Global Business, Technology, Twitter & Amazon

York City. This year's program features business leaders that are exploring past lessons, current trends in the future outlook for global business. Joinings right now are Jason Maria Rothenham, senior consultant at consulting firm h LB von Dal based in the Netherlands, but joining us on site here at the Withhem Global Summit. Jason, thanks so much for joining us. I know when your panel coming up you're gonna be

covering the manufacturing industry and how technologies impacting business. Give us your sense as you talk to your clients around the world, you know kind of what are the big challenges that they are facing in terms of adapting to interest in technology great, Thanks Paul. I'm so happy to be here in New York City. It's a beautiful day outside, and I'm excited, excited to talk about technology and from Amsterdam. And Uh, we like to innovate, we like to change,

and so do our clients. I keep saying this in presentations all around the world that unless you're Coca Cola or you're an old fashioned watchmaker, UH, technology is going to impact you. It's gonna change the way you do business, change the way you think. And we see that. UM. I'll just pick up one simple topic like logistics. Logistics is totally being impacted by technology, with AI, with robotics,

with the big data. UM, it's all about how do I get my consumer how do I get my products to my own consumers as quick as possible and as cheap as possible. Um. We see robotics taking over in logistics centrums, tread printing. UM. What I would advise people, if you're listening and if you're a business leader, just just look at you all of your processes and think how can technology impact be and what kind of investments

I need to make in there? Jason, do you feel like business leaders in general are aware of how radical the change is and how quickly they have to adapt. No, no, And I'll be very direct with that. I think only ten percent of the business community understands the changes that are coming into place UM and those ten percents are usually the big boys that are playing the Googles of this world, the facebooks. But the mid level, the small businesses is there is there a particular industry that's that's

particularly behind UM. What we would see is the retail market is still a bit bigger problem. I've seen back home where I live. I live in a small town outside of Amsterdam. It's called hof Top Retail. Bricky motor stores are closing down by the day, and yet you still see business owners saying, oh yeah, I've got a bit of cash lying around, so let's just go and open up another shop. Again. They make the same mistake again and again and again. And they got to ask

yoursel why do they do that? Let you do that? Because because they have fit the past, and they're making the decisions based on the past, not of the future. And they thought, oh, my well, my dad did it, my my uncle did it, so I should do it too. They're not learning from the future. So for some of these. You know, I get the big companies, the technology oriented companies, obviously they have a better familiarity with with change and evolution.

But when you go to see some of your smaller and mid size clients, how do you get them to really start thinking about their business models and how they may need to adapt. Right, So what we do with at FANDAL is we try to expose our clients to our logic clients, try to get them to think a bit differently. UM mandate almost that you have to read

a book a day. I'll pick up once a week at least, spend some sessions in the morning, UM reading How We've got a little program where we teach our staff to actually learn the code to be more relatable to UM clients. UM getting them used to familiar with UH Internet websites will be surprised, we've we've still got client so don't even have a website. And that and that is and that is a big problem. That's a problem. Well, you know, when you say technology, it's a pretty broad

sweep of things. Artificial intelligence logistics, while they can be paired together, are distinct and can be applied in different ways. So how do you go about determining. I mean for the retailers, for example, what should they be doing, because it's not just simply abandoned brick and mortar, How should they be thinking in this technological era. That's an excellent question. Um. What they should be looking at at is how do I bring in AI, bring in big data into understanding

who my clients are. So I'll tell you a little story of a client of mind. What they do is they inside small little chips in the in the hangars, and they know how many times a piece of clothing is taken off a hangar, how many times to put back?

And then that gives you a lot of information if to give some perspective, if I have a customer that comes in or several customers that come in and pick up the same uh piece of clothing and if put it back, that tells you a lot about Maybe I'm pricing it wrong, maybe it's the wrong color, maybe it's not but something is good about it. But I don't

know why my clients are not buying it. So you can flow through from where it was picked up right to the checkout counter and see whether there's a good flow through their Apart from that, you can set up senses all the way around your store. You can tell which part of my stars are underutilized. There's a lot of stuff you can do with AI. That sounds like it costs some money. How about somebody smaller and mid sized companies do they have the capital to make these

investments in technology? Right? So we've got two parts of the market. One is a very conservative part. In speak for Europe, a lot of our clients are sitting on money. They're sitting on money, they don't want to invest, they don't know what's coming up ahead. I heard uh recently that in the US that that there is no such thing as a recession. That I heard that, But in Europe we still very conservative over that we don't know what's coming around, so we allow U sit and to

answer your question, Uh, that costs a lot of money. Well, if you take get in small steps, baby steps, it shouldn't cost you a lot. Jason Maria Rathenom, thank you so much for being with us. UH, senior consultant at h l V von Dala, which is based in Amsterdam, but is here with us on site in New York City at with him seventh Annual Global Summit. Thank you so much, so interesting. I love the idea of these sensors.

I mean, I love them, and I also wonder what else you can do with all of that data, you know, I mean that's the other issue. But at a certain point, people have to be aware that we live in a technological era and people are looking to use the facilities they have to the best advantage possible. We are broadcasting live from with him seventh Annual Global Summit in New York City. A big topic of discussion is logistics and how technology is transforming, UH, the way that goods move

around the world. Joining us now Michael Kaminski, chief operating officer at h M t X Industries, which is a global l v T manufacturer. I had to look up what l v T was, ask Michael what that is. It's luxury vinyl tile because I actually googled it. But luxury vinyl tile. Looking you can look at the different layers here. So, Michael, from a moving things around perspective, how crucial is that to what you do every day? Well,

it's the essence of what I do every day. Where we sell over seven million dollars of product l v T UH, most of its manufactured. It is manufactured in China and we sell it throughout the world, although about eighty plus percent is sold in the United States. So getting those goods from China into the United States and then out into the distribution centers, then into the local community,

and then ultimately to customers homes is all about logistics. So, uh, we've been talking a little bit about this China trade thing here in tariffs and all that kind of thing, and it's been the talk of the markets really for the last six months or so. How has tariffs impacted your business? Well, it's a significant issue. Uh. It takes up a huge amount of my time and senior executive of the company time. The tariffs on our products ten

percent tariffs started on September two, eighteen. Uh, there were threats to go up to that kept on happening and actually in June did rise the t So that's an enormous amount of money placed on our goods. Um it's it's the topic who bears the cost of that. You pass that along to your customers or do you as a company eat it, or is a little bit of both. Well, there's a certain gentleman who thinks the Chinese are paying

for it. Um, he's wrong. Uh. The costs are paid by a variety of different people in the global supply chain. First and foremost, we've negotiated prices with our factories. We have eaten a percentage of the the higher costs, We've passed on a percentage of those costs to our customers, and then our customers have passed on a percentage of those costs to the consumers. So the truth and matter is worn by many different people and it hurts many

different people throughout the chain. Some people have said, well, just changed the supply chain, and when you talk about the factories, uh and sort of replacing them, etcetera. There there's an issue with that. But logistically, how challenging would it be to uh completely rejigger the supply chain? I mean, simply put, it couldn't be done. Uh. The investment and the factories are manufacturing partners in Asia have invested tens and tens of millions of dollars into their facilities. They

backed over a hundred million dollars in certain instances. Uh, you just can't replicate that. First from a from a cost point of view. Uh. In fact, one of our biggest competitors over the last few years is invested almost a billion dollars to create a manufacturing facility in the United States that would be capable of producing the product that we make, and they've been unsuccessful. It's not a

simple product to make um. And second of all, who would invest that kind of money unless you felt that you could make a good product and and go to get a good return on it. So um our supply chain is embedded, and it starts with our manufacturing facilities in China, and then across the board. Each element of it has to react to it. You just can't pick

up a factory, move it and and start afresh. What's your primary UM I guess transportation method or route of bringing the product from China to the U S. You just slap on one of those big monster container ships and it goes to Long Beach or something like that. Yes, okay. So we ship approximately two thousand containers a month. Almost

all of that comes out of the Shanghai port starts. Actually, our manufacturing partners are in jiang Jigon, China, which is up the Yellow Yankcee River a few hours from Shanghai. So they go from the manufacturing facility in Jang Jigan on river boats down to the port of China, which is Shanghai, by far the largest port in the world. Two thousand containers a month get put on those very very large boats that you see out there. Uh. Some of them go to the port of Long Beach and

Los Angeles. Some come through the Panama Canal and go to the port of Savannah, which is actually the third largest port for these kinds of containers in the in the country. And then we have distribution facilities in Compton, California, in rinkin Georgia, which is a little bit outside of Savannah, and from there we then ship them throughout the United States. Just quickly here, I'm wondering whether there are new technologies that would facilitate some of the logistics around this that

you're hesitant to invest in right now due to the uncertainties. Well, you know, it's very very hard in this uncertain environment to make long term strategic decisions. We happen to be very lucky in the fact that we have a product that the consumer is clamoring for and so we are selling even in the face of these tariffs. We're doing very very well. So we're not going to stop investing in our businesses because of the uncertainty, but but it

makes it more difficult. We've invested UH. Two years ago we opened a new facility in outside of Savannah, invested eleven million dollars in robotics and in a new facility. So we're doing that all the time, understood. Michael Commitskey, thanks so much for joining us. We appreciate you stopping by here. Michael's the CEO of h mt X Industries, joining us here at the with them seventh Annual Global

Summit at second in New York City. Veraging with logistic discussions and really important to get that view in terms of on the ground, how realistic it is to shift around your entire UH supply chain exactly, not very easy. This is Bloomberg. We are so lucky to have with us Tom Angel, who is the practice leader with him's Financial Services Group. He has decades of experience with private equity and venture capital firms in particular, which is incredibly topical.

Just this morning, Mark Wiseman of black Rocks that that almost half of Black Rocks institutional clients plan to increase their allocation to private asset classes. So Tom, thank you so much for being here, can you talk about that shift and sort of what you're seeing among your clients in terms of the just massive amount of money flooding into that There is a lot of capital coming into the market, and especially for the private equity venture capital

funds UM. So if you take a look at Cowper's Texas T Shirt Union, a lot of the pensions stated of sovereign funds they are looking a ways to make returns because they have to pay their retirees and typically you're trying to look at a seven eight percent return depending on what they're um what the amount is that they need to return in order to be able to make those payments. So UM, they can't make it in

the market UM over a long period of time. But I think in the least twenty years, UH, the private market has significantly outperformed the public market. And those studies are out and so they're doing much more allocations to private private equity, venture capital. Real estate could be dead funds, a lot of private dead funds that are out there, and in order to generate those returns that they need, they're allocating dollars to that. Since the christ this back

in two thousand and eight, two thousand nine. You know, so we've been going almost ten a little more years, and that you keep wondering, well, when is that going to stop? Because all that capital keeps coming in, how they're going to deploy it? But places like Cowper's and

the others, they're not on a short term window. So actually, some of the larger institutions like Blackstone and Carlisle, they're looking at doing twenty year funds set a ten year typical private equity funds ten ure because they have a longer term horizon and so they want to generate more returns,

higher returns over a longer period of time. So they're not worried about market dips or even even a recession because at a recession point, they think they have an opportunity to buy in at a lower price and get better value. So, Tom, one of the issues that kind of I think came to the market's head this year, which maybe it's too much money chasing too few deals in the venture community and maybe even the private equity community.

You know, maybe the greatest example that would be we work where in the venture private world, and you could even say were lift that, you know, the valuations that were getting in the private market just we're too high. Then they get really unmasked. I guess when they came to the public markets. Are some are your clients worried about too much money, tasting too few deals and driving

valuations to you know, crazy levels. Yeah, you'll talk to a lot of our our funds and and they're looking at what they're paying in terms of maybe on the private equity side, in terms of um EBA on multiples, they're definitely going up, and you know they're looking at

that and maybe being too frothy. But um if you say to them, hey, what are you worried you're gonna be holding the bag when the recession turns around, that you have all these investments and they have capital that they have to deploy that they've gotten in, and so they're looking at that downturn as a possible um value by at that point. So you know, they may start to get hurt on some of these valuations, but they're going to make up on those valuations after the recession

if you know one is coming. Um So, I think the returns have been there and they have continued to be there. Uh So on the venture side, you know you brought up good points in terms of things that have But there's only public companies where ten fifteen years ago there were seven thousand. There's there's really no place to put put the capital now that those particular examples you're brought up weren't profitable, and nobody's worried about profitability.

They were more worried about growth on the private side. Once they become public, everybody's looking at, well, one is a profit going to turn around? I mean, if you look at what happened with Amazon years ago, similar type of thing, it took a while before they kind of hit their stride. So the question is uber is lift good public companies or good companies that are eventually turn it around and they were in large growth mode and

now they're going to try and become profitable. Uh. I think that's where the way you have to look at it as opposed to this is just a bad model and it's not working right now. I think it's fascinating that some private equity firms are moving to twenty year fund models. That's new, right, I mean that does that have a precedent pre crisis, No, So this is new because again they have certain institutional investors that are looking

more long term. So if you got a ten year fund and your investment period is your first three or four years, UM, then after that you're kind of carrying it. So how much higher are some of the returns on say a twenty year fund versus a ten year fund. They've only been um launched in the last few years, so UM. We don't have statistics on that yet, but I would think that you have more of an opportunity of when to sell as opposed to your coming to the end of the fund and now you have to

liquidate those positions. So um. And there were only for you know, those larger institutional types of investors, retirement plans, state funds, um that don't need the money you know immediately if you're high net worth individual and these are investments you want to get some cash back within ten years. These more worried about future payments for all the pensioneers over a period of time. Let switch gears real quickly

to hedge funds. I saw just news I think the last there so that Jeffrey Vinneck, the former star hedge fund manager of Fidelity madgellan and who ran a long time hedge fund, actually closed shop because he couldn't raise funds. Is it that hard to raise money today? It's difficult, especially on the hedge fund side. The e t fs have really um hurt the hedge fund industry because the fees are a lot less UM. So that's really brought

it down. I think I saw a week or so or ago where UM dollars into e t f's first for the first time exceeded dollars into hedge funds or manage funds. So there was more capital going to those uh e t f s, and and you know, you need the right manager. So it's not everybody that can um come in there. And you know back in the old days where everybody would set up a fund and invest in it, that's not happening anymore. Yeah. I guess which shocked me is Jeff Vinick. I mean, you don't

get a bigger name. Well, there's a large a lot of large like Leon Cooperman became a family office. There were a lord a lot of large institutional head funds that basically shut up, shutdown shop, gave all the money back, and now they have a family office instead. Right exactly. Uh, let's see here we are here, we're broadcasting life from with him Seventhaniel Global Summit and second in New York City. Tom Angel Practice Leader with him Financial Services script. Thanks

so much for joining us. We appreciate your comments on the financial service indust You have a great conference today. Thank you well. Twitter reported results last night and the market did not like those results. The stock is trading off about nineteen percent today, stocks around thirty one a share. To get the latest on what happened there and also week a little preview of Amazon, we welcome our good friend to Tender Warral. He's a senior Internet annalyst for

Bloomberg INTELLGM. He joined us from our San Francisco studio, Tender, thank you so much for joining us. First, give us a sense of what happened at Twitter. They were on a little bit of a run there. Looked like they were turning things around. What happened, Yeah, you're right, it was. It was a disappointing quote on Twitter has just walked a few steps back in its recovery story here. I mean, first, it was a quarter with a lot of bugs in

their mobile app promotions product. That's sort of like impacting the at targeting aspect and hence the revenue that's coming from that product. But the bigger concern here was the seasonality that they were experiencing two months in the quarter. Uh And it's interesting, but the seasonality was around events. So basically, there are a lot of events happening, there's content flowing around that, the air product launches happening, you know, the your revenues go up. But if that doesn't happen,

then suddenly you see a lull that's happening. And this this is a problem in terms of long term growth visibility because you know, if they're not able to maintain a steady scheme of advertisers, that it becomes difficult to see how they can you know, continue to grow double digit for years to come. So I'm struggling to understand why they're having difficulties with advertisers given the fact that their user base continue to show pretty strong growth, which

actually had been a question for the company a while back. Yeah, that's a good question, and they are showing they continue to show progress on the user growth. But what happens is with with Twitter, you know, they're going after these bigger brand advertisers. Self service a very small portion of the business, not like uh, Facebook or Google or even Snap for that matter. So you know, the salesforce has

to drive these advertising dollars. And and sometimes because these advertising dollars sort of budgets flow against a given event or a series of events or a product launch, you know, they tend to keep on seeking new advertisers of humane versus having a self service engine running like Facebook is. And and that's why you see this lumpiness. And this lumpiness is what what worries us the most. But there was also a problem with some bugs that it talked

about what what was the issue there? So the issue there was basically the ad targeting of the mobile app promotions product, which is basically you know, mobile app installed ads and and things like that. These are higher price ads. They were facing issues with the data that was flowing

through to the advertisers. There was some data that was not supposed to go was going, some of it was not going, and and because that reduced the at targeting, that had an impact on the spending against UH that product, and that's why they saw they saw hit there. Now the expectation is this will continue next quarter UH and into next year as well. But next year they have some uplift coming from the organic election year traffic. They have Japan Olympics, uh coming as well, so they have

some offsets they're coming in next year. But what what investers are questioning right now is the longevity here in terms of you know, this lumpiness and business or if vents driven or hits driven seasonality that that that the quota is shorn so tender. Probably maybe as recently as a year ago. There are real questions around this company. Could it be a long term viable player in the

digital advertising market place. Did it have big enough audience to compete with, you know, for ad dollars against the facebooks and the of the world and the snapchats and all the all that kind of thing. They seem to be on their way to answering that question in the affirmative. But did they take a big step back here? Uh? They did, Paul, and I think last you're right, last couple of quoters. They have been showing progress towards that.

In fact, the health initiative that they are spending money on is actually paying off as we see you know, the da you growth happening. But when it comes to attracting advertisers longer term and scaling the business you know, they have to scale the small business, small and medium business dependence more. They have to scale the self serve advertising,

the dr advertising war. So those are the aspects that there are still in the in the making and and this quarter really puts them back in the show me mode for to answer that longcome good question. So just shifting gears a little bit, We're expecting Amazon earnings after the bell. What are you looking for? Costs is going

to be the biggest topic. Last quarter, we saw their marketing costs skyrocketed as they spend money on a WST marketing, Prime Video, Alexa, and lex of those also one day shipping, which is giving a boost to revenue, so we anticipate that boost too happened this quarter as well. But what

would it cost is the question. And we saw them come ahead a little bit than expectations last quarter, but really, because it's so early with this one day shipping, we don't know exactly how many or how quickly the new products are being added to this platform and how much more it can really cost. So this is a big question mark for Amazon from profitability standpoint. So from a

revenue growth standpoint, I think they're doing well. One day shipping is helping a WS wrote will come in question again as it did last quarter, but you know the size of the business, thirty billion dollars plus business. It has to be considered when we look at these growth

rates going forward. But the focus for Amazon, I think this quarter in the quarters to come, really is going to be cost Thank you so much for being with us to tender Verall, senior Internet analyst for a Bloomberg Intelligence, joining us from our San Francisco studios. Twitter shares down more than nine percent on those disappointing earnings, still though

shares that more than nine percent year to date. Amazon shares ahead of the earnings release after the bell uh up just at one point four percent, so people expecting some positive news there. We are broadcasting live from with him seventh Annual Global Summit in New York City, looking at a mixed market with the Dow down while the other broad indusicries are higher to set up a tenthse of eight percent. Thanks for listening to the Bloomberg Panel podcast.

You can subscribe and listen to Inner Use at Apple Podcasts or whatever podcast platform you prefer. M Paul Sweeney, I'm on Twitter at PT Sweeney. I'm Lisa abram Woits. I'm on Twitter at Lisa abram Whits one before the podcast, you can always catch us worldwide on Bloomberg Radio