Fred Fox: Don’t Just Blame it on the Weather

the planning of various companies from retail to insurance to transportation. Uh. What they try and do is find ways of removing the impact of weather from a company's data so they could create a baseline to look forward and do future planning. And when you turns out that when you do that, there are some really fascinating things you learn. You learn who is impacted by whether it's not necessarily who you

might think. When when you look at the economy in the US is about se consumer spending, and you think how large retail is as a part of that, whether it really has an outsized impact on the overall economy. Now, granted, you may give up sales in February and recapture them in in March, but there are consequences to that, whether it's in the same quarter, whether you're getting the same price,

the same margin, etcetera. It really has a very very significant discount and the impact of weather on online retailers like Amazon is absolutely stunning. You will be shocked when when you hear this. So, with no further ado, here is my interview with Fred Fox. My guest today is Fred Fox. He is the founder and CEO of of Planalytics. Fred has pioneered the development and commercialization of weather analytics

and how this impacts the global supply chain. He advises many of the world's largest corporations UH Previously, he is the inventor of a patent which I think we could call whether nom mix. Is that a short description. He received a BS degree from the Georgia Institute of Technology.

This is really a fascinating subject because, as as we see and have seen over the past couple of years, whether has an enormous impact on the economy, on the basically where people live, how they live, how companies can operate. What first got you interested in this topic? Well, it's great to be here. I left out Welcome to Bloomberg, he apologized, I'm like racing right into this because I'm jazzed about this subject. Well, look, you know you start

with several key facts. One, whether he is the UH on the velope that we all live in and have lived in since mankind first walked upright on the planet, and even before I would say, even be four. So if you look at two days economy, sixty of the world's g MP gross national product it's from consumer spending, and sixty of consumer spending is highly affected by weather.

So when you take a step back, we'll explain that what do you mean six of consumer spending is affected by weather, meaning the ability of we hear it every season. Retailers quarterly numbers, they come out and said, well, winter started late, it's a cold winter, it's a warm winter. It's do you mean that sort of effect or actually moving goods around the world now, actually just just affects, affecting consumer purchasing decisions in a meaningful way. Weather has

that effect still today. And so what I mean is that weather drives need not once. So when we drives needs not once. Okay, So the summer people by swim gear, and the winter they buy heavy coats if they're in that part exactly. So everything that we wear as clothing, most of it has a weather impact, unless it's high fashion. Everything we put on our body, whether it be suntan lotion, anything to do with the eyes, ears, nos face, skin,

all is weather affected. Any any anything we do outdoors, lawn, garden, outdoor hiking activities, all all of those things are highly affected by weather. And so when you look at the impact that weather has on when we buy, how much we buy it, what price we buy it at, weather is involved in all of those purchasing decisions. On an

unconscious level. You have me thinking about the things I purchase, be it be its suntan lotion or the fact that I have a jeep because I live in part of the world where when it snows and you have a regular car, you sometimes ain't going anywhere without. And I'm not a truck guy, but let me tell you, I don't even think twice about snow anymore. All Right, it's gonna slow everything down, but at least I know I could get to where I have to go. Those sorts

of decisions absolutely. And so we know there are seasons. You know, there's fall, uh, spring, winter, summer, but the timing of when those seasons start, where they start affects enormously when and where and how much people buy. So, for instance, uh, this February in the northeast was fairly mild. We had an early start to the spring season, and then March came and March was downright cold, freeze, wet, nasty, and and so spending on normal spring summer stuff stopped

for almost four to five weeks. We had the same thing in the summer. It was a surprisingly cool May and a ridiculously hot June, right, and so April came, April was warm and and and nice, and so consumer spending shot up. And then May came and it was cold and wet again, and so you know what took place in June. Even though June was a nice month to sell, everything was selling at off price because by that point everyone needs to get rid of merchandise or

too late in the season. So while retailers may have sold out of their inventory, they sold a much lower price level than they would have had a sold in March. And so weather has an enormous effect on all of these things. How do you define business weather intelligence? So what we mean by that is really putting weather into a con text that businesses can use and action to

make different types of decisions. And that's what really weather analytics and the world of analytics allows us to do today on a mess scale an affordable basis is to take all this rich data that comes out of the retail and retail supplier industries, mounds of data, and match it with weather so that we no longer have to guess at what our weather impact is today. There's we can know exactly when, where, and how much weather is

driving consumers to buy or not buy. Let's talk a little bit about some of the ways the weather impacts business. I keep hearing these crazy numbers. The eclipse that took place earlier this year was seven millions to a billion dollars in US business. Is that remotely true? It certainly could be true if you assume that all of us took off a few hours of work to watch it. I guess, as I guess it could be the impact of weather, though tends not to be the big storms

that we know. So something like a sandy, yeah, I mean, I mean it's something like a sandy definitely had an impact, but it was very localized and and and it was very short term. In those localized areas, the large impacts come from temperature and precipitation, which are much more spread out over broader areas. So this past March and May when it was cold and wet, it was cold and wet over the eastern half of the US. That's a pretty big area for it to drive versus a big

storm like uh, like a sandy. So so that's surprising to hear. I think of big storms, and I think of sandy. In the New York area, we were out, didn't have power for thirteen days. You see Katrina which reached havoc on a city like New Orleans. But all those things were fairly localized. You're saying, the day to day changes in whether the unexpected or at least drier

than or hotter than, are those the big impacts? Yes, So March probably had about a three billion dollar negative impact on just the d i y industry, meaning people who who do their own home building, their own repairs, their own gardening. Is that that because of all the rain and cold, it really the the laid what people did Now they made a bunch of that back up

in April, but not all of it. That's fascinating. What what are other ways that weather impacts business and the economy that that I think most people don't realize, well, whether in impacts t affic. So the choice to go to a restaurant, it's based on how nice it is outside as well as anything. So rain and lots of rain really dampens no pun intend but but it dampens restaurant traffic. And so the more lower price the restaurant, more in the QSR, the more the impact, meaning that

the higher priced again need versus once. If we're going to a high price restaurant, we may go out during rain exactly where if a little rain should keep you up right, if it's a McDonald's or a sub subway, we probably won't go if it's raining. Uh. Little things like restaurants that have a drive through are less weather impacted than those that don't have a drive through, meaning people don't have to get out of the cars. They'll

drive through it, they'll pick it up there. Exactly about the weather exactly what what about things like rain is easy? What about snow which makes it a will dice you to drive outside? Now the caveat to that as you go to Canton in the middle of January and they're obrevious to it. Exactly. So whether affects people differently based on where they live. So, for instance, a few flakes of snow will shut down Atlanta, Georgia a few. Remember Dallas last year had a brief ice storm. Literally the

entire city was closed. Kills them where if you go up to let's say, uh, Vermont, they're driving in several feet of snow. It doesn't even bother them. So uh. People, let's say in Minneapolis, will buy thermal underwear only when it goes down below let's say degrees and when it starts to sell. But in Florida, they'll start buying it when it's about sixty Thermal underwear in Florida below, yes, because they are used to warmer temperatures, so that slight change is as big an impact as it is in

Minneapolis when it goes below. So let me push back on this theory a little bit. Look, the weather goes The counter argument is cyclical. It's cold in the winter, it's warm in the summer. Aren't people more likely to buy things like overcoats or thermal underwear in northern climates as we head into winter. How much is that really impacted by short time swings in the weather. It's a

lot more than you think. So most people don't buy ahead of a season Most people buy on impulse when they start feeling a certain way, So it's an internal clock that goes off as soon as we feel warm or feel cold. Wet or dry sort of puts off that clock. Oh we have to go and buy this or buy that. So when when when? Uh, when unfavorable weather happens early in the season, it puts off purchases. The more you put off purchases, the more people as you go through the season are likely to put it

off for an entire season. So there's a point at which they say, you know what, I don't really need that overcoade. I'll get through the winter with what I've got and I'll wait till next year, or I'll wait till the they go on sale in the spring. So as far as the way the price game is played, uh, you know, the earlier in the season it sells, they higher the price you're going to get. The later in the season itsels, the lower the price. So it makes

a big impact on profits and margins. That's quite fascinating. So we always hear whether as a go to excuse of CEOs during earnings calls, How legitimate is it? I mean when I hear a retailer say, hey, our sales are soft because it's snowed in the winter. Well, it's supposed to a snow in the winter. Why would your sales be off? How much of this is excuse making and how much of this is a legitimate concern of

companies like retailers. So we always say that whether is a reason for retail performance are Our main message to the industry is that though that you can't manage to what you've never measured. And in a world of big data analytics where you can really analyze any sized data set for very little money, there's no excuse why why companies today can't know and tell the street and investors

precisely how weathers driving them. How do you guys use big data to help companies create those sort of analytics. So it used to be up until a few years ago, that a chief executive could get away with just blaming weather and not be punished for it. And today blaming

weather is just not enough. Our message is that you can now take all of your historical data, sales data, measure it against weather, and come up with a precise model that every day, week, month, quarter, any given time you can know exactly how weather is driving your business.

We had one client I won't name a d I Y group that put out to the street in this that weather really hurt him in the spring, but they didn't explain exactly how it hurt him, and so everyone assumed it was an excuse and their stock dropped mightily as a result of it, and there's still recovering from it. Uh. Those companies that can put out not only the weather drove them, but explain it drove us down by five due to weather in the northeast that hit us here

and at our sales are up here. That can that can really be transparent about it, are going to be rewarded by investors. Uh. Weather can hide as well good fighting natural results. So in in this company's UH example, when you stripped out the impact of weather, their sales are actually way up over last year, but they were against the headwind of climate and weather, so it was really it was really covering up how good that they

were doing. So that sort of information sounds like it would be very helpful for hedge funds trader as anybody who's looking to capture a short term advantage in short term market movements. Raises the question who are your clients aside from some of these big retailers and others. Are you selling this research, these analytics to Wall Street? So uh, we sell obviously to our to all the large retailers

manufacturers globally that they that's our main client base. We do a little bit in in agriculture, and we also sell some of the benchmark research to FI financial firms who are using it for you the other own research, any hedge funds, anybody who's really specifically looking for show me where the data is better but it's masked by by weather. Is that is that a potential client base? It is is a potential client base, It's not currently a big client base of ours. So we're talking about retail.

You have Amazon as the eight pound gulla and gorilla in the room. And when I'm sitting in the comfort of my living room with the fireplace burning, the weather outside almost doesn't matter. How has Amazon impacted your business and is whether significant to them in their seals. I I love the US this point because here's one of the most fascinating things. Amazon and online sales are actually

more impacted by weather than store based sales. I would never have guessed that and I wouldn't have either until we started to look at the data several years ago. And this is this is this is the reason. Again, weather drives need. And when it's a certain type of weather and you suddenly want to buy a certain type of product because of the weather, you still have to get into a car to go to a store to

buy it. So there is a versus picking up your phone, punching in a few points to it, and ordering it in the palm of your hands. In other words, Uh, that need the weather drives can be full filled, quicker, easier, uh through a mobile sale than getting into a car, which gets you to think, do I really want to get into a car to go and buy this? And so mobile sales are actually more weather affected. Uh. To the upside though, it's yes, like so it's bad weather

works to Amazon's advantage. I just saw a data point today. Amazon is now something like of all online sales, some insane number like that bad weather means people are less likely to get into the car and therefore might be more likely to go online and purchase it. Or just good weather. So let's say in February it's warm outside and it's dry, I no one wants to go to a store if you get a spade of good weather.

And so I wanted to plant a orchard in my backyard this year, and my original goal was to go to a dscaper, but I was busy, and so in order to order it because it was warm in February, I went on my phone. I went to an online service and I ordered my orchard online, which then came in March when was cold and wet. That's a that's that's fascinating. Let's talk a little bit about global warming because clearly that's going to have a big impact on

various businesses. How are companies thinking about climate change and what sort of impact does that have on their businesses? So, you know, climate change happens over very long cycles thirty fifty years. Most chief executives are in their job for five years, so it doesn't have a direct in the pact. I think the biggest thing with the climate change that that we always push is is is really knowing how climate is impacting your companies. Most companies today can't measure

and don't know exactly what climate means to them. Really, that is that is shocking to hear one would imagine that especially for companies like transport or insurers, or or anybody who's build building real estate in southern Florida. These things would be significant, they know in general terms, but they've really not modeled. And again our message to market is that you can't uh manage to what you've never measured.

So dealing with climate change, what we say is why we don't know really what that change is going to be. We should know how climate affects our companies as a

first stage. And so what we've built it is an analytical cloud based engine that does just that, that takes an all the data, mixes it with weather and measures it and comes up with an ongoing model that they can know any given time exactly and precisely how weather is impacting their their their group from a financial standpoint, revenue, profits, etcetera. That's quite fascinating. So what percentage of companies are actively engaged in thinking about climate change, in building it into

some of their long term planning. Very few are actually doing it. Some of them are our clients, some of them are not, but very few. A lot of people are talking about it, thinking about it. And you you have to separate the words sustainability from really taking into

account how climate impacts you. So most big companies today do do some type of sustainability, which is great for saving resources, money, clean environment, but very few are actually analytically using their data say O, hey, how how are we really affected by by the weather and they're there before, How can we act differently as a result of it. So we talked earlier about Katrina and Sandy and some

of the other pretty substantial um disasters weather disasters. How do these and remember everybody just has to flash back to this for a few minutes. It was Walt's Well television coverage you couldn't get away from it, at least if you were in the path of of either of those Katrina, even here in New York because the I guess the political component. Uh, you couldn't get away from that. For weeks, there was NonStop coverage of that. What is

the actual impact of these large weather events? Well remembered that. Uh, you know, in the case of Sandy, it hit it hit the New York areas so and hit the hub of media. Uh. These these impacts are large on a very local basis. So obviously New Orleans was devastated, uh by that storm. Uh, New York City and the Jersey Shore was devastated by sandy. But those are fairly small geographical areas. When you look at a national company, uh that is spanning a place like the US that has

on ninety different climate zones. So the maybe the bigger question is when you have these big localized events, does it have any sort of impact on the rest of the country other than a five minute television spot. Does everybody shrug it off and go on? I mean, I know that when when Katrina hit, I didn't stop going out to restaurants, So I'm assuming the rest of the country is the same way. Well, it really depends when it where your businesses are located. So if their spread

out nationally, it has a very large impact. If you if you're concentrated in the Northeast as far as where your revenue comes from when the sandy hit, yes, that has a much larger impact. When you look at companies in Canada, Uh, they are spread out on a national basis, but really it's two cities that matter there the weather in the Terronto area and the weather up in the mont Montal area. Out I would think Vancouver is just as big as either of those But that's much nicer weather,

isn't it. It's much nicer and it's a much smaller number of people. Really, So when you look at a national company, that's I think the third or fourth largest. Calgary is another one. So it really comes down to the weather in those two main markets drive most businesses in UH Canada. So what can companies do to mitigate weather related business risk? The first thing they have to do is to measure it and really understand how is whether driving us UH. Then they have to strip whether

out of their data to normalize it. That normalization reduces volatility, increases forecast accuracy, so it's probably removing weather from last year's data which is messing up their planning. We can increase forecast accuracy anywhere from two to eight on a national enterprise basis, which is huge. And then from an in season standpoint, looking at a week, they have to insert weather into their data so that they can action according to where and when consumer demon is going to

be next week driven by weather. So it seems like we've been making fun of the weather man for for forever. Is forecasting weather getting any better? And I know from my personal experience using the app on the phone. UM, perfect example, I have a concert. We're recording this. I have an outdoor concert tonight. For the past four days, it's supposed to be raining tonight. Only by the time we got till Tuesday night, it poured Tuesday night, and now the sun's out and it's supposed to be really

nice tonight. So how good is weather forecasting? How much better has or worse has it gotten over the years? And can we really look out much beyond a couple of days and make an intelligent forecast. So weather forecasting has improved dramatically over the last three to four decades. Satellites have to help, satellite being able to crunch more data. When I was a kid, Uh, we could forecast out about a day or two. Today we can get a good five day forecast. It's fairly accurate. You can get

seven to ten days out. That gives your pretty good trending that didn't happen even uh twenty years ago. Uh. I think the biggest thing to ask is, now that we have access to so much computing power through the cloud, will that advance weather forecasting out more time? And that's really the work that's being done out there. It's certainly helping to get more more local, so to get more accurate local forecast in one town versus another. There's no

doubt that that is taking place. Whether it gets us out a week or a month or more, I think is yet to be seen. Do we overlook the fact that weather forecasters give us the forecast in terms of probability, and when the probability, hey, the chance of rain turns up? Are we wrong for blaming them for that low probabilistic outcome actually taking place? Well, I think that the profession hurts themselves by giving probabilities, you know I want. I once worked with a man named Irving Crick in in

my youth. Irving crick was Eisenhower's meteorologist chief information officer during the Second World War, and he always taught me never to give probabilities. He said, just tell them what's going to happen and stick by it. You're really going to be right or wrong, he said. Probabilities just give you a cushion, but doesn't really help the user to know what's going to happen. And so from then on and and in fact, in up planelytics, we don't give

any probabilities. We just tell them what's going to happen, tell them how it's going to impact their sales, and we stick by it. What happens when you're looking out and there's certain things that are fifty fifty that there isn't a clear uh likely outcome, Well, in those cases you have to be driven by the data and of course the plane lytics. We don't make our own forecasts. We buy the weather forecast data just like anyone else, uh, and uh what we do is we use that data

to go into our models to forecast sales. Are they going to be up or down? And generally are Our sales models are much more accurate than let's say, just the weather, because we are applying different types of analytics to it to give a client exactly what they need to know, which is how much is weather going to drive us? So you're much more concerned with more extreme events than that sort of partly cloudy sort of day, right, I mean, the part partly cloudy rainy on a day

day basis is not so much driving sales. Is what's happening in the warming or colding or cold versus last year or normal. Those are the things that are really driving people to buy or to not buy. We have been speaking with Fred Fox. He is the chief executive officer and founder of weather analytics company planalytic Us. We love your comments, feedback and suggestions right to me at m IB podcast at Bloomberg dot net. Be sure and check out my daily column on Bloomberg View dot com.

You can follow me on Twitter at rid Holts. I'm Barry rid Holts. You're listening to Masters in Business on Bloomberg Radio. Welcome to the podcast, Fred, Thank you so much for doing this. This is really fascinating stuff for me. Um, Let's let's talk a little bit about about some things we missed that I really wanted to get to. You founded the company in n so you're you're twenty plus years old. What was the original vision? What was the plan?

Because I can't imagine in the mid ninety nineties, with technology booming and the dot coms blowing up, who stopped and says I have an idea, let's do a weather analytics company for data services for businesses. What what motivated that and what was the original vision behind this? Well, we were doing some work at a group called Charming

Shops outside of Philly, their big chain. Are they still around they're not, but they were discount women's fashion, and uh, the ahead of that company, David Wax, who was a good family friend, said, look at our numbers here because they're all up and down. And I'm wondering if it's weather. And I asked everyone around the organization. No one knew, and someone said, why don't you speak to such and such who is a merchant who has been here for

thirty years. And I went to speak to this person and and I was a young guy, and he answered me. He didn't say it, but he said it like the stupid it's the weather. And I got some weather data and we looked at some of their numbers and was just shocked at how how the weather matched their sales, almost one to one. And it gave me an idea that if this is such a big deal and no one's looking at it, this is this is something that

these businesses need to know. And so the the original mission that we started with really hasn't changed, which is to help businesses measure and manage the impact of weather to get to improve their their sales and profits. Did you have any background in weather or meteorology or anything like that. No, No, I went to an engineering school, like graduated from a College of Architecture at at Georgia Tech. I was analytically minded, but it wasn't what I had

set out to do in life. Did you get any push back from friends or family business associates when you said, here's my idea, I want to open up a weather analytics company to help businesses deal with weather. Did anybody look at you like, dude, what are you talking abouh? Lots of people. In fact, a close family friend who who who was very successful in industry, pulled me aside and said, Fred, just remember that when you have your first failure, make sure to get up off your feet

and try again. And I remember saying to him, David, what do you mean you you I think when I fail? He said, no, no, I'm I'm I'm not saying that. I'm just saying that when you have your first failure. Uh. So that was very loud and clear. Note that he didn't think much of what I thought. He was just doing to encourage you. Hey, listen, everybody slips and falls. You have to get up and keep trying. That's interesting, And so what was the original vision when when you

first started mapping this out. How did you see this development? So our original vision hasn't changed, the means by which we're doing it has changed radically, and and and so our vision has been to help businesses uncover how weathers affecting them and to measure it and then provide them the information that they can action and do things differently as a result of knowing how weather is going to affect them next week, next month, next season. What's changed is,

of course, our means of doing it. When we started out in nineties six with Planalytics, the most advanced technology we had was UH Excel that was our analytical platform, as well as UH email. So just a simple spreadsheet, not any big database exactly. We would get the data, we would match it up, we would provide them results in power Point, which was sort of the newest, uh

latest thing around. Then UH we slowly evolve that we raised a lot of money UH in and two oh one to really build out a whole web based platform and tool for presenting the data. UH We we moved from a consulting shot more to a software is a service model in around two oh five and six. And software is a service, so your clients is it a subscription model, so they're subscribing to their service and they can run their data through your engine and deal with

the outright themselves. And then what has really changed our world more than anything else has been me a cloud. So the cloud has allowed us to measure all of the company's data all at once, going as far back as they have, and come up with an enterprise model to how weather affects every bit of their enterprise. We were never able to do that a few years ago. I mean it would have shut down our whole operation, and all of a sudden, the cloud allows you to

do that. So for the first time, we can really fulfill our mission that we started with twenty years ago to now tell companies exactly how they are weather affected and to transform the way that they operate, plan allocate everything due to climate. So let's talk about that transformation, because there's I want to ask you about different sectors.

But before I get to that, I'm a retailer and I live in a part of the I operate stores in the part of the country that is subject to hot and cold and wet and snow and what have you. What what is it that I'm going to do? Two plan around weather events. So there are several things, and that's both preseason, in season and postseason preseason. What we can do is to remove weather from last year's data. Why is that important because the weather only reoccurs about

a time and they've given place and time. So by leaving weather in their data, they're actually having chance that last year won't happen. So by removing it and normalizing it, they can plan from a weather neutral basis, which improves their accuracy tremendously on specific product categories. That can be

as much as twenty forecast improvement just by removing weather vaults. So, in other words, before the season starts, you can say, this is what our sales were like minus the impact of weather last year, and we'll just extrapolate s sent

gain into this year exactly. There's your baseline, right. And then in season, as we start to get the data in from from all the weather forecast models, we didn't put that into our business model that we've built that tells them exactly how much and where weather we'll drive them in terms of dollars and units next few days, next next week, and so that affects how they replenish, how they market how they order. And then postseason, which is looking at from a reporting standpoint, how to weather

really affect us last week? Was it the weather? Was it our marketing? Was it something else? So being able to separate out weather pro provides enormous worth in helping them to know how they are really performing, so whether affects them in all three time zones. And the last thing is because we can do interrupt because we can now do UH enterprise modeling, we now are integrating those

analytics directly into their existing software and RP systems. So we have relationships with a j d A or call all of those firms and we can put that data right into their existing systems. So it's now automatic what we call algorithmic retailing that this can now take place. So retail is pretty obvious. Or one would imagine what other sectors are significantly affected by UM whether I would have to imagine transportation, UM, insurance, what what else is

there an impact? Well, so anyone, uh even so anyone making selling servicing consumer goods, So a manufacturers, retailer's rest aren't small's UH, online or stores all very weather affected when you go outside of the consumer sectors, UH, one of the things that we are working on is a new business your business called I graw Metrics, which is instead of measuring the impact of weather on consumer demand, it is looking at the impact of weather on the

crops globally and really how that affects all the different businesses servicing the agricultural chains. And I have to come back to you just mentioned online and offline. I have to come back to the whole issue of e commerce and weather. What does this mean for for retailers going forward? If e commerce is not only weather resistant but good weather, people don't go to the stores bad weather, they owner online. Uh. Is the impact of weather just driving a further adoption

of of e commerce. Well, Uh, I would say that weather is affecting online sales even more than it affects store based sales, and so as consumers go more online. For for us as a weather analytics company, that's really good news because it means that more and more types of shopping behavior has a higher level of weather impact than the stores. So it's even more important for for these companies to really understand how much weather is driving it.

I'll say it another way too, that when you look at the residual meaning after they've measured everything else, what is the part left they can measure? So what are these groups know now? Well, they can measure rams, they can measure hot products, uh, and they can measure what types of consumers and how advertising works. But the residual comes down to really two things. Price and weather. Those are the two levels that they have. And yet every company out there looks at price, but almost no one's

looking at weather. And yet weather can have a higher impact on their sales than even priced us. So an optimum let's let's imagine an optimum company that is fully adapted to dealing with weather. What are they doing as the weather changes in order to address that, not just the reporting of it, but getting things to consumers and

capturing their attention in response to weather related events. Well, how our clients use it and how others should be using it is to use it again preseason to set what the plan is to allocate to to pre allocate to the stores based on where the demand is going to be. So if you can allocate right the first time,

that saves a lot on inventory uh. And then once you get into the season, being able to replenish the stores ahead to where and when consumer DMan, especially weather driven can consumer demand is give us an example of

weather driven consumer demand. So so right now, if you are a retailer or even a manufacturer going to out of d C, you are only looking backwards if you're not using weather, meaning that you know that you're running out of a certain good and so you want to ship products to your d C s or stores based to make sure that you have stuff on the shelf.

But if you use weather analytics, all of a sudden you have a predictive tool to know not only where your inventory is low, but where the consumer demand is going to be for these products, so you can ship ahead of it to know that, hey, we're going to ship to the Northeast right away, because next week we are showing whether driven demand is going to be up over last year and we're out of products, versus the Southeast where we're out of products too, but whether driven

demand is going to be down cent so we may not be chipping there as fast we we need to run to the stores. Another example is really marketing into waves of weather driven demand. So we know from all of our experience that when you markt into upcoming weather driven demand, you do get greater lift you you get a greater response, so you can actually drive more people to your site, to your stores. I'm making them aware of the right product at at the right time. So

I want to get to our favorite standard questions. Before I do that, I have to ask you've mentioned several things that I just never imagined about. Whether tell me one one more to give me one more example of things that most people, including businesses that should know better, are just holy oblivious to about how weather impacts the economy, different businesses, etcetera. Well, you know, uh, things that you

would think are not whether affected are weather. Fact. One of the products we start analyze a lot a few years ago is a pet food. Pet food tends to be whether affected. See I would imagine pet food is my pet is I have a couple of big dogs. They eat a lot of food. I order that on Amazon, and I do it pretty regularly. I know, all right, I'm two thirds of the way through the bag or

another bag. Why would that be affected by weather? It's because people are buying other things that are affects by weather. So they're going to a site, They're going into the stores to buy more seasonal foods. Seasonal items UH. And what we're seeing is is that there's that there's an impact on weather. It's not as big as let's say, UH shorts or fleece or boots, but we're seeing a one to two percent UH lift or drag due to weather, which for pet foods it doesn't have a lot of drivers.

That's a big one. Give me, give me one more. That's that's quite fascinating. Never would have guessed that, Well, anything to do with restaurant traffic is very weather effected. That the people don't really think through that. You know, we just don't go to to buy food out if it's raining, or if it's very hot, or or what do you do in places like Seattle or London where it seems to rain much of the time. How does

that impact the restaurants or is it more regional? Well, here is the funny thing that when you live in a climate that's always wet, people shop when it's wet and shop less when it's sunny because they they want to be outside. It's it's why the weather impacts on Tampa and Miami, Florida are so different for the same weather and you have to say why they're both in Florida. They're they're both in South Florida. Well, No, Tampa and

Miami have very different demographics. Tampa is a much older group of people in it than Miami, which is younger. So when the weather gets nice in Tampa, shopping goes up because older people are shopping when it's nice. When the weather gets nice in Miami, it's it's it's much younger people. They aren't shopping, they're outdoing outdoor activities. So it really varies by where and when you live. So you're you're you would say, a wetter area like Seattle.

People in the shop when it rains, They'll go to restaurants when it rains. It shouldn't really make any exactly. I have a friend who uh whose company was bought by Yahoo in the nine nineties, and when I had asked him about that um some years later, he said, you know how you adapting to California as a lifelong New Yorker And his answer was, it took us two years to unpack. Why did it take you so long

to unpack? Well, we plan on unpacking each weekend, and each weekend it's nice out, so we would run outside and do outdoor activities. It took us about two years to figure out, Oh, it's always nice out, so we're not gonna miss anything by unpacking. That's the fear. You unpacking on a Saturday, it rains on a Sunday, you ruin your whole your whole weekend. So that that was

jeff story was literally took him two years to to unpack. Um, let's get to some of my favorite questions that we ask AOL our guests tell us, tell us the most important thing that people don't know about your background. Well, I think one of the things that people may or may not know is that I am a a stutterer and that uh and and when I was younger, I pretty much couldn't talk still how old till my mid late teens, and even through college, I had a lot

of difficulties. Uh So I had to overcome that in really everything that I do. And I think that when you have a disability, when you're younger and you are over and that you are able to overcome that disability, and it really set you up differently than others. It gives you a certain fortitude, It gives you certain empathy maybe towards others. So you're a CEO. You're obviously doing sales with different companies. How does that presentation factor impact you?

I mean, you you have to be communicating constantly with people. I have to speak all the time, I have to speak in front of audiences, and uh, you know, I just don't I just don't really let it get to me. So if I think my speech is going off, then I'll take a deep breath and I'll start again. And you just get You just get used to plowing through and doing the best you can. And I do like sales, so it's not that I just have to do sales, but I love selling. So I'm a stutterer that loves selling.

Well that that is quite quite fascinating to tell us about some of your early mentors. You know, I've had a lot of great people. I've been blessed to know great people, starting with my mother and father, who are really still great mentors. My my, my, my, my grandmother, uncle, and aunt all taught me a lot of things about people, ethics, had to deal with people. I mean, I grew up in a household of five, so we were always fighting for attention and food, uh at a table, and and

in work. I've I've worked with just a lot of tremendous people. Irving Crisk, who my first company was was with. I mean working with a World War two guy that knew Eisenhower and worked with him when I was in my twenties. Was was really neat. I've had a lot of people that I've worked with. The who I've hired have become my mentors, So I I like to think that I learned from those who I work with as well. Let's talk about um other and I'm normally if I'm

speaking to an investor, I asked about other investors. But you're a little difficult to pigeonhole. So what sort of data analytics people and or weather people influence your approach

to to your business? You know, one of my the person who who who helped me to get Planets going in nineties six and raise money is uh Howard Morgan, who is the co founder of first Round Capital and has been involved with the Internet really since it's just since in the seventies, so he's sort of become a legend, and I was very lucky to have him as a

person that helped me get the company going. Has been on my board for many years up until a first round capital and he's still still a guy go to for advice and just watching people like that, how they deal with investors, how they raise money, their expectations has been a great guide to me about how to work with in in investors. So this is everybody's favorite question. Tell us about some of your favorite books. They could be analytics or whether related or not, fiction, non fiction?

What are you reading? What do you like? You know, the books has sort of evolved since my youth, so if you you know, if you look at my youth, I loved Iron Ran the fountain Head Atlas Shrug. I love reading about history. The People Disdiscovery of Freedom by or by rose A. Wild. It was a great book I read early on. You know, recently, I just read a great book by Peters and On on Accidental Superpower, and it talks about the US and why why we are the way we are. So history people is really

a love of mine to read. And I think that goes into the to the climate area too, because climate is part of what makes history warming, cooling, drought. I mean that is what has driven mankind and civilization and war is very much to do with how climate drives people. There's a reason why there's there's a lot of shiites in a South Iraq, it's because of the drought cycle

over thousands of years. When there's drought up in the the northern plains of Persia Iran, you know, it drives people down to the lower delta of the euphrates where there's lots of order and food. So just little things like that. Understanding climate allows you to answer part of the why of civilization, people and the nations. That's quite interesting. Um So since you launched planets over twenty years ago, what's changed in the industry. What's the key element that

has altered how you approach this business. Well, there are several key changes. Uh. When I started, whether data had a lot of of worth. Today it has very little UH value because it's become a comodity product, meaning that anyone can get as much weather data as they want. UH that very easily. In the In the States, weather data is a free it's paid for by the taxpayers.

So our ability to access that has become very easy. UH. Analytics, the strides and the ability to analyze huge amounts of data have been revolutionary in just the last twenty years. And and that's why for me. I'm as excited, if not more excited than when we started playing analytics twenty years ago, because the analytics really allows us to full fulfill the mission that we started with in ways that we couldn't even dream of even a several years ago.

So that really leads into the next question, what what are the next major shifts? Is it all technology or what what is going to change going forward? Well, for us, uh, the the certainly the technology cloud computing provides us the ability to what I call weather eyes the entire business world. So we now have the world as our oyster of which to play in, which we didn't a few years ago. So our ability to grow at scale with a single analytics engine and analyze any company anywhere is now upon us.

So we have an incredible opportunity to not only change our company, but to change the entire world how it uses and brings in weather and climate. So that's pretty exciting because you don't get those opportunities to make that big of an impact as we now can do. Uh, There's there's certainly lots of other changes that take place out outside of our little part of the world, but

for us, that's as big as it gets. Well to whether it is all of business for sure, Um tell us about a time you failed and what you learned from the experience. Well, uh, you know, we all failed many times, and it's uh, you know, the key is to get up off the ground, shake it off, and just keep walking ahead. I I remember, uh, after Night eleven, we had raised almost a little less than a year before, a lot of venture money, and we had hired a lot of people, and we were gearing up to really

break open. And then and Not eleven happened and the world stopped. And it's sort of it was pretty obvious that the spend that we had was not going to match our our our growth, and that at some point down the road, about a year down the road, that we would run the money. So I went back to my board and I said, we need to really cut our spend a lot, and we need to look at a different world than when we started a year ago.

Part of my board so that's great, And part of my board wanted to fire me because they said, we didn't put money into Planalytics for you to cut spending. We expect you to spend. And it was a real fight and a real lesson, and I basically said, look,

if you want to fire me, then fire me. But this is what I think and this is what I'm recommending, and more of my board agreed, many agreed with me than didn't, and we ended up taking the company down to about half of our spend, so we put major cuts and were able to really make it through the downturn that lasted a few years. What do you do to keep mentally and or physically fit outside of the office.

What do you do for relaxation or enjoyment? Well, I have an exercise routine that can travel, so anything I can do on the floor to exercise works for me. So just push up, sit up, stretches, uh, anything like that, walking stairs, I found it. If I have to go to a gym that I don't go. So I have a routine I do. As far as relaxation, I had a spending time in my life my kids, especially my five year old daughter, which you know, nothing is more

fun than a five year old girl. Um. What sort of advice would you give to millennials or someone just starting out their career who want to go into some form of data analytics, consulting, or anything involving weather. Well, I would thinks if if I could just go broader a little bit. Uh, you know, the first advice that I would give them is make sure you love what you're doing. You know, life is short, and uh, whatever you do, you better love it. And it doesn't matter

what you're paid. Yes, it helps to be paid a lot, but the more important thing is to be happy. Uh. You know. Another thing that I would say is is to uh, you know, treat treat others as you want to be treated. So as you know it says in the good book Love Love Viticus, you know, love your fellow as yourself. So you know, treat others well and expect to be treated well, and to try to do things that are going to help help the people. Uh

you know. I I also think that I also think that when you're looking at uh what you want to do and where you want to do it, the important thing is to surround yourself with a happy, positive people. So and it's not that we shouldn't try to help those who are down in our luck, but there are people that are just not positive. And I find that, uh, I'm much better off if I hire positive people. If you know, if I'm with positive people, because they're always

a lift. I like that answer, Um, and tell me for our final question, what is it that you know about whether analytics as a business today that you wish you knew twenty years ago when you were starting out. Well, I'm glad I didn't know how hard it would be to make a market because market making is definitely hard. It's also the most most exciting thing that one can do to to educate people, change the way they think, and to provide huge value. So it's not so much

what I wish I knew it. It's it's more about what I've learned, Because if I knew how hard it would be, you would you do what I have still done it? I think I would, but I have to measure that against the benefits I've gotten from really learning and all the great people that I've met in doing it, and more importantly, taking something as a morphous is weather and suddenly putting it into a major company systems that

they're using it every day, planning with every day. That's what really gets our juice is going quite quite fascinating. We have been speaking to Fred Fox. He is the founder and CEO of Planalytics. If you enjoy this conversation. Be sure to look up or down a few inches on Apple iTunes, where you can see any of the prior hundred and fifty or so previous podcasts. I would be remiss if I did not thank all the people

who helped put this podcast together. Medina Partwana is our recording and audio engineer, who makes me sound far better than I actually am in real life. Taylor Riggs is our producer and booker. Michael bat Nick is the head of research. We love your comments, feedback, end suggestions right to us at m IB podcast at Bloomberg dot net. I'm Barry Ritults. You've been listening to Masters in Business on Bloomberg Radio