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Private Equity Fees Are Ripe For The ’Vanguard Effect’ · Bloomberg Intelligence

• 0:02
  Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul Swinge. You.
• 0:05
  Speaker 1: Along with my co host Lisa Brahma Waits, each day
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  Speaker 1: we bring you the most noteworthy and useful interviews for
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  Speaker 1: the trading floor. Find a Bloomberg penl podcast on Apple
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  Speaker 1: Podcast or wherever you listen to podcasts, as well as
• 0:17
  Speaker 1: at Bloomberg dot com. Well, the Wall Street Journal is
• 0:25
  Speaker 1: reporting that Vanguard Group held preliminary talks with private equity
• 0:29
  Speaker 1: firms as it considers offering alternative investments to its clients.
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  Speaker 1: To get the latest returned to Eric call Tunist. Eric
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  Speaker 1: is a senior et f annalyst for Bloomberg Intelligence based
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  Speaker 1: in Princeton, New Jersey. Eric, thanks so much for joining us.
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  Speaker 1: What do you think Vanguard is doing here as it
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  Speaker 1: takes a look at the private equity space. Yeah, I
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  Speaker 1: think a lot of people when they first look at this,
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  Speaker 1: they think they're going to offer mutual funds right for
• 0:51
  Speaker 1: the masses, But this is a little different. What the
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  Speaker 1: story really taps into, in my opinion, is the growing
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  Speaker 1: advisory businesses Vanguard. Vanguard has five trillion a little more
• 1:03
  Speaker 1: than that, actually in fund assets, but it's only got
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  Speaker 1: about a hundred billion in advisory assets. This is money
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  Speaker 1: that it gives a tax. Advice manages your portfolio, but
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  Speaker 1: that's a growing business of theirs, And what they're what
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  Speaker 1: they're looking at is, hey, we're advisors now and we
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  Speaker 1: offer obviously exposure to public markets, but we see that
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  Speaker 1: there's less companies going public, they're waiting longer. Private equity
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  Speaker 1: is where there's a lot of wealth to be made.
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  Speaker 1: Potentially we could offer this to those clients, at least
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  Speaker 1: the ones that pass the accredited investor test, which most
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  Speaker 1: retail investors I think that use Vanguard would uh, And
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  Speaker 1: so it's in my opinion pretty logical. The private equity
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  Speaker 1: market is expected to grow their skating to where the
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  Speaker 1: puck will be. The interesting part is will they be
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  Speaker 1: able to offer it in vanguardian fees? Right now private
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  Speaker 1: equity fund could be one or two percent, if not more.
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  Speaker 1: Vanguard is used to offering funds at ten basis points.
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  Speaker 1: So yeah, that's a big question mark, but certainly it's
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  Speaker 1: not surprising, especially in the post Vogel Vogel Vanguard is
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  Speaker 1: a little more aggressive. Well, I want to pick up
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  Speaker 1: on exactly that point the whole concept of fees here,
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  Speaker 1: because Vanderguard is the indexing giant, They're really the ones
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  Speaker 1: with John Vogel, who really came up with the idea
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  Speaker 1: of a low fee type of funds that just tried
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  Speaker 1: to track the market performance. Uh. They arguably have been
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  Speaker 1: responsible for what we've seen across the asset management industry
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  Speaker 1: with a lot of the firms facing a lot of
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  Speaker 1: print pressure is due to those lowered fees. Will Vanguard
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  Speaker 1: do the same thing to private equity? So yeah, I
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  Speaker 1: think they could start that ball rolling. Uh. You know
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  Speaker 1: what's interesting is Vanguard has this situation where they offer
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  Speaker 1: active mutual funds and about half of the one point
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  Speaker 1: three trillion they have an active mutual point assets is subadvised.
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  Speaker 1: I think they could do something similar here. But what's
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  Speaker 1: interesting about those active mutual fund assets is that the
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  Speaker 1: asset weighted average fee is about twenty basis points. So
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  Speaker 1: they figured out a way to get active cheap. They
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  Speaker 1: probably do the same thing with private equity. They're just
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  Speaker 1: not going to offer something expensive. Now. The question is,
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  Speaker 1: let's say they start doing this and they offer a
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  Speaker 1: fund for private equity that's say forty basis points or something. Um, yeah,
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  Speaker 1: I think that could start to create what we call
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  Speaker 1: this the Vanguard effect. It's not just Vanguard offering it cheap.
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  Speaker 1: It's that they force others in the neighborhood to lower
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  Speaker 1: their fees. That's just been going on in E T
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  Speaker 1: F and funds for the last thirty years. So yeah,
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  Speaker 1: I think it could be something. It just probably is
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  Speaker 1: going to take quite a while. Again, given that the
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  Speaker 1: advisory assets they have is only about a hundred billion,
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  Speaker 1: so that's why this is going to be a very
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  Speaker 1: slow process. But look, I've looked at the fees. They're
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  Speaker 1: kind of right for disruption, I would say, and Vanguard
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  Speaker 1: is the king of disruptors in asset management. So that
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  Speaker 1: brings me to my question, what has been the response
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  Speaker 1: from the private equity community today, Because when Vanguard you know,
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  Speaker 1: starts looking at you know, your business, much like when
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  Speaker 1: Amazon looks at you know, a certain business, whether it's
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  Speaker 1: retail or groceries, competitors take notice. Yeah. I've been looking
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  Speaker 1: on Twitter at some of the reaction. I think a
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  Speaker 1: lot of people think, first of all, do you really
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  Speaker 1: want Vanguard type investors in all liquid uh, you know funds.
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  Speaker 1: That's one thing I don't. I think a lot of
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  Speaker 1: the best private equity and the best hedge funds because
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  Speaker 1: Vanguard offers hedge funds type alternative strategies in mutual funds already,
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  Speaker 1: so they do all. Uh, they haven't really you know,
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  Speaker 1: completely disrupted the hedge fund business with that, So I
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  Speaker 1: don't think there's a lot of fear. I don't think
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  Speaker 1: there should be a lot of fear. Again, just like
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  Speaker 1: with mutual funds, if you're good and you've got something
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  Speaker 1: good going on, you'll be able to charge for it.
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  Speaker 1: So I think for the ones that might not be
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  Speaker 1: as good or might just be mediocre, those are the
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  Speaker 1: ones that probably should be worried about about being priced
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  Speaker 1: out or price down by a Vanguard. Just real quick,
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  Speaker 1: how much could this potentially be an effort of Vanguard
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  Speaker 1: to boost its own profits. I don't think it's much.
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  Speaker 1: I really think Vanguard is playing a different game. They
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  Speaker 1: just are not like other companies generally. That's the DNA
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  Speaker 1: of Vogel still in there, the mutual ownership structure. I
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  Speaker 1: just think they're really boy scout in their nature, and
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  Speaker 1: they just want to serve their clients, and they feel
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  Speaker 1: like private equity is something that would be missing from
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  Speaker 1: a client portfolio in the future. Eric Baun, thank you
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  Speaker 1: so much for being with us and sharing that perspective.
• 5:30
  Speaker 1: Eric Boltun as a senior et F analyst for Bloomberg Intelligence.
• 5:49
  Speaker 1: New York State has passed some of the most sweeping
• 5:52
  Speaker 1: overhauls to rent end property legislation in its history, having
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  Speaker 1: some pretty big ripple effect throughout the real estate market.
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  Speaker 1: Joining us down to discuss Francis Greenberger, chairman and chief
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  Speaker 1: executive officer of Time Equities Incorporated, based in New York City. So,
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  Speaker 1: New York State agreed to strength and rent laws and
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  Speaker 1: tenant protections. From your perspective, what are the most important
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  Speaker 1: parts of this legislation. Well, I think the legislation represents
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  Speaker 1: very bad social and economic policy for the city and state,
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  Speaker 1: and I'm happy to tell you why. Uh. Politically, it's
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  Speaker 1: the narrative is that it's protecting one point three million tenants,
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  Speaker 1: but it really isn't because all of those tenants are
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  Speaker 1: rent stabilized and they were protected against under existing law,
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  Speaker 1: and the increases to the last five years have ranged
• 6:45
  Speaker 1: between zero and one. Uh. Now, the part that is
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  Speaker 1: being affected are the few people that choose to lead
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  Speaker 1: those apartments, and it's about the new tenants who come in.
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  Speaker 1: Under the prior law, there were incentives for fixing up
• 7:01
  Speaker 1: those apartments. There were extra increases which gave the owners
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  Speaker 1: some balance to pay the increased expenses and operating taxes
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  Speaker 1: and taxes which were not being covered by the zero
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  Speaker 1: or rent allowance for existing tenants. So was it there
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  Speaker 1: was a certain amount of balance that has been lost,
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  Speaker 1: and now owners will simply face increasing losses every year.
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  Speaker 1: So it's not good economic policy. So what is your
• 7:31
  Speaker 1: expectation about what this new rent law will due to
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  Speaker 1: the value of housing. I think it will dramatically decrease
• 7:40
  Speaker 1: the value of housing, which will have another effect, which
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  Speaker 1: is that it will erode the city's tax base. The
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  Speaker 1: city needs those taxes, So what are they going to do.
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  Speaker 1: They're going to increase the taxes on people own their
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  Speaker 1: own homes, whether their co opt condominiums or private houses.
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  Speaker 1: They will have to subs at eye these few thousand
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  Speaker 1: apartments that we're turning over and providing the economic lifeline
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  Speaker 1: for rental housing. So Francis just walk us through how
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  Speaker 1: it would dramatically lower property values in New York City. Well,
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  Speaker 1: if you buy a property where you expect your income
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  Speaker 1: to go down every year instead of stay the same
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  Speaker 1: or go up, you're obviously going to pay a lot
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  Speaker 1: less for it. Well, I guess one question that I
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  Speaker 1: have is there's one thing about buying an apartment building
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  Speaker 1: in order to rent out the individual units. It's another
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  Speaker 1: thing if you have a condominium building and you sell
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  Speaker 1: units to people. There's a question of whether there might
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  Speaker 1: be a greater demand for the condominium type units. If
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  Speaker 1: you are going to guarantee a certain degree of maintenance, etcetera.
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  Speaker 1: That might be UH sort of left behind a little
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  Speaker 1: bit on the rental units due to fee pressures. Well,
• 8:57
  Speaker 1: clearly the future of rental house UH and the maintenance
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  Speaker 1: of it UH is in doubt because when owners don't
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  Speaker 1: have income to pay the costs, where is the money
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  Speaker 1: going to come from. We see that in the in
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  Speaker 1: the housing that the that the government owns, the Nightsha housing,
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  Speaker 1: and what a disaster that is because they are base
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  Speaker 1: basically starved it in this case their own revenue streams
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  Speaker 1: and didn't do the necessary repairs. So, yes, condominium or
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  Speaker 1: co op housing will be superior in the event in
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  Speaker 1: the sense that it will be UH better maintained On
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  Speaker 1: the other hand, those are the people who are going
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  Speaker 1: to be picking up the bill for the UH for
• 9:42
  Speaker 1: for taking away this income stream and tax space on
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  Speaker 1: rent on the rental housing side. Another potential effect here
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  Speaker 1: is that as this situation increases, and again I think
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  Speaker 1: it's really very important to focus on the fact that
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  Speaker 1: this law really affects few thousand apartments that turn over
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  Speaker 1: every year and we're then being rented at UH significant
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  Speaker 1: increases or UH twenty. They used to allow increases, so
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  Speaker 1: um by taking that away, it made force increases on
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  Speaker 1: the people that are stabilized tenants in place, whereas I said,
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  Speaker 1: current law has left those increases at zero or one,
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  Speaker 1: so those people may also have to pick up the bill.
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  Speaker 1: This is a complete disbalancing of what previously was a
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  Speaker 1: working solution. So, for instance, how will this impact you're
• 10:41
  Speaker 1: investing across a New York City. Well, I think that's
• 10:46
  Speaker 1: the other thing. Uh Again, as I said, there was
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  Speaker 1: a semi balanced picture before, and now the political process
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  Speaker 1: has taken that away, which means that in the eyes
• 10:57
  Speaker 1: of business people and investors like me, the state and
• 11:00
  Speaker 1: the city are no longer reliable partners. And I think
• 11:04
  Speaker 1: any person who invested with people who turned out to
• 11:06
  Speaker 1: be unreliable certainly wouldn't come back and be invested. So
• 11:10
  Speaker 1: I think you're going to see more and more people
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  Speaker 1: uh turning their investments to states that have a more
• 11:16
  Speaker 1: reliable pattern of unfair pattern of treating business and investors
• 11:22
  Speaker 1: in their in their states fairly. So friends, as which
• 11:26
  Speaker 1: states are you turning your sites to instead of New
• 11:29
  Speaker 1: York when it comes to investing, Well, we're currently we're
• 11:33
  Speaker 1: just started a construction project in Florida. We just finished
• 11:37
  Speaker 1: one in Michigan in a place called Grand Rapids. Uh,
• 11:42
  Speaker 1: we're about to begin one in Chicago. So from your perspective,
• 11:47
  Speaker 1: is this something that again it seems like it's a
• 11:50
  Speaker 1: relatively uh low number of units we're talking about across
• 11:55
  Speaker 1: you know, a big market. I mean, is the material
• 11:58
  Speaker 1: it just doesn't seem that matio real to the overall
• 12:00
  Speaker 1: economics of real estate in this market. Well, I think
• 12:04
  Speaker 1: in addition, as I say, it disturbed the balance that
• 12:07
  Speaker 1: existed between allowing existing tenants zero or one percent increases
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  Speaker 1: and still allowing landlords to maintain, not increase their profit margins.
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  Speaker 1: But they were able to pay the increased expenses out
• 12:22
  Speaker 1: of the increased rents on the vacancies, so that has
• 12:24
  Speaker 1: been taken away and landlords have been left with a
• 12:27
  Speaker 1: losing proposition. You know, that leaves a very bitter taste
• 12:31
  Speaker 1: in people's minds and and and in their investment intentions.
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  Speaker 1: And just like the Amazon reaction to politics in New
• 12:40
  Speaker 1: York was negative, I think you're going to see this
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  Speaker 1: spread and this is a a second uh nail in
• 12:45
  Speaker 1: the uh in the coffin, so to speak. So francis
• 12:51
  Speaker 1: just just just real quick here, how much do you
• 12:53
  Speaker 1: how much do you expect prices to go down in
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  Speaker 1: New York City? Uh? You? Um, real estate often trades
• 13:05
  Speaker 1: on futures rather than existing and this has taken away
• 13:10
  Speaker 1: to the future, the hope for something better and it's
• 13:15
  Speaker 1: and it's replaced it with an expectation of something worse.
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  Speaker 1: Is that reduction? Is it more? I'm not sure the
• 13:24
  Speaker 1: market will tell our storyection that would be news. Francis Greenberger,
• 13:29
  Speaker 1: value of all rental housing in New York. Francis Greenberger,
• 13:33
  Speaker 1: Chairman CEO of Time Equity, Inc. Thank you so much
• 13:35
  Speaker 1: for joining us. Well about a year after shuttering it's
• 13:55
  Speaker 1: US operations, toys are us is back to get a
• 13:59
  Speaker 1: sense of what's going on there. We welcome to good
• 14:00
  Speaker 1: friend Burt Flickinger, Managing director of Strategic Resource Group, joining
• 14:04
  Speaker 1: us here in our Bloomberg Interactive Brooker Studio. So correct
• 14:08
  Speaker 1: me if I'm wrong, Bert, So, the US business of
• 14:10
  Speaker 1: Toys r US UH shuttered their operations about a year ago,
• 14:14
  Speaker 1: but now they're coming back. How are they doing that?
• 14:16
  Speaker 1: Coming back with a couple of stores, But it's already
• 14:20
  Speaker 1: a proven concept and that they have scores of stores
• 14:23
  Speaker 1: that are very successful Asia, India, parts of Europe. And
• 14:27
  Speaker 1: it was affirmed by Kroger fred Meyer brilliant CEO Rodney
• 14:31
  Speaker 1: McMullen that put six hundred Jeffrey Jeffries Toy Box Toys
• 14:36
  Speaker 1: r US departments and stores within the Kroger stores, which
• 14:41
  Speaker 1: are doing tremendously well. The other key comparable on the
• 14:45
  Speaker 1: Bloomberg terminal is the toys have catalyzed a big part
• 14:50
  Speaker 1: of Walmart, Target and Amazon's growth and on a total
• 14:55
  Speaker 1: return basis in the last year, Walmart and Target are
• 14:58
  Speaker 1: both up about forty or sent Amazon about the same
• 15:02
  Speaker 1: and compared to the x RT or the SMP Retail
• 15:05
  Speaker 1: Index is barely up at all, and they still can't
• 15:09
  Speaker 1: handle the big box stores still can't handle the demand
• 15:13
  Speaker 1: of the ten billion that Toys r Us did in
• 15:15
  Speaker 1: the US retail So it sounds like Richard Barry has
• 15:19
  Speaker 1: come up with this concept of reincarnating Toys r US
• 15:25
  Speaker 1: with smaller stores but in some of the same footprints,
• 15:28
  Speaker 1: shrunken footprints, because he saw an opportunity there that was
• 15:32
  Speaker 1: still being unmet by the big box retailers. My question is, UH,
• 15:39
  Speaker 1: what what exactly is this reincarnation. Is it just taking
• 15:42
  Speaker 1: the name and then re envisioning the modern toy store
• 15:45
  Speaker 1: or is this basically just restarting without the debt? Lisa,
• 15:49
  Speaker 1: It's both restarting without the debt, that's key, and the
• 15:53
  Speaker 1: landlords of the major malls will pay for the UH
• 15:56
  Speaker 1: fit out a lot of the equipment build out, so
• 15:58
  Speaker 1: they'll be next to no capital commitment. The key thing
• 16:02
  Speaker 1: you references the name UH. They'll have the name. The
• 16:05
  Speaker 1: stores were about fifteen years behind UH, caught in a
• 16:09
  Speaker 1: bowl constricted proverbial choke hold from RNADO and the original
• 16:14
  Speaker 1: legacy owners and now with Richard Barry, it's the chief
• 16:18
  Speaker 1: merchant who goes all the way back to the seminal
• 16:20
  Speaker 1: genius Charles Lazarus who uh started Toys r US and
• 16:24
  Speaker 1: built it into a worldwide powerhouse. Barry knows how to
• 16:27
  Speaker 1: merchandise the stores, work with Disney, Marvel, Lucas studios for
• 16:32
  Speaker 1: the licensed goods, but also to make the stores exciting
• 16:35
  Speaker 1: from a digital interactive standpoint. So they'll have the name,
• 16:39
  Speaker 1: but the stores will catch up about fifteen years because
• 16:42
  Speaker 1: they'll have the capital along with the skill and hopefully
• 16:46
  Speaker 1: the scale. So what I understand about this is Toys
• 16:50
  Speaker 1: Rust is looking to open about it maybe a half
• 16:53
  Speaker 1: a dozen stores for the holiday season. Do you think
• 16:56
  Speaker 1: this might just be the first step and maybe bringing
• 16:59
  Speaker 1: back Toys Rust and bigger way in US? Yes, the
• 17:01
  Speaker 1: first step, and and our research indicates with mall support,
• 17:06
  Speaker 1: they'll be able to do at least fifty, likely a
• 17:08
  Speaker 1: hundred plus stores in the major malls across the US
• 17:12
  Speaker 1: which would love to have Toys or US and Babies
• 17:15
  Speaker 1: or US as a co anchor. And what's interesting from
• 17:18
  Speaker 1: our researches, Amazon has an achilles heel in this thing too,
• 17:22
  Speaker 1: is Amazon's almost de facto price gouging on anything that's
• 17:26
  Speaker 1: either heavier weight or large and shipping size. So if
• 17:29
  Speaker 1: it's a baby crib or baby stroller. Amazonal charge a
• 17:33
  Speaker 1: hundred dollars more delivered Amazon Prime members than say even
• 17:37
  Speaker 1: Alby's on the West Side of Manhattan or any other
• 17:40
  Speaker 1: major toy retailer in the US. There's a lot of
• 17:43
  Speaker 1: room with the support from UH Jack's, Marvel, Marvel has Bro,
• 17:49
  Speaker 1: the studios and the hardlines and soft lines vendors, and
• 17:53
  Speaker 1: also Amazon went bankrupt with diapers are US, so there's
• 17:57
  Speaker 1: a big window for Toys r US to re estate
• 18:00
  Speaker 1: wish itself. One thing you talked about was reimagining the
• 18:03
  Speaker 1: stores and making them more enticing to the modern child,
• 18:07
  Speaker 1: which means having all sorts of electronics there. I'm just
• 18:11
  Speaker 1: wondering what type of investment uh they really need to
• 18:14
  Speaker 1: get these stores into a shape to be an experience,
• 18:18
  Speaker 1: which really is the name of the game in retail
• 18:20
  Speaker 1: right now. Perfect variable you're referencing, Lisa. If it's an
• 18:24
  Speaker 1: investment on toys or US as part, it could be
• 18:27
  Speaker 1: a million plus per store. If they get the support
• 18:31
  Speaker 1: of Disney behind Star Wars, UH Frozen, Future Toy Story releases,
• 18:38
  Speaker 1: Kung Fu Panda, whatever it is, and get the studios
• 18:42
  Speaker 1: to co invest and ideally get somebody like UH Bob
• 18:46
  Speaker 1: Pittman at Clear Channel Outdoor use their skill outside on
• 18:51
  Speaker 1: the air rights of the store, the walls and the
• 18:53
  Speaker 1: departments inside the store could be spectacular. Would would the
• 18:57
  Speaker 1: actual vendors, the toy vendors, Would they prefer to do
• 19:00
  Speaker 1: business with toys r US over say Amazon or Walmart?
• 19:06
  Speaker 1: UH definitely prefer to do business with toys. Are USO
• 19:09
  Speaker 1: over Amazon? Going back to the Hachette Books, UH and
• 19:13
  Speaker 1: I trust case for UH anti competitive practices, potential predatory
• 19:18
  Speaker 1: pricing that seems to be ubiquitous beyond books to toys, etcetera.
• 19:23
  Speaker 1: Walmart under Doug McMillan, Target under Brian Cornell are more
• 19:27
  Speaker 1: enlightened buyers, but they don't have the physical space and
• 19:30
  Speaker 1: the stores to carry the full depth and range of toys.
• 19:33
  Speaker 1: So the vendors are seeing a lot of growth with
• 19:35
  Speaker 1: Macy's committing a full floor at Harold Squared to Toys
• 19:39
  Speaker 1: and some of the other stores, but nobody can do
• 19:41
  Speaker 1: it like Toys r US and Richard Berry. The one
• 19:44
  Speaker 1: variable is David Pico, who is the genius of real
• 19:48
  Speaker 1: estate strategy and development, got picked off by Chris Baldwin
• 19:52
  Speaker 1: and his team to go to BJ's wholesale, So toys
• 19:55
  Speaker 1: are us is skating shorthanded with a key player on
• 19:57
  Speaker 1: the development side. But Richard Berry's the end and he'll
• 20:00
  Speaker 1: break through with this format. To Paul's point on on
• 20:04
  Speaker 1: a very strong continuum of future growth. Really interesting to
• 20:09
  Speaker 1: see the revival here. I Frankly Brick and Mortar. Bert Flickinger,
• 20:13
  Speaker 1: thank you so much for being with us. Always a pleasure.
• 20:15
  Speaker 1: Bert Flickinger is Managing director for Strategic Resource Group. Well,
• 20:35
  Speaker 1: many companies are developing products to reduce sugar intake by consumers.
• 20:40
  Speaker 1: One such company is Duma Talk and has really startup
• 20:43
  Speaker 1: that has created a sugar reduction solution that uses targeted
• 20:46
  Speaker 1: delivery technology to reduce the amount of sugar used up
• 20:50
  Speaker 1: to per serving. To help us dig into the details
• 20:54
  Speaker 1: of this new company, we welcome Iran Baniel, chief executive
• 20:58
  Speaker 1: officer and president of Duma Talk based in Israel. Aron,
• 21:01
  Speaker 1: thank you so much for joining us. I wonder if
• 21:03
  Speaker 1: you could just briefly kind of tell us kind of
• 21:05
  Speaker 1: what is the solution, uh that your company has that
• 21:09
  Speaker 1: reduces the sugar intake. So nice to be with you guys.
• 21:16
  Speaker 1: When you take a bite into a cake, say over
• 21:21
  Speaker 1: eight of the sugar in the cake will never see
• 21:26
  Speaker 1: a sweet receptor, so it contributes nothing towards the sweetness
• 21:31
  Speaker 1: of the product, so only would probably hit receptors. What
• 21:37
  Speaker 1: we do is by loading the sugar onto a mineral
• 21:44
  Speaker 1: or a fiber carrier, we actually create clusters of sugar
• 21:50
  Speaker 1: molecules and when those hit the receptors, they get they
• 21:54
  Speaker 1: stick to the receptors longer, and they keep pumping sugar
• 21:59
  Speaker 1: molecule to the receptors, sort of cheating you to experience
• 22:07
  Speaker 1: a sweetness that is disproportionate to the amount of sugar
• 22:12
  Speaker 1: in the cake or in the biscuit or in the chocolate.
• 22:16
  Speaker 1: So you literally use less two taste more that is
• 22:24
  Speaker 1: flavored delivery improved in efficacy. So the results of this,
• 22:31
  Speaker 1: if I am correct, is that you can reduce by
• 22:35
  Speaker 1: more than of sugar content in some of these sweets
• 22:38
  Speaker 1: or other products by using your technologies. I'm wondering have
• 22:44
  Speaker 1: there been any big companies that have adopted some of
• 22:48
  Speaker 1: your techniques. So we are now in the process of
• 22:53
  Speaker 1: a providing large pilots to some those large CPGs um
• 23:03
  Speaker 1: taking existing products and making the doumatalk version of the product,
• 23:11
  Speaker 1: which would be not only reduced in sugar, but also
• 23:16
  Speaker 1: rich in fiber and rich often in proteins. So we
• 23:21
  Speaker 1: also have developed a whole host of data on how
• 23:28
  Speaker 1: you can replace the photy percent of sugar you've taken
• 23:32
  Speaker 1: out with really much better for you nutrition and actually,
• 23:41
  Speaker 1: in blind tastings, consumers seem to prefer the Doumatalk reduced
• 23:48
  Speaker 1: version to the original products. So we started by wanting
• 23:55
  Speaker 1: to be as sweet, we are now understanding that we
• 23:59
  Speaker 1: are very often preferred and we seem to fare better
• 24:05
  Speaker 1: than the original. So that's really, uh, the first time
• 24:11
  Speaker 1: that someone that we are aware of can propose a
• 24:16
  Speaker 1: sugar reduced version of products that don't disrupt the need
• 24:22
  Speaker 1: we have for indulgences for the products we love. So,
• 24:28
  Speaker 1: is this going to be another colored packet, packet of
• 24:31
  Speaker 1: sweeteners in the bowl when I go to a restaurant.
• 24:33
  Speaker 1: I've got pink, I've got blue, I've got yellow. Is
• 24:35
  Speaker 1: this going to be another those your competitors? No, what,
• 24:41
  Speaker 1: the existing sugar reductions are not sugar based. We are
• 24:46
  Speaker 1: sugar based, and sugar is not It's not bad for you,
• 24:52
  Speaker 1: and unless you over overdo it. So sugar, if you
• 24:58
  Speaker 1: consume sugar in measured quantities. You'll find it gives you energy,
• 25:04
  Speaker 1: its bulk, it's taste, its color, its happiness. Sugar is happiness,
• 25:09
  Speaker 1: but only if consumed as recommended. So what we do
• 25:17
  Speaker 1: is we actually allow you to consume the products you
• 25:22
  Speaker 1: love without actually overdoing the sugar intake. Run. One question
• 25:29
  Speaker 1: that I have is people have found that sugar replacements
• 25:33
  Speaker 1: actually don't necessarily contribute to weight loss because people feel hungrier,
• 25:38
  Speaker 1: their bodies feel like they're going to be getting a
• 25:40
  Speaker 1: certain amount of sugar, so they eat more to compensate
• 25:43
  Speaker 1: for that. Has there been any study done in a
• 25:47
  Speaker 1: similar vein with Tom talk, It's a very good question,
• 25:53
  Speaker 1: and thank you for asking it. We are the funding
• 25:59
  Speaker 1: is there and angst others to fund much larger trials
• 26:04
  Speaker 1: than we've done. But one of the mode of actions
• 26:07
  Speaker 1: that we have developed is called muco adhesive. The area
• 26:15
  Speaker 1: of the tongue is the best probably area for dispersing
• 26:24
  Speaker 1: in a very same way things like sugars, but also people.
• 26:32
  Speaker 1: It's been used for pharmaceuticals as well. So what we
• 26:37
  Speaker 1: actually do is we have this cluster, let's say, of
• 26:43
  Speaker 1: sweetness come to the receptor. It sticks by the receptor
• 26:48
  Speaker 1: longer and and the sweetness is very satisfying, so you
• 26:55
  Speaker 1: don't really reach out for another bite so quickly. Yeah,
• 27:00
  Speaker 1: you are really getting the full beauty of the sweetness
• 27:05
  Speaker 1: with the first bite, and you are not rushing into
• 27:10
  Speaker 1: the second, third bite. Aaron Vanielle, thank you so much
• 27:14
  Speaker 1: for being with us, chief executive officer and president of
• 27:16
  Speaker 1: Duma Talk based in Israel. They just raised two million
• 27:20
  Speaker 1: dollars in a series B round funding. This is Bloomberg.
• 27:25
  Speaker 1: Thanks for listening to the Bloomberg pen L podcast. You
• 27:27
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• 27:30
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• 27:33
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• 27:35
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• 27:38
  Speaker 1: can always catch us worldwide. I'm Bloomberg Radio.