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Global Business, Technology, Twitter & Amazon · Bloomberg Intelligence

0:02
Speaker 1: Welcome to the Bloomberg Penel podcast on Paul Swing You.
0:05
Speaker 1: Along with my co host Lisa Brahma Waits, each day
0:07
Speaker 1: we bring you the most noteworthy and useful interviews for
0:10
Speaker 1: you and your money, whether at the grocery store or
0:12
Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple
0:15
Speaker 1: podcast or wherever you listen to podcasts, as well as
0:17
Speaker 1: at Bloomberg dot com. We're broadcasting live from with ham
0:21
Speaker 1: seventh Annual Global Summit at Events Space Second in New
0:25
Speaker 1: York City. This year's program features business leaders that are
0:28
Speaker 1: exploring past lessons, current trends in the future outlook for
0:31
Speaker 1: global business. Joinings right now are Jason Maria Rothenham, senior
0:35
Speaker 1: consultant at consulting firm h LB von Dal based in
0:39
Speaker 1: the Netherlands, but joining us on site here at the
0:41
Speaker 1: Withhem Global Summit. Jason, thanks so much for joining us.
0:44
Speaker 1: I know when your panel coming up you're gonna be
0:47
Speaker 1: covering the manufacturing industry and how technologies impacting business. Give
0:52
Speaker 1: us your sense as you talk to your clients around
0:54
Speaker 1: the world, you know kind of what are the big
0:57
Speaker 1: challenges that they are facing in terms of adapting to
1:00
Speaker 1: interest in technology great, Thanks Paul. I'm so happy to
1:03
Speaker 1: be here in New York City. It's a beautiful day outside,
1:06
Speaker 1: and I'm excited, excited to talk about technology and from Amsterdam.
1:09
Speaker 1: And Uh, we like to innovate, we like to change,
1:12
Speaker 1: and so do our clients. I keep saying this in
1:14
Speaker 1: presentations all around the world that unless you're Coca Cola
1:17
Speaker 1: or you're an old fashioned watchmaker, UH, technology is going
1:22
Speaker 1: to impact you. It's gonna change the way you do business,
1:24
Speaker 1: change the way you think. And we see that. UM.
1:27
Speaker 1: I'll just pick up one simple topic like logistics. Logistics
1:31
Speaker 1: is totally being impacted by technology, with AI, with robotics,
1:35
Speaker 1: with the big data. UM, it's all about how do
1:38
Speaker 1: I get my consumer how do I get my products
1:40
Speaker 1: to my own consumers as quick as possible and as
1:43
Speaker 1: cheap as possible. Um. We see robotics taking over in
1:47
Speaker 1: logistics centrums, tread printing. UM. What I would advise people,
1:52
Speaker 1: if you're listening and if you're a business leader, just
1:54
Speaker 1: just look at you all of your processes and think
1:57
Speaker 1: how can technology impact be and what kind of investments
2:00
Speaker 1: I need to make in there? Jason, do you feel
2:02
Speaker 1: like business leaders in general are aware of how radical
2:06
Speaker 1: the change is and how quickly they have to adapt. No, no,
2:10
Speaker 1: And I'll be very direct with that. I think only
2:12
Speaker 1: ten percent of the business community understands the changes that
2:16
Speaker 1: are coming into place UM and those ten percents are
2:20
Speaker 1: usually the big boys that are playing the Googles of
2:23
Speaker 1: this world, the facebooks. But the mid level, the small
2:26
Speaker 1: businesses is there is there a particular industry that's that's
2:30
Speaker 1: particularly behind UM. What we would see is the retail
2:35
Speaker 1: market is still a bit bigger problem. I've seen back
2:38
Speaker 1: home where I live. I live in a small town
2:40
Speaker 1: outside of Amsterdam. It's called hof Top Retail. Bricky motor
2:45
Speaker 1: stores are closing down by the day, and yet you
2:48
Speaker 1: still see business owners saying, oh yeah, I've got a
2:50
Speaker 1: bit of cash lying around, so let's just go and
2:52
Speaker 1: open up another shop. Again. They make the same mistake
2:54
Speaker 1: again and again and again. And they got to ask
2:56
Speaker 1: yoursel why do they do that? Let you do that?
2:58
Speaker 1: Because because they have fit the past, and they're making
3:01
Speaker 1: the decisions based on the past, not of the future.
3:04
Speaker 1: And they thought, oh, my well, my dad did it,
3:06
Speaker 1: my my uncle did it, so I should do it too.
3:08
Speaker 1: They're not learning from the future. So for some of these.
3:12
Speaker 1: You know, I get the big companies, the technology oriented companies,
3:15
Speaker 1: obviously they have a better familiarity with with change and evolution.
3:19
Speaker 1: But when you go to see some of your smaller
3:21
Speaker 1: and mid size clients, how do you get them to
3:24
Speaker 1: really start thinking about their business models and how they
3:27
Speaker 1: may need to adapt. Right, So what we do with
3:29
Speaker 1: at FANDAL is we try to expose our clients to
3:32
Speaker 1: our logic clients, try to get them to think a
3:34
Speaker 1: bit differently. UM mandate almost that you have to read
3:38
Speaker 1: a book a day. I'll pick up once a week
3:40
Speaker 1: at least, spend some sessions in the morning, UM reading
3:44
Speaker 1: How We've got a little program where we teach our
3:48
Speaker 1: staff to actually learn the code to be more relatable
3:51
Speaker 1: to UM clients. UM getting them used to familiar with
3:56
Speaker 1: UH Internet websites will be surprised, we've we've still got
3:59
Speaker 1: client so don't even have a website. And that and
4:02
Speaker 1: that is and that is a big problem. That's a problem. Well,
4:04
Speaker 1: you know, when you say technology, it's a pretty broad
4:06
Speaker 1: sweep of things. Artificial intelligence logistics, while they can be
4:10
Speaker 1: paired together, are distinct and can be applied in different ways.
4:14
Speaker 1: So how do you go about determining. I mean for
4:16
Speaker 1: the retailers, for example, what should they be doing, because
4:19
Speaker 1: it's not just simply abandoned brick and mortar, How should
4:22
Speaker 1: they be thinking in this technological era. That's an excellent question. Um.
4:28
Speaker 1: What they should be looking at at is how do
4:30
Speaker 1: I bring in AI, bring in big data into understanding
4:35
Speaker 1: who my clients are. So I'll tell you a little
4:37
Speaker 1: story of a client of mind. What they do is
4:39
Speaker 1: they inside small little chips in the in the hangars,
4:44
Speaker 1: and they know how many times a piece of clothing
4:46
Speaker 1: is taken off a hangar, how many times to put back?
4:48
Speaker 1: And then that gives you a lot of information if
4:51
Speaker 1: to give some perspective, if I have a customer that
4:54
Speaker 1: comes in or several customers that come in and pick
4:57
Speaker 1: up the same uh piece of clothing and if put
5:00
Speaker 1: it back, that tells you a lot about Maybe I'm
5:02
Speaker 1: pricing it wrong, maybe it's the wrong color, maybe it's
5:04
Speaker 1: not but something is good about it. But I don't
5:07
Speaker 1: know why my clients are not buying it. So you
5:09
Speaker 1: can flow through from where it was picked up right
5:12
Speaker 1: to the checkout counter and see whether there's a good
5:16
Speaker 1: flow through their Apart from that, you can set up
5:19
Speaker 1: senses all the way around your store. You can tell
5:21
Speaker 1: which part of my stars are underutilized. There's a lot
5:24
Speaker 1: of stuff you can do with AI. That sounds like
5:27
Speaker 1: it costs some money. How about somebody smaller and mid
5:30
Speaker 1: sized companies do they have the capital to make these
5:32
Speaker 1: investments in technology? Right? So we've got two parts of
5:34
Speaker 1: the market. One is a very conservative part. In speak
5:38
Speaker 1: for Europe, a lot of our clients are sitting on money.
5:41
Speaker 1: They're sitting on money, they don't want to invest, they
5:42
Speaker 1: don't know what's coming up ahead. I heard uh recently
5:45
Speaker 1: that in the US that that there is no such
5:48
Speaker 1: thing as a recession. That I heard that, But in
5:50
Speaker 1: Europe we still very conservative over that we don't know
5:52
Speaker 1: what's coming around, so we allow U sit and to
5:56
Speaker 1: answer your question, Uh, that costs a lot of money. Well,
5:59
Speaker 1: if you take get in small steps, baby steps, it
6:01
Speaker 1: shouldn't cost you a lot. Jason Maria Rathenom, thank you
6:05
Speaker 1: so much for being with us. UH, senior consultant at
6:07
Speaker 1: h l V von Dala, which is based in Amsterdam,
6:11
Speaker 1: but is here with us on site in New York
6:14
Speaker 1: City at with him seventh Annual Global Summit. Thank you
6:16
Speaker 1: so much, so interesting. I love the idea of these sensors.
6:19
Speaker 1: I mean, I love them, and I also wonder what
6:22
Speaker 1: else you can do with all of that data, you know,
6:23
Speaker 1: I mean that's the other issue. But at a certain point,
6:26
Speaker 1: people have to be aware that we live in a
6:28
Speaker 1: technological era and people are looking to use the facilities
6:32
Speaker 1: they have to the best advantage possible. We are broadcasting
6:49
Speaker 1: live from with him seventh Annual Global Summit in New
6:52
Speaker 1: York City. A big topic of discussion is logistics and
6:55
Speaker 1: how technology is transforming, UH, the way that goods move
7:00
Speaker 1: around the world. Joining us now Michael Kaminski, chief operating
7:03
Speaker 1: officer at h M t X Industries, which is a
7:07
Speaker 1: global l v T manufacturer. I had to look up
7:10
Speaker 1: what l v T was, ask Michael what that is.
7:12
Speaker 1: It's luxury vinyl tile because I actually googled it. But
7:15
Speaker 1: luxury vinyl tile. Looking you can look at the different
7:18
Speaker 1: layers here. So, Michael, from a moving things around perspective,
7:23
Speaker 1: how crucial is that to what you do every day? Well,
7:26
Speaker 1: it's the essence of what I do every day. Where
7:29
Speaker 1: we sell over seven million dollars of product l v
7:32
Speaker 1: T UH, most of its manufactured. It is manufactured in
7:37
Speaker 1: China and we sell it throughout the world, although about
7:40
Speaker 1: eighty plus percent is sold in the United States. So
7:43
Speaker 1: getting those goods from China into the United States and
7:47
Speaker 1: then out into the distribution centers, then into the local community,
7:51
Speaker 1: and then ultimately to customers homes is all about logistics. So, uh,
7:57
Speaker 1: we've been talking a little bit about this China trade
7:59
Speaker 1: thing here in tariffs and all that kind of thing,
8:01
Speaker 1: and it's been the talk of the markets really for
8:04
Speaker 1: the last six months or so. How has tariffs impacted
8:09
Speaker 1: your business? Well, it's a significant issue. Uh. It takes
8:13
Speaker 1: up a huge amount of my time and senior executive
8:18
Speaker 1: of the company time. The tariffs on our products ten
8:22
Speaker 1: percent tariffs started on September two, eighteen. Uh, there were
8:27
Speaker 1: threats to go up to that kept on happening and
8:30
Speaker 1: actually in June did rise the t So that's an
8:35
Speaker 1: enormous amount of money placed on our goods. Um it's
8:40
Speaker 1: it's the topic who bears the cost of that. You
8:42
Speaker 1: pass that along to your customers or do you as
8:45
Speaker 1: a company eat it, or is a little bit of both. Well,
8:47
Speaker 1: there's a certain gentleman who thinks the Chinese are paying
8:50
Speaker 1: for it. Um, he's wrong. Uh. The costs are paid
8:54
Speaker 1: by a variety of different people in the global supply chain.
8:58
Speaker 1: First and foremost, we've negotiated prices with our factories. We
9:04
Speaker 1: have eaten a percentage of the the higher costs, We've
9:08
Speaker 1: passed on a percentage of those costs to our customers,
9:12
Speaker 1: and then our customers have passed on a percentage of
9:15
Speaker 1: those costs to the consumers. So the truth and matter
9:18
Speaker 1: is worn by many different people and it hurts many
9:23
Speaker 1: different people throughout the chain. Some people have said, well,
9:26
Speaker 1: just changed the supply chain, and when you talk about
9:28
Speaker 1: the factories, uh and sort of replacing them, etcetera. There
9:32
Speaker 1: there's an issue with that. But logistically, how challenging would
9:36
Speaker 1: it be to uh completely rejigger the supply chain? I mean,
9:40
Speaker 1: simply put, it couldn't be done. Uh. The investment and
9:44
Speaker 1: the factories are manufacturing partners in Asia have invested tens
9:49
Speaker 1: and tens of millions of dollars into their facilities. They
9:52
Speaker 1: backed over a hundred million dollars in certain instances. Uh,
9:56
Speaker 1: you just can't replicate that. First from a from a
9:59
Speaker 1: cost point of view. Uh. In fact, one of our
10:01
Speaker 1: biggest competitors over the last few years is invested almost
10:05
Speaker 1: a billion dollars to create a manufacturing facility in the
10:09
Speaker 1: United States that would be capable of producing the product
10:13
Speaker 1: that we make, and they've been unsuccessful. It's not a
10:16
Speaker 1: simple product to make um. And second of all, who
10:20
Speaker 1: would invest that kind of money unless you felt that
10:22
Speaker 1: you could make a good product and and go to
10:25
Speaker 1: get a good return on it. So um our supply
10:29
Speaker 1: chain is embedded, and it starts with our manufacturing facilities
10:33
Speaker 1: in China, and then across the board. Each element of
10:37
Speaker 1: it has to react to it. You just can't pick
10:40
Speaker 1: up a factory, move it and and start afresh. What's
10:43
Speaker 1: your primary UM I guess transportation method or route of
10:47
Speaker 1: bringing the product from China to the U S. You
10:49
Speaker 1: just slap on one of those big monster container ships
10:52
Speaker 1: and it goes to Long Beach or something like that. Yes, okay.
10:56
Speaker 1: So we ship approximately two thousand containers a month. Almost
11:02
Speaker 1: all of that comes out of the Shanghai port starts. Actually,
11:05
Speaker 1: our manufacturing partners are in jiang Jigon, China, which is
11:09
Speaker 1: up the Yellow Yankcee River a few hours from Shanghai.
11:12
Speaker 1: So they go from the manufacturing facility in Jang Jigan
11:16
Speaker 1: on river boats down to the port of China, which
11:18
Speaker 1: is Shanghai, by far the largest port in the world.
11:22
Speaker 1: Two thousand containers a month get put on those very
11:25
Speaker 1: very large boats that you see out there. Uh. Some
11:28
Speaker 1: of them go to the port of Long Beach and
11:30
Speaker 1: Los Angeles. Some come through the Panama Canal and go
11:34
Speaker 1: to the port of Savannah, which is actually the third
11:38
Speaker 1: largest port for these kinds of containers in the in
11:41
Speaker 1: the country. And then we have distribution facilities in Compton, California,
11:47
Speaker 1: in rinkin Georgia, which is a little bit outside of Savannah,
11:50
Speaker 1: and from there we then ship them throughout the United States.
11:54
Speaker 1: Just quickly here, I'm wondering whether there are new technologies
11:58
Speaker 1: that would facilitate some of the logistics around this that
12:01
Speaker 1: you're hesitant to invest in right now due to the uncertainties. Well,
12:07
Speaker 1: you know, it's very very hard in this uncertain environment
12:10
Speaker 1: to make long term strategic decisions. We happen to be
12:14
Speaker 1: very lucky in the fact that we have a product
12:16
Speaker 1: that the consumer is clamoring for and so we are
12:20
Speaker 1: selling even in the face of these tariffs. We're doing
12:24
Speaker 1: very very well. So we're not going to stop investing
12:27
Speaker 1: in our businesses because of the uncertainty, but but it
12:30
Speaker 1: makes it more difficult. We've invested UH. Two years ago
12:34
Speaker 1: we opened a new facility in outside of Savannah, invested
12:37
Speaker 1: eleven million dollars in robotics and in a new facility.
12:42
Speaker 1: So we're doing that all the time, understood. Michael Commitskey,
12:45
Speaker 1: thanks so much for joining us. We appreciate you stopping
12:47
Speaker 1: by here. Michael's the CEO of h mt X Industries,
12:51
Speaker 1: joining us here at the with them seventh Annual Global
12:54
Speaker 1: Summit at second in New York City. Veraging with logistic
12:58
Speaker 1: discussions and really important to get that view in terms
13:01
Speaker 1: of on the ground, how realistic it is to shift
13:04
Speaker 1: around your entire UH supply chain exactly, not very easy.
13:08
Speaker 1: This is Bloomberg. We are so lucky to have with
13:27
Speaker 1: us Tom Angel, who is the practice leader with him's
13:30
Speaker 1: Financial Services Group. He has decades of experience with private
13:35
Speaker 1: equity and venture capital firms in particular, which is incredibly topical.
13:39
Speaker 1: Just this morning, Mark Wiseman of black Rocks that that
13:41
Speaker 1: almost half of Black Rocks institutional clients plan to increase
13:44
Speaker 1: their allocation to private asset classes. So Tom, thank you
13:49
Speaker 1: so much for being here, can you talk about that
13:52
Speaker 1: shift and sort of what you're seeing among your clients
13:55
Speaker 1: in terms of the just massive amount of money flooding
13:58
Speaker 1: into that There is a lot of capital coming into
14:00
Speaker 1: the market, and especially for the private equity venture capital
14:04
Speaker 1: funds UM. So if you take a look at Cowper's
14:08
Speaker 1: Texas T Shirt Union, a lot of the pensions stated
14:11
Speaker 1: of sovereign funds they are looking a ways to make
14:14
Speaker 1: returns because they have to pay their retirees and typically
14:18
Speaker 1: you're trying to look at a seven eight percent return
14:21
Speaker 1: depending on what they're um what the amount is that
14:25
Speaker 1: they need to return in order to be able to
14:27
Speaker 1: make those payments. So UM, they can't make it in
14:30
Speaker 1: the market UM over a long period of time. But
14:34
Speaker 1: I think in the least twenty years, UH, the private
14:37
Speaker 1: market has significantly outperformed the public market. And those studies
14:41
Speaker 1: are out and so they're doing much more allocations to
14:45
Speaker 1: private private equity, venture capital. Real estate could be dead funds,
14:51
Speaker 1: a lot of private dead funds that are out there,
14:53
Speaker 1: and in order to generate those returns that they need,
14:56
Speaker 1: they're allocating dollars to that. Since the christ this back
15:00
Speaker 1: in two thousand and eight, two thousand nine. You know,
15:02
Speaker 1: so we've been going almost ten a little more years,
15:05
Speaker 1: and that you keep wondering, well, when is that going
15:07
Speaker 1: to stop? Because all that capital keeps coming in, how
15:09
Speaker 1: they're going to deploy it? But places like Cowper's and
15:13
Speaker 1: the others, they're not on a short term window. So actually,
15:16
Speaker 1: some of the larger institutions like Blackstone and Carlisle, they're
15:21
Speaker 1: looking at doing twenty year funds set a ten year
15:23
Speaker 1: typical private equity funds ten ure because they have a
15:26
Speaker 1: longer term horizon and so they want to generate more returns,
15:30
Speaker 1: higher returns over a longer period of time. So they're
15:32
Speaker 1: not worried about market dips or even even a recession
15:36
Speaker 1: because at a recession point, they think they have an
15:39
Speaker 1: opportunity to buy in at a lower price and get
15:42
Speaker 1: better value. So, Tom, one of the issues that kind
15:45
Speaker 1: of I think came to the market's head this year,
15:48
Speaker 1: which maybe it's too much money chasing too few deals
15:51
Speaker 1: in the venture community and maybe even the private equity community.
15:54
Speaker 1: You know, maybe the greatest example that would be we
15:56
Speaker 1: work where in the venture private world, and you could
15:59
Speaker 1: even say were lift that, you know, the valuations that
16:02
Speaker 1: were getting in the private market just we're too high.
16:05
Speaker 1: Then they get really unmasked. I guess when they came
16:08
Speaker 1: to the public markets. Are some are your clients worried
16:11
Speaker 1: about too much money, tasting too few deals and driving
16:15
Speaker 1: valuations to you know, crazy levels. Yeah, you'll talk to
16:17
Speaker 1: a lot of our our funds and and they're looking
16:20
Speaker 1: at what they're paying in terms of maybe on the
16:23
Speaker 1: private equity side, in terms of um EBA on multiples,
16:27
Speaker 1: they're definitely going up, and you know they're looking at
16:29
Speaker 1: that and maybe being too frothy. But um if you
16:33
Speaker 1: say to them, hey, what are you worried you're gonna
16:36
Speaker 1: be holding the bag when the recession turns around, that
16:38
Speaker 1: you have all these investments and they have capital that
16:41
Speaker 1: they have to deploy that they've gotten in, and so
16:44
Speaker 1: they're looking at that downturn as a possible um value
16:47
Speaker 1: by at that point. So you know, they may start
16:50
Speaker 1: to get hurt on some of these valuations, but they're
16:52
Speaker 1: going to make up on those valuations after the recession
16:56
Speaker 1: if you know one is coming. Um So, I think
17:00
Speaker 1: the returns have been there and they have continued to
17:02
Speaker 1: be there. Uh So on the venture side, you know
17:05
Speaker 1: you brought up good points in terms of things that
17:08
Speaker 1: have But there's only public companies where ten fifteen years
17:14
Speaker 1: ago there were seven thousand. There's there's really no place
17:16
Speaker 1: to put put the capital now that those particular examples
17:20
Speaker 1: you're brought up weren't profitable, and nobody's worried about profitability.
17:23
Speaker 1: They were more worried about growth on the private side.
17:26
Speaker 1: Once they become public, everybody's looking at, well, one is
17:29
Speaker 1: a profit going to turn around? I mean, if you
17:31
Speaker 1: look at what happened with Amazon years ago, similar type
17:34
Speaker 1: of thing, it took a while before they kind of
17:36
Speaker 1: hit their stride. So the question is uber is lift
17:40
Speaker 1: good public companies or good companies that are eventually turn
17:43
Speaker 1: it around and they were in large growth mode and
17:45
Speaker 1: now they're going to try and become profitable. Uh. I
17:49
Speaker 1: think that's where the way you have to look at
17:51
Speaker 1: it as opposed to this is just a bad model
17:54
Speaker 1: and it's not working right now. I think it's fascinating
17:57
Speaker 1: that some private equity firms are moving to twenty year
18:00
Speaker 1: fund models. That's new, right, I mean that does that
18:02
Speaker 1: have a precedent pre crisis, No, So this is new
18:06
Speaker 1: because again they have certain institutional investors that are looking
18:10
Speaker 1: more long term. So if you got a ten year
18:13
Speaker 1: fund and your investment period is your first three or
18:15
Speaker 1: four years, UM, then after that you're kind of carrying it.
18:19
Speaker 1: So how much higher are some of the returns on
18:22
Speaker 1: say a twenty year fund versus a ten year fund.
18:25
Speaker 1: They've only been um launched in the last few years,
18:29
Speaker 1: so UM. We don't have statistics on that yet, but
18:34
Speaker 1: I would think that you have more of an opportunity
18:36
Speaker 1: of when to sell as opposed to your coming to
18:38
Speaker 1: the end of the fund and now you have to
18:40
Speaker 1: liquidate those positions. So um. And there were only for
18:45
Speaker 1: you know, those larger institutional types of investors, retirement plans,
18:49
Speaker 1: state funds, um that don't need the money you know
18:53
Speaker 1: immediately if you're high net worth individual and these are
18:56
Speaker 1: investments you want to get some cash back within ten years.
18:59
Speaker 1: These more worried about future payments for all the pensioneers
19:02
Speaker 1: over a period of time. Let switch gears real quickly
19:04
Speaker 1: to hedge funds. I saw just news I think the
19:06
Speaker 1: last there so that Jeffrey Vinneck, the former star hedge
19:09
Speaker 1: fund manager of Fidelity madgellan and who ran a long
19:11
Speaker 1: time hedge fund, actually closed shop because he couldn't raise funds.
19:16
Speaker 1: Is it that hard to raise money today? It's difficult,
19:19
Speaker 1: especially on the hedge fund side. The e t fs
19:21
Speaker 1: have really um hurt the hedge fund industry because the
19:25
Speaker 1: fees are a lot less UM. So that's really brought
19:28
Speaker 1: it down. I think I saw a week or so
19:31
Speaker 1: or ago where UM dollars into e t f's first
19:35
Speaker 1: for the first time exceeded dollars into hedge funds or
19:38
Speaker 1: manage funds. So there was more capital going to those
19:42
Speaker 1: uh e t f s, and and you know, you
19:44
Speaker 1: need the right manager. So it's not everybody that can
19:48
Speaker 1: um come in there. And you know back in the
19:50
Speaker 1: old days where everybody would set up a fund and
19:52
Speaker 1: invest in it, that's not happening anymore. Yeah. I guess
19:55
Speaker 1: which shocked me is Jeff Vinick. I mean, you don't
19:57
Speaker 1: get a bigger name. Well, there's a large a lot
20:00
Speaker 1: of large like Leon Cooperman became a family office. There
20:04
Speaker 1: were a lord a lot of large institutional head funds
20:06
Speaker 1: that basically shut up, shutdown shop, gave all the money back,
20:09
Speaker 1: and now they have a family office instead. Right exactly. Uh,
20:13
Speaker 1: let's see here we are here, we're broadcasting life from
20:16
Speaker 1: with him Seventhaniel Global Summit and second in New York City.
20:20
Speaker 1: Tom Angel Practice Leader with him Financial Services script. Thanks
20:23
Speaker 1: so much for joining us. We appreciate your comments on
20:26
Speaker 1: the financial service indust You have a great conference today.
20:28
Speaker 1: Thank you well. Twitter reported results last night and the
20:44
Speaker 1: market did not like those results. The stock is trading
20:48
Speaker 1: off about nineteen percent today, stocks around thirty one a share.
20:52
Speaker 1: To get the latest on what happened there and also
20:54
Speaker 1: week a little preview of Amazon, we welcome our good
20:56
Speaker 1: friend to Tender Warral. He's a senior Internet annalyst for
20:59
Speaker 1: Bloomberg INTELLGM. He joined us from our San Francisco studio, Tender,
21:03
Speaker 1: thank you so much for joining us. First, give us
21:04
Speaker 1: a sense of what happened at Twitter. They were on
21:07
Speaker 1: a little bit of a run there. Looked like they
21:09
Speaker 1: were turning things around. What happened, Yeah, you're right, it was.
21:12
Speaker 1: It was a disappointing quote on Twitter has just walked
21:15
Speaker 1: a few steps back in its recovery story here. I mean, first,
21:18
Speaker 1: it was a quarter with a lot of bugs in
21:21
Speaker 1: their mobile app promotions product. That's sort of like impacting
21:25
Speaker 1: the at targeting aspect and hence the revenue that's coming
21:29
Speaker 1: from that product. But the bigger concern here was the
21:32
Speaker 1: seasonality that they were experiencing two months in the quarter.
21:36
Speaker 1: Uh And it's interesting, but the seasonality was around events.
21:39
Speaker 1: So basically, there are a lot of events happening, there's
21:41
Speaker 1: content flowing around that, the air product launches happening, you know,
21:44
Speaker 1: the your revenues go up. But if that doesn't happen,
21:47
Speaker 1: then suddenly you see a lull that's happening. And this
21:50
Speaker 1: this is a problem in terms of long term growth
21:53
Speaker 1: visibility because you know, if they're not able to maintain
21:55
Speaker 1: a steady scheme of advertisers, that it becomes difficult to
21:59
Speaker 1: see how they can you know, continue to grow double
22:02
Speaker 1: digit for years to come. So I'm struggling to understand
22:05
Speaker 1: why they're having difficulties with advertisers given the fact that
22:08
Speaker 1: their user base continue to show pretty strong growth, which
22:12
Speaker 1: actually had been a question for the company a while back. Yeah,
22:16
Speaker 1: that's a good question, and they are showing they continue
22:19
Speaker 1: to show progress on the user growth. But what happens
22:21
Speaker 1: is with with Twitter, you know, they're going after these
22:24
Speaker 1: bigger brand advertisers. Self service a very small portion of
22:28
Speaker 1: the business, not like uh, Facebook or Google or even
22:31
Speaker 1: Snap for that matter. So you know, the salesforce has
22:34
Speaker 1: to drive these advertising dollars. And and sometimes because these
22:38
Speaker 1: advertising dollars sort of budgets flow against a given event
22:43
Speaker 1: or a series of events or a product launch, you know,
22:45
Speaker 1: they tend to keep on seeking new advertisers of humane
22:50
Speaker 1: versus having a self service engine running like Facebook is.
22:54
Speaker 1: And and that's why you see this lumpiness. And this
22:56
Speaker 1: lumpiness is what what worries us the most. But there
22:59
Speaker 1: was also a problem with some bugs that it talked
23:02
Speaker 1: about what what was the issue there? So the issue
23:05
Speaker 1: there was basically the ad targeting of the mobile app
23:09
Speaker 1: promotions product, which is basically you know, mobile app installed
23:12
Speaker 1: ads and and things like that. These are higher price ads.
23:15
Speaker 1: They were facing issues with the data that was flowing
23:19
Speaker 1: through to the advertisers. There was some data that was
23:22
Speaker 1: not supposed to go was going, some of it was
23:24
Speaker 1: not going, and and because that reduced the at targeting,
23:28
Speaker 1: that had an impact on the spending against UH that product,
23:32
Speaker 1: and that's why they saw they saw hit there. Now
23:35
Speaker 1: the expectation is this will continue next quarter UH and
23:39
Speaker 1: into next year as well. But next year they have
23:42
Speaker 1: some uplift coming from the organic election year traffic. They
23:45
Speaker 1: have Japan Olympics, uh coming as well, so they have
23:49
Speaker 1: some offsets they're coming in next year. But what what
23:53
Speaker 1: investers are questioning right now is the longevity here in
23:56
Speaker 1: terms of you know, this lumpiness and business or if
24:00
Speaker 1: vents driven or hits driven seasonality that that that the
24:03
Speaker 1: quota is shorn so tender. Probably maybe as recently as
24:06
Speaker 1: a year ago. There are real questions around this company.
24:10
Speaker 1: Could it be a long term viable player in the
24:13
Speaker 1: digital advertising market place. Did it have big enough audience
24:16
Speaker 1: to compete with, you know, for ad dollars against the
24:18
Speaker 1: facebooks and the of the world and the snapchats and
24:21
Speaker 1: all the all that kind of thing. They seem to
24:23
Speaker 1: be on their way to answering that question in the affirmative.
24:26
Speaker 1: But did they take a big step back here? Uh?
24:29
Speaker 1: They did, Paul, and I think last you're right, last
24:32
Speaker 1: couple of quoters. They have been showing progress towards that.
24:35
Speaker 1: In fact, the health initiative that they are spending money
24:38
Speaker 1: on is actually paying off as we see you know,
24:40
Speaker 1: the da you growth happening. But when it comes to
24:43
Speaker 1: attracting advertisers longer term and scaling the business you know,
24:47
Speaker 1: they have to scale the small business, small and medium
24:51
Speaker 1: business dependence more. They have to scale the self serve advertising,
24:54
Speaker 1: the dr advertising war. So those are the aspects that
24:57
Speaker 1: there are still in the in the making and and
25:00
Speaker 1: this quarter really puts them back in the show me
25:02
Speaker 1: mode for to answer that longcome good question. So just
25:06
Speaker 1: shifting gears a little bit, We're expecting Amazon earnings after
25:08
Speaker 1: the bell. What are you looking for? Costs is going
25:12
Speaker 1: to be the biggest topic. Last quarter, we saw their
25:15
Speaker 1: marketing costs skyrocketed as they spend money on a WST marketing,
25:21
Speaker 1: Prime Video, Alexa, and lex of those also one day shipping,
25:25
Speaker 1: which is giving a boost to revenue, so we anticipate
25:28
Speaker 1: that boost too happened this quarter as well. But what
25:32
Speaker 1: would it cost is the question. And we saw them
25:36
Speaker 1: come ahead a little bit than expectations last quarter, but really,
25:40
Speaker 1: because it's so early with this one day shipping, we
25:43
Speaker 1: don't know exactly how many or how quickly the new
25:46
Speaker 1: products are being added to this platform and how much
25:48
Speaker 1: more it can really cost. So this is a big
25:50
Speaker 1: question mark for Amazon from profitability standpoint. So from a
25:54
Speaker 1: revenue growth standpoint, I think they're doing well. One day
25:58
Speaker 1: shipping is helping a WS wrote will come in question
26:01
Speaker 1: again as it did last quarter, but you know the
26:04
Speaker 1: size of the business, thirty billion dollars plus business. It
26:07
Speaker 1: has to be considered when we look at these growth
26:10
Speaker 1: rates going forward. But the focus for Amazon, I think
26:14
Speaker 1: this quarter in the quarters to come, really is going
26:16
Speaker 1: to be cost Thank you so much for being with
26:19
Speaker 1: us to tender Verall, senior Internet analyst for a Bloomberg Intelligence,
26:23
Speaker 1: joining us from our San Francisco studios. Twitter shares down
26:26
Speaker 1: more than nine percent on those disappointing earnings, still though
26:31
Speaker 1: shares that more than nine percent year to date. Amazon
26:34
Speaker 1: shares ahead of the earnings release after the bell uh
26:38
Speaker 1: up just at one point four percent, so people expecting
26:41
Speaker 1: some positive news there. We are broadcasting live from with
26:45
Speaker 1: him seventh Annual Global Summit in New York City, looking
26:48
Speaker 1: at a mixed market with the Dow down while the
26:51
Speaker 1: other broad indusicries are higher to set up a tenthse
26:54
Speaker 1: of eight percent. Thanks for listening to the Bloomberg Panel podcast.
26:58
Speaker 1: You can subscribe and listen to Inner Use at Apple
27:00
Speaker 1: Podcasts or whatever podcast platform you prefer. M Paul Sweeney,
27:04
Speaker 1: I'm on Twitter at PT Sweeney. I'm Lisa abram Woits.
27:06
Speaker 1: I'm on Twitter at Lisa abram Whits one before the podcast,
27:09
Speaker 1: you can always catch us worldwide on Bloomberg Radio