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Former Apple Engineer Unveils Jobs' Creative Process · Bloomberg Intelligence

0:05
Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim Fox.
0:08
Speaker 1: Along with my co host Lisa Abramowitz. Each day we
0:11
Speaker 1: bring you the most important, noteworthy, and useful interviews for
0:15
Speaker 1: you and your money, whether you're at the grocery store
0:17
Speaker 1: or the trading floor. Find the Bloomberg P and L
0:20
Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Our
0:33
Speaker 1: next guest is the author of a new book entitled
0:37
Speaker 1: Creative Selection, inside Apple's design process during the golden age
0:42
Speaker 1: of Steve Jobs ken CoA Cienda. He joins us now
0:47
Speaker 1: in our eleven three oh studios, and he is also
0:49
Speaker 1: the former principal engineer of iPhone software at Apple. So
0:54
Speaker 1: if you have any problems with your iPhone, you know
0:57
Speaker 1: who to ask. Great to have you with us hand.
1:00
Speaker 1: Thanks for coming in. Thanks so much, it's great to
1:02
Speaker 1: be here. Tell us why you decided to write this book, Well,
1:07
Speaker 1: I thought, I think I worked at Apple during an
1:09
Speaker 1: interesting time in its history. I got the opportunity to
1:13
Speaker 1: work on some products like the iPhone, but I also
1:17
Speaker 1: started at the company back in two thousand one one.
1:19
Speaker 1: Apple was still an underdog and and the iPod hadn't
1:23
Speaker 1: even been released. Yet and and the Mac was still
1:26
Speaker 1: the company's main product, and and it was at a
1:29
Speaker 1: five percent market share in a computer industry dominated by
1:32
Speaker 1: Microsoft Windows. And so I was I was there. I
1:35
Speaker 1: was a witness to this effort of Steve Jobs to
1:39
Speaker 1: make the company relevant again, not only the market but
1:42
Speaker 1: in people's minds. And and that's with products like the
1:45
Speaker 1: iPhone and and and the iPod before it. Right, that
1:48
Speaker 1: that worked out pretty well. So Ken, here we are.
1:51
Speaker 1: Apple is now worth more than a trillion dollars in
1:54
Speaker 1: market cap. What point in your tenure at Apple did
1:59
Speaker 1: you realized, Huh, we're working on something that's really big. Well,
2:05
Speaker 1: when the iPhone came out, of course, it built upon
2:09
Speaker 1: the iPod before it, and so Apple had already re
2:13
Speaker 1: established itself as as as a company worth watching. But
2:18
Speaker 1: then with the iPhone, uh, and and and the release
2:22
Speaker 1: of apps, and and the excitement that people had, uh
2:27
Speaker 1: that they could carry around this computer in their pocket,
2:30
Speaker 1: and that he could download all of this software that
2:33
Speaker 1: that opened up all of these these these new software
2:36
Speaker 1: and hardware networking capabilities to them. Uh, it became clear
2:40
Speaker 1: to us that that this was something special. Just give
2:44
Speaker 1: people a little flavor of how you ended up at
2:48
Speaker 1: Apple because you did not well. You graduated with a
2:51
Speaker 1: degree from in history, and I understand that you're also
2:55
Speaker 1: at one point thinking of a career as a motorcycle repair.
2:59
Speaker 1: So I graduated from college. I had a history degree,
3:03
Speaker 1: uh and I wanted to do so. Yes, I I
3:07
Speaker 1: went to Yale uh and and but I wanted to
3:10
Speaker 1: do something different from from studying and so I I
3:15
Speaker 1: went to motorcycle mechanics school. I have to say, Uh,
3:19
Speaker 1: this wasn't the most popular decision with my father, but
3:24
Speaker 1: my family got behind me and supported me. And so yeah,
3:26
Speaker 1: I went out to to fix motorcycles. You know, throughout
3:29
Speaker 1: my throughout my life, throughout my career, I've I've tried
3:33
Speaker 1: to figure out ways that I could reinvent uh and
3:38
Speaker 1: and and integrate new new new efforts, new new directions,
3:43
Speaker 1: new ideas. So ken one thing that I'm struck by
3:47
Speaker 1: as Apple sort of starts a path forward, how much
3:51
Speaker 1: was Steve Jobs responsible for the dynamism of Apple? And
3:57
Speaker 1: you know, does his his death and you know, kind
4:00
Speaker 1: of the saturation of the Apple products at this point
4:03
Speaker 1: create a cap and how much further it can go
4:05
Speaker 1: and innovate? Well, you see Steve created the culture that
4:12
Speaker 1: we used at Apple to build products. And and to
4:16
Speaker 1: just talk a little bit about that a second, because
4:18
Speaker 1: I think it does inform so much about what what
4:21
Speaker 1: what Apple is and how it how it does its work.
4:24
Speaker 1: You know, he was a great editor and and and
4:27
Speaker 1: he set these assignments for people like me a programmer,
4:31
Speaker 1: and he would evaluate the work that came back, you know,
4:33
Speaker 1: always with a mind for how these products would fit
4:38
Speaker 1: into people's lives so that it wouldn't wouldn't be just
4:42
Speaker 1: a piece of technology, uh, that it would be something
4:45
Speaker 1: that people would find meaningful and useful for them, you know.
4:48
Speaker 1: And this this continues on his his his legacy is
4:54
Speaker 1: still very very strong in the company. Well when you
4:56
Speaker 1: say meaningful to them, I mean right now we're broadcasting
5:00
Speaker 1: as these set it hearings go on with Facebook and Twitter,
5:04
Speaker 1: and I just have to wonder, I mean, given the
5:06
Speaker 1: fact that people are raising questions about iPhone or smartphone
5:10
Speaker 1: addictions and that people are using social media that's being
5:14
Speaker 1: corrupted according to some people buy foreign actors and bots
5:19
Speaker 1: and the like. You know, does that does that vision
5:21
Speaker 1: change or is there something about that that has to
5:23
Speaker 1: change just by nature of where we are right now. Yeah,
5:27
Speaker 1: I think as a society, as a culture, we are
5:31
Speaker 1: learning what to do with these new devices and and
5:35
Speaker 1: and the pervasive part that they play in our lives. Yeah,
5:39
Speaker 1: where this is still new to us. This technology like
5:43
Speaker 1: the iPhone didn't exist a dozen years ago, and Twitter
5:47
Speaker 1: didn't either, and so we are still trying to figure
5:53
Speaker 1: out how to incorporate these new ideas and these new
5:57
Speaker 1: capabilities into our life. So it's you know, I'm an optimist.
6:00
Speaker 1: I think we're going to figure it out. Well, your
6:03
Speaker 1: book is very optimistic as well, and I gotta say
6:05
Speaker 1: it is a great read. It's called creative Selection. And
6:08
Speaker 1: I'm wondering if you could just quickly tell the story
6:10
Speaker 1: about a demo that you'd made with a gentleman name
6:14
Speaker 1: Phil Schiller, just had to do with the Corty keyboard
6:18
Speaker 1: that we're If you've got large thumbs, it's your fault.
6:22
Speaker 1: Using and creating the keyboard for the iPhone. Is a
6:27
Speaker 1: fascinating story about collaboration at Apple. Right. Well, you see,
6:31
Speaker 1: the way that we did work was always based on
6:35
Speaker 1: demos and and and we used this creative selection process
6:40
Speaker 1: to Starwinnian process of evolving the projects and and and
6:45
Speaker 1: the products from these early stage stages where lots of
6:49
Speaker 1: times the software wasn't very good. And so this this
6:53
Speaker 1: demo that you're you're mentioning was was an instance where
6:56
Speaker 1: this early prototype, well, it didn't really work very well
6:59
Speaker 1: for Phil and like Apple, he said so. And so
7:05
Speaker 1: you know, for me as a as a product developer
7:07
Speaker 1: and designer, you had to have a pretty thick skin.
7:10
Speaker 1: But you had to react to what these people were
7:13
Speaker 1: saying when they tried to software, because that's the experience
7:16
Speaker 1: that people have. They walk into an Apple store and
7:18
Speaker 1: they pick up a device, and they need to decide
7:20
Speaker 1: if they want to buy it or not. And and
7:23
Speaker 1: so it was job the job for someone like me
7:25
Speaker 1: to make sure that the product worked, that that the
7:28
Speaker 1: experience would be good when people tried the product. Yeah,
7:32
Speaker 1: and not to get too offended when people say, uh,
7:34
Speaker 1: it doesn't work for me. I'm sure it was. Yeah. Yeah.
7:38
Speaker 1: It was then my my role to step in and
7:40
Speaker 1: figure out what what's making people have that reaction and
7:43
Speaker 1: to bridge that gap so that the experiences is a
7:45
Speaker 1: good one rather than uh. Ken Cakscenda, thank you so
7:49
Speaker 1: much for being with us. Ken Kshnda is author and
7:51
Speaker 1: former principal engineer of iPhone software at Apple. His new
7:55
Speaker 1: book is Creative Selection, Inside Apple's design process during the
7:59
Speaker 1: Golden Age. Steve Jobs chairs of Twitter. They are lower
8:17
Speaker 1: right now by four and a half percent. As comes
8:19
Speaker 1: as the chief executive, Jack Dorsey testifies for the Senate
8:23
Speaker 1: Intelligence Committee. Here to tell us more about these hearings
8:26
Speaker 1: and the companies is Mark Douglas, the chief executive of Steelhouse.
8:31
Speaker 1: All Right, Mark Douglass, what do you take away from
8:33
Speaker 1: the hearings? Is this just a political theater or are
8:36
Speaker 1: there going to be substantive changes at these social media companies? Um? Hi,
8:41
Speaker 1: good morning, So Um, I would put a little bit
8:44
Speaker 1: between those two. I mean, I don't think there's going
8:48
Speaker 1: to be much that comes from these hearings from a
8:52
Speaker 1: congressional Senate perspective in terms of legislation that's essentially not
8:57
Speaker 1: already enacted by these companies. And there's the they already
9:00
Speaker 1: have controls and plays, they have taken actions and things
9:03
Speaker 1: like that. But I think the hearings are pretty informative.
9:06
Speaker 1: I think for anyone that chooses to watch them, like
9:08
Speaker 1: with the Zuckerberg testimony, you learn a lot. You learn
9:11
Speaker 1: a lot about how these companies operate, Marco, Who do
9:13
Speaker 1: you think has performed better today, Jack Dorsey or Cheryl Samberg? Um.
9:17
Speaker 1: Cheryl Samberg. Jack sings to me personally, UM, fairly nervous.
9:22
Speaker 1: I think he has never smiled. Demeanor UM, which is
9:26
Speaker 1: kind of um personally to me doesn't read that well.
9:30
Speaker 1: I think Cheryl, you know her, her experience as an
9:34
Speaker 1: executive and kind of comfort just being in front of
9:38
Speaker 1: a microphone and in a setting, UM seeing she just
9:41
Speaker 1: kind of comes across much better. Marca, what if you
9:44
Speaker 1: could comment on the world of advertising as it relates
9:47
Speaker 1: to social media and whether publishers, those people who purchase
9:52
Speaker 1: advertising online are they really getting what the social media
9:56
Speaker 1: companies tell them they're getting or they getting many of
10:00
Speaker 1: the fake and illegitimate accounts that have also been the
10:04
Speaker 1: subject of political investigation. Yeah, I mean that's an interesting question.
10:10
Speaker 1: So the Facebook in particular is widely considered the best
10:15
Speaker 1: performing advertising platform period um and so, and the way
10:20
Speaker 1: that measured is two ways, um. Two people click on
10:24
Speaker 1: the ads and respond to them, and do they purchase
10:27
Speaker 1: goods and services after they see the ads and the
10:30
Speaker 1: goods and services You can't the clicks potentially, UM can
10:36
Speaker 1: be a little you know, maybe a fake box or
10:40
Speaker 1: something like that can do that. There's not really an
10:42
Speaker 1: incentive to do it, but people um companies run these
10:46
Speaker 1: ads and they get the purchases that they're looking for,
10:48
Speaker 1: they get the consumer response that they're looking for. So
10:51
Speaker 1: I think, in particular on the social media companies, that's
10:54
Speaker 1: considered really safe place to advertise and very very high
10:57
Speaker 1: performing place for advertising the place of money. So, given
11:01
Speaker 1: your background and your intimate knowledge of how the advertising
11:04
Speaker 1: works and data collection UH plays out, what is the
11:08
Speaker 1: question that you would ask both Cheryl Sandberg and Jack
11:12
Speaker 1: Dorsey and what would you be hoping to hear? Well,
11:17
Speaker 1: I think what most consumers want to hear. So in
11:19
Speaker 1: terms of the question, let's say that question was coming
11:21
Speaker 1: from a consumer perspective, is my data being solved? I
11:26
Speaker 1: think when I talk to people, they generally understand these
11:29
Speaker 1: platforms are free and in return for them being free,
11:34
Speaker 1: that they're going to receive ads, and those ads are
11:37
Speaker 1: going to be targeted at their interests, words they use
11:40
Speaker 1: in their profiles, things like that, what they you know,
11:43
Speaker 1: where I think most people draw the line is are
11:45
Speaker 1: you selling that data in any way? Are you giving
11:48
Speaker 1: it away? Are you trading it in any way? And
11:50
Speaker 1: I think that's um ultimately the real question here. UM.
11:54
Speaker 1: I know a lot of centers want to talk about
11:56
Speaker 1: political ads. I think that's another not consumed a question,
12:00
Speaker 1: but a question that Americans have is is you know
12:03
Speaker 1: when when their political ad placed, are they legitimate? Are
12:07
Speaker 1: they real? Um? Those are the two key things. I think,
12:10
Speaker 1: the consumer data, what's happening with my data? And and
12:13
Speaker 1: can I trust that the ads I see, particularly in
12:16
Speaker 1: a political arena, are are legitimate? Thank you so much
12:20
Speaker 1: for being with us. Mark Douglas, chief executive Officer of
12:22
Speaker 1: Steelhouse talking about what we've been hearing among the Senate
12:27
Speaker 1: Intelligence Committee, where we have both Cheryl Sandberg as well
12:31
Speaker 1: as Jack Dorsey of Facebook and Twitter respectively, testifying in
12:35
Speaker 1: front of Congress. Really interesting that this hearing was supposed
12:38
Speaker 1: to be about interference with US elections. We've heard very good.
12:44
Speaker 1: In fact, I haven't heard anything specifically about the presidential
12:50
Speaker 1: election or any specifics regarding what the companies have done
12:54
Speaker 1: to ensure that that doesn't happen with the upcoming the
12:57
Speaker 1: term elections. Indeed, and there does seem to be a
12:59
Speaker 1: lot of focus. Potential regulations are oversight of these companies,
13:02
Speaker 1: and perhaps that's what's leading the tech shares to decline
13:05
Speaker 1: more than other arrival industries. The market for initial public
13:25
Speaker 1: offerings in the United States that have been announced more
13:28
Speaker 1: than twenty seven billion dollars worth of initial public offerings
13:32
Speaker 1: so far this year a hundred companies. Here to help
13:35
Speaker 1: us understand the market is Manuel Enrique's founder and chief
13:39
Speaker 1: executive officer of Hercules Capital. They are based in Palo
13:43
Speaker 1: Alto and Manuel joins us now and well, thank you
13:46
Speaker 1: very much for being with us. Tell people a little
13:48
Speaker 1: bit about Hercules Capital and the kind of money that
13:51
Speaker 1: you invest and at what stage because you're kind of
13:54
Speaker 1: at the very beginning for a lot of companies, maybe
13:57
Speaker 1: between one and forty million dollars of investment capital. Correct. Well,
14:02
Speaker 1: we kind of helped bridge the gap for companies looking
14:05
Speaker 1: to expand and grow without having UH to ENCURRG greater
14:08
Speaker 1: solution and you get either grow by using venture capital
14:12
Speaker 1: equity dollars or you can grow by having more conservative
14:15
Speaker 1: bank capital. We fit in that middle void where we
14:18
Speaker 1: actually help these companies continue to advance or innovations and
14:22
Speaker 1: their disruptive technologies by preserving more capital ownership to the
14:25
Speaker 1: original investors, original seat investors, and the founders by using
14:30
Speaker 1: a vehicle call venture debt, which is what we do. MM. Interesting.
14:34
Speaker 1: This is especially interesting to me because it comes at
14:36
Speaker 1: a time where there's increasing focus on how the number
14:40
Speaker 1: of I p O s has declined significantly in the
14:43
Speaker 1: United States. SEC Chair Jay Clayton has me that's one
14:46
Speaker 1: of his priorities to basically prompt more companies to go
14:50
Speaker 1: public in the US. What's your take on the I
14:53
Speaker 1: p O market? And you know, do you sort of
14:55
Speaker 1: agree with people who say that people like you who
14:58
Speaker 1: offer this bridge finance saying reduced the need to go public. Well,
15:03
Speaker 1: there's certainly there's there's a lot of factors that question.
15:06
Speaker 1: I mean, number one, you can go back as far
15:08
Speaker 1: as decimalization, uh causing an impact on that, Sarbans Oxley
15:12
Speaker 1: another issue causing that, and then the public shareholders demanding
15:17
Speaker 1: that business models be more developed and start showing less
15:21
Speaker 1: of a cash burned before they go public, and all
15:24
Speaker 1: of that has actually changed, and in fact, fiscal two
15:27
Speaker 1: thousand and eighteen we're probably seeing one of the most
15:29
Speaker 1: robust IBO market activities we haven't seen in probably over
15:33
Speaker 1: a decade and UH So far the first two quarters
15:37
Speaker 1: of the year have been very very strong, with very
15:39
Speaker 1: strong performance for companies like for example, to start with,
15:42
Speaker 1: like Roku alone, UH is up since its i p
15:45
Speaker 1: almost almost three and a half times and its valuation.
15:48
Speaker 1: Docu Signed, one of our own portfolio companies, has been
15:51
Speaker 1: a blockbuster, doing phenomenally well, probably a hundred hundred plus
15:55
Speaker 1: percent since going public, and there's multiple examples of that
15:59
Speaker 1: throughout those recent i p o s. But what makes
16:01
Speaker 1: this I p O market very interesting and very unique.
16:04
Speaker 1: It is not just subject to the technology tape performing well.
16:08
Speaker 1: It's also seeing very good strong performance on biotech. So
16:11
Speaker 1: it's a wide industry uplift that's going on. As investors
16:15
Speaker 1: continue to clamor for growth, they're seeing that growth coming
16:18
Speaker 1: from biotech and technology companies. Just to give the detail
16:21
Speaker 1: about docu Sign, that company went public in March of
16:24
Speaker 1: the year, a seven hundred and twenty three million dollar
16:28
Speaker 1: i p O. That share is so far performing a
16:31
Speaker 1: hundred and twenty three What can you tell us about
16:35
Speaker 1: investing in the biotechnology industry or medical device business because
16:40
Speaker 1: those are both areas that you're interested in. Yes, we
16:44
Speaker 1: have um about the one point five billion of assets
16:47
Speaker 1: we have invested, literally half of it is invested in
16:50
Speaker 1: about technology companies from wide array of companies from anywhere
16:53
Speaker 1: from biotech to medical devices to therapeutic diagnostics UM and
16:58
Speaker 1: we're seeing a very great strong performance in that area
17:01
Speaker 1: as well. And we're very happy with what we're seeing
17:04
Speaker 1: with the results in the biotech companies, despite the fact
17:07
Speaker 1: that you've been seen this kind of storm cloud forming
17:10
Speaker 1: on drug prices that has been looming either from the
17:13
Speaker 1: Clinton administration or sorry when Hillary Clinton was looking at
17:16
Speaker 1: drug price regulation and now the Trump administration is looking
17:19
Speaker 1: at drug price regulations. Although we've seen a lot of
17:22
Speaker 1: that headwind causing some impact in biotechs, we're seeing so
17:26
Speaker 1: far the industry seems to be brushing that off rightfully,
17:29
Speaker 1: so because they're making such a great medical advancement that's
17:33
Speaker 1: going on there. So I'm just wondering, from your perspective,
17:36
Speaker 1: one's the best time to invest in a company before
17:39
Speaker 1: they go public at this point or after they go public. Well,
17:42
Speaker 1: that's a great question, because what Hercules offers to the
17:45
Speaker 1: shareholders who in our stock is the ability to actually
17:48
Speaker 1: own some of these high promising pre I p O
17:52
Speaker 1: PREEM and a companies that are now beyond just a concept.
17:56
Speaker 1: So we definitely we generally don't invest in a Series
17:58
Speaker 1: A or Series B we search of development company. We
18:01
Speaker 1: tend to invest after the company has shown demonstrative progress
18:04
Speaker 1: in its development. So we try to take as much
18:06
Speaker 1: risk out of the investment as we possibly can and
18:09
Speaker 1: therefore allow our shareholders to participate an additional upside. So
18:13
Speaker 1: an interesting way of looking at Hercules is and Hercules
18:16
Speaker 1: almost be seen as kind of et F of the
18:20
Speaker 1: venture capital industry. We have a wide distribution of different
18:23
Speaker 1: venture capital firms, different uh technology and life sciences companies
18:28
Speaker 1: that we invest in, the different geographies of the United States,
18:30
Speaker 1: and different stages of developments, all aggregated in this one
18:33
Speaker 1: portfolio called Hercules. So you can participate in that by
18:37
Speaker 1: getting a nice dividend yield generally about nine nine percent
18:40
Speaker 1: dividend yield, while also seeing capital appreciation when these companies
18:43
Speaker 1: go public any evidence of docuside. For example, Manuel Henriquez,
18:47
Speaker 1: thank you so much for being with us. Manuel Henriquez,
18:49
Speaker 1: as founder and chief executive officer of Hercules at Capital
18:52
Speaker 1: in Palo Alto, California. I want to shift our attention
19:10
Speaker 1: though now to retail to shopping and the places where
19:14
Speaker 1: you do that shopping. And joining us now is Tom McGee, President,
19:17
Speaker 1: Chief executive Officer of the International Council of Shopping Centers.
19:20
Speaker 1: He joins us here in our eleven three oh studios
19:22
Speaker 1: in New York. Tom, thank you so much for being
19:25
Speaker 1: back with us. Really good to have you, especially in
19:27
Speaker 1: light of the retail earnings that we've gotten, which were inconsistent,
19:32
Speaker 1: I should say, where you have some of the longtime laggards,
19:35
Speaker 1: with J C. Penny, Sears, uh L brands really suffering
19:39
Speaker 1: as a result of weaker earnings, while the Amazons of
19:42
Speaker 1: the world and the Walmart and other big box stores too. Well,
19:46
Speaker 1: I'm just wondering, from your perspective, would it be better
19:49
Speaker 1: for j C. Penny and Sears to go out of
19:51
Speaker 1: business and to let other healthier retailers go in those
19:55
Speaker 1: key spots in some of the malls in order to
19:57
Speaker 1: generate more traffic, or do you think they should hang
20:00
Speaker 1: and for longer. Well, I think that First of all,
20:02
Speaker 1: I think it's a fiercely competitive industry and it always
20:05
Speaker 1: has been. Uh And if you look at uh the
20:08
Speaker 1: retail names today and compared to twenty years ago, and
20:10
Speaker 1: thirty years ago, you see a lot of change and
20:13
Speaker 1: fluctuation that happens. I think consumers should make that, you know, decision,
20:17
Speaker 1: not me, and I understand that, but I'm just wondering
20:20
Speaker 1: from a health perspective, do you think it's it's better
20:22
Speaker 1: for stores to sort of live their life and then
20:24
Speaker 1: be turned over if they're not being super successful, or
20:27
Speaker 1: is it better for familiar names to kind of hang
20:29
Speaker 1: on again. I think I think the consumers should decide that.
20:33
Speaker 1: I think from a from a shopping center developers perspective
20:36
Speaker 1: and an owner and manager, they're always looking for the
20:38
Speaker 1: mix and curation of folks that are going to drive
20:40
Speaker 1: foot traffic. And generally what drives foot traffic is those
20:44
Speaker 1: brands that are doing well in the marketplace, that are
20:46
Speaker 1: offering products or services. And I think that's an important
20:49
Speaker 1: element in you know, retail real estate today, really consumer
20:53
Speaker 1: real estate is that you're moving from really a product
20:56
Speaker 1: centric city and almost an apparel centricity that may have
20:59
Speaker 1: defined retail over the course of the last twenty five
21:02
Speaker 1: years or so, to one that does include that, but
21:05
Speaker 1: it's a composition of a lot more, a lot more services, hospitality.
21:09
Speaker 1: You see quite frankly, when you see what's really happening
21:13
Speaker 1: in in retail in general is and I've always believed,
21:17
Speaker 1: and I've said this on this show, this whole retail
21:19
Speaker 1: apocalypse is just you know, kind of overblown what really
21:23
Speaker 1: is happening as a retail renaissance, and that there is
21:25
Speaker 1: a lot of redevelopment happening where you're mixing, um relative
21:30
Speaker 1: to what consumer demand is, mixing hospitality and living and
21:34
Speaker 1: retail all in one environment because people like to live, work,
21:37
Speaker 1: and play in one place, and I think you're seeing
21:39
Speaker 1: those things happen in retail generally here in the United States.
21:41
Speaker 1: And you know, we just recently issued kind of a
21:44
Speaker 1: global perspectives report because we are an international organization, and
21:47
Speaker 1: I think you see those same trends at different stages
21:51
Speaker 1: taking place across the world as well. All Right, I'm
21:54
Speaker 1: gonna give you a list of brands, and you can
21:57
Speaker 1: raise your hand if you've heard of them, because I
21:59
Speaker 1: confess that I've only recently, you know, tried to keep
22:02
Speaker 1: up to date. Thread Up, ever Lane, All Birds Away,
22:07
Speaker 1: Koto Packs, the Ministry of Supply, Indocino and m jem
22:12
Speaker 1: I Yes, and Casper Sleep. What do they all have
22:15
Speaker 1: in common. These are digitally native brands that have all
22:20
Speaker 1: opened actual physical stores. From the perspective of the International
22:26
Speaker 1: Council of Shopping Centers, to those kinds of brands demand
22:32
Speaker 1: something different than what a traditional store based operation wants.
22:41
Speaker 1: Are they savvy er in some ways? Do they want
22:43
Speaker 1: something different? What do they what do they want? First
22:46
Speaker 1: of all, I think it's the I think it's the
22:48
Speaker 1: natural evolution that we should expect that to be a
22:51
Speaker 1: continuing trend. I think the last ten years of really
22:54
Speaker 1: retailers are really invested in their online channel, and you know,
22:58
Speaker 1: not surprisingly so because that was new and emerging. I
23:01
Speaker 1: think what retailers Bobos is one example, right because Walmart
23:04
Speaker 1: bought them, Sure and now and now what you're seeing
23:07
Speaker 1: though is retailers and I really do believe this is
23:09
Speaker 1: the trend of the next ten years. Retailers are going
23:11
Speaker 1: to invest in their physical channel and that synergy that's
23:14
Speaker 1: going to take place because consumers really don't care. They
23:17
Speaker 1: just want, you know, best price, best service, regardless they're
23:19
Speaker 1: somewhat channel agnostic. I do think what you'll see though,
23:23
Speaker 1: is the stores of the future will increasingly focus upon experience.
23:27
Speaker 1: I think some of the brands that you're talking about,
23:29
Speaker 1: you know, Casper, the Sleep you know, it's a sleep center,
23:32
Speaker 1: and you know they're gonna focus upon experience as opposed
23:35
Speaker 1: to just a collection of products, and so infer inferred
23:39
Speaker 1: in that is, yes, the experiential aspect of seeing merchandise
23:43
Speaker 1: in a different way, but also just a greater level
23:46
Speaker 1: of customer service than you've had in the past. You know,
23:48
Speaker 1: the FAO Schwartz is opening up, you know, a new
23:52
Speaker 1: store here in Rocks Center, and all of us that
23:54
Speaker 1: are you know, grew up in the same age group,
23:56
Speaker 1: were excited about that. But you know, when they talked about,
23:59
Speaker 1: you know, the store, they talked a lot about experiential.
24:02
Speaker 1: They're taking a lot of space, but experiential and that
24:05
Speaker 1: the folks that are going to work there are really
24:06
Speaker 1: going to be in some in some ways in character,
24:09
Speaker 1: and you know you're going to have almost a theatrical
24:12
Speaker 1: experience when you go there. And that's on one end
24:14
Speaker 1: of the extreme. On the other end of extreme, you
24:16
Speaker 1: have something like a t J Max quite frankly, which
24:19
Speaker 1: is you know, which doesn't really doesn't have much of
24:22
Speaker 1: an online presence, but it isn't experience because it's like
24:24
Speaker 1: a treasure hunt right to go there, And I think
24:27
Speaker 1: retailers are going to focus more upon what's my experiential
24:31
Speaker 1: offering within my store that's going to differentiate me to
24:35
Speaker 1: our competitors. Since you did just issue a global report,
24:38
Speaker 1: where in the world are you seeing, uh, commercial retail
24:41
Speaker 1: space gain value at the fastest pace right now? Well,
24:45
Speaker 1: obviously the emerging markets, um, you know Asia is is
24:50
Speaker 1: with a growing middle class. Um, you certainly see a
24:52
Speaker 1: lot of investment in retail real estate. I think the
24:55
Speaker 1: Middle East is doing some things that are quite innovative
24:59
Speaker 1: and really I think set an example for some of
25:02
Speaker 1: the things that we are looking to do here in
25:04
Speaker 1: the United States. Um, if you go to a mall
25:06
Speaker 1: and Dubai for example, I mean we all have heard
25:09
Speaker 1: about the ski and shopping exactly, and they've been doing that.
25:15
Speaker 1: That's a decade ago, and you're you're going to see
25:18
Speaker 1: those types of things. You're already starting to see those
25:20
Speaker 1: types of things within malls and shopping centers here in
25:23
Speaker 1: the United States, and so I think you're I think
25:26
Speaker 1: what you're finding in North America is in some cases
25:29
Speaker 1: learning from the rest of the world. We have historically
25:32
Speaker 1: been more much more department store centric here than the
25:36
Speaker 1: rest of the world. I think we're evolving to become
25:39
Speaker 1: much more hospitality and service oriented, which I do think
25:43
Speaker 1: and I don't think it can be overseeing the importance
25:45
Speaker 1: of demographics. You have a you know, a baby boomer
25:49
Speaker 1: generation that's generally empty nesters. Now you have a millennial
25:52
Speaker 1: generation that is not yet in kind of there, you know,
25:56
Speaker 1: having kids, having a home type of a period of
25:59
Speaker 1: their life, and both of those, the largest demographic groups
26:03
Speaker 1: in our country and really in the world, are very
26:05
Speaker 1: much focused upon consuming experiences and services now. Now, maybe
26:09
Speaker 1: the millennials ten years from now will be in a
26:11
Speaker 1: different stage of life. But when you look at what
26:12
Speaker 1: they want right now and what the baby boomers want,
26:15
Speaker 1: which is the hugest percentage of our population, that's what's
26:18
Speaker 1: driving a lot of the changes in retail. Thanks very
26:20
Speaker 1: much for being with us. Tom McGee is the president
26:22
Speaker 1: and the chief executive of the International Council of Shopping
26:27
Speaker 1: Centers and they are out with their Global Perspectives Report.
26:35
Speaker 1: Thanks for listening to the Bloomberg P and L podcast.
26:38
Speaker 1: You can subscribe and listen to interviews at Apple Podcasts, SoundCloud,
26:42
Speaker 1: or whatever podcast platform you prefer I'm pim Fox. I'm
26:45
Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa
26:49
Speaker 1: Abramowits one before the podcast. You can always catch us
26:52
Speaker 1: worldwide on Bloomberg Radio