overall, this was a landmark law that was that President Joe Biden signed just about two years ago, two years ago last month, and the goal is basically to bring manufacturing of these critical electronic components back to the US chips are in everything you could think of, from a microwave to a phone to a nuclear missile, and for decades the US has ceded manufacturing leadership to Asia.
The pandemic revealed to everybody how important ships are. You know, it was a shortage of even less advanced ships that caused auto supply lines to shut down during COVID and governments around the world, not just the US, but from the EU to South Korea, to Japan to Taiwan too. Of course, China has decades of industrial policy in this area. Are really doubling down and trying to make sure that they have a stable and secure domestic manufacturing base for
both economic and national security. The jobs, of course, are an added bonus, but this isn't a jobs program. The goal is to get the world's top chip makers, and the US has gotten commitments from all of them, including Intel, to build significant manufacturing presence on US soil so that the country can make a fifth of the world's most advanced processors by the end.
Of the decade.
But you say, you write your piece that this is a long process. I mean you go back to the Obama administration and Intel was talking with the Obama administration for something that they ended up building and touting during the Trump administration.
That's right, and you know, one of the big difficulties facing the Biden administration is, you know, they're looking at point in time company financials and market conditions. But this is an intensely cyclical industry. And as much as companies would like to make promises to politicians, you know, they'd love to stand with Biden at a build signing or go to the Oval Office, the reality is that they're
beholden to their shareholders and to their customers. And so you have a strategy employed not just by Intel but by other major companies as well, to build factory shells, do what has cost billions of dollars but is actually the cheap part of the process, and only outfit them with actual equipment when they can see, you know, six months down the line, nine months down the line, exactly
what their demand picture is going to look like. And so right now you're starting to see a lot of the signs that you would want to see if the country were going to meet it's, you know, a decade end goal of making all of these chips at home, but that's in factory construction not in actual equipment purchases, and so there are a lot of other indicators to watch to see whether companies will actually make good on their production plans in the timelines that they have set
out with the administration.
I wanted to talk about that timeline. What do we know about what's next for Intel and how much time they do have before they would be set to receive those billions of dollars in grants.
Intel would love to the answer to that question very active negotiation. You know, there are companies that are quite close, but we haven't actually seen any chips sacked money go
out the door. All of the announcements, of which there are more than thirty billion dollars committed, have been in the form of these preliminary agreements like the one that I described Biden announcing for Intel in March, and so all of the companies are going through due diligence, actively hashing out the specific dollars and cents that are correlated with you know, X production milestone, X customer commitment, and it's you know, a very company by company basis, and
so really what Intel is feeling right now is not necessarily like, oh, we're worried our chips ACKed award is going away. That would only happen if their US factories went away, and intil hasn't made any decision to that effect. But it's about the timing. Intel has a balance sheet that's in pretty dire strait and they want to get this money as quickly as possible. But that'll only happen
if they cooperate with due diligence. They have resisted some requests from the Biden administration so far, and of course if the actually get their factories off the ground, which requires the company to invest billions of dollars itself.
To what extent does the US government need Intel to succeed? I'm not asking if it's like too big to fail, but is it too important to fail?
Intel's crucial to the overall Chips Act effort. There are only three companies that make the types of advanced processors that the US is really really focused on in this effort, and that's Intel, Samsung, and TSMC, And both of the latter companies are building factories on US soil. But to get to a fifth of the world's production, especially when governments around the globe are trying to do the same thing, you really need these large scale commitments like the ones
that Intel is making. I mean they're planning multiple fabs in Ohio and multiple fab expansions in Arizona. So to potentially lose those projects or to see them delayed, which again we don't really know what's going to happen on that front, would be a pretty massive blow to the
overall ambition of the program. Intel's also the only American maker of these chips, which the Pentagon has decided as really crucial for Department of Defense supply chains, and Intel's the sole intended beneficiary of a three and a half billion dollar program to stand up a secure facility to make semiconductors for military and intelligence purposes.
So will the.
Ships Act fail if Intel fails? No, there are hundreds of companies that were interested in the money. More than a dozen awards have already been announced. But it's impossible to overstate how critical Intel's investments are to not just the company's turnaround plan, but also the Biben administration's goals.
Mackenzie Hawkins, Bloomberg News US Economic and Industrial Policy reporter.
You're listening to the Bloomberg Business Week podcast. Catch us Live weekday afternoons from two to five pm Eastern Listen on Apple, card Play and and Broud Auto with a Bloomberg business act or want us live on YouTube.
The US Open wrapping up in New York City this weekend, and this year the Grand Slam saw a record breaking attendance, cementing itself as a can't miss summer event for not only the casual fan, but celebrity influencers, well connected New Yorkers, some titans of finance, some of them there to watch
incredible tennis, some there to see and be seeing. It's also perhaps my favorite sporting event of the year because not only do Carol and I get to take in the festivities and watch some of the sports American stars like Francis Tiaffo, Coco Goff, and Taylor Fritz, but we also have a chance to speak with someone who understands tennis elite athletes in the world of sports like pretty
much nobody else. John Wertheim is executive editor and senior writer at Sports Illustrated and correspondent for The Tennis Channel. He joined us at the US Open.
You know, Kennis, that's this weird point where Roger Feeder is retired Titan player, everyone loved him. Not here, Florida Williams Titan not here, Rolf and the Doll not here. And I think everybody worried, Oh man, after these legends retire, what does tennis look like? Is anyone going to care about the sport? And we've kind of made uncharacteristically great, you know, graceful pivot for tennis, and the grounds are more filful than ever. The the attendance is through the roof.
It's going to set a record, and it's kind of strange because we have this deficit of stars compared to what we used to have. So that's that's a story I'm looking at.
So do we have the deficit of stars or are is Cocoa Goff going to be there? Is Shelton going to be there? Is Alcoraz there?
I mean Alcarez could have been there? Yeah, a last he's not in the tournament. Yeah, I mean, I think they're bright prospects. I think they're fans that they're players that fans are starting to build relationships with. But you know, we're not talking about guys, you know, twenty majors. Yeah, Coco Gov's wonderful, but just one And I kind of feel like fans kind of like the unpredictability of it all, and they don't mind that any of twenty players could win.
And they don't mind that Carlos Alcaraz wins two tournaments and then loses in the second round here.
So in a sense, is that better for the sport?
It's funny because I think the conventional wisdom is you sort of need excellence to the top. But the NFL, which is the most successful sports league certainly in the US, how's this any given Sunday theory and parody is great? Did we want all fans to think their team could get to the Super Bowl? It's kind of worked out for them. And I think tennis is sort of pleasantly surprised how well things are going in the absence of stars.
Why do you think it is that way?
You know, We've been talking with various folks from the USTA and they talk about the Zendaya movie Challengers and how much money it made, and you're rolling your eyes.
I didn't see it. Actually, Ida's Sandaya's rate is quite high, so I don't know, you know how much it I made, But no, I think you're I think tennis is having a bit of a moment, and I think instead of tethering itself to these stars Torena, Williams, Rogers, Cetter, Rofindo, I mean, it's kind of it's about the culture, it's
about the fashion, it's about the the international aspects. I mean I think some of it too is just you and I could be playing and it would still be fun to come to the US Open and watch the tennis match. Yeah, I mean this is such a big event. It's almost sort of actually.
John and if I was playing, No, it wouldn't.
Be if they would have honey deuces and they would have music, and it's I mean it's almost sort of they're not player dependent here the way they used to be. No,
I think there's a lot to recommend about tennis. I mean I have pet theories about I think I think pickleball maybe a bit of a help that all millions, millions of people are now sort of understanding what it means to hit a slice, or they have a more appreciation for tennis because they've been bopping around a wiffle ball in their in their yards.
Yeah, it's been it's been really awesome to watch and least be able to cover it over the last few years, and even in those that little bit of times, see the growth.
How many opens have you covered?
I'm not trying, You're doing so well, and now you've kind of it's really depressing a lot. I mean, like since the nineties.
Remember the nineties, remember it was, but that was a really important era for American men's tennis.
Yeah, I mean I sort of caught the very very tail end of sampress agacy, and then I sort of came up, you know, I came up with like mack and.
Roe and Connor's before, and they all looked at me like I was eve I.
Nineties. Yeah exactly, Oh sorry, go ahead. No, It's just funny because the game sort of takes on different identities and and it was it was tampras Agasy, and then you had the Williams sisters and you sort of had this international. I mean, I was here when Andy Ronick won and you said, oh, there's this fresh American champion and then here comes Roger feder Rofnadal and Novak Djokovic that basically ate everyone else lunch for twenty years.
Look how far we've come.
So look how far we've But you knew exactly think about that.
Just coming off the Olympics.
I was a gymnast as a young kid, and I mean to look at Simone Biles, right, and normally you have a good season, maybe you're really young, but look at like I just think there's is there something happening in sports where yeah, people can go the distance.
And why not?
I have two theories. You want to real quick that One of them is just it's evolution, it's sports science. I also think it appropriate for a Bloomberg audience. Tom Brady, it's commerce, it's money, it's I mean these players have I mean, you know, Billy Jean King used to come in the back of a station wagon. Now you've got players, They've got their own messuses, they've got their own teams. They're not standing in line waiting for the Hurts rental car counter to.
Oh, they're getting private judge, I think exactly.
And I think that has the extensions a.
Career hardly because they have deals with private jet companies.
Well that too. It doesn't doesn't hurt when you have that endorsement.
But if they didn't play well, I mean they're playing well though.
They can avail themselves to all the cold plunges and the trainers and the physios, and I mean all is Tom Brady similar? And I think Lebron James is still going strong and yeah, twenty years into this career, and I think it's because they can afford career Extenis this one's.
Done a cold plunge by the.
Way, Yeah, very popular, They're very popular. I I mean, who knows it to scientists, But this might be a good time to talk doping, might be all right, what's the deal?
I don't in this sport. I mean, I you want my honest opinion. I believe. I believe that incentives explained an awful lot of human behavior. And I get why some athletes will dope. I get why some athletes who might be trying to, you know, have this career resurgence laid in their career with dope. I can see how
young athletes. I just I don't think. I mean, obviously we're we're talking about Jon Excenter and everyone given a tournament and we have this sort of strange story where he had failed to doping tests from about five months ago, but was essentially exonerated and found no negligence, no fault because the trainer essentially was careless and use the substance that was legal in Italy but is not is on the bad list, And I just I get the skepticism. I understand sort of. There are a lot of players
who are very suspicious about this. I just i'm I always look at incentives. Why would a guy with one hundred and fifty million dollars Nike deal starting his career in March when there are no major tournaments for months and months. The amount was so minuscule. It wouldn't enhance performance. It just doesn't make sense that he would intentionally dope.
That may sound naive. I think they're probably mean naive to say there's no doping in tennis, But I also think it's such a sport that depends on hand eye coordination and focus and mental toughness. It's not as though putting on five pounds of muscle is really where the action is. I think the doping probably might help with recovery and with some of the CARDI again, I don't think it's one hundred percent clean. I don't think any sport is. But in this case, I just the facts
of the case that the process is disturbing. It's very strange. The usually you hear about this right away. Usually there's a strict liability standard, where hey, we don't care what happened. It's in your system. You're the CEO of your system, right, you're guilty. That wasn't the case. I mean, I think there are a lot of process questions.
Does that give you pause? The lack of process questions?
Yeah, I mean, I think the way this handled, people are gonna have to go back and really pick this apart and figure out why it was that this guy played for five and a half months. Why wasn't there the publicity that usually accompanies some of these announcements. There are a lot of players saying, boy, I wish you know I. I tested positive too, and I also was eventually exonerated, but I had to take the reputational hit, yeah,
and or I couldn't play, or I couldn't play. So I think the way this was handled raises a lot of questions. But I just, I mean, everyone's speculating. I just don't think he don't.
Your point about incentives is really interesting because I didn't think you were gonna got money exactly. I thought you're going the other way. And I come from a world of cycling, where you know doping is and has been rampant for years, and you know a tenth of a second or that much more power is what ends up mattering in the end of a race. And the idea. When you said incentives, I thought, oh, incentives to win. But no, you're saying that there's too much to lose for these players.
Yeah, exactly. I mean you think about how much of these players income and networks had nothing to do with prize money. It's image, it's reputation, it's what they represent, it's how they carry themselves. You are jeopardizing all of that to win a couple of tennis matches in Indian Wells, California in March. I don't I mean again, I don't
want to be naive here. Everyone's one thing that's interesting about this to me is that some very credible, very knowledgeable, very reasonable former players agree with me and sort of say it doesn't make sense. The amount was so minuscule. Very credible, very reasonable, very educated former players say something's really fishy here. The amount might just be that he was cycling off of it. Don't be seduced by sort of the fractional the sort of infantesimally small amount. Don't
be naive. And the guy got caught twice, what more do you need? So so even within tennis, even in the sort of inner sanctum, there's they're very divergent opinions. I just think, like, you get to a point with your reputation and your net worth and how much sponsorship you have. I mean, these players can make four or five million dollars for being a worldwide brand ambassador. That's more than the US Open champion will make. Right, why
would you jeopardize that in March over this infant? I again, he is a vanishingly small amount of banned substance.
Wellthough, we see in.
Our world very wealthy people, financiers who have tons of money and yet do something that breaks the law just to get a little bit more money, right, And you think.
Really like why did you do that? But but I hear what you.
Said, Yeah, no, it's a fair point. I mean, the risk reward calculus is not always you know, rated.
You know, could have been the car, Like do you blame the coach?
Yeah, I mean that's sort of where this falls. Is essentially that the trainer and again the substances, it's legal in Italy, but on the box it says it says doping, so I'm not sure where and I mean someone else is So listen, your job as a trainer, what are your big jobs that you.
Put it down, get it away from me?
You know what?
Uh?
You know asprend works pretty well too. I mean there are alternatives, but Basset Tracin will cover that that cut as well. It was a really strange set of circumstances and almost a look, if you're a trainer, your number one job basically is to get anything even potentially illegal or on the band list away from the athlete. And here's a guy putting it on his hand and then giving the athlete an ungloved massage. The flip side is, I don't people do dumb things. I don't. I mean,
I don't know. It's it's definitely it's been. I mean inside these doors where we are now, it's still very much being discussed.
You talk about that a little bit because what we're at the Bud Collins Media Center and you go inside here, this is where all the journalists are. What's the what's the vibe been like covering this with the other journalists.
Is that the story in particular.
Yeah, well is that I mean, this story is still dominating.
Yeah, I mean the players his initial press release and I you know, whatever we all have, we're all familiar with press releases. I look forward to putting this issue behind me. And you want to say, oh, that's oh do.
You Yeah, that's not really how it was one way to keep the issue front and center.
Yeah, exactly right.
We know this is what you would like.
I just want to move on.
But that's you know, but the other players have been really supportive of him. It sounds like some of them, some of them.
Yeah, I'd say it's been very guarded. Actually you think so, Yeah, I mean I think given the range, I mean sometimes sort of my guilty pleasure is UFC is fixed martial arts. There anytime someone there's a doping violation, everybody piles on and sort of says, listen this, I knew this guy was cheating. This is much more guarded. But these are sort of these very sort of meticulously worded sense. Nobody is falling on the grenade and no one's a couple
of former players. Nick Curious is here and he's made a numb were of sort of incendiary statements. It's been very I've sort of been surprised at how little support he's gone. There does seem to be real questions about the process, and everyone's got a friend, everyone's got a colleague who had a similar circumstance and didn't have the luxury of six or seven figures worth of legal representation, and sort of this this cakewalk just sort of get this thing buried five and a half months later.
So the money that we continue to see in sports, it's a big thing that we cover a vertical, certainly at Bloomberg a business of sports.
You know, you can go a lot of different places.
But this was an interesting week where the NFL said, okay, private equity, you can own a certain amount of ownership. The money that continues to come into sports, good, bad and different, Like, how do you feel about it?
How do you think about it? Gambling?
We'll talk about that. I mean, I think that, but I think that's it. I think it depends on the sorts. Look any any industry we like money coming in and we like we like more investment and not less. I mean, I think sports are a pretty robut US sector. I think it depends what I mean, we can there's a sportswashing component to this. Do we like money when it comes from the golf region, Well, that comes with some strings attached. Do we like money when it comes through
sports gambling? And that's been a huge infusion of cash for teams and leagues and media, not so much for athletes. We can talk about that. That's been a big topic among the players and the players lounge is a sports gambling we can we can talk about that. I think media money, you know, great if if ESPN wants to re up here. I mean very few properties are actually
going to come up for renewal anytime soon. But look, if the NBA can make a million dollars a season from its media rights deal, like that's great, especially when there's a fifty to fifty split with the players. So right, Yeah, I think it depends. I think in the rule of thumb, you know, commerce good, But I think it depends on the source.
Tell us about the conversations that players are that's been talked in terms of gambling, because they don't necessarily get a piece of it, do they No?
I mean, in this sport it's really problematic and team sports, it says fifty to fifty revenue split, right, So if the NFL does a billion dollars with DraftKings, that's half of that and theory goes to the players. Tennis does not have revenue sharing like that. They also forbid the athletes from using the product, which is standard for most sports. And what happens to tennis is that the play a big gambling sport. I mean, tennis is like the third
most gambled on sport. There are millions of matches, there's flipantory all over the world. I mean it's crazy using there are two guys playing in a parking lot and there are three fans. Wi We're not talking about the US Open here. I mean there are all these low level events and they're you know, three fans watching, but they're tens of thousands of dollars being wagered on this match. It is ripe for corruption. But the what's really problematic to the players is that they get a lot of
abuse from losing. Gambio. You you cow, I just lost one hundred dollars because you can't hold your serve. And the players are saying, wait a second, we don't get the revenue. We can't even use the product. That's a little problematic. I mean, you guys are getting all this endorsement money into problem. You know, the product itself forbidden from using. You guys can sell the signage and you can get the data rights deal, which basically just means
selling data to bookies. And not only do we not get any revenue, we open up our phone and we have a stream of messages that are just the most vile thing you've ever heard from, you know, from aggrieved gamblers.
Right, this seems very problematic.
It's really problematic.
You've tweeted on this.
Yeah, I mean it's it's really I mean, tennis needs a lot more player representation. It's probably I mean, I think it's problematic across the board for any of a hundred reasons. But at least football players and basketball players are seeing some of that money. These players get all the downside, you know, they open their phone and they
get death threats because they missed a forehand. And the tournaments are the ones that can put the signage on the back wall saying you know, DraftKings and fanduels.
And it's such a solitary sport too, so it's not like a team is getting the hatred. It's this individual, and everything is riding on this this one individual. So what's the solution there?
I mean, I think it's it's nice Eve to say. I mean, in a perfect world, maybe Tennis says listen, not for us. We're not going to give you our data. I mean, there are ways to turn off the spigott. I don't think that's realistic. A bit more revenue to the players would at least give them some some skin in the game. At least they're essentially getting paid for the abuse they're taken. I also think you have to monitor this. I mean, when I can't wrap my brain
around with you, guys can help me with this. I can't order an uber and say my name is you know, Moscow Mule eleven seventeen. I can't. I mean, the anonymity I think would end a lot of this. Why why is it that I can send a player a death threat and bear no consequence when they lose a tennis match, But I can't. I can't go on Amazon and use a pseudonym.
I mean, there might be somebody who launches rockets. You might want to talk to you about this. Oh, yeah, you could exact question. Yeah, that's what I'm.
Thinking No, it's like there's a whole social world try to put the responsibility or are they verified.
Accounts that are you know, just pay ten bucks a month or whatever. It doesn't matter who you are.
A I is probably just gonna make it all worse in terms.
Of you know, and AI. When AI and sports gambling intersecond, my issue with sports gamling right now, we are at the uh remember when you know, you had Joe Cammell kids magazines, you had vending machines in high school selling cigarettes. This is a smoking set, really the smoking section on the airplane, as if the smoke knew when to stop it did? I bet we're I think we're at that phase with sports gambling. We're gonna look back and we're gonna say what you were allowed to do this?
The players got banned out of the bag. Now I mean there's no.
Yeah, I think there's regulation and I think there's some I mean, I think whatever the cliche you to TOOTHPAS isn't going back into two. But I think we're gonna look back at this period and say, was there no regulation whatsoever?
I mean, would you expect at some point there's going to be some big blow up of something whether.
That's a great point because I think I think the way the leagues and again, this is one of the great about faces of sports. I mean ten years ago, the leagues would say that this is the most sinister thing. They all, you know, every everybody went into Capitol Hill to say, why PASSPA the you know, the legislation should be overturned and why And then they ever in the league essentially did it about face and said, yeah, you know what, you know, this is a lot of revenue
we're passing up and we need sunlight. We need legal legal gambling is better than illegal gambling. And the one thing the league said was that the threat of corruption is going to be lessened when it's public, right, We're gonna have all this data, we have all this access. It's like marijuana. It's sort of gonna decriminalize. And I think in a very short amount of time this started out. There are a couple of college scandals, and there was
a baseball coach who tip someone off. And then now all of a sudden, we have the Sho Heo Tani. You know, the MVP of reigning mvpated Well he wasn't. Yeah, I mean, I think it looks pretty clear he wasn't corrupt, but someone very close to him was siphoning money out of his account to pay his dance. We have them someone on the Toronto Raptors is now banned from basketball globally because I think the water levels get very high, and I feel like we're we are one Black Sox
type scandal away from this thing really imploding. I think right now there are a lot of people who are wringing their hands and it's it's great. We love this infusion of revenue. And some stadiums have sports books. You know, I'm I'm you know, Sports Illustrated, Tennis Channel, CBS, ESPN, I.
Mean ESPN and Vegas does it.
I mean every sports media exactly.
I'm sure Mickey is not into this.
You don't think uh no, I mean again, like on ESPN, you couldn't mention points spreads a few years ago. That my favorite, my favorite story of all these is that the Vegas Chamber of Commerce wanted to buy a Super super Bowl at about twenty years ago and in the NFL said no because it's too adjacent to gambling.
It was just Las Vegas and the Super Bowl.
Yeah, it was in the Chamber of commerce exactly. And now the Super Bowl is in Las Vegas, the announcers are telling you what the points spread is, and pretty soon we're just gonna go to NFL dot com and bet on football games on the NFL's website. I mean, the the about face on this is, uh, it's pretty dramatic.
Everybody in the pool like, it's totally.
I feel like we'd be remiss because I you earlier this year, you did something on CBS Sunday Morning, and it was about defending Sports Illustrated.
It's relevance. And you know, our.
Producer Paul Brennan, faithful reader for forty five years, starting when he was a kid, loved the magazine version, you know, and we were confused if there is a print version there still is, right, what does the world dose.
By not having print versions?
First of all, I'd say that, surprisingly and against all odds, there seems to be a very happy resolution here. I did that piece for I don't know what that was, maybe February. I did that piece for CBS Sunday Morning, and it was really a problematic time for Sports Illustrating. We sort of had this white night. This company Minute Media stepped up and you know, we're knocking on plywood and so far, so good. It's sort of a miraculous
happy media story. I mean to me, it's not so much that the print versus digital mean, you know, candidly, print is a lot. Yeah, there's a smaller part of our life than it was just a few years ago. To me, it's just sort of the independence of it all and the fact that you don't have to you know, it's it's fear and favor, and it's writing about things without a partnership with the league, and there's no conflict of interest. I mean to me, that's what's lost with
this changing media landscape. And my attitude is like I don't care if it's TV or digital or the phone or print or wherever it is, as long as it's getting to consumer. To me, it's just the independence, and I think that's that's that's sort of what my great fear was at the time, that this is just another
media anthony that's going to be swallowed up. And now everything's sort of mediated through a league, a team and athlete themselves, which is great, but you also need some sort of objectivity and uh agreed, Happily Sports Illustrated kind of sort of a comeback story in twenty twenty four. I'm happy to tell you very cool.
I'm glad to hear that. I also, I love that you love Trader Joe's.
Where did you hear that? I love Trader Joe? Ah? Oh, I love Trader Chair. I love to say that he's got a conflict of interest. I'm an unpached folks.
It's out there.
It's good stuff.
Thank you, thank you so much.
Pleasure.
This is a pleasure.
We always feel like it's just such a smart.
Guy and he's in the flesh.
This year is a flash. He's here. Zoom.
The tennis chant is going to be calling.
Like, hey, yeah right, good back to no pleasure, No, no.
Don't, don't don't John worthim of course, as we said, he is covering the US Open for the Tennis Channel. He's executive editor, senior writer at Sports Illustrated UH and of course correspondent for sixty minutes.
You're listening to the Bloomberg Business Week podcast. Listen live each weekday. He's starting at two pm Eastern on Apple car Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa playing Bloomberg eleven thirty.
Wrapping up this hour with one more taste of our US Open coverage on Bloomberg BusinessWeek. The tennis stars at the US Open have trained much of their lives to achieve peak performance on one of the biggest stages in sports. Our next guest says that achieving success is about the journey and not always about the end reward. She's a former athlete, and she's represented athletes and negotiating deals, and now she's helping others, including non athletes, perform at their
very best. Molly Fletcher is founder and CEO of the talent development company game Changer Performance Group. She's also the author of the new book Dynamic Drive, The Purpose Fueled Formula for Sustainable Success.
Well, you know, for almost twenty years, I was a sports agent, and so I had an opportunity to see so early in my career. I mean, it was sort of a front row seat to peak performance. And what I saw is that at the end of their careers, the things that gave them the most satisfaction was actually not the trophies, right, It wasn't the rings on their fingers, but it was the at some level, the knowledge that they.
Left it all out there for where you are. They left it all out on the court. They gave it everything they had.
And so yeah, the book that I have it is all about how do we align our pursuits and our outcomes at some level in service of who are we becoming in the pursuit? Who are we becoming in the journey as much as the achievements, the trophies, the outcomes. Right when we think about the guy or the gall that's about to hoist a trophy over their head after winning the Open, I think when you see those tiers of joy, it's anchored more in the pursuit than in fact the achievement itself.
So interesting that you say that, I think about that with amateur athletes too, who you know, might work a full time job, but they're also have athletic goals and maybe those athletic goals that they have they don't achieve. But what they did was they trained for that marathon, they trained for that one hundred mile bike race. They might not have finish in the time that they wanted to, but maybe it was the training leading up to that that experience that actually is fulfilling.
One hundred percent.
I mean, I think sometimes when we think about you know, drive is such an amazing thing, right, like the drive to run a marathon, the drive to achieve something. It's such an awesome thing, and it's amazing. But to me, so much of why I'm so passionate about dynamic drive as I define it, is because our lives are so transformative.
They're so dynamic right at some level. In other words, it's not about reaching the summit or finishing or running that marathon, per saye to your point, and you know, because at some level, the interesting thing is what do you do when you're when you're done right?
Like you guys probably.
See it and have seen it, and I know I saw it as a sports agent. I mean, when you when you finish the marathon, when you win the US Open, when you win, uh, you know, a world championship, what do you do next? And if you're in the pursuit of better every day, if you're working on your mindset, if you're working inside of discipline and resilience, and you're anchoring all of it in something bigger, right, a bigger why at some level to me it makes the journey worth the time.
So what do you do, like, how do you work with someone or how do you train someone? I think you and I STONI as you'll feel like we'll come off of something and it's like so great and yeah, and then you got to remember.
That there's the flip side of that too. We come up with something, we come off with something and you're like, you know what, it could have been a lot better, and here's why, right, So, how do you like, we're pretty harsh critics of ourselves.
Absolutely, so how do you get your mindset to be like, okay, you know, or maybe that was a bad one, or so, how do we make it better or how do we not let that kind of throw us off?
Course?
Well, and and you hit on it right there with that word mindset, because it's everything right and you guys see it out there on the courts right there. I mean, the difference between the guys and gals that are that are that are competing and continuing to make progress so often, right, it's their.
It's their mindset. It's not talent.
It is at some level that gets them there, but it's the discipline and the resilience in the mindset that keeps them winning. And so to your question, I mean, I think you know, we have like something like seventy thousand thoughts a day, which is kind of insane when you think about it, right, And so if we aren't intentional about reframing our thoughts right, like really intentional about saying, am I telling myself something right now that is taking me where I want to go? Or am I telling
myself something that that isn't right? And so I teach something in dynamic drive called a total mindset reset, which is, how do we recognize when we're telling ourselves something that isn't going to take us where we want to go or give us the outcome or the make.
Us show up as the best version of ourselves? How can I recognize that?
How can I then replace it with something different and better that in fact is driving toward the outcome that we want?
And how do I reinforce it? Right? You know, you see athletes. I've certainly got the open yd right.
You see athletes looking at notebooks right and cards, and they're getting their mind right and reinforcing the kind of self talk they need when they're out on the court.
What is that self talk? And how can we take what they do on the court and apply it to our own lives when it comes to either professionally or personally.
Yeah, for sure.
I mean, you know, Dyna drive has seven keys to it, right that I unpack in detail. Of course, it's all foundationally anchored in purpose. But I would say the first step fundamentally is saying, where am I playing.
Small in my life?
Right?
Like, where am I Where am I maybe not showing up in a way that aligns with the legacy that I would want to leave. And that was really what got me to this point right now, which is pulling back and saying do I want to be an agent and negotiate two billion, three billion, five billion contracts?
What am I chasing? Right?
So?
I think to answer your question, it's pulling back and saying, where am I playing small? Where could I have an opportunity to level up a little bit in service of the legacy I want to leave, in service of what I want on my tombstone, right in service of me showing up both personally and professionally and living into my four values. And then I think we have to say what am I really chasing?
Right? I think sometimes in life.
Whether you're a you know, stay at home parent, whether you're a pastor whether you're a professional tennis player, whether you're a media talent like you. It's pulling back and saying what am I chasing? Right, Like, at some level, what is all of this for? And who am I becoming as a result of the pursuit this.
Those are tough.
Those are the kid drive you a little crazy and you're not your best you or maybe I feel like that I'm not my best me sometimes.
Because it makes you a little crazy.
Hey, Mollie, one thing we do want to ask you and love hearing kind of your perspective on how to help people be their best if you if you will, you mentioned twenty years representing three hundred plus of the world's top NFL, MLB, NBA, NCAA athletes, coaches, So Drew Brees, Tom Brady, Aaron Andrews.
I could go on and on and on.
What was the fun part of that? The good part of that? What was the maybe not so fun part of it? And why did you stop?
Yeah? Awesome question?
And uh, you know, I mean the fun part is being around peak performers, right, being around people who live into and want to pursue better every day. Right, that have the kind of mindset and resilience and discipline and that that was and is so magnetic and so fulfilling and so fun.
Is there anybody that in particular that stands out that you were just like, oh my god, they're just on a different plane.
You know.
John Smoltz was a picture for the for the Atlanta Braves. To me, he he got it from the perspective that he would step out on the mounta and give it all all he had all the time. He wasn't a frey to change. It wasn't really about him. It was about the other guys in the clubhouse more than him, right. And and I think you know Ernie Johnson Junior. You guys know EJ's name, given the work that you do.
I mean just you know, we'd go from the set where he's between Kenny and and Barkley, right, and then we'd get in a mini man and drive to go have lunch with his his sensed past son, Michael, who is severely disabled, and have lunch and j would rub his head and feed Michael.
And you know, so I.
Think it's it's the it's the people that recognize the the opportunity and the uniqueness of it and also recognize the blessings in it and and at some level don't get too self absorbed in their sort of in the in the seat that are that they're in and you guys see it there right, Like it's easy to do that when everywhere you turn, everybody stands up and moves and follows you, right and so small cej Doc Rivers,
Tom Izzo. These are people, and the list goes on and on and on, but they're great human beings who obviously had an unbelievable had unbelievable careers too.
In terms of the stuff that maybe wasn't so fun being an agent and why you stick.
Yeah, I was hoping you forget that part of the question, girl, and you're back.
With it, I said to tim I Waite. I'm like, I want to follow up.
Hey, yeah, yeah, yeah, I know.
I was just so you know, the the I would say that not so fun is when is when you you know, the eleven o'clock call when a player gets traded and they didn't want to. You know, the player that just gets up to the big leagues and then they get injured. You know, the golfer that's right there and they're about to win their first tournament and they sort of don't get it done for whatever reason.
On the back nine on a Sunday.
You know those because the love and the connection. I mean, these are people that you're at their wedding, right, you're there when their kids are born, and so when they're disappointed and their heartbreaks or their family's heartbreaks, man.
That hurts. You know that hurts.
And so I would say, I would say that was the hardest part truly, or the or the the other component I would actually say is.
The ones who had just an enormous amount.
Of talent but didn't have candidly what I break down in the dynamic drive, the discipline, the resilience, the mindset. So they had all the talent, the talent isn't enough, right, Like you need talent plus yeah, resilience, talent plus discipline plus mindset. So that was always sad to see that at some of the wasted talent, knowing the gap that existed, and you know that that hurts your heart too.
Yeah, I could see that.
What would you say to somebody who's feeling a little burned out right now? I'm not talking about a pro athlete, but somebody who's feeling just like really really tired.
Here's what I would tell them.
I would say, burnout is usually a result of chasing the wrong things. In other words, it's putting your energy towards the things that don't matter to you.
Right.
So, and when we operate into dynamic drive, because the foundation is that we're plugged into our purpose in everything that we do, burnout is actually at bay. In other words, for somebody who's feeling burned out, what I would encourage them to do, pull back and do is ask themselves some tough questions.
Right, what am I chasing? What matters most to me?
What legacy do I want to leave? What at some level are the things, the people, the relationships, the values, the beliefs that are most important to me? And how am I living and pouring my energy into those things in service of creating alignment and in turn offsetting burnout. Because I think where people find themselves burned out is they're misaligned, right, Like, they're misaligned.
In other words, they're spending great time and energy. Yeah, right, totally, I'm glad that.
Yeah.
I mean, it is spending your time and energy doing things that don't ladder up to what in fact matters most to you. And so that's why I'm so passionate about this approach to drive into life and at some level what can become really an identity in which we approach our lives because it keeps burnout at bain.
It doesn't focus on the competition.
It's an inside out approach to living, to living our lives in fullness without regret and leaving the legacy that we really want to leave.
Now. It's a deeper think and thought, as you said, mindset and just thinking about right when we all ultimately will leave this world, like how you leave it right? And do you feel kind of good.
On the way out?
To be quite owing?
No, I really I think about the relation as I get older, As I get older. Molly Fletcher, thank you so much for all this time, Founder and chief executive officer at game Change, Change your Performance Group, and of course her new book is called Dynamic Drive.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern Listen on Apple car Play and Andbroud Auto with a Bloomberg Business app, or watch us live on YouTube.
Plenty ahead in our second hour of the weekend edition of Bloomberg Business Week, including the CEO of Ziggy's Coffee on managing economic challenges in the specialty coffee space and how sometimes smaller is better. We'll explain. Plus we talk a lot about this on Bloomberg Business Week, the lack
of racial representation when it comes to finance. A little later on in the program, we're going to chat with the co founder of East Chop Capital, it's a black owned private equity firm, on how they're working to eliminate this disparity and grow the world of private equity. First up this hour, before entering the financial services sector, students must learn the tools to succeed in the field by
going to school for minorities. The challenge of admission into some of the top B schools in the nation are great. According to the Bloomberg BusinessWeek Best B Schools Diversity Index, only two MBA programs have a greater non white majority. Those are Howard and FIU. Last month, we learned that the share of black students in the incoming class at MIT plummeted after the Supreme Court effectively banned considering race
as a factor in undergraduate admissions. Last year, the university said the class of twenty twenty eight is five percent black. That's down from an average of thirteen percent in recent years. The share of Hispanic students in the class is eleven percent, that's down from fifteen percent. Ed Smith Lewis is senior vice president of Strategy at UNCF. It's the United Negro College Fund, which supports sixty thousand plus students and thirty
seven HBCUs, historically black colleges and universities. He spoke with Carol and Bloomberg's Matt Miller on how the UNCF is providing a pipeline of students from HBCU's entering finance.
When I hear those MIT statistics, I think, where's the
opportunity and all of it. How do we start to sort of maybe reposition sort of the deficit or the change in the percentage of individuals that may or may not enroll in our mits of the world and start to think more intentionally about how do we create more robust institutions that compare to MIT and such as such as not a conversation about who got into the Ivy League, but how is our higher education system really serving the needs of all of our students, regardless of which sort
of medallion institution they may have gone to. How do we think about investing the resources of MIT and the opportunities that MIT provide and really start developing those in the other spaces and places where our students have been enrolled.
I mean, ideally, any higher education institution is going to want to have a diverse class that benefits everybody in the class, right, and you want it to be somewhat representative of the society in which you live. So if there's a deficit of black students, are a deficit of Hispanic students, admissions Admissions is going to have to try and fix that. How can they fix it if they can't take, you know, race or ethnicity into account.
A race may be one indicator of whether or not a student has or has not had the right set of opportunities, or scored the right test, or scored the right score on the right test. But the reality is if we look at other differentiating factors, like lived experience, where people are born, what high schools they've gone to, and really look at the institutional context around an individual's experience, you can likely get to some of the same results whatever,
without ever really having to say race. And while that's a good how do you do it?
How do you do it well?
Will you do it by looking at what schools individuals go to?
Right?
How about we move away from the idea that we're going to take the highest SAT score from the number one prep school as an admission requirement and say, well, if we want diversity, let's ensure that we're pulling students from all the types of institutions public, public high schools, private high schools, rural high schools. And you'll likely get to the same place if you diversify your geographic approach or your institutional type.
So is this about looking at somebody who's maybe at a school system that isn't so great but did really well compared to their peers. Is that what you're talking about or something else or just being much more diverse in terms of where you look for students.
Well, I think it's where you look and what you're looking for. At present, we're putting a lot of energy into test scores, and we all know, or at least higher education knows, that test scores actually are an indicator of success. You can look at what other opportunities was the student engaged and based on his or her contexts. Now, is it great that you have a high test score
and someone who played the piano and an orchestra. Perhaps, But maybe that student who come from a rural area where they didn't have access to the same types of oppertunities but led a student organization or participated in community service heavily has the same type of tenacity and desire
to grow and learn, maybe without the opportunities. And so what you're looking for is trying to write size expectations on outcomes with expectations or inputs or opportunities those those individuals have had.
So are you like you're talking about the standardized testing? Is that in particular you're thinking is not a good thing?
For sure?
Yeah?
I think standardized testing is just rooted in sort of a systematic approach to getting an understanding of one's aptitude. And I think we've learned through differentiated approaches in K twelve that not everyone learns the same and if you don't learn the same, you likely don't test the same. And so how do we start to think about differentiated models of assessing a student's readiness to learn? And that's
what we're saying we're just looking for differentiated approaches. Here at UNCF, we're a scholarship organization, we're actually looking at more cognitive opportunities and we're moving away from sort of raw quantitative understand it to a qualitative one where we're educating our readers or our scholarship application scores on what can you look for and how a student thinks about his or her lived experience, what opportunities they had, how do they think about loss and failure as well as
their wins in their writing, and how they communicate their experience and less about the test score.
I know, I went to some public school graduations in the Midwest this year, and I noticed that each of these schools, with classes of two or three hundred kids, had one or two in the IVY leagues. And if you go to graduations here at you know, Nightingale, Bamford School or Collegiate, if you look at you know, graduating classes at Deerfield or and over private schools, they're they're
putting dozens of kids into the IVY leagues. And I think that's part of their admissions process, and maybe the ivs need to rethink that and years some.
Of it though is. I will also say it's you know, generational, you know, families and legacies, legacies in a big way.
Right.
Well, I mean, if these Ivy League schools really want diversity, they're going to have to really rethink that admissions process because you can't always take a dozen kids from the most expensive boarding schools in the country and then ignore all these private schools in Flyover Country and talk to us about a CLAIM Accelerated Learning in Asset Investment Management.
You're working to get a robust pipeline of students from historically black colleges and universities from HBCUs, so talk to us about this program and how you're doing it.
No, we're really excited about the support from at its capital, at phil Growth and its investment in Project ACCLAIM, where we are fundamentally focused on providing the right opportunities to our students to take advantage of the robust economy that we have in our country. Project ACCLAIM has three simple objectives.
Think number one, provide student experiences from an academic perspective that really enables them to understand and through hands on experience, what does it mean to be an asset manager in this country? For many HBCUs. Seventy five percent of our students are low income or come from low income families.
Sixty percent of first in their generation in their family to go to college, their first generation students, and so the idea that you would have exposure to asset management careers are few and far between for many of the students. More importantly than having that exposure to asset management is that real hands on experience. Because you can learn from the textbook all day, but until you had a real experience,
an opportunity to sort of touch the opportunity. We know that our students don't do as well with sort of been thrown into the defense. And so the question becomes, how can we move upstream in the asset management pipeline and start to invest heavily in real experience. That's what
Project Acclaim is set to do. It will invest four million dollars into an investment fund that's managed by students on the campuses of Morehouse and how are you university in our pilot years, this real investment opportunity to understand what does it take to ensure the risk profile of your investment are appropriate, to do the due diligence necessary to make an investment to track, monitor and assess the
progress against your portfolio. Is a real opportunity just going to be provided to these institutions, and with the support of Atage Capital, an opportunity to scale that to many more HBCUs over time. We're excited about this program not just because of that hands on experience, but the approach
we're taken to do it. UNCF is leveraging a shared fund approach where Howard students and Morehouse students will operate under the same approach to understand what can we do to build the capacity of our institution stuff provide these kind of high relevant programs, and so that also has the potential.
To scale well.
And I mean the idea ultimately is to get them basically on Wall Street or in global Wall Street. I wonder if what I'm watching is especially industrial companies in the Midwest, you know, John d or Harley Davidson, a Jack Daniels are shying away from their DEI initiatives. But I feel like Wall Street and American you know, the American public still embraces these de I initiatives. Is that what you're seeing as well.
Well to your earlier point to have diversity of perspectives is actually to have an organization that's well functioning and efficient. As you might imagine, when it comes to investment, it's always knowing where is the put going, And to have different perspectives sitting around the table means your due diligence is just better. And we've seen from minority asset managers sometimes one, two, three x outcomes compared to market rates.
And that's just because sometimes you're asking a different question which also leads to a different answer. And so that diversity of perspectives, we think is a benefit to all companies, not just our asset management.
Tons of research right over decades have like pointed that out the importance of diversity in the boardroom, diversity to company. But having said that, you know, as companies, I do wonder at as companies increasingly or rolling back their DEI
plans and strategies. As Matt just pointed out, you know, Harley Davidson, you had Jack Daniel's Maker Brown Foreman Deer in company, how does it make it more difficult for maybe what you're trying to do to get that pipeline that is more diverse, whether it's going into financial services or somewhere else.
No, it's always been a difficult struggle, to say the least. We are trying to close systemic gaps and opportunity within organizations. But the reality is for those that are taking a step back at this moment, we're focusing our attention on
those who are leaning in. We fundamentally believe if we can find the coalition of the willing prove the value, that it becomes a market differentiator than those who may have stepped back for the moment might realize the business opportunity associated with this and come on board and eventually realize not only is it beneficial to the business, beneficial to inclusion generally in our country.
All right, well, listen, super good to get some time with you. I really appreciate it. Good luck with your pursuits.
There.
Ed Smith lewis a's senior VP of Strategy at the United Negro College Fund. Joining us here on Bloomberg Business Week.
You're listening to the Bloomberg Business Week Podcast. Listen live each weekday starting at two pm Eastern ont applecar Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station just say Alexa play Bloomberg eleven thirty.
Here's some not so surprising data around race and asset management. Not surprising if you've been paying any attention to what we talk about here on Bloomberg Business Week. I found this article in the Harvard Business Review, and it says that back in twenty twenty one, this is research from Josh Lerner at Harvard Business School, of all assets owned, only one point four percent we're managed by minority owned firms. And back in twenty twenty one, minorities made up more
than forty percent of the population. As I mentioned Josh Lerner at Harvard Business School, He's got a ton of research around this. There's a huge disparity between who has and who manages these assets based on what our population in the United States actually looks like. Somebody who's trying to address that is Calvin Butz Junior. He's co founder and general partner at East Chop Capital. He joins us here in the Bloomberg studio. Good to have you with us, Calvin, how are you.
I'm doing well. Thanks for having me.
Yeah, thanks so much for having us. I want to get to what you're doing at East Chop but we'd be remiss if we didn't. And look, you know, one of the benefits of being in private equity is you don't necessarily have to mark to market every day and understand, you know, the value of how your assets have changed. But you see a day like this in the equity markets, what do.
You think, Well, I mean it's September, right, I mean, SMP's normally down in September. Obviously, you know, still looking forward to the job report later this week. So it's a lot going on. I mean, it's a first of the month, is four month left in the year. It's just that time of year. It's that time of year for a lot of voliday ye season.
Talk about seasonality. Let's talk a little bit about the assets over at Eastchop Capital, because you guys are doing some really interesting stuff. When we talk about real estate private equity, you're not just doing real estate, but you're also doing art investing. Talk take me through the assets that you have under management and where you're looking to grow.
Yeah, so eas Shop Capital. Starting twenty eighteen, we have two major verticals. The first one's real estate and the second one was angel investing. From real estate perspective, we operate the largest minority owned luxury vacation home portfolio right now. We own and operate assets as far north as Martha's Vineyard, as far as south as Orlando, and we have homes being built in Orlando, Florida, as well as Cinnamon Shore, Texas. And we have homes in Gallinburg, Tennessee, et cetera.
When you say luxury, how do you define that?
So we have anywhere from four to twelve bedroom homes that are completely renovated with in room master suites, opportunities for multiple families that come in rent and stay.
We have homes with indoor bowling.
Alleys, so you own and manage the home correct correct, rent them out through a platform such as Airbnb.
Airbnb, Verbal Innovation, dot com, a lot of a lot of different platforms.
Twelve bedrooms that is yeah, that's luxury. And I mean we talk about the luxury market all the time when it comes to accessories, handbag, shoes, et cetera. What does the luxury market in real estate rentals look like right now? We know that the housing market in general has been pretty frozen. You think about the effect of higher interest rates that structural under supply of housing when it comes to luxury real estate, what's the vibe there?
So I think the vibe is, you know, you have to make sure you have the right amenities for folks, and I think it's not going to be if folks are not going to travel. It's just how they're going to travel, and the difference in how they travel. People are traveling with more families. They're bringing their in laws, So you need more space, more rooms, more amenities, more living spaces, larger pools, and et cetera. So we've been able to provide that across our portfolio.
What about the art investing side of this.
Well, so, I mean I'm a personal investor in art. So I've been collecting art for about five years now. We've gotten our investors from the shot capital into such things like Broadway plays and other investments, but the art side has really much me personally, been just just trying to give back. And I have a long term vision of donating my our collection and Hampton University and you know, help us litify one of the historic uh Black collegists in their museum and our collecting.
Okay, so it's not just real estate in our You're also thinking about sports, media, beverage. You mentioned entertainment too.
That's absolutely correct. So we have different verticals that we've invested in. So from a sports perspective, we've invested in a MLS Next Pro team in Connecticut.
We're very excited about that.
That's the minor league version of soccer, and so we're looking forward to being a part of that. Andre Swatson his team has put together a dynamic opportunity for our investors to be a part of a minor league team and hopefully lead to MLS expansion over over the course of time with the with the plans there in that league. From a Spirits perspective, we're the largest minority investors and Uncle Nearest, which will in the fastest growing whiskey brands
in the world right now. So we're very excited to be a part of that group.
And I want to talk a little bit more about your investor base because reading through the details, So you closed your first fund in December twenty twenty at four million dollars. You recently closed your second fund at eleven million dollars in April twenty twenty four. Just give us more details on who is investing in your funds.
Sure, so we have.
About two hundred and fifty investors across the real estate and angel investing. About ninety percent of them are African American and folks of color, and we have about twenty three percent women. Our first fund, we went door to door, friends, family, fraternity, brothers and sisters and you know, kind of going around and you know, just kind of going door to door.
And the second fund because of word of mouth, because of track record and the success of the real estate, it was it was easier to raise four x return, you know, and almost a third of the time.
Wow, you talked about the composition of your investors. I started out our segment by talking to uh, the lack of diversity when it comes to money management of small fraction one point four percent again going back to that Harvard Business School research by Professor Josh Lerner there, how does that change? How How did you change that? How have you changed that?
Well, I mean, we need to see more folks like myself actually managing assets, and so our our goals to grow at you in to a bigion dollars over time with different vertical sports, media, real estate, and then from that to bring folks along with us. That's part of closing the wealth gap, you know, because you know, we want to educate folks and find all the credit investors that are that look like us and give them opportunity to invest in private markets where the returns are greater.
How do you find those accredited and investors? And a reminder, those are people with over a million dollars in net worth in their primary.
Including primary residents, two undred k single income through j K combined with your spouse or partner. You know, we're gonna it's It's really been word of mouth for us right now. We've been you know, speaking at different events and you know, kind of doing our own road show or really it's about education, right So we want to educate folks on their status and once they understand that they are credit investors and they have access to private deal flow and private markets, it's an excitement.
And a need to be educated and learn how to get into those deals.
So I have to imagine that, you know, for some of those accredited investors that you're linking up with, that maybe there is their first time investing in a VC fund and I mean talk.
Us through that.
What does that education process look like? It's a lot different. I would imagine than just clicking by on an index tracking ETF for example.
It's been great.
I mean we've had a chance to really educate folks from A to Z right, so not only identifying their status and what they're able to invest in, but also educating on them on how.
To evaluate deal flow.
You know, what to look for, what questions ask, how to set up you know, capital calls, and how to commit to wires and I mean we really have done it from start to finish and kind of have a
handhelding approach for our first time investors. Now we have other investors who have a little more savvyer and have done different private market stuff on their own, but for the majority our investors, this was their first investment into a private equity fund and then now into other ventures that we've got them in via our SPVs, our special purpose vehicles.
You say that you are looking to grow assets into a billion dollars, what's the timeline for that.
Well, we want to do it in the next you know, three to five years, and we probably have a two hundred and fifty million dollar real estate pipeline that we're excited to kind of roll out over the next couple of months that will be introducing to our investors into the world. But then also you know, we continue to
seek you know, deal flow. A lot of unique private market deal flow is starting to flow down to the community level, and we want to be one of those firms that curate that that deal flow for our investor base.
A lot of the real estate that you have acquired over the last few years has been during a you know, uncharacteristically in recent years, high interest rate environment. How did you finance those?
So we did very well pre COVID.
We bought a lot of our real estate and we held it during COVID, managed it very well. And then recently we've been paying cash for houses because of the you know, current interest rate environment. A goal is to watch their rates drop and then you know, refinance those out and have favorable lending terms and then give money back to our investors as well.
And taught us about the geography a little bit. I mean, we talked a little bit about the luxury market, but I also see, you know, looking through your talking points this focus on B plus cities that are growing. Talk to us about who falls into that category when you look around the map.
Sure, sure, so from the luxury vacational perspective. We look at lakes, beaches, mountain resorts for the rest of the real estate perspective. Yes, we love fast growing B plus cities Columbus, Ohio, Austin, Texas, Nashville.
You know, we're very excited to kind of be a part of their growth.
You see these teams that are starting to look at you know, additional sports franchises, look at their urban airbnb markets expanding, and just really just the overall just entertainment of what's happening in these in these local cities.
We want to be a part of that growth.
Your investors are unique in the sense that they don't necessarily look like a lot of other private equity investors. You have two hundred more than two hudred investors. Ninety percent of them are black, twenty three percent of them are women. Do you think you'll be able to keep those that demographic data as you grow?
Well, No, I mean we're open to all investment. I mean, you know, that's just where we focus on it. That's been our relationship, that's been our network as we grow. I mean, we're excited to welcome capital, you know, from from all different walks of life as long as it's good money, you know, and you know, folks are understanding what we're trying to accomplish and they have the same values as us.
You know, we'll be excited for that.
But it'd be it'd be great to continue to get Black dollars into into the private market space.
Where do you see other areas for growth? We mentioned a lot of the different assets that you own right now, the types that you have your eye on. Where where what's interesting to you right now?
I say, I mean sports is great, I mean ownership.
You're starting to see a lot of the professional teams open up little packets or pieces of ownership. We'd like to be a part of those in all the major cities and even some of the up and coming, uh you know, minor league teams that are growing. Kind of start there and build into owning a professional team one day. Media, we've gotten a lot of interest from our investor base around Broadway plays. We want at Lesha keys Is Health's Kitchen did really well with that, and we've got some
other opportunities come in the pipeline, you know. And then you know, obviously real estate, I mean looking at supporting our HBCUs with housing and you know, some of the needs that are there, and we want to address those gaps and make money doing it and.
Keeping the focus on the future. Before we let you go, I want to talk a little bit more about the investor base. So the goal is to build the AUM to a billion dollars. Right now, you have two hundred plus investors. What do you think your sweet spot is in terms of investors. Are you looking for ultra high net worth individuals eventually are you happy with just you know, accredited investors, Like where do you see that going when it comes to your investor makeup?
So I think it's a blend. I think our sweet spot is folks who are making their first or second private market investment, who have just identified themselves as a credit investors who want to get into wealth building, want to get a little more aggressive around, you know, building well for themselves and their family. But I mean, we also have great deal flow, so we'll open to family offices and other institutions that may want to support us
in our ventures. I mean, you know, we are doing real estate, which is a hard asset which traditionally does well, and luxury real estate has been proven to be strong.
Over the course of the years.
Well, Calvin so enjoyed this conversation. Really fascinating perspective on the private markets on of course, private equity investing. That is Calvin Budz Junior. He is the co founder and general partner over at East Chop Capital.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern Listen on Apple car Play and then Brout Auto with a Bloomberg Business app, or watch us live on YouTube.
Twenty years ago, the first Ziggi's Coffee opened up in Longmont, Colorado, just northeast of Boulder. The idea behind it from the husband and wife team was, in the words of the company, to create quote a space where people could gather and feel right at home. Fast forward to today, they've got ninety six stores open, the vast majority of them are franchised, and they're set to pass one hundred by the end of this year, when they're said to be in twenty
two states. They've sold more than eleven million drinks, and they've done it all by bootstrapping. For more on what's led to their success, we spoke with the CEO and co founder of Ziggy's Coffee Brandon Nudsen.
Yeah, it really goes back to college. My wife and I were kind of lost in school and she got a job at a little drive through coffee shop, and I had the great idea that, you know, hey, let's just drop out of school and you know, we could do this. How hard it be? And I did convince her. Her parents didn't love that, but I did convince her to drop We're doing drop out of school and pursue our dream of open and drive through coffee shop.
But it is hard, and like we're you know, you kind of run into like whatever the psychological phenomenon is when you're toly talking to people who've done it successfully that you know, it sounds like it's easier than it is. But there are a lot of people like you who aren't still doing this because what they did did not succeed. What made it work for Ziggy.
When we opened our first it's actually called Gizzies. At first, I quit my job and we're living out of the tip jar, living out of the you know, whatever little money we could make, and we're just a position where, no matter how hard it get, we didn't have a choice, and so we fought through it and listen to customers and just grinded away.
But it's interesting, right, like I think I certainly in New York there's a million places you can go get coffee, well known big chains, no ziggies, not yet, smaller places. I tend to like kind of local places, small coffee shops.
But there's so more of a third wave coffee person.
I am more of a third wave or make it at home because there's so many great devices. How in two decades has the market changed?
Well, I mean drive through is huge now, and you know, you know, give a lot of credit to Dutch Bros. They really put drive through coffee on the map. I know Starbucks has done a great job with that as well. You know, I think it's become you know, if you look at the product makes you know. I think we first started, we were probably eighty percent hot coffee and twenty percent cold, and it switched. It's like seventy cold between energy drinking.
Smoothie those That's what Starbucks is too.
Yeah, It's it's just what people are looking for. It's very interesting.
You know, it's funny that you're the drive through so big for you because when you started this company, it wasn't about drive through. It was about creating a space, similar to what Howard Schultz has talked about when he expanded Starbucks into the so called third place. Have you been able to kind of keep to the core of creating this space for people to gather and hang out even with drive through.
Yeah, I think it's kind of one of those unanswered prayers. We wanted a drive through. We did not want to do a cafe. We just couldn't afford it. We were broke college dropouts and moving into a new state where it just knew my sister, and so the only thing we could really afford to do was we got really lucky and got this brick and mortar place in downtown Longmont.
What we learned there was, you know, we're really in the service business and no matter I joke, I made horrible coffee back then, but I had great relationship with customers. So we learned that first and then translated that into the drive through.
Were there moments? I mean, I feel like whenever we talk to an entrepreneur, even super successful ones like yourself, you know, are those who are now co founders and heads of you know, publicly held companies or used to be. There's always a moment where you're like, I'm not sure we're going to make it. I am curious how many times you felt that way?
For twelve years? Probably ten years?
Wow.
And the thing with us is every time, you know, every time we made it. If you got our first store really running and making some money, then I beg my wife to do a second one, and then we went back to, oh my gosh, what did we do whenever we're going to make it? And then we got there, we open a third and it's it's kind of it's been an ongoing battle for sure.
So talk a little bit about growth, because Carolin, I do talk to a lot of folks who are in the franchise business, and you know, the idea that it's really asset light is I think appealing to a lot of folks because they are able to grow without actually taking on that risk. They can offload that risk.
I think it's an interesting business model. I mean, how does that make it so much easier for you guys to grow without the risk. But you've also got to make sure the brand doesn't get tarnished.
Yeah exactly. I mean it comes down to training. We have a team of over fifty people here for you know, ninety seven locations because it's all about support and I think of every store as our store from the standpoint of not wanting to fail and from a risk standpoint. We're very close with all of our franchisees. So again, yes it's capital, it's a lot easier on the balance sheet, but we still fill the burden and we take every store seriously as if it were our home.
Brandon, how do you decide where you grow and how you grow the rate with you which you grow? Like, you know, we want to ask you a little bit about Starbucks, do you and kind of where they are? It feels like they're always the one everybody is measured against. But having said that, it felt like it got to a point where there's one on every corner and how could it not be eating into the business of one
or the other. So, how do you guys proceed with growth in a smart and thoughtful way that really pays off in the bottom and top lines.
Well, there's two areas that we have success, and the first one is people. We need to find great franchise ease, great operators. At the end of the day. We're in the service business, and employees look up to their owners and they need to respect them, like them, and that's when they'll do a really, really good job, is when they really care about the owners and so the people are. We're not like targeting, you know, a certain wave across the country. We don't care if we're in Maine or
if we're in southern California. We have a great operator. We feel really good. The next piece is like we love bids small markets fifteen thousand person, towns fifty getting over. We love those smart small.
Markets like meaed where you're joining us from.
Yeah, we have thirty five hundred people and this is one of the best stores in the company. We're plugged in the community. We have community events, We sponsor high school things. My kids go to high school and middle school and elementary school here, and so people just buy in. We are the coffee shop.
How much capital does somebody need to start at ziggis.
It's a wide range. We say, you know, on the low in maybe one hundred, one hundred and fifty thousand on cash all if you're going to buy land and build and develop three fifty four hundred thousand, If you're gonna buy the land with down payment and those sort of things.
How quickly does that initial investment get paid off? How quickly is the return?
It depends on what year we're talking about. Now, you know interest rates, it's such a wide variety for folks, it'd be hard to even tell you what that is.
It's okay, So it's obviously been harder in a higher rate environment. Correct.
Oh, it's tough. I mean, you know, between interest rates and labor and cost of goods and those sort of things. It's it's it's always moving and we're just just trying to adjust as it goes.
What about franchise fees that get paid to you, I mean, that's how you guys end up making the money. How do those sort of tabulate?
Yeah, so franchise fees are really the upfront fees to buy the rights of the license, and that money gets used to open stores and train. We're big believers in heavy training. We send a team of six people out for at least two weeks to open stores wherever they are because it's really importantly open, really strong, where the money is made on our end, where the revenue comes in to support our team. That supports our franchises is a royalty of six percent on the kind of adjusted growth.
Okay, so let's go to you know, we mentioned Starbucks before, and it's certainly a story that has been front and center for us as it's getting a new CEO, very well known in the fast casual space, well known to you too. Yeah, Brian Nicol, you've known him for years. We've you know, known him for a while.
Yeah, you've interviewed him a lot.
You and I have also both talked to him, and yeah, and followed him because he came in, you know, just as the pandemic was getting underway, a tough time with a well known chain that was you know, certainly had its issues and really got deep into digital in terms of automating some things at the chain. Starbucks fighting off slumping demand. Uh, you know, customers are having to make choices, and I wonder what you think about price point. They're
also dealing with some concerns in the Chinese market. They're looking to you know, cut weight times, They've got activist investors. There's a lot going on. What do you make of starbucks woes? How do you think about where they are? And I understand you operate in a very different space. But I'm just curious what you watch in terms of their woes.
I mean, it's crazy to, you know, put ourselves up next to Starbucks, and they are. They are the reason that we're all in this business. They educate to the consumer, and we all shall be saying thank you, and so I'll never ever speak poorly on them.
I think a little bit.
It's just a little bit of tiredness of the brand. I mean, I think people are excited about new brands. Like I said, dus Rose and Siggies, it's new. I think the comparisons with us from them. We have a big food menu, our food mixes twenty five percent, and which makes this different than a lot of other brands. I just think that it's hard to stay on top. I think everyone's trying to knock you down, and I
think they'll figure it out. They always seem to, you know, we try to stay out of all the things that are polarizing. We just focus on giving great, authentic service to our customers. And I could see them going back to that. But honestly, we're head down focus on our franchisees, just trying to help them be successful and you know, it's a tough market out there. We want to really spend our time just focusing on our customers.
What do you find when it comes to loyalty, Brandon, Like, when people find out about the shop, do they come back? How do you have loyalty programs that track that?
Yeah, yeah, we have a Lloyds are We're in the mid to high fifty percent as far as our in our app usage, So those are our loyal members. You know, right now people are not frequent in stores as much, and that's definitely our goal. But it's all about regulars for us.
What about like app ordering and stuff.
Yeah, we do some app order and it's not a ton it's single digits order ahead. We're working on that. We just released our new app about a year ago and working through some kings there, but it's definitely a big part of it.
So what's next for you guys? And I am curious. You say, you know, it's fun to kind of put yourself in the league of Starbucks. Having said that, is there a growth that you want to stay at, our size that you want to stay at. Do you think about going public? Like, what's what's the future.
I couldn't think of anything worse than Gwen public. For me personally, it looks like it doesn't look like a whole lot of fun to me. You know, we're going to open I mean, we'd love it. We're targeting forty five fifty stores a year. We're going to let the franchise de dictate that if we can find awesome people to open one hundred stores a year, will do that. But you can't force it. And that's what's great about
not being public. We can grow at a pace that makes sense for us, and it makes sense for franchisees and make sure we're putting them in positions to be successful.
Well, it doesn't necessarily you don't necessarily have the pressure on you to go public or have an exit because you haven't accepted any outside financing right correct, Nope.
Our goal is to just help every franchise e make as much money as possible right now, and there's no pressures outside of that.
So profitable I assume you are given that you haven't had to take on any venture fundraising or private equity funds.
Yeah, yes, it's we've really invested in our team and so that's been the biggest challenge for us as a company is you know, we have fifty people for our headcounts, over fifty for you know, ninety seven stores. It's a
big number. But we really believe, especially right now with how tough it is out there, that we need to provide a ton of support and a ton of train and information and we need to be relevant with ltos and those sort of things, which is why we have just an amazing creative team and operations team here which does cut into that. But we're looking down the line.
How do you figure out operations and logistics at your scale given that there needs to be a consistent customer experience at stores that are several states away from where you are in Mead, Colorado.
Yeah, technology is great. I think twenty years ago this
would have been really really hard. But we have tons of metrics from you know, zoom timers that measure how along the cars in line to you know, obviously online reviews, but we use you know, a mystery shops and we do that on a regular basis, like once a week for three months with a new store opens, we have a mystery shopper every week that goes in and just takes pictures and of their cup and make sure that the drink is right, the food is hot, and all
of those things that really helps us keep tabs on how people are feeling.
Yeah, I mean this is an undercover customer basically that you know, provides the report to the franchise owner. So, and what about actually like making sure the coffee is consistent? Do you roast the coffee all in one place and then ship it out to the different stores?
Yeah? Absolutely, So we have an incredible partner, Dolana's Coffee Roasters out of Seattle. They roast the coffee there, they put on a semi and send it to lovel In, Colorado to our distribution company, and then we send it from there after our franchise ease.
I love getting into the nitty gritty. Having said that, a place like you and kind of the towns it sounds like, or the markets that you are serving, can give us a really great idea about what's up with the consumer. And we have numerous stories that we've been reporting out here at Bloomberg about consumers making choices and trading down or not buying one thing so that they can do something else. So what are you seeing with
the consumer? What noticeable trends that tell you whether or not the consumer's starting to feel some stress.
Yeah, it's frequency, right, Someone that used to come fur days a week come they come twice now, and you know we're there. You know, we're two years ago that you know, five bucks was nothing. Now it does matter. And we talked to our burisas franchises all the time about just you know, don't don't take that for granted.
You know, when you do get them those one or two times a week, you know, make sure it's a great experience because they're they're there for the coffee, but they're there more for the relationships and talking to someone on the way to work or after school and and so so it's really important that we take care of them that way.
And getting workers labor, labor, costs, supply chains, all of that stuff something that we obsessed about, you know, right after the pandemic, has all of that calmed down.
Yeah, labor has gotten much much better. I mean it's very expensive now, but as far as application might get four applications for brest to you know, a year ago, and now it's fifty and so there's definitely, you know, definitely a larger labor pool. And then certainly supply chain. We're not We're not fighting over getting products anymore. It's it's it's still expensive, but it's but it's much more available.
That seems a little concerning.
No.
Fifth, up from four applications for a burst up to fifty? Is that consistent across markets?
You know? You know, I'm at checking my franchise. He's on that, you know, I don't know. I would assume so, but but again I don't have that data in front of me.
Yeah, because that would I mean, that would show that there are a lot of people out there looking for work, all right.
I feel like the million billion, trillion dollar question is how the heck did you guys do this on your own? We talked about bootstrapping it and Tim and I know in preparing for it, and you talked about it that you didn't did you tap family friends at all? But like, how did you do that? Or was it just a case of I don't know, how.
Did you do it?
No? I appreciate asking the question. My mother in law gave us the first initial loan of fifty thousand dollars that we paid off right about when we paid our student loans off, which took about fourteen years, so that really helped. And then my dad kicked in some money to help a little bit about seventy grand. Other than that, it's been floating, begging the you know, on our early days, begging the sales tax department not not to close our doors and let us have some time to pay it off.
And it's just grinding. And I have an amazing wife who is just knows how to figure things out. And then just some key hires along the way. We just got really lucky and hired some amazing baristas that are you know, one of this now our vice president. And so we've just had a ton of support and help and it's been hard, but man, it's been wonderful.
Hey, because there's isn't available to in many places, at least not yet where our listeners and our viewers are. Give us an idea of price point and sort of how it compares to other coffee places that people would go to. How much is a cup of coffee?
That's a great question. It depends on what you all like a drip property. I even had my notes here because I know you might aswer those questions.
I mean, we're priced right at probably Starbucks, if not on some items even a little bit more, and you might kind of scratch your head a little bit, but you know, our taste is a big part of what makes it East great is when you go from a twelve ounce to a twenty ounce, that the flavor profile is very much the same.
But in order to do that, you really got to up your shots of espress. So you've got up your flavor. I think a lot of competitors kind of just add a little bit more milk to it. And so in order for us to do that, like in a twenty ounce, getting three shots or four shots versus maybe two a competitor, we have to account for that. But considering those things,
I would say we're a little bit less expensive. But if you were to look at sixty ounce, you know, Latte versus say Starbucks, I'd say we're right there, even maybe even a tid bit more.
All right, I've been popping in some zip codes.
One last question.
Definitely not in New York City, not right outside New York City. What's the closest ziggies to New York City? Oh, my gosh, New Hampshire.
Maybe New Hampshire. Yeah, we got North Carolina, New Hampshire. Yeah, that's probably as close as you're going to get there. You can make that maybe a day trip over there.
Yeah, we could do a day trip.
Yeah, your coffee is going to be cold by the time you bring it back to New York, Carrol. Maybe the ice, maybe the ice will be melted. Hey, real quick, before we let you go.
Food.
You're not going to ask me are you coming to New York anytime soon?
Nothing in New York. We're working on New Jersey just from a drive from standpoint, just challenging real estate market. But at the end of the day, we're just haven't found the right franchise yet.
All right, challenging, challenging real estate market is a good way to describe New York City. I think that's an understatement.
Tim is always hungry, So ask your food questions.
Yeah, how much of revenue is from food? Because I know that you're increasingly making a food menu part of.
This twenty five percent, believe it or not. So the first open we were three to five, and we've grown it. We've done a great job with you know, we just breakfast burritos and we do a lot of gluten free stuff. It's really really My son is Celiac and so we just started carrying that stuff and have really grown and people love it, so tons and tons of food options.
Well, listen, this was really fun. Good luck and look forward to check in with you maybe down the road again. Be well, enjoy the rest of your summer and have a good fall.
I appreciate you having me.
You bet Brandon Knutsen. He is a founder chief executive officer of Ziggy's Coffee.
Joining us for me Colorado.
Yeah, enjoy your summer. I mean he's working twenty four to seven, Carol, there's no break for this guy.
Do you can tell what did he say at the twenty years that they've done twelve?
Like?
Yes, was struggling and stressless and stressful.
This is the Bloomberg Business Week podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from two to five pm 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