E-Commerce & Supply Chains with Kornit Digital CEO

at Bloomberg dot com slash podcast. Well. One of the things we try to do here in Bloomberg Radio, particularly during this pandemic, is to talk to CEOs from different parts of the economy, different parts of the world to see how their businesses have been impacted by COVID UH and how they're adapting. Today, we're going to chat with Ronan Samuel. He's the CEO of corn It Digital, based

in Israel. Corner Digital manufacturers digital inkjet printers. The printers are used by the textile industry to print directly on to cloth thrown and thanks so much for joining us here again. You know, years, like I'm sure many other businesses around the world have been really impacted by COVID. I'd love to get a sense of how it impacted your company and and kind of how your positions here as the world begins to reopen. First of all, pleasure

to be to be with all of you. UM. So UM, you know we have we are playing in the UH. In the textile industry and the technical industry is the second most polluted industry in the world after the oil industry. It's actually there's a huge consumption of water UM. And there's about thirty percent of four that are being produced never been sold, which creates twenty one million tons of text and are being on the way and about twenty

eight trillion little water that being consumed. UH. This is huge, UM, and the textile industry has to move into most sustainable way of production. Now. The COVID erupted there like March last year, UM, and it was kind of a shock for the industry because the retail UM really stopped UM and the consumer went and ordering online UM and through the e commerce and the ecommerce today is representing like thirty percent of that being solved for the e commerce UH.

And the focus that in twenty twenty four will be about six older girl being sold in e commerce, which really fueling the need for own demand manufacturing. Yeah, and I mean it's not just e commerce, right Runnan. We expect to get what we order tomorrow. You know, Amazon has spoiled consumers into wanting something within twenty four hours. So if I order UM UH tank top T shirt, it can't really be made in Taiwan because it has to be here right away. Does that mean we're gonna

see UM supply chains spread out over the globe? Yeah, so you're absolutely right. So the e commerce has to adopt the supply chain to meet the consumer needs. And what the consumer needs is immediate gratification. They would like to have the same experience as going to a retail shop and get think the products. They would like to get their products within twenty four hours. But they also would like to choose to choose a variety of products.

A self expression is very important. Nobody wants to wear the same tissuts that anyone else next to him wearing UM, So they want to add a variety of products uh and and to go to the e commerce and having a variety of products and keeping the inventory offer a

large sp use of products is almost impossible. So you have to change the supply chain into on demand manufacturing and you move you have to move the manufacturing from offshore to on shore or near shore next to the consumer and next to the main cities, like what Amazon is doing leveraging our technology or many other companies. So core Net is enabling on the main sustainable manufacturing, on shore manufacturing, and really changing the entire supply chain of

the textile market. Ron Interest real quickly seconds give us a sense of how the industry can reduce its footprint in terms of the ecological harm it does. Yeah. So if you if you produce on demand, UH, and you produced to an order, So actually everything you produce being consumed today, thirty percent of the product are being produced, never being consumed, and you're throwing it away. This creates a huge amount of waste of materials, of water, um

and a huge amount of pollution. So just by changing the supply chain to on show, on demand, this is a huge benefit for the globe and we are very happy to take a major part and a leadership in that. Ronan, thank you so much for joining us. We really appreciate you getting on from Israel and sharing the story of your company. Ronan Samuel, he's the CEO of corn It

Digital again a big player in the global textiles industry. UH. Navigating this pandemic, navigating the reopening and trying to do it in a more sustainable way given some of the challenges that that industry deals with as in terms of the sustainability issues. Let's bring in Laura Davison, Bloomberg Tax reporter. Lara, thanks so much for joining us, And what do we know about this plan here? So, yeah, this is basically Biden reverting to a different part of his American Jobs Plan.

This is a a minimum tax on financial profits for for financial accounting purposes. This would basically affect companies like Amazon, like Netflix that has been able in the past to use legal tax breaks for research and development, for stock options to cut down their tax bills too, you know, zero percent or very low rate. So what what the Biden plan would say here and say, Okay, you know, even if you do have all these credits andtroductions, you have to pay at least fifteen percent on your on

your financial statement profits. Um. This is basically a negotiating tactic that the Biden U is bringing up here, as as the Washington Post reported, um and saying Okay, we're not going to raise the tax rate, but we're going to make sure that at least a minimum amount of tax would be paid. It's very interesting. I wonder how corporate America will react to this. I mean, on the one hand, um, surely they don't want to see rates

rise at twenty eight percent. But let's face it, Laura, even if rates rise to nominally, a lot of companies are still gonna pay nothing, right. Yeah. And the important thing to remember here too is this is part of the negotiations happening with the publicans. Um. You know, Biden and several center Republicans are working on trying to come up with some sort of bipartisan infrastructure deal, and this is one of the ways he's trying to kind of

find ways to to pay for that plan. Democrats can still even if they do a bipartisan deal, or if they don't do something with Republicans can still go and are likely to do a separate tax deal later in the year that would raise the corporate rate. So this doesn't really take the rate off the table, It just puts it in a different bill than it might have been otherwise. Um. So that's one thing that's important to

remember as well. As you know, even if the rate, the headline rate is percent, there are still lots of other deductions, credits, other tax breaks in the tax cod I mean that many companies pay far, far less because whatever the headline tax rate is. Yeah, Laura, what is there a sense about any kind of support for a tax floor, whether it's fift or something else. Is there bipartisan support for that? This is something that that Republicans

have pushed back on Democrats. Um like the idea, uh, largely, but there's been some It's it's not universally seen as as a good idea. It's a little bit harder to implement. It's also, um, you know, a lot of economists say this is sort of a kind of roundabout way to

go about this. If Congress doesn't want companies taking all these tax credits, introductions, getting rid of the tax credits and inductions, don't put some sort of minimum tax after giving people tax breaks and then taking them away, it's sort of a economically inefficient way to go about it. I mean, we've already seen Congress telling the banks they don't want them lending to two oil businesses that are

perfectly legal operating in the United States. Um. I think we're not gonna understand how Congress works, but to me, it seems like Laura Um companies would prefer to have a percent top rate to a fifteen percent minimum, you know, And then it probably depends a little bit on the profile of your of your company. If you're someone like a tech company that has a ton of you know, research and development costs and things that can really cut down your UM your tax bill, having a minimum tax

it's certainly not helpful. And having a little bit of a higher tax um, you know, isn't It wouldn't be as big of a deal if you have fewer of those credits and productions. If you're already paying you know, somewhere above fift it doesn't affect you as much. But this is something that you can imagine Corporate America is

is galvanizing behind right now. And uh, you know, the US Chamber of Commerce and Business Roundtable they're figuring out, you know, running the numbers and how will this affect you know, large companies in the country. Matt, this is my fifth fourth week coming back to the office full time to Bloomberg's HQ at seven thirty one Lexington Avenue. How do you like it? I love it, love being back, um and uh, you know, and what I'm noticing Matt is. You know, every week it's getting a little bit more

people here in our headquarters. But I just wonder what's gonna what's happening with other businesses, you see, I don't really see a consensus on hey, let's get everybody back or let's be all remote or hybrid. Is just a lot of feeling out, I think along from corporate America, and that raises a lot of questions. But one of the questions is what does that mean for commercial real estate,

not just in New York but around the country. Kevin Thorpe, he's the chief economist and head of global research for Cushman and Wakefield. They know where thing or two about commercial real estate. Kevin, thanks so much for joining us here. So again, you know, it's my fourth week back in Manhattan working, doing the commute, doing all that kind of thing. Um what is your sense as to how commercial real estate and vacancies and corporate America will come back to work? Yeah, well,

thanks for having a good do with you. Glad to hear you're back at the office. Um, So I have a prediction for you, and here it is when when most people will be back, going to be Tuesday, September seven, I am, and so there's the day after labor Day. It's it's when we expect most of me back and I left an extra seven minutes for people to get

their coffee. Um, I think really, look, I think virtually every survey conducted does suggest that employers and employees are anxious to get back to the office, obviously with more flexibility, but they want to go back, right. We're social creatures. We know that we can make one close one equal three in the office, and we know that that happy hours by yourself after work is not really a very

happy hour. So, uh, you know, I think it's gonna be case by case, but um, for sure, I think the August September time frame is when most are penciling it. I don't know. I mean, I say so. I love being in the office. I've never worked a day from home, and to me it sounds nightmarish. But I also lived two blocks from my studio here were I in you know, Bronxville, making an hour commute each way or worse, New Jersey. Having to deal with Penn Station. New Jersey is awesome,

but you know I wouldn't want Penn Station is nasty. Um. I feel like they're probably a lot of people who still would be happy working from Summit rather than um coming into the big Apple, and you're likely going to see a little pushback there, Kevin. Yeah, I think it'll be a mix, right. I think we learned from this sort of first forced work from home experiment that it actually worked pretty well. I mean, people are a good portion of the workforce was largely productive, um and so

that that's very real. Stating on compute time is very real, but that doesn't replace some people be able to kind of work remotely for a long period of time. And it hasn't gone remote, right, So it doesn't replace the

valleys that office brains. When it comes to collaboration, worker productivity factors, now, it's still over factors, and these are these are the same reasons that office buildings were created in the first place, right, And so there's an economic inseet of not to mention, you want to in general be closer to your clients, right and a lot of the major clients are slow located in the city centers.

So um, so yeah, I think there is going to be Those are a strong incentive, but it'll be Kevin, give us a sense of how the state, how the city of New York is right now, because in terms of vacancies and what the trends have been, what do you need to do to get people back into office. We've heard reports that people are you know, companies are subleasing or trying to sublease some of their space. What are you seeing in New York City? Yeah, so great,

great question. So New York, New York got hard, very hard. But I mean virtually every big city San Francisco, La. But New York in particular got hit very hard by the pandemic. The fundamentals got got rocked. And right now office vacancy in Manhattan is you know, overfitting, pushing certain spots, and so it's a real challenge. It's absolutely a very strong you know, uh tenant that there uh strong leverage

right now in the Manhattan market. One thing else say about New York is there in economics there's something called perfect substitutes. Right, So there's you know, Coca cola versus pepsi. If you don't like coke, you can go to pepsi. That kind of thing. There really isn't a perfect substitute for a New York right A year of pandemic doesn't change everything that New York has to offer in terms

of infrastructure and restaurants and art and labor talent. So I'm confident New York is gonna bounce back and there will be a return to the office, certainly in New York, and it has. It's bounced back from every single recession as far as data goes back, So I just think it's gonna take it longer. We we've read that there are some industries that are still kind of the bright spots of commercial real estate, life sciences, for for example, um, they need to work in the offices, in the labs. Um,

you know, they have to be there. Where do you see the most trouble and where do you see the least Yeah, So, just broadly speaking in commercial real estate, and there's certain certain property types that are actually have recovered swiftly, doing extremely well. You probably have covered this, you know, throughout your time on the program. Industrial logistics absolutely booming, warehouse based, the e commerce effect, data centers,

as you mentioned, life sciences, as you mentioned. I actually think we're now at the point where we're going to see these other property type that have struggled throughout the pandemic property types that really rely on bringing people together, like office, like retail. I think we're now seeing the green shoots and those those sectors are likely they joined the party here. I think will bailing soon. All right, Kevin, thanks so much for joining us. We appreciate getting that

update on commercial real estate. Kevin Thorpe, chief economists and head of Global Research for Cushman and Wakefield. The economy is opening up? Will people come back to their offices? This is Bloomberg Bloomberg Opinion informed perspectives, an expert, data driven commentary on breaking news. All Right, A m C has been a wild ride, to say the least, and

if you owned it, um, you've gotten super rich. Over the last couple of days, it was up well, it was doubled yesterday, and it doubled the week before that. It's up two thousand, eight hundred and fifty percent since the beginning of this year alone. It's off twenty two today. Maybe people are taking profits, maybe they're getting ready for new shares um. In any case, we bring in Chris

Bryant from Bloomberg Opinion to tell us what exactly is happening. Chris, had they just struck upon um an incredibly great business strategy that nobody foresaw coming, and so share holders are rushing to get in on this. Well not, I mean, it continues to be an upolute, extraordinary story. The latest, of course, we had this morning was that they are announcing the intention to issue yet more stock, so up to eleven million shares, and of course you know that

will inevitably further dilute shareholders a little bit. Of course, they've done that previously and the stock has risen, so you know, I'm not going to try and you know, second guests the movements in the market today, but I will say this. You know they didn't issue prospectus to

a company that announcement. We said the following. Under the circumstances, given the volatility I'm just referred to, we cause you against investing in our class A common stock unless you are prepared to incur the risk of losing all or a substantial portion of your investment. So that's UM. That's straight from a mc UM. So clearly anybody who invested at these value rations are you know, taking a big risk. Uh,

and they're well aware of it. I should hope with the market cap now, I mean that's a risk for anyone buying making an equity investment, right, They just don't usually put it that clearly in the prospectives um for sure. I mean, of course, you buying stock always entails risk. But what they're saying here is because of the massive volatility that we have had in our stock, which is unrelated to the performance of our business, that obviously that

entails extra That's the key class. So, Chris, you know, another aspect of this whole, you know, the deal with AMC has been the role of the CEO, Adam Aaron. He has really embraced these retail reddit investors um and kind of egging them on a little bit. It feels to me, what what do you make of it? Yeah, I mean I read a Columnartier in the week where I said that he was playing with fire, and I

think I stand behind that. I mean, ultimately, he's performed an amazing service for his company and his shells in the sense that you know, this company has been able to raise a lot of capital to the company that was on the verge of bankruptcy several times over the past year or so. That's now off the table for at least the next year. Or two because they've raised so much money now, but they're simply not in danger

of running out of it anymore. Nevertheless, of course, by you know, appealing to two retail investors, and he's done an incredible job of that in terms of, you know, giving YouTube interviews, in terms of you know, retweeting memes and all these fun things that make him you know, a friend to the to the retail investor, and the latest of course yesterday saying you know, you can have

free popcorn. Um. All of this, of course, you know, ultimately encouraged retail investors to buy the stock at ever higher prices. And my concern, of course is that some of these investors are relatively inexperienced, and the danger is of course that they get a nasty surprise down the track, although they're prepared. I mean, if you read through Wall Street bets, um, those apes know that they're probably gonna

lose their nut eventually. Um, Aaron Adams, I'm looking at the HDS function on the Bloomberg, which is Great Holdings and obviously a huge portion of this stock is now owned by retail, but he owned as of the last reporting period seven orty eight thousand seven forty seven shares. Most recent change, he domped half a million. I wonder

what his ownership stake looks like now. Those those shares interesting that he's sold were actually given to his sons, so that clearly they have done very nicely out of that if they still hold this dog. Actually know, did my column very interesting? A mc um had an executive pay plan which was linked to the share price targets.

Those price targets were lowered last year because it was thought that they wouldn't be able to achieve them, and of course when the shares first took off in January and then those targets were very quickly met thanks to Reddit. So you know, Adam Aaron is you know, scratching the backs of retail investors and you know, and that's been returned.

He of course is doing very well this He still holds a substantial number of uh you know, shares already and of course we will get further ones as a result of his executive compensation, so you know, no doubt at all he'll do well. Its shareholders do well. And that's what he said time and again, I work for you. Now that's the case, and he's done a good job by raising money. The problem is now, is it can they made saying that the price at these elevated levels,

that of course will be very difficult. I would. It's a refreshing view though, right Chris. I mean you've researched and written about CEO pay executive pay recently. I know, and this is one share This is one CEO who knows that he works for the owners. Yeah, that's true, and um, you know, of course it's very difficult when you've got a very diverse retail investor basis they do now to speak directly to to those shareholders. There aren't

just you know twenty r so key institutional investors. He's got to go and see now he has to speak to them all. And I think it was quite smart actually yesterday by saying, you know, everybody mocked it, you know, free popcorn. But if if it encourages written investors to engage more with the company by stigning up to their portal, hopefully then they'll be able to get them to vote in favor of you know, further expeditions if that is

required as expected. I think at some point they're going to publish a new proxy statement which will detail any possible further authorization for share issurans. But you know, for now, they've got enough money in the door. I was even talking about doing acquisitions or so forth yesterday. I think the priority really should be paying down debt. They've got a lot of debt still, and I've got a lot of rent that they owe to landlords. So this money

can be good to good use. So, Chris, you know Adam Aaron here, the CEO, he's kind of playing up to his new shareholders, kind of reminds me of another you know, uh ceo is a kind of a promoter, and that's Elon Musk. I think about Elon Musk and how he, you know, really promotes on social media and other tesla as well as other assets like dog coin. So maybe Adam Aaron's is following in the steps of

Elon Musk. Yeah, I think that's right. Look, I think a lot of people who look at Masque's performance and he's not everybody's cup of tea, but what he has done is connected with this young retail base. Uh. You know, Musk is able to direct the movement of cryptocurrencies and stocks just with a single tweet. Uh. And you know, clearly Adam Aaron is a you know, an older generation. It's probably not. He's not natural And so for media.

You didn't tweet for a long time, I think. And then you know, once he realized that retail investors could be such a post and force and help for his company, then he's re engaged and you know, he's taken good advice. Uh. You know, he's naturally a sort of outspoken character. And I think you know the retail investors who have warned him. I will say this though, that one can take this retail narrative a bit too far. At the end of the day, ten billion of the stock has traded so

far today. It's not just retail investors buying the shat. Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews with Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller three. Boss Whinney, I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio.