This is Bloomberg Business Week with Carol Messer and Tim Steneveek on Bloomberg Radio.
All Right, everybody, you don't see this a lot these days, someone spending their entire career at a single company. But that's exactly what our next guest did. After thirty three years at Dow Howard and Ungerlider, he retired back in November. He oversaw Dow DuPont split into three separate public companies. We're talking about Dow DuPont, DuPont and then Corteva. I hope I'm saying that correctly.
Fair to say, Carol, he's seen quite a few cycles and quite a few changes through his career at the chemicals giant. Howard Ungerlighter joins us on a zoom in New York City. Howard, good to have you with us. Look, why did you retire?
Hey, Tim, Good afternoon, Carol. Thank you. Somewhere in the suburbs of Philadelphia. My mother is smiling if she's listening to nice introduction. Look, Look, thirty three years is a long time to be doing anything, and I just felt like it was the right time to continue with my leadership journey. You know, I just arrived in New York. You know, my grand my, well, all of my ancestors
actually immigrated from Eastern Europe. My grandfather worked at a dry cleaner's for more than fifty years in Brooklyn, and you know, he just he instilled in me a work ethic around pressing pants. And I still remember early days. He's long since passed away, but when I was first at Dow more than thirty three years ago. Now, he used to call me and ask me at the end of the day how many pants that I pressed, because that was his view of hard work. And that's what
he instilled in me. And I did that for thirty three years, and it was time to look where my leadership journey is going to take me next.
Do you have a favorite moment though, within that thirty three year journey at Dow specifically.
Oh, my goodness, you know, thirty three years. It seemed like every year was something special. Certainly the investor relations role that I did in a financial crisis. You know, I took that role in April of two thousand and eight, we announced the acquisition at Romanhaus in the summer. Lehman collapsed in September, and we all know what happened after that, So, you know the old adage of what doesn't kill you
makes you stronger. I learned a lot about myself. I learned a lot about our great company called Dow through that period of the financial crisis.
I still love that you went there because I always think that that is a time when the CFO that position was no longer about the earnings call or quarterly earnings report, only just that. But it became the CFOs kept companies alive and figured out the balance sheet and what they needed to do. And I just feel like from that day forward, CFOs meant something very different.
Carol, I couldn't agree more. Actually, my joke at the time was there were no equity investors. Everybody was a fixed income investor. They all wanted to ask about credit and risk and mitigation and trying to find where the bottom was. Now, that's fifteen plus years ago now, But I actually think you bring up a great point. You know, the role of CFO, I really think has evolved dramatically
over the last twenty five thirty years. If you go back into the nineties, the best path to the CFO steat was most likely treasurer, a deal maker, a lot of m and A experience through the early part of the two thousands, after Enron and Sarbanes Oxley, it really became an accounting driven, compliance driven, controlled driven role. And I would say, really the financial crisis was the beginning of I think the evolution as a CFO as co pilot.
You know, I am not a pilot by training, but I use that analogy because I think it's really apropos The CFO really has to be the co pilot of the enterprise today. And you think about what a co pilot does is they have to do everything that the pilot does. They may not have they have one fewer stripe on their on their shirt sleeve, but they have to be able to land, take off, talk to the talk to the crew, work with the work with air traffic control, navigate the plane, uh, you know, engage with
the clients or the customers or the passengers. They have to be able to do everything the pilot does. So really CFO is co pilot, I think is is what this generation of CFOs really needs.
I'm going to break a rule that I should not break, but I just can't help myself. Okay, now I'm still stuck on this idea that you know, your grandfather would call you early in your career and I just out of curiosity, is there any chemical that you worked on or anything you oversaw while you were at dow, Like, does this story comefort full circle that he would have used or that dry cleaners end up using in their process.
Yeah. One one one is the perchlor ethylene. It's a product that now no longer makes and it's not really a product that drag cleaners use today for obviously for environmental reasons, but back thirty forty fifty years ago that was the molecule of choice for most drig cleaners. So he definitely used that at the time. That's a lot. That's a long time.
Ago, tim, But you said they're no longer using it.
Right, correct?
Is that?
How come?
Just? I mean, in terms of environmental footprint, there's molecules that are safer today, that are better for the environment and better for the clothes well and safer well.
Can we go there for a little bit, because we thought about this when we were kind of planning. You know, it feels like one of the next industries already or will be on many people's radar is plastics and really the chemical industry is rolling this, and you know the
report that came out earlier this month. I think Columbia and Rutgers about the detectable plastic fragments and a typical leader of bottled water some two hundred and forty thousand, and we've been talking a lot about microplastics and nanoplastics and how they're so much more dangerous. You know. I think about the graduate the movie and there he is in the pool and they're like, what are you gonna do with your life? And they're like plastics? So how
are you thinking about? Having spent so much time in that industry? But what's the constructive conversation to have as we maybe move forward to and probably should move forward to you a continually cleaner world that doesn't impact our environment so much.
Yeah, And I certainly I'm not here speaking on behalf of Dow because I'm no longer with a company, But what I would say is I think where the industry is heading, and Dow is certainly right there front and center is decarbonizing the value chains and driving for circularity. Plastics actually is the most sustainable alternative. It's more sustainable when you look at it on a total carbon life cycle perspective, than paper, than metal, than glass or other
packaging substrates. The challenge is a lot of it, most of it today, unfortunately, is not recycled and it goes into the landfill. And so by driving decarbonization, meaning reducing or eliminating the use of hydrocarbons to make plastics using other materials as raw materials, as feedstocks, then driving circularity so that those materials, once they're transformed into a plastic or a polymer or packaging use or durable good use, don't go into the land fill, but actually get reused
and recycled. I mean that ultimately will really benefit the planet.
But does it not get recycled because it's just not cost efficient to do so.
Yeah, it's more cost efficient today unfortunately to use virgin hydrocarbon resients and virgin polymers. What you know, we were advocating and what I would still support, is some kind of a market based price on carbon. It's not something that currently have is happening in the United States today, it is happening in other in other countries around the world. Canada, our neighbor, for example, does have a market based price
on carbon. And if you implement a market based price in carbon that will encourage and financially incentivize people to actually do that recycling.
But what about the idea of these plastics actually getting into our bloodstreams through microplastics? Now, nanoplastics is the study that Carol was referring to that we talked about on our air a couple.
Of weeks ago.
That's something that's relatively new to me and that that we're just learning about.
Now.
How do you think about all that?
Yeah, I think we need a lot more scientific study. I mean, that's really that we need to let the science drive the answer. Uh. And I mean I would say that's the that's the biggest thing that we can do as a society.
Would you say there's not evidence for that at this point?
No?
Not significant.
No.
We're talking with Howard Underlider. He is former president chief financial officer at Dow and he's joining us on Zoom in New York City. One more thing. I want to kind of go back to what we ended on Howard, if I may. And I was just thinking about all those things and even really wonderful and just kind of
going with us on it and talking about it. But I think there are a lot of industries out there, like I think about I spent a big check in my career, like watching what happened with cigarettes and the settlement pesticide, sugar, trans fats, lead, asbestos, mercury, red dye number five. Yeah, exactly. Although they that settlement, you know, no wrongdoing to be you know, just to be fair
and transparent. There are so many things we learned years after we've been using them that they are bad for society, for individuals. So at the same time, so much that companies do that have improved our lives in immeasurable ways. How does the chemical industry, though, adapt to kind of an environment where we are looking to make or that
we're not impacting individuals, not impacting the environment. You know, carbon credits are one thing, but we want to make sure that we're actually not creating harm in the first place.
Sure, And I think, I mean, it's a great question, Carol and Tim and I would just say that I think, you know, spending thirty three years of my career at DOW, it was all about the science, right and every you know, and science, technology improves, analytics improve and the industry at least coming from a Dow perspective has improved over the last thirty years in a significant way. And you know, you try to use the best available data and analytics
and tools and technologies to develop the right polymers. And there are many there are many chemicals that used to be used decades ago which are no longer used because we found much safer molecules in order to be able to deliver the products and the features and the benefits that we as consumers and co owners like. And I would just say that we've got to continue to do that as an industry and frankly as a society.
Love that. Well, then let's go a little bit further in terms of what you do next. And I think I've read somewhere where you want to make an impact or continue to make an impact, and it could come in a couple different ways, whether it's CEO of a publicly held company or private equity. When you say impact, what do you want to do specifically, Howard?
Yeah, So let me start with what I am doing. So I've signed up as an operating advisor for cdn R based here in New York. I'm also on the board of Kindrel, which was the IBM spin out of the managed infrastructure business a few years ago with Martin Schroeder and David and the team there at Kindrel, and I'm enjoying both of those roles phenomenally well. You know, creating long term value for all stakeholders is what I
would say gets me very, very really excited. I mean, dealing with complex three dimensional problems and challenges and working to create long term value, not just for shareholders or the owners of a company, but really and what I learned in my thirty three year career is you have to invest and create value for all of the stakeholders. That's your customers, the communities in which you operate, and
the citizens and the ultimate end consumers. Depending on where you are in the value chain, would you be focused.
On would you consider going full time in house somewhere and as a CFO or CEO.
Sure, I would. I mean, I'm having lots of interesting conversations as you don't imagine. I mean, I promised myself. A lot of the people that I've spoken with that I respect, they say you can say yes to every conversation, but don't say yes to anything full time for at least six months. Give yourself a little bit of grace, give yourself six months to really refresh and hit the reset button. So I mean, I'm doing just that. I'm having conversations, But I will tell you I really am
enjoying the CD and R folks. I'm enjoying being on the board of Kindrel, and I'm really enjoying the conversations that I'm having a bone and beyond that as well.
Hey, Carol and I were talking earlier in the day about Archer Daniels Midland. I don't know if you saw this news. I know you were traveling today, so forgive me if you haven't. But Archer Daniels Midland plunged twenty four percent, the most ever in a single day, after the company suspended its CFO and cut its earnings out loook, pending an investigation into its accounting practices. We should know.
That's what we know so far. No wrongdoing has been there's no wrongdoing being accused of anyone at this point, but there is an investigation going on. Just as a CFO a former CFO. How do you read into something like that, like news like that.
Yeah, Look, all I know is what I read on Bloomberg on my phone on the way from the airport. So I can't comment on that specific issue. What I would say though, in terms of being a publicly traded company or any company the United States, US gap accounting is the Bible. It's a combination of the Old Testament, the New Testament, to Kuran, pick your favorite, pick your favorite religion. You have to abide by US gap accounting.
That is table stakes. Now, if all you do is focus on the gap accounting, then you're not likely in a great long term value for stakeholders. But you have to start with gap accounting. It all starts and stops at gap a county. You have to do that. So I would imagine, you know, we'll see what happens over the next over the next few weeks and months. Is that story unfold?
This has been great because we've been covering so much as kind of going on in our news today and kind of some of the big narratives, if you will. Having said that, politics is a big narrative, and we know we've got the New Hampshire primary underway. Politics, how do you believe Global CEOs us CEO should be planning for the outcome here in the United States come November.
Look, I think you know businesses have to have to go through many different political cycles. Right, If you're going to be successful over the long term, you know you're going to outlive an individual elected official if you're doing if you're doing the service for the industry. When I think about twenty twenty four, you know, certainly the economy. You know, what I heard Jenet Yellen talk about the other day was that, you know, declaring success and a
soft landing. I hope she is right. I hope we are dealing with a soft landing. With that said, you know, we it's never been done yet. So what I would say to fellow CFOs out there or people who are running companies, is, you know, prepare for a choppy twenty twenty four. Prepare for a twenty twenty four that looked a lot like twenty twenty three. I think for the most part, certainly in the upstream parts of most value chains,
de stocking is most likely over. It's an open question on whether that d stocking will come to an end or continue to extend in some of the downstream consumer oriented areas. But I think, you know, hoping for the best, but preparing for something less than the best is what you know. I always tried to do, and certainly what multiple crises, whether you go back to the financial crisis that we were talking about or the pandemic, you have
to do scenario planning. You have to have a plan, Howard, a plan B and C.
We have to run, do come back. It's one of our favorite kind of conversations, Howard Underlider. Thank you so much, Carol.
I think I told you about this last week.
Yeah.
So some good friends over at our place a couple of weeks ago. They picked up the dad picked up the family's holiday card, showed his family on a fall day in Central Park, beautiful smiling leaves behind him. He said, you want to know a secret about this card? Yeah, said, yeah, of course I want to a secret. It's a holiday card.
They're no secrets here, he said, Okay. He used photoshops AI feature to remove people from the photo and put freeze back in place, so it actually makes them look like they were alone in Central Park on a fall weekend.
That's your friend's not an expert at this time, that's the thing.
Yeah, he No, he's a doctor. He has no idea how like he's not trained in photoshop. Like it wouldn't be that impressive if somebody.
But he trades a graphic artist on the side.
He said he watched a YouTube video and then it was like he said, he called it. He was so easy to do. I thought it was kind of cool because like it's professional photo editing, but it's actually using generative AI. And all he had to do was like put the cursor over this one area and then trees appear.
Well.
Our next guest is nodding. She is in studio. We're delighted to have with us, Ashley Still. She's senior vice president of Creative Business at Adobe. As I said, here at Bloomberg headquarters in New York City, you're nodding because like anybody can do this. Now it seems like.
Yes, that is my favorite holiday card story. Now, thank you so much for showing that. And it's great to be here. And that really just crystallizes the power of generative AI to make creativity more approachable or accessible to everybody.
So I think the thing that I want to talk about with you, like we want to go a lot of places. We want to talk about the economy in what you're hearing from companies and sort of like the B to B side of things. But I want to talk about how you're leveraging AI in this different way because I think there's a lot of concern right now about generative AI and it being quote unquote safe and like copyright issues. We see New York Times filing lawsuits.
What do you do at Adobe to make sure that what you are providing customers with they can then go put on their holiday card and they're not going to get in trouble for it.
Absolutely, So obviously the creative community is incredibly important to us. You know, as you mentioned, your friend is a doctor, but many of our customers are artists and designers, but also businesses. And so we made a decision very early in all of our research and development around generative AI to actually build our own foundational models and use our own content that we have licensed to to train the models. And that really separates us from pretty much everybody else
because our content is what we call creator friendly. It respects the intellectual property.
If you're training with content that you guys have rights to, it's going to stay within that universe exactly.
So we don't go scrape content from the public Internet. We only use and we have a service called Adobe Stock where photographers and creators all over the world have actually contributed their content and given us a license to that. They've been compensated for us to train to both resell that content but also train our AI models on that content.
Take me through this decision here, because this is Adobe, this is not Adobe's first rodeo, whereas a lot of these startups it is their first rodeo. So when did this decision happen and how expensive has this decision been over the course of development.
Well, I mean we first of all, we've been developing AI for a decade, so we're not new to needing to think through the data that you're using to train models. We've been uh you know, kind of building that uh that muscle for a decade. We also have been in
the stock business for at least a decade. It's not for the stock photos business, and uh and so from early on we actually have had the rights to and we realized probably again probably like at least date or ten years ago, that we needed to expand the idea of stock content to be not just reselling again for licensed content, but to be using for training. So this is actually not new.
So when you hear all the concerns and worries that are out there. Do you think that there is somewhat of an easy solution in terms of the worries about kind of what generative AI can do and where it can go.
Well, in terms of copyright, I think they're choices, right, there's lots of lots of topics around generate event. I mean it's in terms of but in terms of copyright, I think it's about choices. There's models. So for example, if you want to create a Starbucks coffee cup using Firefly, which is our generator AIA service, you can't because we have not we have explicitly never trained our models to
know what a Starbucks coffee cup looks like. And so if you're and I'll get to some of the things that we're working with companies on, we think the solution to that is to then actually just work with Starbucks if they want to create Starbucks coffee cups, to extend the model with their content. Right, But if you go to some of the other services in the market they
have trained. On the public Internet, there are plenty of Starbucks coffee cups on the public Internet, holiday ones, regular ones, and so there's a lot of content that it would have been able to be trained on. But again, but you don't have a right to that brand.
Right, So let's go there, because that's a really interesting development in this sort of new world. I think for a lot new for Adobe necessarily, but I think new for a lot of people is this world of AI. So if this partnership were to happen, who pays whom?
Oh in terms of you and Starbucks for example, Oh well, we we see that as actually a benefit to being a customer of Adobe that they we would enable them to extend Firefly to uh to understand again what Starbucks content looks like. That doesn't necessarily mean that they need to enable that for the entire world. Okay, so it's like it's a brand extension for their use.
Oh, I see what you're saying. So for for starbucks own use, So they could they could help create marketing materials using Firefly. Not necessarily. Let's say there were somebody who was upset about a union negotiation between Starbucks and employees, creating a Starbucks image that the company wouldn't.
Exactly and of course we could look at brand partnerships to bring that content into the public version of our Fly but that's not something that we've we've done yet.
Do companies want to do that? Are they scared of that world?
I think they're first trying to understand how they use generative AI for their own internal use cases. I think they're thinking a little less about, you know, going back to your friend's holiday card example, do they want to be able to have your friend holding a coffee cup in that image? I think they're more concerned with how do we expand our marketing, how do we get scale versus you know, some of those use cases.
So I only have a been a minute and a half here left, So I am always curious about someone in your position, right you're working with lots of different clients finding out what they need, what they want. How would you describe the business environment and the ease at which companies are spending right now?
You know, I think we've been in a similar position for a while, Like I don't. I don't think anything has.
As a year ago same as two years ago.
I think it's been the same for about a year, particularly for large companies, where there's just more scrutiny of big contracts and spending and really pressing to see the ROI of these investments. I think absolutely we've seen continued strength and digital and you know, a very significant portion of Adobe's businesses actually through Adobe dot com, and that has actually been really strong and certainly something.
Stronger than it was the past six months or a year ago.
You know, it's it's been strong throughout the past year, and particularly as you were mentioning, as we innovate in our products like Photoshop, which generative phil and Firefly, we've actually seen demand for our products increase. But certainly it's both of those I would say, you know, I've seen more scrutiny on the business side for spending and continued consumer.
Put You really explained it really well in terms of the copyright, right the information, It sounds like any easy fix if people just do that responsibil responsibly started.
Yeah, if they started by training in the beginning, Yeah, you know.
We just stuff that they've got approval of license like that is pretty amazing, so easy, right, but it works. Ashley. Thanks, This kind of flew so hopefully we get to catch up with you soon in the future. Ashley, Yeah, thank you. Senior vice president of Created Business over at Adobe. As we mentioned, she's here at our Bloomberg Interactive Broker Studio. This is Bloomberg Radio.