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Private Credit, Investing, And Cybersecurity · Bloomberg Intelligence

• 0:00
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
• 0:04
  Speaker 1: my co host Matt Miller. Every business day we bring
• 0:06
  Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
• 0:11
  Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
• 0:15
  Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
• 0:18
  Speaker 1: at Bloomberg dot com slash podcast. I want to get
• 0:22
  Speaker 1: to our next guest here, Jess Larson, CEO and founder
• 0:25
  Speaker 1: of Briarcliff Credit Partners. Jess, thanks so much for joining
• 0:28
  Speaker 1: us here. You know, I want to get you know,
• 0:31
  Speaker 1: your view of the private credit business. Give us a
• 0:35
  Speaker 1: sense that like how big private credit is? Is it growing?
• 0:38
  Speaker 1: How is it used within the compital markets? Thank you well.
• 0:43
  Speaker 1: First of all, thank you very much for for having
• 0:45
  Speaker 1: me on and write A credit is already sitting at
• 0:49
  Speaker 1: one point to trillion dollars, so it is. It has
• 0:52
  Speaker 1: really matured and grown since kind of Dart Frank intermediated
• 0:55
  Speaker 1: the banks. So it's been sprinting and growing since two
• 0:58
  Speaker 1: thousand and ten. Now what's really interesting here is that sprinting,
• 1:03
  Speaker 1: that growth is not it is not slowing down by
• 1:06
  Speaker 1: any in any way. So what we anticipate is by
• 1:10
  Speaker 1: so only a few years, two years out it will
• 1:13
  Speaker 1: be at two point seven trillion dollar asset class. So
• 1:16
  Speaker 1: growth is there, it's here to stay. How do I
• 1:19
  Speaker 1: get a piece of that? Because I hear I'm looking
• 1:21
  Speaker 1: at the ten year trading at two point four That
• 1:25
  Speaker 1: doesn't do it for me. I need more yield. I'm
• 1:27
  Speaker 1: thinking about private credit. How do I get exposure? How
• 1:29
  Speaker 1: does the average investor get exposure to the private credit market? Well,
• 1:33
  Speaker 1: depending on whether we talk about the average average consumer
• 1:36
  Speaker 1: or the average institutions, right, But that is exactly you're
• 1:39
  Speaker 1: starting on the on the perfect point here, right is
• 1:43
  Speaker 1: your fixed income is really becoming a no income, and
• 1:46
  Speaker 1: so what you want to do is you want to
• 1:48
  Speaker 1: rotate some of that into your private creditor and in
• 1:52
  Speaker 1: many cases, what's the diary lending asset class? So what
• 1:55
  Speaker 1: that is exactly why we're seeing private credit becoming increasingly popular,
• 1:59
  Speaker 1: right it is? It is for those reasons. Is there
• 2:02
  Speaker 1: a difference between what you're doing and direct lending? Private
• 2:07
  Speaker 1: credit um is a very broad kind of asset class
• 2:11
  Speaker 1: as sub part of that or sub strategy that is
• 2:14
  Speaker 1: direct lending, But there's so much more to private credits
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  Speaker 1: than just doric lending, and that is exactly what we
• 2:21
  Speaker 1: do here at Briercliffe. We look at more n stack
• 2:24
  Speaker 1: to specific uncorelated strategies, that sits outside of direct lending,
• 2:29
  Speaker 1: offering other types of access and exposure to these institutions
• 2:34
  Speaker 1: and to you. But you gotta call me after this program.
• 2:38
  Speaker 1: So what kind of sectors are interesting to you guys
• 2:42
  Speaker 1: at Briarcliffe these days in terms of the credit outlook. Yes,
• 2:48
  Speaker 1: what we have seen over the last five six years
• 2:51
  Speaker 1: which has been really interesting within the private credit space,
• 2:53
  Speaker 1: we have seen direct lending really taken front and center.
• 2:57
  Speaker 1: Bearing in mind leading up to the g f C
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  Speaker 1: it was really mess and distressed for control. That was
• 3:03
  Speaker 1: really what private credit was PRETFC, both CFC and dot frank.
• 3:08
  Speaker 1: It was all about drek lending because the banks simply
• 3:10
  Speaker 1: couldn't offer it. Darren that direk lending is a great
• 3:13
  Speaker 1: asset class, but as more capital comes into it, there
• 3:17
  Speaker 1: has been some compression returns US pension funds and a
• 3:21
  Speaker 1: lot of institutionals here in the US have an internal
• 3:25
  Speaker 1: performance hurdle of seven percent. And if your direct lending
• 3:28
  Speaker 1: is no longer meeting that, you really want to look
• 3:31
  Speaker 1: outside of direct lending. It could be sector specific, it
• 3:35
  Speaker 1: could be different kind of specialty lending. It could be
• 3:38
  Speaker 1: structured products, it could be all sorts of encore lated
• 3:42
  Speaker 1: strategies that kind of gives you more diversification and even
• 3:46
  Speaker 1: higher performance. And that's what we're looking for. Where I
• 3:51
  Speaker 1: guess there's probably no shortage of But where are you
• 3:54
  Speaker 1: getting the borrowers? Well, the borrowers said, well, you know,
• 4:00
  Speaker 1: the majority of our society, of the Georga or economy
• 4:04
  Speaker 1: are really private, privately owned companies. So there is really
• 4:07
  Speaker 1: no shortes of border borrows out there as long as
• 4:11
  Speaker 1: the banks are unable to really service these private companies.
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  Speaker 1: So there are no shortage whether we find them in
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  Speaker 1: the healthcare industry, the food sector, or even the sports
• 4:21
  Speaker 1: clubs or simply even the banks need help with their
• 4:25
  Speaker 1: revolver strategies. There are really no short as of boars
• 4:28
  Speaker 1: out there. But can you do it? I mean, is
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  Speaker 1: it cheaper than a bank? I mean, sorry, an institution
• 4:33
  Speaker 1: going to a bank and selling a bond. Well, for
• 4:38
  Speaker 1: many companies like your restaurant chains, um, the banking finances
• 4:42
  Speaker 1: seem siming not available anymore. Right, And if you want
• 4:46
  Speaker 1: flexible capital and flexible financing. The banking route is simply
• 4:52
  Speaker 1: not possible anymore. So you really need to find different
• 4:55
  Speaker 1: ways of accessing the capital market. And that is why
• 4:58
  Speaker 1: the private credit is not so much about price, it's
• 5:03
  Speaker 1: more about the ability to really get access. Hey, Jess,
• 5:07
  Speaker 1: thanks so much for joining us. Really appreciate that. Jess Larson,
• 5:09
  Speaker 1: CEO and founder of Briarcliff Credit Partners. This is the
• 5:14
  Speaker 1: Big Take, the best of Bloomberg's in depth original reporting
• 5:18
  Speaker 1: from around the globe. We're running on a financial system
• 5:21
  Speaker 1: that's running on old technology. We're seeing places reach fresh
• 5:25
  Speaker 1: recordize what unfolds in mid terms, we will no doubt
• 5:28
  Speaker 1: see again in the next presidential election. The Big Take
• 5:31
  Speaker 1: on Bloomberg Radio. All right, the Big Take story today
• 5:36
  Speaker 1: takes us to the main line of Philadelphia. We're talking Malvern, Pennsylvania,
• 5:40
  Speaker 1: and you can talk Malvern, you talk, uh, you know
• 5:42
  Speaker 1: about Vanguard. They have eight trillion dollars in assets under management.
• 5:47
  Speaker 1: Only black Rock manages more money. But there's change going
• 5:50
  Speaker 1: on at Vanguard. Let's get the latest on that story.
• 5:53
  Speaker 1: Any massive investing reporter for Bloomberg News joins us here
• 5:56
  Speaker 1: with the Big Take story. What's going on in malve In, Pennsylvania.
• 6:00
  Speaker 1: Any So, Vanguard, as you mentioned, is one of the
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  Speaker 1: world's largest asset managers. It's the second largest in the
• 6:07
  Speaker 1: entire world with eight trillion in assets. And it built
• 6:11
  Speaker 1: it was it was founded by Jack Bogel on this
• 6:13
  Speaker 1: principle of low cost study as it goes investing. And
• 6:19
  Speaker 1: they've they've pivoted in some ways as the industry has
• 6:23
  Speaker 1: changed to keep up and to continue competing. So it's
• 6:27
  Speaker 1: really a very unique model in the industry. And it's
• 6:32
  Speaker 1: and they're starting to move into directions that are a
• 6:35
  Speaker 1: little bit different for a place like Vanguard. Uh, places
• 6:38
  Speaker 1: like private equity, for example, which uh steam counter at
• 6:42
  Speaker 1: least to some people to what Bogol's ethos was all about.
• 6:45
  Speaker 1: Gotta be counter to everyone about what Bogel. I mean. Imagine,
• 6:51
  Speaker 1: if you will, someone who changed Wall Street more than
• 6:54
  Speaker 1: anyone else and didn't end up a billionaire. Isn't that
• 6:58
  Speaker 1: the case with Jack Bogel exactly? Uh, Vogel did not
• 7:02
  Speaker 1: wind up a billionaire. He had I think about a
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  Speaker 1: net worth of less than a hundred million dollars when
• 7:09
  Speaker 1: he died, and you compare that against you know, the
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  Speaker 1: billionaires the billionaire Johnson family, for example, of Fidelity Fame
• 7:16
  Speaker 1: a direct competitor to Vanguard, So it's pretty extraordinary. He
• 7:19
  Speaker 1: found in the firm all on the idea of lowering
• 7:23
  Speaker 1: costs year after year for investors and really offering these
• 7:28
  Speaker 1: cheap funds, mostly index funds um and undercutting competitors on price.
• 7:34
  Speaker 1: What's changed in the industry is all the other competitors
• 7:38
  Speaker 1: like black Rock, Fidelity, Charles Schwab had basically no choice
• 7:43
  Speaker 1: but to follow Vanguard and cut their own fees on
• 7:46
  Speaker 1: a lot of funds to the bone as well. And
• 7:49
  Speaker 1: so what Vanguard is seeing now is that it kind
• 7:51
  Speaker 1: of has to move in a different direction if it
• 7:53
  Speaker 1: wants to keep accumulating assets because it's already so large.
• 7:57
  Speaker 1: So that helped precipitate some of the changes, but does
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  Speaker 1: it annie. I mean, the point the reason Bogel died
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  Speaker 1: with only a hundred million dollars roughly is that it
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  Speaker 1: wasn't his endgame. He he wasn't trying to get mega
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  Speaker 1: rich um. He didn't need to to win in Wall
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  Speaker 1: Street terms. He was on a mission to help the
• 8:21
  Speaker 1: average investor. If that's what Vanguard wants to do, um,
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  Speaker 1: do they think private equity products are going to help
• 8:28
  Speaker 1: the average investor perseasely. Well, they say that they can
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  Speaker 1: undercut competitors on price, even for private equity. That we're
• 8:36
  Speaker 1: that kind of rarefied higher fee world. But you know,
• 8:39
  Speaker 1: it is different, it's a it's a it's a bit
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  Speaker 1: of a shift for them. They're also focused a lot
• 8:44
  Speaker 1: on financial advice. And something that UM has has that
• 8:48
  Speaker 1: people have kind of observed is, oh, there are a
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  Speaker 1: couple of funds now that are only for their advice customers. So,
• 8:55
  Speaker 1: you know, is could that be considered counter to Bogel's
• 8:59
  Speaker 1: kind of eat those say as well. So the point
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  Speaker 1: Vanguard's whole rais on detra is still lowering costs. It
• 9:06
  Speaker 1: has this unusual mutualized ownership structure UM, where it's funds
• 9:11
  Speaker 1: owned the firm and therefore the investors in the fund
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  Speaker 1: zone the firm. So it's different from any other kind
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  Speaker 1: of East on Wall Street. But UM, you know, it
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  Speaker 1: has this community of die hard fans called the Bogolheads,
• 9:23
  Speaker 1: and they've observed some of this change happening in some
• 9:26
  Speaker 1: cases raised in eyebrow, and he talked to us about
• 9:28
  Speaker 1: the culture at Vanguard. One of the things that jumps
• 9:31
  Speaker 1: out of me, was they won't pay their people that well,
• 9:35
  Speaker 1: do they? What's the culture there? Right? So, because the
• 9:39
  Speaker 1: firm is so focused on cost cutting and is located
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  Speaker 1: away from Wall Street in this suburb of Pennsylvania, Malvern,
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  Speaker 1: it has a different kind of culture. It has a
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  Speaker 1: very insular culture. UM. It has a culture of Bogol
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  Speaker 1: founded the firm UH with this kind of focus on
• 10:00
  Speaker 1: ship terminology that comes from Vanguards, named after an eighteenth
• 10:04
  Speaker 1: century naval ship. UM. So the staff is called a crew. Um.
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  Speaker 1: They use a lot of nautical terminology. Uh. They're removed
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  Speaker 1: from Wall Street and by most people's accounts, a little
• 10:16
  Speaker 1: bit less hard charging and sharp elbowed as it can
• 10:20
  Speaker 1: be to work at some kinds of competitors. UM. And
• 10:25
  Speaker 1: and because the firm is focused on cost cutting, you're
• 10:28
  Speaker 1: not going to get the kind of dazzling salaries you
• 10:31
  Speaker 1: might be able to elsewhere, because you know, the point,
• 10:35
  Speaker 1: so much of the point of working at Vanguard is
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  Speaker 1: this mission of lowering costs for investors. So to work
• 10:41
  Speaker 1: there you kind of have to buy into that mentality.
• 10:44
  Speaker 1: And UM. One thing we note in the story is
• 10:46
  Speaker 1: that UH typically they pay about a third less than
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  Speaker 1: other major Wall Street competitors as a result, Well, you
• 10:55
  Speaker 1: don't have to pay too much if you're if all
• 10:58
  Speaker 1: you're gonna do is I the SMP in a basket
• 11:02
  Speaker 1: and hold it until you die, right, which is kind
• 11:05
  Speaker 1: of what Jack Bogel used to a spouse. Um. So
• 11:09
  Speaker 1: it's interesting. I mean, I don't need much advice for that, Annie,
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  Speaker 1: I just you know, I just gave it, that's right.
• 11:16
  Speaker 1: So that's another interesting thing Vogel. Vogel's real adherents are
• 11:21
  Speaker 1: very do it yourself kinds of investors. When you talk
• 11:24
  Speaker 1: to people who are in the Bogol Heads community, many
• 11:27
  Speaker 1: of them independently came to Bogel's philosophies, read his books,
• 11:31
  Speaker 1: and became almost religiously devoted to his principles about making
• 11:38
  Speaker 1: sure that you're paying very low fees and just you know,
• 11:41
  Speaker 1: buying the market um through index funds, letting it compound
• 11:44
  Speaker 1: over times. They're they're very, very focused on that. So
• 11:48
  Speaker 1: that's another way that the shift to advice could be
• 11:52
  Speaker 1: seen as a little bit different from what Bogel had
• 11:56
  Speaker 1: had previously preached. All right, Annie, thank you so much.
• 12:00
  Speaker 1: We appreciate that. At a note, Annie and your piece,
• 12:03
  Speaker 1: you quote Eric Balcunis and analyso Bloomberg Intelligence. He's got
• 12:07
  Speaker 1: a new book out. It's author it's called The Bogel Effect.
• 12:11
  Speaker 1: Uh So talks about Bogel's life and influence. So any
• 12:15
  Speaker 1: quoted Mr Balcunis in there. Maybe we'll get Eric on
• 12:17
  Speaker 1: at some point to talk about his book and his
• 12:19
  Speaker 1: thoughts and what he discovered about these huge fund down
• 12:23
  Speaker 1: in suburban Philadelphia. Any massive industry reporter for Bloomberg News
• 12:28
  Speaker 1: with a big take story today, you can find that
• 12:30
  Speaker 1: on Bloomberg dot com, Slash Big Take or ni Space
• 12:34
  Speaker 1: Big Take go on the Bloomberg terminal. Interest rates they're rising, inflation,
• 12:42
  Speaker 1: it's rising, the economy it's slowing. What is an equity
• 12:46
  Speaker 1: investor to do? Hugh Robert's head of analytics at quant Insights,
• 12:49
  Speaker 1: joins us. Hugh, I guess i'd love to get your
• 12:53
  Speaker 1: thoughts about these markets here, given some of the notable
• 12:57
  Speaker 1: headwinds we have out there, What is your take? Well, interestingly,
• 13:03
  Speaker 1: on our models, Although you have a lot of scary
• 13:06
  Speaker 1: headlines out there, and I totally get the narrative that
• 13:10
  Speaker 1: that people are looking at, I've actually just seen a
• 13:13
  Speaker 1: bounce which made complete sense on our modeling work. The
• 13:16
  Speaker 1: way the pattern of association between smp MASDAK, Russell and
• 13:23
  Speaker 1: macro factors is as long as the said are relatively
• 13:27
  Speaker 1: measured with their rate hiking campaign, and as long as
• 13:30
  Speaker 1: that measurement involves you know, none distruction to credit spreads,
• 13:35
  Speaker 1: no big risk of music regards to VIX, and actually,
• 13:38
  Speaker 1: on current patterning, there's no reason why this has to
• 13:41
  Speaker 1: be bad for US equity markets. The key that we're
• 13:44
  Speaker 1: really watching is the relationship with credit spreads and also
• 13:48
  Speaker 1: the level of real yields. So I think the game
• 13:50
  Speaker 1: changing will be if the fends campaign starts to continue
• 13:54
  Speaker 1: to see real yields moving higher and even start threatening
• 13:57
  Speaker 1: to move into positive territory, then you can have original change.
• 14:00
  Speaker 1: But for now, equities are actually doing what they should
• 14:03
  Speaker 1: be doing given current map for patterns. YA really ills
• 14:08
  Speaker 1: right now are negative fifty three basis points on the tenure.
• 14:12
  Speaker 1: Um uh. But the question is um, I guess we
• 14:19
  Speaker 1: could still go into a recession and equities could be fine, right.
• 14:22
  Speaker 1: I mean, it doesn't always have to mean that we
• 14:25
  Speaker 1: have losses on indexes. Because the economy contracts for two
• 14:29
  Speaker 1: quarters in a row. I think that's a really fair comment,
• 14:32
  Speaker 1: I al really do. And also I think just to
• 14:34
  Speaker 1: take a step back on that, I think the Keith
• 14:36
  Speaker 1: in now is is that the information narrative is everywhere.
• 14:40
  Speaker 1: Everyone knows the dynamic around inflation, even the last residaws
• 14:44
  Speaker 1: of tin transitory. I think they're who were still hanging
• 14:47
  Speaker 1: in there at the beginning of this year. Comfort in
• 14:49
  Speaker 1: Ukraine's gonna killed those guys off, and and people aren't
• 14:52
  Speaker 1: looking at transitory at all. But I think the big
• 14:55
  Speaker 1: question now to your point, is if it's stagnation that
• 14:59
  Speaker 1: could on extaglation and inflation, that's actually not necessarily a
• 15:03
  Speaker 1: bad regime for equity market. Um, if it's proper staculation
• 15:08
  Speaker 1: while we're talking about a real kind of hard landing
• 15:11
  Speaker 1: and inflation, then yes that's different. But at the moment, yes,
• 15:15
  Speaker 1: there's lots of reasons if you look at kind of
• 15:17
  Speaker 1: credit impulse and what the yield curve is doing to
• 15:20
  Speaker 1: to to fear a hard landing, but we're not actually
• 15:23
  Speaker 1: seeing there in the data as yet. So again I
• 15:25
  Speaker 1: think at the moment there's lots of headline reasons to
• 15:29
  Speaker 1: scare equities, but on the analysis that we're seeing at
• 15:32
  Speaker 1: the moment, they're largely behaving if they should be all
• 15:35
  Speaker 1: right you So, if if I'm as Tom Keenelix say,
• 15:39
  Speaker 1: have the courage to be in the market, in the
• 15:41
  Speaker 1: equity markets, what are some of the sectors that you
• 15:43
  Speaker 1: guys are focusing on these days. Well, the most interesting
• 15:47
  Speaker 1: one is that we have the ability to fill of
• 15:49
  Speaker 1: look at the standard investment plot. You know, whether an
• 15:52
  Speaker 1: asset to booming bust goldilocks, and what's the kind of
• 15:55
  Speaker 1: macro regime that it's in and at the moment the
• 16:00
  Speaker 1: looking at the index the global index level, the one
• 16:03
  Speaker 1: that stands out is that the NASDACK has the strongest
• 16:06
  Speaker 1: probity sentsitute to inflation and has a modest but negative
• 16:11
  Speaker 1: sentstitute to growth. I it's okay with the weaker growth,
• 16:15
  Speaker 1: so that the area really us big tex. I think
• 16:18
  Speaker 1: you have to be careful obviously spectech and nonprofitless names,
• 16:23
  Speaker 1: but big tech actually has some nice defensive properties here.
• 16:27
  Speaker 1: If you believe that we're going to go into extaflationary environment,
• 16:31
  Speaker 1: what would you stay away from in general? I'm not
• 16:34
  Speaker 1: asking for a specific company that you hate. Yeah, I mean,
• 16:37
  Speaker 1: I guess at the end of the logic would obviously
• 16:40
  Speaker 1: be cyclicals and we know that a lot of people
• 16:42
  Speaker 1: rotated into value trades earlier this year. UM, if you're
• 16:47
  Speaker 1: going to get a hard landing, then clude that to
• 16:49
  Speaker 1: the obvious play for you. Other people will pointed the
• 16:54
  Speaker 1: flattening and the curve in the normal relationships pursued with
• 16:57
  Speaker 1: with TEX. There will be a lot of debate I
• 16:59
  Speaker 1: think on the whole kind of ros versus final rination.
• 17:02
  Speaker 1: For us right here, right now, tech it the best
• 17:04
  Speaker 1: place to play. UM. Energy obviously is a classic cyclical blade.
• 17:09
  Speaker 1: But you know, I just think one commodity markets are
• 17:11
  Speaker 1: doing what they're doing, even if it's a six coal play,
• 17:14
  Speaker 1: you wouldn't want to be under exposed to energy just
• 17:17
  Speaker 1: because of the underlying commodity shifts and the supply demand
• 17:20
  Speaker 1: and alex that are out there at the momentum. So
• 17:23
  Speaker 1: I guess that would leave the more classic cyquical things
• 17:25
  Speaker 1: that be like consumer discretionary. UM financials is a value play,
• 17:30
  Speaker 1: but obviously if rates are going higher, that should be
• 17:33
  Speaker 1: doing well. And a lot of financial models on our
• 17:35
  Speaker 1: framework are in the regime that they are behaving in
• 17:39
  Speaker 1: a kind of in a strong macro trading environment that
• 17:43
  Speaker 1: they are lagging slightly. So it probably put consumer discretion
• 17:46
  Speaker 1: we have of both XLF and actively here. What do
• 17:49
  Speaker 1: you make of the destruction we've seen in the bond market.
• 17:52
  Speaker 1: I mean it's been the worst quarter for global bonds
• 17:55
  Speaker 1: in my lifetime. Um, what does that mean. It's brutal,
• 18:01
  Speaker 1: isn't it. It's really brutal, and I think it's only
• 18:03
  Speaker 1: now be challenged by the end um. They've seen the
• 18:05
  Speaker 1: last couple of trading days and the two are fighting
• 18:08
  Speaker 1: between them. UM. I think the thing is with the
• 18:12
  Speaker 1: bond bear market is I think on this occasion now,
• 18:15
  Speaker 1: a lot of people are making good money on it. Um.
• 18:18
  Speaker 1: I think if you look at the commitment of traders stuff,
• 18:20
  Speaker 1: you look at a lot of the kind of cell
• 18:22
  Speaker 1: side positioning surveys. You know, it's been easy to make
• 18:26
  Speaker 1: a bare res duration argument for some months now. So
• 18:30
  Speaker 1: I think performance stats for your typical multi asset fund
• 18:35
  Speaker 1: will actually be pretty decent. And yes, the price action
• 18:37
  Speaker 1: is horrible, UM, but I don't think everyone will be chronic.
• 18:42
  Speaker 1: All right here, thanks so much for joining us. Love
• 18:45
  Speaker 1: getting your thoughts there. Hugh Robert's head of analytics at
• 18:47
  Speaker 1: quant Insights. All right, let's go to Christie Why because
• 18:55
  Speaker 1: I want to talk cyber security. We're seeing that continue
• 18:58
  Speaker 1: to be a big issue for individuals, for corporations, for
• 19:03
  Speaker 1: states slash countries. Christie Wyatt, CEO and president of Absolute Software, Christie,
• 19:09
  Speaker 1: you know, we we kind of look at all the
• 19:10
  Speaker 1: news coming out of Ukraine and Russia and you know,
• 19:12
  Speaker 1: one of the areas where we're seeing some disputes in cybersecurity,
• 19:17
  Speaker 1: cyber warfare. Just give us a sense kind of where
• 19:22
  Speaker 1: the average American company or average American is in terms
• 19:27
  Speaker 1: of dealing with cybersecurity. It seems like we're still many
• 19:29
  Speaker 1: steps behind where the bad guys are. Well, sorry, excuse me,
• 19:34
  Speaker 1: I think it's it's a great question, um, but I
• 19:37
  Speaker 1: think we're always going to feel that way. I think
• 19:39
  Speaker 1: that cyber is one of those risk landscapes where things
• 19:42
  Speaker 1: are going to continuously evolve and we're always going to
• 19:44
  Speaker 1: feel like we're just a little bit behind. I do
• 19:47
  Speaker 1: think that the average enterprise in in the US that
• 19:51
  Speaker 1: we see today is pretty well protected, meaning that they've
• 19:55
  Speaker 1: been thoughtful about what kind of controls they need in place.
• 19:58
  Speaker 1: I think the missing pieces do they have perfect visibility
• 20:01
  Speaker 1: of whether those things, the technologies are actually installed in
• 20:04
  Speaker 1: working and protecting them, especially now when we know that
• 20:07
  Speaker 1: we're all sort of shields up right, we are all
• 20:10
  Speaker 1: on standby waiting to see what happens. Yeah, exactly, Um,
• 20:14
  Speaker 1: what what should I be doing? What should we all
• 20:16
  Speaker 1: be doing? As you know private citizens? M Is there
• 20:20
  Speaker 1: anything beyond two step verification? Oh? Gosh, the average the
• 20:25
  Speaker 1: average enterprise UM business, so large business will start with them.
• 20:29
  Speaker 1: You know, they have between ten and twenty security applications
• 20:32
  Speaker 1: running on every computer that there are ways are using.
• 20:34
  Speaker 1: So there's a lot more than multi factor authentication, and
• 20:37
  Speaker 1: clearly the smaller the organization, the less of those you have.
• 20:40
  Speaker 1: I would say there's really three things that you that
• 20:43
  Speaker 1: we should be thinking about. First is have we been
• 20:45
  Speaker 1: thoughtful about, um, what applications are appropriate for your side
• 20:50
  Speaker 1: of business? Multi factor authentication? Encryption? The second thing is
• 20:54
  Speaker 1: you know do do I know what I'm going to do?
• 20:56
  Speaker 1: Is something that happens successful cyber attack? They're happening with
• 21:00
  Speaker 1: phishing emails, things that a user clicks on, and so
• 21:03
  Speaker 1: they're bound to happen no matter how much training you're doing.
• 21:06
  Speaker 1: Do you know what you're going to do next? Um?
• 21:09
  Speaker 1: And that leaves me to my third thing, which is
• 21:11
  Speaker 1: just training. Have you talked to your employees. Have you
• 21:13
  Speaker 1: talked to the people around to the people you care
• 21:15
  Speaker 1: about and said, do you know what phishing looks was?
• 21:17
  Speaker 1: Do you know what what bad things look like when
• 21:19
  Speaker 1: they're happening? Will you recognize it? And will you know
• 21:22
  Speaker 1: kind of what to do? So, I mean, one of
• 21:25
  Speaker 1: the things that we've noticed as pandemic is people were
• 21:27
  Speaker 1: spending a lot more time working from home, learning from home.
• 21:31
  Speaker 1: It seems like there's more and more data information going
• 21:34
  Speaker 1: into the clouds. The cloud inherently safe. Do you believe
• 21:41
  Speaker 1: I think that. I mean, clearly, we would not see
• 21:44
  Speaker 1: the migration of data into the cloud if we didn't
• 21:46
  Speaker 1: feel comfortable with the level of security there. I don't
• 21:48
  Speaker 1: think that's really where you're risks. Never say never, But
• 21:53
  Speaker 1: the overwhelming number of attacks that we see are actually
• 21:56
  Speaker 1: happening on the end points. They're happening on the computer
• 21:58
  Speaker 1: that the user is using as a way to facilitate
• 22:01
  Speaker 1: getting access to the data. And that data could be
• 22:03
  Speaker 1: on the cloud, or in the data center, or on
• 22:05
  Speaker 1: the computer itself. And so the endpoint is the place
• 22:08
  Speaker 1: to focus. It is what people touch, and especially as
• 22:11
  Speaker 1: you pointed out, because everybody's at home and so you
• 22:15
  Speaker 1: have fewer layers of security available to you. You can't
• 22:19
  Speaker 1: there's not network monitoring. These devices are not surrounded. They
• 22:22
  Speaker 1: could be sitting on a home network, and so that
• 22:25
  Speaker 1: user and those applications you're installing on that device on
• 22:27
  Speaker 1: your last line of defense. It does seem like it's
• 22:31
  Speaker 1: just gonna be too easy. I mean, I've I, you know,
• 22:37
  Speaker 1: watch for this stuff and nonetheless have been either scammed
• 22:41
  Speaker 1: or almost scammed like two or three times this quarter. Um,
• 22:46
  Speaker 1: they're just so good, they're so good at it. You know,
• 22:49
  Speaker 1: I had a for example, I had a call from
• 22:54
  Speaker 1: purportedly Verizon. They knew my name, my address, they asked
• 22:58
  Speaker 1: for my sociald A uh, you know, the last four
• 23:02
  Speaker 1: digits of course, and they knew exactly how much my
• 23:05
  Speaker 1: bill was to the penny at that moment. So they
• 23:09
  Speaker 1: clearly they have access to data and then they use
• 23:11
  Speaker 1: it to get that That's not the kind of attack.
• 23:14
  Speaker 1: I guess we're concerned about what do you think the
• 23:15
  Speaker 1: Russians will be able to do if they hit us
• 23:19
  Speaker 1: as hard as they can. So if someone was going
• 23:22
  Speaker 1: to try to disrupt an economy or a community, they're
• 23:26
  Speaker 1: going to attack critical infrastructure they're going to go after
• 23:28
  Speaker 1: financial services, communications, power, and energy, and so it is.
• 23:33
  Speaker 1: You know, it is perhaps um innocuous. It could be
• 23:37
  Speaker 1: a we said the breach We thought octo a couple
• 23:39
  Speaker 1: of weeks ago, with a support rep or somebody who
• 23:42
  Speaker 1: had access to do support controls accidentally clicking or getting
• 23:45
  Speaker 1: access to their credentials and then being able to use
• 23:48
  Speaker 1: that to do other things. And so it could look
• 23:51
  Speaker 1: as simple as what you just described, right. It could
• 23:53
  Speaker 1: look like your Verizon bill where they're just trying to
• 23:55
  Speaker 1: collect information from you. It could look like, um, somebody
• 23:59
  Speaker 1: is asking you to verify a payment that is missing
• 24:02
  Speaker 1: or insurance. Internally, within organizations, we see a lot of
• 24:06
  Speaker 1: attacks where people are getting approached that looks like an
• 24:08
  Speaker 1: executive is asking them to do something. You know, please
• 24:11
  Speaker 1: go you know, please go log in and do this thing,
• 24:13
  Speaker 1: or please go get this money and sent it over here. Um.
• 24:17
  Speaker 1: The thing to remember, whether you're a user at home
• 24:19
  Speaker 1: or whether you're an employee trying to do your job
• 24:22
  Speaker 1: at work, is they're not really going to call you. Guys.
• 24:24
  Speaker 1: It's never going to call you and say hi, I'd
• 24:26
  Speaker 1: like to talk to you. Please give me all of
• 24:27
  Speaker 1: your data. The easiest thing to do is to say,
• 24:30
  Speaker 1: you know, to not respond to the email, to not
• 24:32
  Speaker 1: to that call, and then just call them and then
• 24:34
  Speaker 1: say did you try to reach me? And and so
• 24:37
  Speaker 1: don't click all right, Christie, thank you so much for
• 24:40
  Speaker 1: joining us there. Christie Wyatt, the CEO and president of
• 24:42
  Speaker 1: Absolute Software, Thanks for listening to the Bloomberg Markets podcast.
• 24:48
  Speaker 1: You can subscribe and listen to interviews of Apple Podcasts
• 24:51
  Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm
• 24:55
  Speaker 1: on Twitter at Matt Miller three. Put on False Whinnie.
• 24:59
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• 25:02
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