Millennial Consumers Aren't Willing to Pay for Digital Transactions, Bhatt Says

to give to the poor. A new version of robin Hood today is it comes in the form of robin Hood, the company that's based in Palo Alto, California that provides a commission free app for trading stocks and with us here as the co founder and co chief executive officer of the company, Beiju Bot Beiji, thank you so much for joining us. So can you just give us a sense of what the company does and how you make money? Absolutely,

and thanks for having me on robin Hood. Our mission is to make the markets more accessible for everyone in the US. UM what we do is we have an an app for Iowa's and Android, and we recently around a desktop version of robin Hood as well that lets consumers across the country invest in the stock market, and we cut out the things that really create a difference between the rich and the poor when it comes to investing.

So there's no minimums to get started, there's no five to ten dollar commission every time you trade, and it's it's made to be really easy for people that are getting started and also really powerful for people that have been using it for a long time. And we announced it about two years ago. It's been growing very quickly.

Um we've crossed now over three billion users in the US UM and we've transacted over a hundred billion dollars in the last two years, saving our consumers over a million or over a billion excuse me dollar in commissions in total. So the business has been growing, you know, really well. And uh, it's it's really introduced just a brand new generation of consumers. And in the stock market. How do you make money? The way we make money is we've got a paid version of robin Hood, which

lets consumers borrow from US. So for as little as ten dollars a month, you can get up to an additional two thousand dollars in your account, and we also collect interest on the cash and stocks in your account, and we we split that with the consumer, And just to follow up on that, why do you believe that a five dollar or six dollar commission is what's keeping the majority of non wealthy investors from participating in the stock market, because that kind of speaks to the issue

of trading in and out and that somehow the commissions are what are the obstacle rather than a viable long term strategy to make money. Well, I think it's I think it's commissions are a much bigger deal for consumers than you know, as your I that kind of are in. But why, I mean, if you're not going to trade a lot, why would let's say, you know, buying shares and paying your commission and holding the stock for whatever period of time. Why is that the barrier? Isn't that

the cost of doing business? No, it's really not. I think we've got a generation of consumers that are not that are not really willing to pay for digital services. And when you look at what goes into facilitating a stock transaction, it's purely electronic and there's really no difference

between that and sending an email. So I think it's it's one of those things that when it once it goes away, it gets a lot of people to start thinking, oh, well, maybe I'll try this and I'll kind of see how this works, um and it just it feels like a less cumbersome commitment to make. So are most of the clients that you have, do you have a sense of

how old they are? Yeah? Absolutely, So. This is one of the interesting things about our company is that the majority of people that use robin Hood and I think it's being like of our consumers are under the age of forty and so it's this new generation of consumers that sort of commonly called millennials um that that they're using this as kind of their first entry point into investing in the stock market, and they're they're getting started

today when they're a lot younger, rather than waiting until they're a little bit later in life in their fifties or sixties. When you know, I think a lot of companies like The Trade and and tdumer Trade see their

consumers getting online. You know, there's this sort of stereotype that millennials aren't as interested in stock trading and see more value and say bitcoin, uh than stocks, especially because they grew up with the very present who thousand and eight experience and I'm just wondering how much truth there is to you that based on your findings. In other words, is there a big group of millennials who are interested in trading individuals stacks? You know, that's really what we're seeing.

I mean, if you take a look at our our numbers, right, We've we've got over three million people that have AC counts with us that have found up in just the last two years. And you can put that side by side with the trade which has about three points six million consumers UM. So we're we're becoming, you know, a very sizeable market participant, and largely on you know, on

the grounds that young people have chosen us, Robinson. So, I think that the market demand is certainly there UM, And I think it's it's one of those things that's happening relatively quickly. And I think when we look at this in a couple of years, we'll see that the younger generation of consumers UM will actually amount for I think it will be a bigger audience than than the last generation. And what about backing, who are some of

your investors? Yeah, so we've raised over I think a hundred and seventy six million dollars over the last few years. We're backed by top tier investors like uh any A, uh Google Ventures, and Trees and Harwood Ventures. Indeed also some some celebrities like Ashton Kutcher and Snoop dogg Um in the Gang from It's Always in Sunny in Philadelphia

if you ever watched that show. So all right, well, thanks for enlightening us on robin Hood much appreciated Buys You Bought is the co founder and the co chief executive of robin Hood. They're based in Palo Alto, offering what they described as commission free trading in equities. Artificial intelligence and the use of artificial intelligence in the economy is expected to reach about thirty six billion dollars by this according to a report of from a eligence marketer.

This is a grand View research and here to help us understand how this uh new technology will be used in industries such as the restaurant business as well as retail is Shing Tao. He is the chairman and the chief executive of Remark Holdings, and he joins us now on the phone line from Las Vegas. Shing, thank you very much for being with us. Maybe just begin by talking about UH sort of subsidiary of yours called can Can.

That's k A N k A N What is it and how does that fold into the overall business of Remark Holdings. Great, thank you for having me. Um. We uh, we had built it's been about three years since we kind of laid up division to build can Can, which is a big data artificial intelligence platform, and that was really to marry all the different assets that we had currently owned and had you know, looked to potentially acquire

in the future. Uh, you know, going going into really two thousand and thirteen, and we found that, you know, the business that we were in, it was very tough to compete and if we didn't have you know, if we didn't care about the profits and all that. So it was pretty important at that time to really make a a big bet at that time, uh, to see how do we create a technology platform or technology that you can't just throw cash at the problem, uh, in

order to enter it. And and that's really how we first um you know, kind of made the move into that field. And we realized that in the beginning was like, look, you know, with at that time, you know, the social media accounts, we weren't really very well integrated um. You know, now three years later you see a kind of a there there's a need for a break between the data that you see in China and and and other parts of the world, given that China is closed to the

kind of foreign groups going into there. Uh, And so we created a platform to marry the data from both sides where um it would serve two purposes. One is to help, you know, obviously help our own businesses, but number two create solutions for business that are trying to enter into China or Chinese business trying to enter outside of China into the US. So shan just sort of

to zoom out a little bit. So Remark is a data collection company, right, You collect certain data and this partnership with ken Ken allows you to analyze it and use it more for your clients. Is that accurate? No? Is our AI platform that we've built from the ground up. Okay? And then with respect to Remark, it's you get data from a number of different sources that you subscribers can

use to analyze consumer habits, credit, etcetera. Right, So what we do is we create we create a technology to be able to scrape all the data from you know, all the major social media sites around the world. Number one. Number two really any site with a lot of consumer information. Now obviously that has a lot of data, as we have over one point three billion unique user profiles, and then there needs to be, uh, you know, something to

really connect the dots. And so that's what we've built as the AI platform basically is trained by the data that we've have, because you know, strong AI is driven by strong data. So, um, it's fascinating and I'm wondering what the challenges for you to gain access to that data you're scraping from all these other sites. I know that this has been held up as the greatest value of the big companies is really their data, right, so it's hard for you to get access to it. And

what's your business model? I mean you get subscription fees and you use part of it to uh to license the data. How does it work? Yeah, So, so we we have a number of different partnerships, some some we you know, it's it's primarily just a scraping technology that we're able to get public available, publicly available data better

than others. That's number one. Number two. We have data partnerships with both Ali Baba intencent where we open up our data and they do as well, and we basically utilize the three groups different data to train to AI models, which is why it works so well from a business standpoint um. You know, as as you know, there are a lot of different AI companies out there, and that's

the buzzword. You know. We're able to monetize very quickly because we are providing solutions in a number of different areas. The first in the biggest isn't isn't fintech in China, which is the first market that we launched in less than the third of the people they're actually have a credit history, as we know in the US, so the way the financial institutions are doing their their lending is

based on your behavioral history. Presumably we have the most of it, given all the social media history, uh that we have, and a big target for us are the millennials and and sort of the the younger demographic from and because because we have so much data and because that's really what creates the foundation for the AI platform, we're able to move into a number of different areas as well. It's not just fintech, but it's also in

for example, like food safety. So one of the one of the projects that we're working on right now is with the Shanghainese government where the where the China government has mandated where you have to wear a mask and a hat uh in order to prepare food. Uh. So using our technology, being able to monitor a whole area and be able to identify who's who, be able to decipher if a person is wearing a mask, a hat

or both. Uh. You know, our AI allows us to do that and to pick up where there might be a violation of that policy, and then it sends directly to the health agencies will make sure there's um you know, actually integrity in that in that data. So from that too, um you know. Uh. In hunsl right now where Ali Baba is based there, they're going through a mandate where they're banning motorcycles on the street to prevent new slow down pollution. But how do you know the difference between

a motorcycle and electric bikes? So are AI because it's been trained by so many images, uh you know, over ten billion images, allows us to actually be very accurate how we decipher who's who, what's what. Shanta, thank you so much for joining ours Shingtau, chairman and chief executive officer of Remark Holdings based in Shanghai, China. But he was coming to us from Las Vegas taxes and debate in Washington over changes in tax policy. Let's find out

more from Wayne wine Garden. He is a senior Fellow in Business and Economics at the Pacific Research Institute. Wayne Uh, let's just begin by maybe laying out from your perspective what needs to change for tax policy to help the economy grow. Well, if we're looking at the proposal that's out there, the most important art is the corporate income tax reform. The US corporate tax system is so out of balance and so uncompetitive compared to all of our

global global competitors. I think that's something that's very well known. So the idea that we're bringing that tax rate down from thirty and the fact that we're going from this global tax system that nobody else has to the territorial tax system brings our our corporate tax system into ligne

with the global competitors. And importantly, what it's also going to do for us is it's going to stop this kind of movement of inversions and companies moving overseas, that's gonna all stop, and the incentive is going to be to set up corporations here in the US. Wayne, how do you feel about the healthcare angle that's been pulled into this tax debate with the Senate provision removing the

Obamacare payments that are required. That's it's it's a it's a bet that a more complex bill is going to be easier to get through than something perhaps more simple. And you know, perhaps that bet is right, perhaps it's wrong. Individually, each makes sense, right that the mandate doesn't make sense. It forces people to buy insurance at a cost that they don't believe is worthwhile for them. Wait, hold away, Hold on a second. I mean the idea was to

sort of sustain Obamacare. But I guess what I want is, do you think that this is a prudent move? And do you think that pulling out this Obamacare mandate is the right move? It's right moves if it can pass, Yes, I don't believe. I believe it makes it a little bit more difficult to pass because of bringing in the Affordable Care Act issues into the tax reform, which is

already complex enough. But if if it does pass, we were going to have based on the budget scoring window that they have to kind of fit this bill through. It helps move tax reform along in terms of the deficit constraints that it faces, and it's in itself it's a good policy. So combine those two things together, Yes, it's a good move politically, though you're bringing in the host of other issues and that needs to be kind of worked out. When can we just go back to

the corporate tax reformation for just a moment? Is is there any evidence that lower in corporate taxes will lead to greater economic growth? Yes, And if you look at the economics literature, undoubtedly the corporate income tax has a very large impact on kind of how much capital companies are going to invest, how much they can reinvest in their workers. So there's a lot of connection between how high or how burdens them your corporate income taxt rate

is and how much economic growth the country can can sustain. Okay, So then so I was gonna say, so okay, So having said that, why or do you believe it would be relevant to in a sense have a test. For example, if you do off for this tax reduction to corporations, they are only able to claim it if indeed they follow through on what you just described, which is spending more on research and development, spending more on hiring. Well, you don't necessarily want every corporation spending more on R

and DM. And this just gets to what drives growth and for us to try to determine what's the right investment for every corporation through the tax code, I mean, that's how we end up with this complex you know, tens of thousands of pages of tax code to what we want is a ideally that the much more simple flat tax structure that makes it kind of easier for corporations to spend their time talking about how do we get the best products to customers and not worrying about

how do we kind of gain the tax system to maximize profits. If we do that, we'll get stronger growth. Some companies we may want to contract because they're our growth industries. We want more investment in areas matter, so as a kind of from a government perspective, you don't know that, and so you want that to be as neutral as possible so that we can kind of sustain the most dynamic economy we can create. When is there anything in either the Senate or the House bill as

they currently stand that concerns you. There's there's several things. I mean, certainly on the personal income tax inside, there's a lot of kind of trying to bang square pegs

into round holes. I mean, the big problem. I would have loved to have seen the payroll tax be included in the tax reform because when you're talking about middle class tax relief, class and lower income people don't pay income taxes, they pay payroll taxes, and so there's drive to try to create lower income and middle income tax relief, but not including the most important taxes to those individuals has has led to a lot of unnecessary complexities and

backward bending, kind of strange provisions. So I would have ideally like to have seen those removed and actually to start addressing how can we fold the payroll tax into this broader tax reform. Are you concerned at all about the fact that the deficit is poised to expand by one and a half trillion dollars with a conservative estimate. Yes, Uh, the depth is definitely a problem. But the problem with the deficit is it's a spending problem, and that's something

that with or without tax reform, we need to address. Uh, and that needs to be addressed to fundamental budget process reform, fundamental spending reform, so that we can bring kind of our expenditures into line with what we're able to kind of generate from a tax revenue. If you look at how much revenue the tax system raises kind of relative to the size of the economy, that's been fairly constant, even though we've had major changes in terms of tax revenue.

But we look at the expenditures and that keeps rising, you know, long term, there's lots of wiggles around it, but rising long term relative to the size of the economy. That's the problem with the deficit, and we need to bring this spending under control. Otherwise we're not going to get control the deficity no matter what we do in taxes. Wait,

just quickly. We were speaking yesterday with a group of real estate executives at the Burden Executive Summit here at Bloomberg and one of the things they talked about was the deductibility of state and local taxes. Uh. Do you believe that that will be erased in this in this tax bill? Um? No, I think if you're gonna it should be erased. Let me start with that that it's the right policy to get rid of it, but you

have strong interests behind it. And when you start looking at how do we get the bill a bill past, it seems that some kind of measured like the house where they have the property taxes can still be included up to I think it's ten thousand dollars. I think you're going to have some sort of compromise on that simply because there's too much interest to keep it going. But under an ideal tax REFILM, absolutely you would give

it of that. You need to broaden the base to get the tax weight down, and that's an important area. Wayne wine Garden, thank you so much for joining us. Wayne wide Garden, Senior Fellow in Business and Economics at the Pacific Research Institute and Falls Church, Virginia. Let's turn our attention now to a piece of paper, a very expensive piece of paper, indeed, a four hundred and fifty million dollar piece of paper that just happens to have the painting. I guess it may even be a canvas, uh,

that is m Leonardo da Vinci. Work by Leonardo da Vinci sold for four hundred and fifty million dollars at Christie's auction House yesterday evening, and here to tell us more about it is Bloomberg's art reporter Katya Kazakia. And I usually get your name right, I beg your pardon. I guess I was stunned by the four and fifty million dollar price. Tech tell me tell us about Salvatore Mundi or Savior of the World. And why would anyone

pay four hundred and fifty million dollars for a single painting? Well, it's the last Leonardo. So that's that was how Christie's promoted it. And it's actually true, you know, Leonardo. There only less than twenty Leonardo paintings in the world right now. And I was rediscovered in two thousand eleven. It had been really restored, pretty hands on restoration. So the condition is not great, but it has this magic about it, right, it has Leonardo, but one of the greatest, if not

the greatest artists of all times. And um, it's the last one. And so for someone there's so much wealth, and you know, we've talked about it a lot. You know, in the growth of wealth has been unprecedented, and so there are a lot of billionaires in Asia and in America, and in Europe and emerging economists who are building their museums, who need you know, they need a show upper And and we've seen over the past months. It's only been on tour by Christie's four months and thirty thousand people.

They showed it in Hong Kong, they showed it in London and San Francisco and in in New York. And during the last week people in the rain waited to get in and to see this work. And Christie's they're they're really smart marketers. They put together this video of people looking at the painting in all transfixed, some with tears

in their eyes. Leonardo Dicapriism on them appears suddenly, you know, and so the profound effect that this painting, whether or not you know it is the real Leonardo or not, like it kind of be on the pail, it doesn't matter, you know. Well, God, yeah, I want to pick up on a point that you mentioned here, which is this highlights just how much wealth is slashing around. I mean, we're talking nearly half a billion dollars here for a painting. Yes, it is rare. A lot of things are rare in

this world. It doesn't mean that there is a willing buyer for nearly half a billion dollars, especially considering that it's way more than twice as much as the last mark of hundred and seventy nine point four million dollars for a Pablo Picasso painting. Do you have a sense of how small the group is of people who not only could afford this, but who would be interested in spending this for like a vanity project or what else could it be? It's, um, I don't think it's it's

the group is not small at all. And that was so striking is because, uh, in three hundred up to three hundred and seventy million, there were three people who were doggedly competing for it. Um, So there were three people in the world who could afford it at that level. And you know, you mentioned the Picasso of course because it was hundred and eighty million dollars, but they have been private sales a lot higher up to like three hundred million, that would know. But we've never even heard

those numbers in the sales room. We've never you know, two hundred million, three hundred million dollars in the context of an auction. It it's it sounded surreal, you know, it never happened, and so I think that, yeah, I mean the money, the money is not an issue for people of that elibor. I think of that wealth, so, you know, and it's not a rare just a rare thing. There a lot of rare things, you know this. You know, well, if we accept that this is the last Leonardo, it

is the last Leonardo. There's nothing else like it. So I think for people, you know, and an interestingly, you know, I spoke before the sale with the specialist at Christie's and I don't think they didn't know it's going to go that high. They kind of were thinking it's either going to sell on one bed to the guaranteur of the work, or you know, maybe it will go to

like one fifty. But you know, I think it's surprised everyone. Well, I wonder if it's surprised the owner or the previous owner, the Russian billionaire Dmitri rub Lovelev right, probably he bought the painting in tween. He paid about a hundred and twenty eight million dollars. It was a private sale, so a hundred and twenty eight million dollars in becomes four

hundred and fifty million dollars that's correct. But you know also remember that um, yes, but tube was he got it four seven a half, but the person who sold it to him got it for a d like literally like a few days before. It's a good it's a good way to show just how much the wealthy are are getting wealthier right now. And sixty Fo'm serrying sixty four. Just an interesting factor it that sixty four years ago the same work sold it in the States, sale forty

five pounds million dollars in sixty or four years. Katya Kazakina, Art market reporter for Bloomberg News. Thank you. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. I'm pim Fox. I'm on Twitter at pim Fox. I'm on Twitter at Lisa Abramo. It's one before the podcast. You can always catch us worldwide on Bloomberg Radio.