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Weight Watchers Wants To Own The Healthy Kitchen: CEO Grossman · Bloomberg Intelligence

• 0:05
  Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox.
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  Speaker 1: Along with my co host Lisa Abramowitz. Each day we
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  Speaker 1: bring you the most important, noteworthy, and useful interviews for
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  Speaker 1: you and your money, whether you're at the grocery store
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  Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. It
• 0:33
  Speaker 1: has been one of the hottest stocks this year. Wait Watchers. Yes,
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  Speaker 1: Weight Watchers Chief executive Mindy Grossman joins us here in
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  Speaker 1: our eleven three oh studio. MINDI thank you very much
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  Speaker 1: for being here. You know, before we get into the
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  Speaker 1: details of the company and and you're rolling out, I
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  Speaker 1: want to just get your thoughts on something because I
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  Speaker 1: was looking at a couple of the recent press releases
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  Speaker 1: and it does most of the recent stuff does not
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  Speaker 1: say how to lose weight. It's not about weight loss.
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  Speaker 1: It is about healthy lifestyles. And I want to mention
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  Speaker 1: one particularly, maybe get your thoughts on this, because you
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  Speaker 1: just recently did a deal and it's called w W
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  Speaker 1: Healthy Kitchen, and I wonder if you could use that
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  Speaker 1: as an example of how the whole conversation about health
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  Speaker 1: and wellness and weight loss is changing in the United
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  Speaker 1: States absolutely, PAM. When we announced our new purpose and
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  Speaker 1: vision of we inspire healthy habits for real life, for people,
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  Speaker 1: for families, for communities, the world, for everyone. That's really
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  Speaker 1: about holistic approach to what you put in your body,
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  Speaker 1: how you move your body, and how you think. And
• 1:39
  Speaker 1: as part of doing that, we made some real decisions
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  Speaker 1: about not just what we would do, but what we
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  Speaker 1: wouldn't do. So we announced we're getting out of any
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  Speaker 1: products that have ever had our name on it, that
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  Speaker 1: if anything artificial or preservative, and that we really wanted
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  Speaker 1: to own the healthy kitchen in food, in products, in
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  Speaker 1: content and recipes, and in chefs. So we recently announced
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  Speaker 1: a partnership with Fresh Realm for fresh quick prep meals
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  Speaker 1: that will be in grocery. We also announced a partnership
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  Speaker 1: with Gibson for a whole line of products we just
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  Speaker 1: launched at the Chicago Houseware Show UM to help you
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  Speaker 1: cook healthier with your family in the kitchen and not
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  Speaker 1: just in your kitchen. And we announced our first chef
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  Speaker 1: Ambassador UM to be able to reflect and make all
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  Speaker 1: these healthy recipes. So Chef Eric Greenspan, interestingly enough, was
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  Speaker 1: known as the King of comfort cooking um, and we
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  Speaker 1: were able to share his recipes of everything from shrimp
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  Speaker 1: and grits for four points. But the most important thing
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  Speaker 1: is to give people the tools and to give them
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  Speaker 1: the education and inspiration to lead healthier lives. And we
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  Speaker 1: were talking a little earlier that we know that when
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  Speaker 1: someone in the family does Weight Watchers, the whole family
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  Speaker 1: actually has a benefit and gets healthier because everything we
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  Speaker 1: do fits into your life. There's nothing you can eat,
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  Speaker 1: it's just learning the habits that's going to help you.
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  Speaker 1: So anything we can give people provide people to do that.
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  Speaker 1: And then the last and why it was so important.
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  Speaker 1: We also know that one of the most valuable things
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  Speaker 1: for our members consumers is time. So if we could
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  Speaker 1: give them the ability to have a great meal that
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  Speaker 1: they can prepare and under fifteen minutes, that is going
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  Speaker 1: to give them the points going to fit into their life.
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  Speaker 1: And they could do it for one, they could do
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  Speaker 1: it for two, they could do it for four. This
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  Speaker 1: just makes me think how much fads change because I
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  Speaker 1: think of ultraslim fast shakes uh and how that was
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  Speaker 1: the popular treatment. Give me a bar I can eat
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  Speaker 1: and make me lose weight. Now it's about wholeness and
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  Speaker 1: wellness and purity and and and these other things. I'm
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  Speaker 1: just wondering how concerned you are. I mean, yes, your
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  Speaker 1: shares have been on a run up more than so
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  Speaker 1: far this year. How concerned are you that you're getting
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  Speaker 1: into a territory that competes directly with Amazon, with Blue Apron,
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  Speaker 1: with some of these other brands. We have to remember
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  Speaker 1: this is not our only business. This is a product
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  Speaker 1: extension that we think will not only service our existing
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  Speaker 1: members but others as well. Number one, number two. Just
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  Speaker 1: because we're going to enhance our offerings to include other things,
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  Speaker 1: we will undeniably continue to be the number one authority
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  Speaker 1: globally unhealthy weight loss UM and it's still very much
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  Speaker 1: an acute need for people around the world. I always say,
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  Speaker 1: everybody is talking about health and wellness UM the wellness economy.
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  Speaker 1: Nobody wants to be on a diet, but nobody is
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  Speaker 1: getting healthier, and we have a crisis in obesity. So
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  Speaker 1: we know that weight loss is still going to be
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  Speaker 1: an important component for us UM, and we have the
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  Speaker 1: science behind it our Chief Scientific Officer, Academic Advisory Board
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  Speaker 1: UM that is really an important element and science informs
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  Speaker 1: everything we do, and that undeniably is a real differentiation factor.
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  Speaker 1: Tell people how did weight Watchers begin, because that may
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  Speaker 1: also be a little bit of an eye opener because
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  Speaker 1: it wasn't about selling products at the beginning. Yeah, it's
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  Speaker 1: really interesting. The two core tenants of weight Watchers from
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  Speaker 1: the very beginning was what you put in your body,
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  Speaker 1: the food, and more important, it was about community, which
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  Speaker 1: instill inherently is a core of what we do. Was
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  Speaker 1: g Nightitch starting in her home and bringing people together
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  Speaker 1: to inspire each other. And today community is more important
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  Speaker 1: than ever, so that whether that's our digital community within
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  Speaker 1: our app call connect Um, or whether it's our physical
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  Speaker 1: meetings we have uh just in the United States alone
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  Speaker 1: fifteen thousand meetings a week, globally thirty thousand meetings a
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  Speaker 1: week UM and our three and a half million members
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  Speaker 1: are also all engaged in the app. And what we
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  Speaker 1: have found today when we talk to consume humors, inspiration
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  Speaker 1: is as important, if not more important, than education. So
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  Speaker 1: what's the main obstacle? You said, people are getting less healthy,
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  Speaker 1: not more. Why So I'm asked all the time who
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  Speaker 1: our competition is, and I said, our greatest competition is
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  Speaker 1: people thinking they can get healthy themselves. Um, and they
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  Speaker 1: need a partner, and they need someone to give them
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  Speaker 1: the tools and the education and the support along the way.
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  Speaker 1: Only five percent of people use a commercial weight loss program.
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  Speaker 1: Yeah but no, like very few day back in the fifties.
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  Speaker 1: But what's happening? So I think that there's a lot happening.
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  Speaker 1: I think people lead very frenetic lives. They're not necessarily
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  Speaker 1: preparing understanding what they need to do to be healthier. Um,
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  Speaker 1: how can they support their family? And and that's why,
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  Speaker 1: you know, I think globally people need a partner in
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  Speaker 1: health and that's what we're trying to do. Just talk
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  Speaker 1: a little bit about some of the numbers, because I
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  Speaker 1: know you've got a target by you want to do
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  Speaker 1: two billion. I believe, yes, right, How is it to
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  Speaker 1: have Oprah Winfrey behind you in order to reach that goal? Look,
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  Speaker 1: Oprah has been a fantastic board member, and she's been
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  Speaker 1: an incredible partner to me since I've been at the company. Um,
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  Speaker 1: and she's very engaged and that's terrific. But what is
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  Speaker 1: really important is that all the fundamentals of the business
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  Speaker 1: continue to be enhanced. If you look at our member growth.
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  Speaker 1: If you look at our retention him, it's the highest
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  Speaker 1: levels it's ever been. So the more we can give
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  Speaker 1: our customers what they want, our members what they want,
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  Speaker 1: not just in terms of our program, but in terms
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  Speaker 1: of personalizing the journey for them, giving them more tools
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  Speaker 1: and content, um, giving them products and what we've said
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  Speaker 1: to reach that number, we want to have at least
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  Speaker 1: five million members in our program, touch another five million,
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  Speaker 1: because it's the ripple effect that's really going to get
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  Speaker 1: us there. Mindy Grossman, thank you so much for being
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  Speaker 1: with us. Mindy Grossman, she executive officer of weight Washers,
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  Speaker 1: based in New York. Facebook started the day on a
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  Speaker 1: soft foot. That foot has only gotten softer. Here to
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  Speaker 1: talk about what exactly is driving the losses that are
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  Speaker 1: now nearly seven percent on these shares is our own
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  Speaker 1: Paul Sweeney, who is head of North American Research for
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  Speaker 1: Bloomberg Intelligence and joins us here in our eleven three
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  Speaker 1: oh studios. So, Paul, what's the narrative driving this at
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  Speaker 1: this point? Because earlier today it was just fear of
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  Speaker 1: ambiguous regulation. But these are pretty big losses. Yeah, this
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  Speaker 1: is this is impacting the tech sector across the board
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  Speaker 1: and I think the reason we're seeing it obviously if
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  Speaker 1: the Facebook news brings it to the forefront, and what
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  Speaker 1: it brings to the forefront is I think a long held,
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  Speaker 1: long term risk or concern that even the bullish tech
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  Speaker 1: investors have in the back of their minds that UM,
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  Speaker 1: regulatory risk is something that the industry really needs to
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  Speaker 1: think about as it continues to consolidate and get bigger
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  Speaker 1: on a global scales. So I'm really talking about the names,
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  Speaker 1: the fang names, the facebooks, the Amazons, the Googles and
• 9:05
  Speaker 1: netflix is as they become you know, even larger in
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  Speaker 1: terms of market cap and global reach. I think even
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  Speaker 1: the most bullish investors would say, you know, that is
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  Speaker 1: inviting more regulatory scrutiny around the world. We already see
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  Speaker 1: the regulatory oversight um, I think coming to the for
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  Speaker 1: a little bit more in Europe. UM. But now I
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  Speaker 1: think this is bringing a little bit closer to home
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  Speaker 1: with the Facebook news. Well, but aren't there already oversights
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  Speaker 1: in terms of the kinds of content that can be
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  Speaker 1: deemed criminal or illegal? There are and UM, and I
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  Speaker 1: think Facebook will tell you that they have pretty good controls,
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  Speaker 1: as would a Google, and uh, a Netflix and anybody
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  Speaker 1: to whom you entrust a lot of personal information. Um.
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  Speaker 1: But I think what we're finding out here from some
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  Speaker 1: of the Facebook news is it's not necessarily the Facebook
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  Speaker 1: per se, but it's uh, and what they do with
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  Speaker 1: your information is but what other users might do with
• 9:55
  Speaker 1: that information to the extent they get access to it.
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  Speaker 1: So in the case of Facebook, here, it's really a
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  Speaker 1: question of Facebook, do you really know what information do
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  Speaker 1: you you have? Do you really know who has access
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  Speaker 1: to that info? That's an issue of internal control. And
• 10:07
  Speaker 1: if you deem that that information has been stolen, that's
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  Speaker 1: a criminal act. And if you can find the person
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  Speaker 1: or person's organization, you can actually go after them. So
• 10:16
  Speaker 1: it would Can it be in the same category as
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  Speaker 1: a data breach from Equifax or having your personal information stolen,
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  Speaker 1: let's say from a healthcare provider? Yep, Absolutely, it's the
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  Speaker 1: I think it's very very similar, um. And I think
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  Speaker 1: what's interesting about and why I think the Facebook is
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  Speaker 1: getting such a big news today because it's it's personal information. Uh,
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  Speaker 1: it's information that you're freely sharing with other people, but
• 10:39
  Speaker 1: you choose to to whom you're sharing that information. And
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  Speaker 1: I think the the issue here is consumers aren't really
• 10:45
  Speaker 1: sure about what's happening to their information. And but I
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  Speaker 1: think they always consumers always felt like Facebook did. Facebook
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  Speaker 1: understands where the information is, what safeguards are on it,
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  Speaker 1: who can get access to it. But now it appears
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  Speaker 1: that Facebook maybe doesn't have the level of control over
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  Speaker 1: the information that maybe we we thought. Um, this is
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  Speaker 1: a breach that happened a couple of years ago. Um.
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  Speaker 1: So again, it just kind of brings to the forefront, Uh,
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  Speaker 1: some of the issues about personal data privacy issues, which
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  Speaker 1: are very important around the world, but most notably in Europe.
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  Speaker 1: The regulators are most aggressive there. Uh So again that
• 11:17
  Speaker 1: you know, nothing can stop these stocks. It seems like
• 11:19
  Speaker 1: they continue to put up extraordinary financial results. Um And
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  Speaker 1: this might just be a pullback or short term pullback.
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  Speaker 1: We've seen this before. But again, I think the most
• 11:27
  Speaker 1: bullish investors would even tell you in the back of
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  Speaker 1: their minds of the biggest long term risk that they
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  Speaker 1: see in some of these big tech stories is regulatory risk.
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  Speaker 1: And here's just the latest example of that. So I
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  Speaker 1: want to pick up on that this could just be
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  Speaker 1: a buying opportunity in the long run. And uh, certainly
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  Speaker 1: these shares have sleft off or shrugged off last the
• 11:47
  Speaker 1: last like what ten such scares that we've gotten in
• 11:51
  Speaker 1: this manner. But what's the What's what's the one thing,
• 11:55
  Speaker 1: the event, the development that you're looking for that would
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  Speaker 1: show you that we really are at an inflection point.
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  Speaker 1: It's if it's just I think Congress gets involved here
• 12:03
  Speaker 1: and if you know Congress or UM you know, brings
• 12:05
  Speaker 1: Mark Zuckerberg to Washington, d c. Tis to get in
• 12:07
  Speaker 1: front of some committee here. And so that's a turning
• 12:10
  Speaker 1: point Mark Zuckerberg testifies in Congress inflection point, it is, Yes,
• 12:14
  Speaker 1: it would be, and his performance in front of Congress
• 12:16
  Speaker 1: would also be you know, very closely watched because to date,
• 12:19
  Speaker 1: the big tech companies have generally avoided that level of
• 12:22
  Speaker 1: scrutiny here in the US UM for good reason, because
• 12:26
  Speaker 1: the tech industry has been a you know, a bell
• 12:28
  Speaker 1: weather industry for this country and a tremendous creative jobs
• 12:31
  Speaker 1: and technologies and and all the great stuff UM, and
• 12:33
  Speaker 1: so they've generally avoided a lot of the regulatory um
• 12:36
  Speaker 1: issues that some other industries have had to deal with.
• 12:39
  Speaker 1: But that may be changing a little bit on the margin. Again,
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  Speaker 1: I think what's happening here. What's different here from say
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  Speaker 1: the Google's or even the Microsoft of twenty years ago,
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  Speaker 1: is that this is personal information of individuals. Um. That
• 12:51
  Speaker 1: you know, that type of information wasn't necessarily shared freely
• 12:54
  Speaker 1: or available freely with other technologies. But that's what's a
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  Speaker 1: little bit different here with the social media companies. Um.
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  Speaker 1: And I think that's what we're seeing here today in
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  Speaker 1: the market. Well, is it just that the social media
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  Speaker 1: companies now become just like as I said, Equifax, Heartland
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  Speaker 1: Payment Systems, Yahoo, eBay, uh JP, Morgan Chase, t j
• 13:14
  Speaker 1: x Uber. I mean, all these companies have had data breaches.
• 13:17
  Speaker 1: The U S Office of Personnel Management, I believe they
• 13:20
  Speaker 1: were talking about something like personal information about twenty two
• 13:23
  Speaker 1: million current and former federal employees was hacked. Yeah, and
• 13:26
  Speaker 1: I think it very much is. And it's it's you're
• 13:28
  Speaker 1: gonna I think you're going to see the facebooks of
• 13:30
  Speaker 1: the world and the Googles of the world, uh, you know,
• 13:32
  Speaker 1: be more public about the investments they're making in securing data. Um.
• 13:38
  Speaker 1: But I think what's what's interesting here and what's I
• 13:40
  Speaker 1: think spooking some people is that you think about some
• 13:42
  Speaker 1: of the information that people put into their social networks. Um,
• 13:45
  Speaker 1: and uh, it's it's you know. One could argue maybe
• 13:48
  Speaker 1: it's not as important as your SO security number. Uh,
• 13:52
  Speaker 1: it could be you know, very Uh, it could be
• 13:54
  Speaker 1: some sensitive in information. I think that's kind of what
• 13:56
  Speaker 1: some people are concerned about. Just quickly, I would be
• 13:59
  Speaker 1: remiss if we didn't turn our attention to Apple because
• 14:01
  Speaker 1: there was a Bloomberg News story talking about how they're
• 14:04
  Speaker 1: planning to develop their own display screens and direct competition
• 14:08
  Speaker 1: with Samsung, replacing the ones that they had used previously
• 14:10
  Speaker 1: from them. Is this important to you because it seems
• 14:14
  Speaker 1: to build on the impression that Apple is trying to
• 14:17
  Speaker 1: bring as many things in house as they can. Yeah,
• 14:20
  Speaker 1: it is. It's. Um, you know, I spoke to on
• 14:21
  Speaker 1: a Trinivaston, who who covers technology for for Bloomberg Intelligence,
• 14:25
  Speaker 1: and he said, yeah, this is just another example of
• 14:27
  Speaker 1: of Apple, you know, looking to bring certain critical aspects
• 14:30
  Speaker 1: of their manufacturing capabilities and their technology technology capabilities in house. Um.
• 14:36
  Speaker 1: You know, they are such a big buyer of so
• 14:38
  Speaker 1: many of these components on that I think that this
• 14:41
  Speaker 1: is you know, part of the diversification of kind of
• 14:43
  Speaker 1: their supply chain. A little bit also because a technical issue. Uh.
• 14:47
  Speaker 1: This is according to the story, this is about something
• 14:50
  Speaker 1: called a micro led technology which is different than the
• 14:54
  Speaker 1: old bology and it's it's more challenging to produce it
• 14:58
  Speaker 1: is and and UH think the real question will be
• 15:01
  Speaker 1: for Apple over the next couple of years as they
• 15:02
  Speaker 1: continue to develop this technology, do they license the manufacturing
• 15:05
  Speaker 1: of this technology out to an existing manufacturer or do
• 15:08
  Speaker 1: they keep it in house. That that will be the
• 15:10
  Speaker 1: real decision point for them, and to the extent that
• 15:13
  Speaker 1: they view it as very critical to the supply chain,
• 15:15
  Speaker 1: they may at least initially keep it in house. I
• 15:18
  Speaker 1: want to thank you very much for spending time with
• 15:19
  Speaker 1: us as always. UH. Paul Sweeney is our US director
• 15:23
  Speaker 1: of Research and our senior Media and Internet analyst for
• 15:26
  Speaker 1: Bloomberg Intelligence, giving us an update on Facebook. A U
• 15:45
  Speaker 1: S Circuit Court has struck down the Labor Departments Produciery Rule,
• 15:49
  Speaker 1: dealing a blow to the retirement savings regulation that has
• 15:52
  Speaker 1: been in partial effect since last June. Here to tell
• 15:57
  Speaker 1: us more about this is Elliott Wise Bluethy is the
• 15:59
  Speaker 1: founder and the chief executive of High Tower Advisors, help
• 16:03
  Speaker 1: to manage about fifty billion dollars of customer assets. They're
• 16:07
  Speaker 1: based in Chicago. Elliott, thank you very much for being
• 16:09
  Speaker 1: with us. Just a quick review. The Labor Department has
• 16:13
  Speaker 1: not responded to a request for comment about this. And
• 16:17
  Speaker 1: this was a split decision in the first in the
• 16:19
  Speaker 1: Fifth Circuit Court, and it talks about how this rule
• 16:22
  Speaker 1: requiring managers a pension fund money to be fiduciaries. The
• 16:26
  Speaker 1: rule they said is unreasonable. Now that that may be
• 16:30
  Speaker 1: legally unreasonable, but you have your your own thoughts about
• 16:34
  Speaker 1: whether the rule itself is worthwhile for investors. Tell us
• 16:38
  Speaker 1: your perspective the broader the broader context here is why
• 16:43
  Speaker 1: we're even having a discussion about whether or not the
• 16:47
  Speaker 1: client's interest should be first or not. And the fact
• 16:50
  Speaker 1: that there's a discussion that's been going on, frankly for years.
• 16:54
  Speaker 1: You know, it's just an example of how you can
• 16:57
  Speaker 1: have different commercial influences from Wall Street and big banks.
• 17:01
  Speaker 1: You can have a relatively ineffective regulatory judicial system that
• 17:07
  Speaker 1: allows some of those interests to get momentum and obstruct
• 17:11
  Speaker 1: a very simple concept that there should be a single standard,
• 17:15
  Speaker 1: uniform duty that when an individual interacts with a financial
• 17:19
  Speaker 1: advisor the same way you interact with an accountant, or
• 17:22
  Speaker 1: you interact with a doctor, you have a reasonable expectation
• 17:26
  Speaker 1: that that service provider is putting your interests first, and
• 17:30
  Speaker 1: any confusion or discussion around that should suggest that somebody
• 17:35
  Speaker 1: else in the mix has an interest, and that's a
• 17:38
  Speaker 1: commercial interest, that's that's going to come in front of
• 17:41
  Speaker 1: the client's interest. And we would find that to be
• 17:44
  Speaker 1: very upsetting if this was a medical discussion. You know,
• 17:48
  Speaker 1: if you were if you and I were talking about
• 17:50
  Speaker 1: a ruling that said a doctor, you know, had to
• 17:53
  Speaker 1: follow the Hippocratic oath, you know, Monday, Tuesday, Wednesday, and Thursday,
• 17:57
  Speaker 1: but on Fridays they could represent a drug company ways
• 18:00
  Speaker 1: and put put their own economic interest first and not
• 18:03
  Speaker 1: the patient's interest first. We wouldn't we wouldn't have an argument,
• 18:06
  Speaker 1: But in our industry, we're having that argument, Elliott, Just
• 18:09
  Speaker 1: to push back a little. One thing that financial advisers
• 18:12
  Speaker 1: have argued is that they are unable to sometimes give
• 18:16
  Speaker 1: the advice that they think is best to clients under
• 18:19
  Speaker 1: the new rule because there is something more complicated about it,
• 18:23
  Speaker 1: or it might be a higher fee type of offering,
• 18:27
  Speaker 1: but you know, it might be lucrative down the line,
• 18:29
  Speaker 1: but they don't want to be even uh, potentially seen
• 18:32
  Speaker 1: as having a whiff of a conflict of interest. How
• 18:35
  Speaker 1: would you respond to that, Yeah, I think I think
• 18:38
  Speaker 1: that's a little bit of a of a disingenuous argument.
• 18:43
  Speaker 1: I think that if you have a service provider whose
• 18:46
  Speaker 1: job it is to put the client's interrust first, and
• 18:49
  Speaker 1: you're getting compensated as a service provider, and you're doing
• 18:53
  Speaker 1: the best job that you can, and you're educated and
• 18:55
  Speaker 1: you're trained, and you're focused on what you believe is
• 18:59
  Speaker 1: in your clients best interest, that's a duty that a
• 19:03
  Speaker 1: thoughtful service provider should take on. It's no different than
• 19:07
  Speaker 1: when an accountant reads the new rules for for an I. R.
• 19:11
  Speaker 1: S ruling, or interprets how to handle your taxes, or
• 19:14
  Speaker 1: the way of a medical professional handles the complexity around
• 19:17
  Speaker 1: giving medical advice. In the business of giving advice, you
• 19:22
  Speaker 1: have to shoulder the responsibility of thinking about how does
• 19:27
  Speaker 1: your advice impact the clients. And in the areas of
• 19:30
  Speaker 1: money and finance, there's a high degree of speculation because
• 19:34
  Speaker 1: obviously the markets and the and the way you interact
• 19:37
  Speaker 1: with money can be highly speculative. But that shouldn't undermine
• 19:41
  Speaker 1: the responsibility that the service provider has to put the
• 19:45
  Speaker 1: client first, not the service provider's own economic interest. And
• 19:49
  Speaker 1: that's I think where this argument gets a little bit
• 19:52
  Speaker 1: muddled is if you're not putting the client's interests first,
• 19:57
  Speaker 1: then whose interests are first? And if it's your own
• 20:01
  Speaker 1: interest or it's your employer's interest because of conflicts of interest,
• 20:05
  Speaker 1: then we're getting to the root of the matter, which
• 20:07
  Speaker 1: is not allowing the client to come first, instead allowing
• 20:11
  Speaker 1: a commercial interest of the business to come first. And
• 20:14
  Speaker 1: that's that's what we started High Tower in two thousand
• 20:17
  Speaker 1: and seven under the very simple premise that the client's
• 20:20
  Speaker 1: interests should come first, period and there shouldn't be an
• 20:23
  Speaker 1: argument about it. And and Eliott, just to be even
• 20:26
  Speaker 1: perhaps clear about this, it is not necessarily about whether
• 20:30
  Speaker 1: a specific investment is more or less expensive than another investment.
• 20:35
  Speaker 1: All of that could be part of it, but it's
• 20:38
  Speaker 1: it's just being upfront about what you think is in
• 20:41
  Speaker 1: the client's best interest. Here's how much I may or
• 20:45
  Speaker 1: may not make because I'm recommending it or not recommending it,
• 20:49
  Speaker 1: and this is how I get compensated. Is that accurate
• 20:52
  Speaker 1: as exactly right? Tim So if the if the client
• 20:55
  Speaker 1: is bearing the cost of the investment, which in a
• 20:58
  Speaker 1: fiduciary relationship, whether it's a very modestly priced a product
• 21:04
  Speaker 1: like an et F or a product that may have
• 21:07
  Speaker 1: higher fees like a hedge fund, the cost of that
• 21:10
  Speaker 1: investment in a fiduciary relationship is borne by the client,
• 21:15
  Speaker 1: and the financial advisor gives advice around whether or not
• 21:19
  Speaker 1: the the the appropriateness of that product makes sense. But
• 21:23
  Speaker 1: the financial advisor is not getting compensated as part of
• 21:27
  Speaker 1: the underlying cost of the product unless there's a conflict
• 21:31
  Speaker 1: of interest, and that's that's what where where people are
• 21:33
  Speaker 1: not are not having candid and open conversations. Elliott wise Blue,
• 21:37
  Speaker 1: thank you so much for joining us, founder and chief
• 21:39
  Speaker 1: executive officer of High Tower Advisors, overseeing about fifty dollars
• 21:43
  Speaker 1: from Chicago after spending a few months on a space
• 22:00
  Speaker 1: ships circling around the Earth and perhaps heading towards Mars.
• 22:03
  Speaker 1: Susanne Barton joins us here in our eleven three of studios.
• 22:06
  Speaker 1: She's a commodity reporter for Bloomberg News, and she just
• 22:10
  Speaker 1: wrote a story that feels like it is straight out
• 22:14
  Speaker 1: of Star Trek, and perhaps she hasn't really been traveling
• 22:17
  Speaker 1: around the world in a spaceship. But this story sort
• 22:22
  Speaker 1: of seems like you have Susanna lay it out. Why
• 22:24
  Speaker 1: are people looking to mine asteroids high Um? Well there
• 22:31
  Speaker 1: everyone knows that about you know, Elon Muskin and Jeff
• 22:34
  Speaker 1: Bezosen and Branson, and they're spending tons of money on
• 22:37
  Speaker 1: on space travel. But there was another emerging space industry
• 22:41
  Speaker 1: and people actually think that this will allow them to
• 22:44
  Speaker 1: make tons of money. And it's it's mining asteroids in space.
• 22:47
  Speaker 1: It's mining asteroids for for two things. One water um,
• 22:52
  Speaker 1: which is very valuable when you're in space because it
• 22:54
  Speaker 1: helps to make rocket fuel. And the other reason is
• 22:57
  Speaker 1: for metals, metals that we mind here on Earth. Um.
• 23:02
  Speaker 1: Some people think that at some point we're gonna run
• 23:05
  Speaker 1: low on iron or nickel or cobalt at some point
• 23:09
  Speaker 1: in the future, and so the question is, well, where
• 23:13
  Speaker 1: do we get the next stock of these metals? And
• 23:16
  Speaker 1: people think we can find them on asteroids. And if
• 23:19
  Speaker 1: they're able this niche industry, if they're able to do this,
• 23:23
  Speaker 1: then they believe that it's going to make them tons
• 23:25
  Speaker 1: of money. What is the Osiris rex Uh spacecraft and
• 23:30
  Speaker 1: how does this figure into the story. Well, the Osiris
• 23:33
  Speaker 1: Rex spacecraft. It's um, it's it's it's a mission that's
• 23:38
  Speaker 1: being overseen by by NASA, and it's really going up
• 23:42
  Speaker 1: to this asteroid called Benu, and it's it's one of
• 23:46
  Speaker 1: the first that's actually first US missions that's actually going
• 23:50
  Speaker 1: to go there. Um. They're gonna test four samples off
• 23:54
  Speaker 1: off water and potentially metal on on this on this asteroid,
• 23:59
  Speaker 1: and the spacecraft is actually gonna bring this sample back
• 24:03
  Speaker 1: to Earth in about so um in a couple of months.
• 24:07
  Speaker 1: In a few months, it'll start taking pictures of the
• 24:10
  Speaker 1: asteroid because it'll be moving closer to it, and then
• 24:12
  Speaker 1: it will arrive um uh sometime later this year and
• 24:17
  Speaker 1: going into next year. So logistically, I'm just trying to
• 24:21
  Speaker 1: wrap my head around the complexity of mining a moving,
• 24:26
  Speaker 1: hurdling rock and who knows what else object through space.
• 24:32
  Speaker 1: I mean, how does that happen? How do they do it? Well,
• 24:36
  Speaker 1: they take the spacecraft, Well, the spacecraft goes to the
• 24:39
  Speaker 1: asteroid and it extends these long arms and it's it's
• 24:45
  Speaker 1: sort of it takes literally seconds, just a few seconds,
• 24:49
  Speaker 1: to get tons of the different samples of materials from
• 24:53
  Speaker 1: the asteroid. Then it puts it in a capsule, it
• 24:55
  Speaker 1: sort of locks it up and then in a couple
• 24:58
  Speaker 1: of years it'll bring it back to Earth. Scientists will
• 25:01
  Speaker 1: take a look at it and and study it to
• 25:03
  Speaker 1: see what's really on that asteroid. Um. They do think,
• 25:06
  Speaker 1: you know, a lot of these asteroids have metal at
• 25:09
  Speaker 1: least um, iron at least sign and and they certainly
• 25:14
  Speaker 1: have water. So they'll be doing more tests to figure
• 25:16
  Speaker 1: out where they go from there. Now the effort is
• 25:19
  Speaker 1: uh you mentioned this, This effort is going to return
• 25:23
  Speaker 1: some of the samples to Earth. But I thought it
• 25:26
  Speaker 1: was interesting that a lot of the focus is on
• 25:29
  Speaker 1: using these raw materials but keeping them in space, and
• 25:34
  Speaker 1: that would dovetail with missions to Mars and also keeping
• 25:41
  Speaker 1: humans in long long duration spaceflight exactly. So it's it's
• 25:45
  Speaker 1: really an emerging industry and people these companies will actually
• 25:49
  Speaker 1: at some point be manufacturing UM different work tools, UM
• 25:54
  Speaker 1: probably UH satellite parts and antennas in in space, so
• 26:00
  Speaker 1: they really at some point will not have to come
• 26:02
  Speaker 1: to Earth to make these UH antenna's. They will be
• 26:05
  Speaker 1: able to make them up there. There. There's a company
• 26:07
  Speaker 1: there and now that has sort of what's called a
• 26:10
  Speaker 1: three D printer that actually prints the different parts of
• 26:14
  Speaker 1: of of satellites of UM antennas for use there in space.
• 26:19
  Speaker 1: Who's financing this since it seems like the returns won't
• 26:22
  Speaker 1: be felt for her realized rather for perhaps I don't
• 26:26
  Speaker 1: know what, twenty years right, um So, it's a lot
• 26:30
  Speaker 1: of private equity money. Um there's one company called Planetary Resources,
• 26:35
  Speaker 1: there's another called the Deep Space Industries, and they do
• 26:39
  Speaker 1: have um financing from Branson and even that there's a
• 26:44
  Speaker 1: tiny nation in Europe which wants to be the space
• 26:47
  Speaker 1: hub of Europe called Luxembourg, and they've put tons of
• 26:50
  Speaker 1: money into doing this. So you won't find the typical
• 26:54
  Speaker 1: institutional investor chasing down these companies. Maybe through private equity
• 26:58
  Speaker 1: firm Well yeah maybe that. Um So, so that's where
• 27:02
  Speaker 1: primarily the money is coming from. The money it's also
• 27:04
  Speaker 1: coming from ten Cent, Yeah, yeah, that Chinese billionaire. Yes,
• 27:10
  Speaker 1: he certainly has been putting some effort and some money
• 27:12
  Speaker 1: into this. And who do we know whether this is
• 27:16
  Speaker 1: currently going to be who is a launch facility for this?
• 27:20
  Speaker 1: In other words, you've got to send these things into space.
• 27:23
  Speaker 1: Is this going to be SpaceX or do we know
• 27:26
  Speaker 1: whether it's going to be United Launch Alliance? Um SpaceX
• 27:30
  Speaker 1: primarily well people this little emerging space industry. They expect
• 27:35
  Speaker 1: that SpaceX will actually be very very helpful in in
• 27:38
  Speaker 1: creating this new ecosystem in space because they will be
• 27:42
  Speaker 1: carrying cargo and human beings to space, and you know,
• 27:46
  Speaker 1: they do expect that they'll be doing more frequently as
• 27:49
  Speaker 1: the years go by. Thanks very much, as susan part
• 27:51
  Speaker 1: in our commodities reporter for Bloomberg News. Fascinating story and
• 27:55
  Speaker 1: interesting development. When it comes to mining, you'll be able
• 27:58
  Speaker 1: to mind things in space and they might even stay there. Well.
• 28:05
  Speaker 1: Thanks for listening to the Bloomberg P and L podcast.
• 28:08
  Speaker 1: You can subscribe and listen to interviews at Apple Podcasts, SoundCloud,
• 28:12
  Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm
• 28:15
  Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa Abramo.
• 28:19
  Speaker 1: It's one before the podcast. You can always catch us
• 28:22
  Speaker 1: worldwide on Bloomberg Radio.