Pet Care Demand Post-Pandemic

in any US cities. In fact, San Francisco is home to nearly one hundred and fifty thousand dogs, but just one hundred and fifteen thousand children. That's according to the American Community Survey. So, uh, you know, I'm not a pet person, but I know most people are, and it's a big business. Uh So we're happy to welcome Aaron Easterly. He's a CEO. But you don't have a dog, never had a dog, never had a pet. Your poor children, I know, I know that's trust movie and they've never

been we've never taken him to Disney. So just failure on so many fronts, exactly, Aaron, thanks so much for joining us forgive me for not being a pet enthusiast, but talk to us about Rover, what your company is, what you do, and because I know you're going public soon, I believe Yeah, that's right. So Rover was founded on the premise that all people should deserve the unconditional love of a pet in their lives, whether it be dog

or cat. And we want to make it really easy for people to go about their busy, modern hectic lives and half pets in their lives. So we started a peer to peer marketplace where people can find pet sitters and dog walkers, I mean, anything else they're looking for for the pet care. So how did how did your business get impacted by the pandemic? UM Well tailed two parts of the pandemic. The first part was was brutal. People stayed indoors, that they didn't go into work, and

they traveled a lot less. And we're largely a travel related business of what to do with your pets when you leave town? Sometimes let's to do with your pets when you go into work. So our business was hit pretty hard. But during that same period of time, um the adoption rates of pets of the annual growth rate in that roughly quadruple um. So everyone during the pandemic went out and got a dog or a cat, and so it actually increased our addressable market and we gained

material share. I think at the beginning of the pandemic we were about six and a half times the next biggest player if you look at the third party credit card data sales data um when we started our go public vias back process, or roughly ten times bigger. And if you look at the most recent data or something

about sixteen or seventeen times bigger. UM. So weirdly, the pandemic heard us in the short term, but actually expanded our addressable market, caused us to gain market share, and we've boom coming out of it, saying records the last several months. So, uh, most people know my dog Steve is not just my pet. He's my very best friend and and uh he's you know, been all over with me from New York to Bronxville. We live in Berlin now.

He flew We got him a business class seed. He flew with me on the plane, did we really Yeah yeah, Um, he had the kosher meal, and uh he didn't drink any beers because you know, you had to hold it for eight hours. But for for me, the hardest thing is getting these services, finding a dog walker when I was single, UM or finding someone to watch Steve when I was going places that didn't accept pets, and uh, I've always had to rely on a mishmash of different

services UM and different platforms to find this. UM. I can understand your popularity, but I wonder if you know the popularity of pets at this point is at a peak because of the pandemic. Arin do you think that we're gonna see, now you know, the need to own a dog kind of decline? Well, I think that if you look at the pet ownership breaks in the U S, they's continued to go up even before the pandemic, and that's a multidecade trend, and the spend per pet continues

to go up. UM. I don't think that coming out of the pandemic is going to reverse that. In a lot of ways, I think having a dog is similar to the emotional relationships sometimes people have with kids, which is like, once you're in your life, you can't imagine your life without them, And so I expect that will be pretty similar that most people once they have their furry ball of joy around them will be tough to imagine life without them. All right, again, I'm not a

pet person. I'm an financial analyst. By the way, someone writes in and says, I didn't realize Paul hated American values dogs in Disney in Disney um, But I have a financial analystis stock analy So talk to me about your business model. How do you make money in the pet business? Sure? So we take a percentage of the transactions going through rover Um, typically a small percentage in the range of on average um and across all of our services is a small percentage. I want to be

in your business. Can you imagine if your stockbrokers that I'll take of every trade? Well, small, I'll say, a minority of the dollars going through How about that? All right? So give us some some of the metrics. Is that a perchase? I mean, well, what are the metrics that really drive your business? Yeah? The biggest thing for our business is the rate of repeats. The business is typically between eight and repeat business in a given month. We don't have to do a lot to drive repeat business.

We have incredible loyalty, so that generates really strong Uh, incremental cash flow dynamics, a new customer acquisition and the rate of repeat are the big drivers of our business UM and then average order value UM. So most people when you travel out of town maybe go for three or four night time average at the mix of some

long trips and some small trips UM. And on average overnight cares you know, roughly thirty to thirty five dollars daytime care like in home daycare and dog walking is about twenty Is there any plans, I mean for expansion. I could think of some markets that need a platform like this. For example, UM, you know, if you want to adopt a dog, pet Finder kind of owns that

market in America. But if you want to um find a breeder, it's really difficult to uh sort through all the web pages and understand who's reputable and who's not. I mean, it seems like there's a lot to be done in this space. And obviously pets is a um an industry in which people are just willing to dump cash. I mean, I will pay whatever it costs for Steve. Yeah. Uh, same with mine. That dog London UM lover to death

and she owns me. Yeah. One of the neat things about our business is that there are actually relatively few scale tech companies in the pet space. The pet industry was associated with dot com access about twenty years ago, so suffered from uh, not as much investment as it

could have had. And so when you think about in the US tech companies that have a direct digital relationship with pet owners in the seven figure range, there's basically two e Amazon and Rover, and we think that puts us in a really nice position to continue to expand our offerings. When we started, we had just two offerings. Both were overnight care boarding, which as you take your dog to someone else's home and house sitting someone comes to your home. And when we rolled out our daytime

services dog walking, drop and visit in home daycare. Aaron Easterly, CEO of Rover, thanks very much. All right, let's turn to cyber security. Let's turn to ransomware. We've seen a lot of ransomware stories this year. Seems like they're running, you know, much more frequently than we've seen in the past. Yeah, exactly, even Microsoft, right, which is like if they can't defend against the cyber attack, and who can It's exactly. It's one thing for like the Paramount Film Studio to get hacked.

It's another thing for Microsoft. Patrick, I'm co founder of Ventures, former head of trust and security at Dropbox and the senior VP, chief Trust Officer of Salesforce joins this Patrick, thanks so much for joining us. Is it my imagination or are we seeing more ransomware stories on corporate America and global uh, you know, corporations. It's not your mantros imagination. Were absolutely seeing more on this, and I would say a lot of it is tied to just the plicans

of the business model. It used to be if you were cyber criminal in the past and you steal information, you have to find them a good place and sell instimate money. But nowadays are the ransomware. It's very simple. Now you point and click and crypt and you can go directly demonetizing by using cryptocurrency. We you know, we really didn't have ransomware before cryptocurrency became a thing. Although I mean, you can't really hide, um where the money

is going with cryptocurrency. Everyone can see on the public ledger, so it seems pretty dumb in a way too. But it was supposed to be you can't trace it, but that was never the case. You literally can trace it better than anything else in the world. I mean, it's

like the most traceable there. There is transparency on the transactions, and there are companies that look at tracing it, but the wallet owners are not known, and there are third party services called tumblers that move it through many wallets,

rapidly splitting transactions to try to anonymize them. So true, it's like shredding a paper, but you can just if you want to spend the time and assume, assuming the CIA and the f I have you know, hired enough employees you or or or you if you want to write a program, you know, Um, it just takes another couple of seconds to do it. It's not I mean, it is the most easily traceable thing in the world.

So clearly, cyber uh, cyber security isn't threatened by crypto, right, it's it's that these hackers have figured out a way to get in. Why can they even get into Microsoft? I mean you were running security at drop Box, You're in the in the tech world. Um at Salesforce. Is there anyone who's unhappable? Nobody is unhappable. Uh. Yeah, At the end of the day, it's a game of statistics. I hate to say the larger the company is, the more likely it is that you will find that one

mistake that was made. If all you're looking for is one mistake, is the bad guy to find that entry point. Once you have an entry point, you start exploring extracting information what's called loving laterally, which is broadening your access across the network to get into more systems until you have enough critical access that you do what you need

to do. So it's an iterative process. It takes some time, but frankly, I think you know, even decades ago, you know it's it became common knowledge, at least among the cyber compassentity that there is no such thing as being perfectly secure. It's all about risk management and prioritization. What do you think corporations should do if it's, you know,

if you really can't prevent a hack? What should be the strategy for some of these corporations As I think about kind of trying to make more their systems more secure, it's I would categorize them into two things. Number one is early detection and the ability to do something about it. When you see an early indication of a breach coming in UM, somebody has gotten into a system, you need to have a timely response for that after you detected, and detection, by the way, is very difficult at scale.

My advice is for the vast majority of companies that can't build twenty four seven in house monitoring UM systems and teams basically outsourced the detection part. You want somebody who's watching your network seven who can have early indicators that something is going wrong and block it at that point in time. The second thing is, you know, let's assume that doesn't happen. You need a plan for resilience. So, you know, let's assume they've gotten in, they moved laterally,

they've encrypted a bunch of information or whatnot. You need to have the ability to continue your business, and that

means being able to recover your information UM. A lot of the advice I give folks given folks even when there was a drop box, is just store things in like a cloud based service like a drop box or a Google Drive or Microsoft share Point, and you know, they can decrypt the or they can encrypt and steal the local copy, but they won't be able to get to the cloud back at the stair at least not very effectively, So that's one element, but of BEE much

more sophisticated than that. It's really building scenarios and testing against them to make sure that you anticipate that something like this is going to happen to your business and that you can continue operations. What are you investing in? You you're starting a v VC fund, What are you looking for? We're looking very broadly. You know, my partners J and I started send Ventures and March efficially we raised the twinter million dollar funds, been actively investing, made

for investments already. Um, honestly, you know, we we differentiate because we're former practitioners. We've been running cybersecurity serve functions inside of large enterprises for twenty some one years and that gives a slightly different perspective. So you know, what we invest in is quite frankly, you know, when we look at it from a CAZO security leaders perspective, we're looking stuff and say, yeah, this would have made our

jobs much easier. This is this is a company I would have bought as a customer in the past, So we're looking through the perspective of buyers ones and obviously certain things like ransomware, super interested, but it's a much broader landscape that we look at really from the lens of people who have been practitioners in space for quite a long time. All Right, Patrick, thanks very much for

joining us. Totally fascinating, obviously totally fascinating topic. Great to hear from Patrick him their co founder of sin Ventures. Now let's talk about investing in Uh well, I guess anti climate change. Investing to stop climate change, I guess is the way to put it. Gabriella Herculano, there's a CEO of i Clama, and she joins us um with

her insights on this and got me. The interesting thing is it's not so easy to understand how to do this correctly, right, because if you want to raise the capital costs of those people or companies who emit too much carbon, you also end up raising their returns thereby giving yourself lower returns. Or I guess if you want to say, I want to take a bet that the government is going to change regulations so that these you know, carbon neutral investments are going to pay off later, that's

also not really moving the needle yourself. So what do you do? Well? Um, Well, first of all, thank you so much. Format for having me. What we do is we look at the companies that can can really transition us, move us away from business as usual based on solutions that are um high on carbon footprint. The the motivation behind all that we do is the idea that the best way to reduce the carbon in the atmosphere is

by not a meeting in the first place. So what are these solutions and how do we provide investors with a direct exposure to that. That's pretty much what we've done. It took us almost two years to put this product together. Um, we think that what we've done is provide exposure to a very comprehensive set of relevance visions. And we have a tangible metric that allows us to determine and ascertain and quantify that relevance, which is potential avoided emissions in

diggatons of field two equivalent per year. So that's a mouthful, but it's that idea that there is a data between the emissions that come from you driving from point A to point B an internal combustion engine and taking an electric vehicle tesla right for for that same need, and that delta is the avoidance and that's where the world needs to go towards we need to go UM to satisfy our needs different UH needs for electricity and needs for transportation, for food, UM, all of those relevant ways

in terms of mitigating climate change. So, Gabby, one of the issues that we've heard from E s G investors is that you know, the amount available data to make informed decisions just really isn't that good. I mean, you know, for typical financial analysis, you want the income statement, to balance sheet, the cash flow statement, but for E s G you need a whole bunch of other metrics and they're not really out there or they're not consistent. How do you guys deal with that? Well, we we took

manage in our own hands. We we we gather the information ourselves. Where a London day is the ginstant tact and in Europe we have what is called EU taxonomy, the companies whom have to report what is deemed to be products and services that are positive in the impact in terms of environmental um changes and benefits. So that very long list of what these products and services are

was a very important UM guideline for us. And what we did was we we we have we developed our own methodology because there was no, nothing remotely close to what we wanted to do in the marketplace. So we vertically integrate. We created our own equity benchmarks. So we triangulated these these UH finding the data on what is green revenue and what is also brown revenue, and surprisingly that data is also not there. Investors that want to

negatively screen struggle to get that information. So we looked at the universe that is in line with these products and services that move us away from the business as usual right like we talked about. So we quantified the green revenue and the brown revenue, and then we we quantified and estimated the potential avoided emissions, which is another very relevant UM influence for us is the framework by mission innovation and what constitutes UH that delta, that potential

avoiding inities. So we quantify. That's why it took us two years because we quantified. We went through all the filings, all the public information for each of the companies are it's about hundred and sixty nins in our universe, and we quantify that information for each one of them. What's the name of the e t F you're launching later this month? UM. We we launched last Wednesday, UM launched too. Yeah, yeah, so launching one on New York Stockaching is great. Launching

too is fantastic. UM it's called i climb a Global Decarbonization Transition Leaders and the iclimbate Distributed Renewable Energy Transition Leaders, which tells what we think is the most exciting story within clean energy space, which is the decentralization of our power systems. So we launched both least Wednesday. All right, all right, we'll pay attention to those certainly going forward, and certainly is G investing is a growing, growing part

of this marketplace, a lot of investor interest. Gabriella Herculano, CEO of I Climate, joining us again talking about E s G investing, and as I said, a lot of folks are really interested in this UM type of investing, and they're really pressing the companies that they own, whether it's in their mutual funds and their et s, about those companies UH efforts on E s G and again

there's lots of metrics, lots of grades. Even on the Bloomberg terminal under the f A function where you have financial analysis, you have income statement balanchee, cash flow statements, all that kind of good stuff. Uh and bloombernk also in that function has E s G data, so we're a big part of that data process right there. You know, I'm looking at Tesla t s l a U S Equity and then I hit b Q to get that

Bloomberg quote. It's my favorite quote on the terminal for security because it gives you just a snapshot of everything. And I'm looking at Tessa right here, and it's up on a trailing twelve month basis, but it's down more than six percent here on a year to day basis. So it feels to me like a stock that's looking for a catalyst for that next move. And they we have earnings for the company and for the close, and so let's get a preview and there's no one better

than Dan Ives for that preview. Dan Ives as a managing director Equity Research at web Bush Securities. He is a proud alumnus of the Penn State University. Matt so goes goes against your buck eyes every year. Dan, thanks for joining us here. Again, I'm looking at the stock, you know, kind of not doing much this year. What do you think is the next catalyst for this name?

And will that catalyst come after the close tonight. Yeah, I mean it's really been about the China story because China is such a windpin to the test of both pieces. That's about deliveries going into next year, and China was chopping at this quarter in terms of pr issue safety. That definitely had, but I'd say a negative impact on demand. Tonight's really about Musk hand holding investors through the rest of the year in terms of the trajectory, what China

looks like and alternately, what deliveries could be. I view it as a positive catalysts. The stocks really under perform this year after what was the story to Yere last year. My view to three years out in the green tidalway, this continues to being one of the best ways to play it. You know, I look through um your recommendations, Dan, and you are just crushing it on every other stock that that you cover. You have a big universe and

you're beating your peers almost across the board. The only I mean, you're still beating your peers on Tesla, but still it's down and you have a thousand dollar price target. What do they do wrong or were they not do that? You expected? What was the unexpected move from Tesla. Yeah, and I think when we make these calls and over the last you know called twenty plus years, I I don't like to look at stocks over a quarter or two, right,

it's the longer term thesis. And I think when you look at tests for the first part of the thesis played out last year, but so far this year, China is underperformed. And that's why the stocks on the perform as long as you know, when when you have all these competitors coming in the e V landscape, from the traditional the GM, FORD, b W to the startups, that's put a perception almost an overhang issue comes down to China. And I think what's been a bit surprising is what

we saw this quarter. I mean China was disappointing early on. I think they started to get their sea legs back, have momentum going the second half of the year, and this will go up and down. With China. We think up. We view it as more of a speed bump rad in the start of a more structural negative. That's why I think we start to hear tonight, Dan, you mentioned some of the new competitors coming into the marketplace, and again the big players, the big oms that we've been

waiting for. How do you think about Tesla going up against the g m s and the vws of the world is a and the Mercedes even you know what, we saw some news recently as they really start to put some serious money behind their e M or e V efforts. Yea. And why aren't they worth that much? I mean, you know, why is GM worth only eight billion? Folkswagen, the biggest carmaker in the world, which has such illustrious brands as Porsche and Audi, They're only worth a hundred

four billion dollars and Tesla's worth six fifty. It's a great question, and that's why. Look it's our view and take a step back. Can you get b W forward and especially GM? I believe a lot of these thoughts over the coming years get rerated, not just today, their auto companies from twather viewed by investors more and more start to get disruptive technology multiple because their success and EVS.

Especially when I look at GM, I think that's a name that could be significantly higher as it gets rerded on the conversion to e V s and and ultimately today automobiles in the US or electric vehicle. So I don't view this as necessarily zero sum game. I think you're gonna see a lot of beneficiary tests, a disproportional beneficiary, but no doubt you are going to start to see some share games from the traditional players as part of

this green tidal wave. Dan, let's focus a little bit on the income statement here, some boring old pen l stuff. Does Tesla make a profit on an individual unit basis just excluding any kind of credits or anything like that, And if not, when you expect that to happen, Yeah, not yet, and and that and that goes to the emotional bold bear thesis. Because of the ev tax credits and because of some of those other talents, that's how

they show profitability. But as we go into the next few years, we believe they will be profitable as a car company, right, not just from an EVY tax credit perspective. And I think it's always been a forest through the tree type name where you have to sort of look out, especially because of China and where we are, especially on the software piece, that you're seeing more and more of

the software upgrades, which flows to the bottom line. That's gonna be a major catalyst for Tesla to really see the green and I think a lot of it is the red and the rearview mirror, and that's been something that we've seen really play out over the last few years. If you go back to what's played out in the in the Tesla thesis, what's your biggest conviction of all the You've got a lot of outperforms here, and granted they've all done really well. Um, which one do you

like the best? It's that company at a Cupertino Apple. I mean that's the one where when I just think about where we are in the upgrade cycle, what i'll call it supercycle thesis going into five G services, that continues to get rerated and I think the year from now we're going at three trillion dollar mark cap, and that continues to be the one along with of course

Microsoft is a core cloud play. It's how you play this tech thesis and really fourth in Dusher Revolution play out all right, Well, never reminds me I need to go get a new iPhone. Actually, that's hey, Dan can He's got these recommendations. He knows how to frame them. I love the a on our page for him. It looks a plus for Dan Eyes from Wedbush Securities, this is Bloomberg. 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 nineteen seventy three. And I'm Fall Sweeney. I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio