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Instacart, Volkswagen, Hostess, and Ad Tech · Bloomberg Intelligence

• 0:00
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
• 0:04
  Speaker 1: my co host Matt Miller.
• 0:05
  Speaker 2: Every business day we bring you interviews from CEOs, market pros,
• 0:09
  Speaker 2: and Bloomberg experts, along with essential market moven News.
• 0:14
  Speaker 1: Find the Bloomberg Markets Podcast on Apple Podcasts or wherever
• 0:17
  Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast.
• 0:22
  Speaker 1: So that's why we bring man Deep in here because
• 0:23
  Speaker 1: he's the tech guy for along with Anna rog Ran
• 0:26
  Speaker 1: and the team there Bloomberg Intelligence, a global tech team
• 0:29
  Speaker 1: which Mandeep now runs with an iron fist. I am
• 0:33
  Speaker 1: told Mandeep talk to us about these IPOs totally two
• 0:36
  Speaker 1: different companies, ARM and Instacart. How do you view ARM
• 0:41
  Speaker 1: because that's kind of the one I think that's kind
• 0:42
  Speaker 1: of got people's attention in the sense of is this
• 0:45
  Speaker 1: an AI play or isn't it.
• 0:47
  Speaker 3: Well, So ARM clearly has a history in terms of,
• 0:51
  Speaker 3: you know, being the core part of how AI has
• 0:55
  Speaker 3: evolved and how chips have evolved because they are the
• 0:57
  Speaker 3: IP providers when had come to computing and all the
• 1:02
  Speaker 3: advancements that we've seen, and what they have told us
• 1:05
  Speaker 3: is they have increased the royalty revenue. So basically they
• 1:09
  Speaker 3: have increased the prices and everyone is on board in
• 1:12
  Speaker 3: terms of paying the higher prices for their technology. So
• 1:15
  Speaker 3: that's a good sign ahead of the IPO, and I
• 1:19
  Speaker 3: think from what we have gleaned so far, the IPO
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  Speaker 3: has been oversubscribed. Clearly everyone believes this is a technology
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  Speaker 3: that's not going away. It can be replaced, and hence,
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  Speaker 3: even though the growth was slow, the fact that they
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  Speaker 3: can raise prices like this, it's a good sign ahead
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  Speaker 3: of the IPO. Instacart, on the other hand, completely different
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  Speaker 3: ballgame marketplace business. We know all the marketplace businesses haven't
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  Speaker 3: done very well, including Uber and lived since the IPO, but.
• 1:47
  Speaker 2: The marketplace business is Amazon and marketplace business as well.
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  Speaker 3: Amazon is a two sided marketplace. Instacart is a three
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  Speaker 3: sided marketplace where you've got all the grocery kind of providers,
• 2:01
  Speaker 3: you've got the shoppers, and then you've got the consumers.
• 2:05
  Speaker 3: The problem and ride sharing, for example, is a two
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  Speaker 3: sided marketplace. You only have the consumers and the drivers,
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  Speaker 3: so it's not a three sided marketplace. The problem in
• 2:15
  Speaker 3: a three sided marketplace is your take rates are much
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  Speaker 3: lower because you have to split your take rates through
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  Speaker 3: you know two other providers in a two sided marketplace,
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  Speaker 3: it's a higher take rate. So instakarts business the unit
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  Speaker 3: economics look a lot better than you know, some of
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  Speaker 3: the other providers, whether it's storedash or Uber, simply because
• 2:36
  Speaker 3: they leer a lot more ADS. For every dollar in
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  Speaker 3: transaction revenue. They make about thirty cent in ADS. That's
• 2:44
  Speaker 3: phenomenal for you know, unit economics. Problem is the top
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  Speaker 3: line is decelerating. They have flat order growth. Marketplaces are
• 2:52
  Speaker 3: scale businesses. Once your top line slows, even if you
• 2:55
  Speaker 3: make you know, thirty cents on a dollar for ADS,
• 2:58
  Speaker 3: that's not good enough because you our scale isn't growing.
• 3:01
  Speaker 3: And that is where I think they're pricing the IP
• 3:04
  Speaker 3: appropriately to reflect that.
• 3:06
  Speaker 4: That's a good bet.
• 3:07
  Speaker 2: If you feel like COVID's coming back, Paul, I do
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  Speaker 2: not I know, but I'm saying if you do, you know,
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  Speaker 2: because that would grow their top line, that would masterfully.
• 3:15
  Speaker 4: That would at least for maybe there was a.
• 3:17
  Speaker 3: Pull forward during the Covid time. I mean, all these
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  Speaker 3: companies grew one hundred percent plus triple digit growth.
• 3:22
  Speaker 1: So I guess for Instacart one of the real questions
• 3:24
  Speaker 1: will be valuation. So just walk us through kind of
• 3:28
  Speaker 1: where the thing was valued at its peak, when people
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  Speaker 1: were going nuts getting stuff delivered home, maybe where it
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  Speaker 1: is now.
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  Speaker 3: Yeah, so at its peak it was around thirty nine
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  Speaker 3: billion dollar valuation in twenty twenty one. And that's when
• 3:39
  Speaker 3: you know.
• 3:40
  Speaker 1: See this, This is what I say, being in an
• 3:41
  Speaker 1: old you know, old conjure Wall Street guy, that's Silicon
• 3:45
  Speaker 1: Valley valuation. That's the kids you don't want to come
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  Speaker 1: to the public markets. Then you got to talk to
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  Speaker 1: people like me.
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  Speaker 2: That's what happened here.
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  Speaker 3: Well, and I think back in you know, twenty nineteen
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  Speaker 3: when Lyft went public, they went public at a twenty
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  Speaker 3: billion dollar valuation. There is more than two billion in
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  Speaker 3: an ipo. Well, clearly things have reset completely now and
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  Speaker 3: I think they're.
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  Speaker 4: Worth a fifth of that now.
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  Speaker 2: No lift is worth a gajillion, I mean no, they're
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  Speaker 2: worth a fifth. Yeah, yeah, exactly, I think uber Yeah.
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  Speaker 3: So I think that's where instacart. Clearly the valuation is
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  Speaker 3: a lot more reasonable now. I can see the IPO
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  Speaker 3: pricing maybe revised upward to around ten to twelve billion,
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  Speaker 3: based on the initial pricing it's more a to nine billion.
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  Speaker 3: I can see it being revised slightly higher because of
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  Speaker 3: that ad revenue, and if they can convince investors at
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  Speaker 3: the road show that the top line will re accelerate,
• 4:40
  Speaker 3: because right now, as I said, it's flat order growth.
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  Speaker 3: That's not good news when you're a growth story. So
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  Speaker 3: clearly that top line acceleration is key. But the unit economics,
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  Speaker 3: as I said, for instacart to look a lot healthier
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  Speaker 3: than all the other marketplaces, including door, dash and Uber.
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  Speaker 2: I'll tell you what, Paul, I'd rather get into IPOs
• 4:59
  Speaker 2: in this climate then during the you know, the lift
• 5:04
  Speaker 2: and Rivian, the heady days of massive valuations, because now
• 5:09
  Speaker 2: we're also pessimistic about everything. Right now you have Mande
• 5:12
  Speaker 2: coming on, going, Eh, the top line's not gonna grow
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  Speaker 2: very much. They're gonna have to cut what they are
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  Speaker 2: actually worth by like four times. And back then it
• 5:21
  Speaker 2: was like, who knows, this guy's the limit? You know,
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  Speaker 2: So at least now you can get in without that
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  Speaker 2: irrational exuberance.
• 5:27
  Speaker 1: I'd rather be a momentum investor than a value investor
• 5:30
  Speaker 1: any day of the week because I don't have to
• 5:32
  Speaker 1: be right on the names. I just have to jump
• 5:33
  Speaker 1: on the mo here. I gotta pick the name, right,
• 5:36
  Speaker 1: I gotta pick the valuation, right, I gotta be all
• 5:38
  Speaker 1: kinds of right. So is this the beginning?
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  Speaker 5: Man?
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  Speaker 4: Deep?
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  Speaker 1: I mean, this is gonna be a down round, to
• 5:43
  Speaker 1: put it in the parlance of private equity.
• 5:45
  Speaker 2: Inventry for all of them, right, for arm, for Instacar.
• 5:48
  Speaker 1: So does this open up? I kind of feel like
• 5:50
  Speaker 1: there's a stigma. There is a stigma to not doing
• 5:52
  Speaker 1: down rounds. But now we're gonna have a couple of
• 5:54
  Speaker 1: notable names doing down rounds in the public market. Do
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  Speaker 1: you think that's gonna have an influence on the other
• 6:00
  Speaker 1: companies to maybe consider IPOs?
• 6:02
  Speaker 3: There will be And look, you're not gonna see a
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  Speaker 3: lot more delivery companies come to the scene now. Now
• 6:07
  Speaker 3: the market is consolidating. That's good news for those ones
• 6:11
  Speaker 3: that are left over. So previously you had gopuff and
• 6:14
  Speaker 3: you know every new company coming to the scene trying
• 6:19
  Speaker 3: to figure out delivery. Well, those days are over. I
• 6:22
  Speaker 3: think vcs are quite cautious about investing in this space altogether.
• 6:26
  Speaker 3: And I feel once you have consolidation, which is what
• 6:29
  Speaker 3: we are seeing with Door, Dash, Uber and to an extent, Instacart,
• 6:33
  Speaker 3: that probably will good for the will be good for
• 6:35
  Speaker 3: the unit economics. Of these companies.
• 6:38
  Speaker 1: ARMS said to consider here's Bloomberg story, ARM said to
• 6:40
  Speaker 1: consider raising IPO price range about that that's like dull days.
• 6:44
  Speaker 2: Yeah, but that's because they've already brought it down by
• 6:47
  Speaker 2: so much. You know, they had their own owner by
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  Speaker 2: a stake in them that it essentially already owned for
• 6:54
  Speaker 2: far more than what they're doing public for now.
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  Speaker 1: So it's just I mean, ARM, is this week right
• 6:59
  Speaker 1: like maybe a Tuesday pricing Tuesday night for Wednesday trade.
• 7:02
  Speaker 1: That'd be really interesting to see how that trades. Silicon
• 7:06
  Speaker 1: Valleant in general? Is it still all AI right now?
• 7:10
  Speaker 1: It's all about generator of AI. This year is the
• 7:13
  Speaker 1: year of generator AI. You can lump in chatbots as well,
• 7:16
  Speaker 1: and just overall large angrid models foundational models, which is
• 7:20
  Speaker 1: why the Apple event. If they don't talk about generator
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  Speaker 1: AI at this event, they clearly have a problem.
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  Speaker 4: Because really that's what everyone is hoping for.
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  Speaker 3: That Apple three trillion dollar company hasn't mentioned generat AAI
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  Speaker 3: even once?
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  Speaker 6: Is that right?
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  Speaker 2: Yes?
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  Speaker 1: What's why is that thirty seconds?
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  Speaker 3: Well, because they probably haven't built their foundational model yet
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  Speaker 3: and they are focused on privacy. When you think about
• 7:45
  Speaker 3: large anglid models. It's built on big data sets. Apple
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  Speaker 3: is a company that has always been focused on privacy,
• 7:51
  Speaker 3: and that is what makes them hard to build their
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  Speaker 3: own large angrid model like a chat GPT or.
• 7:56
  Speaker 1: We're going to have you again on this one, because
• 7:58
  Speaker 1: I mean, this kind of could be existential for Apple
• 8:01
  Speaker 1: if they don't, at least in the minds of investors.
• 8:03
  Speaker 4: Dude.
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  Speaker 2: This morning, Gina Martin Adams on Surveillance was talking about
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  Speaker 2: how important generative AI is for a hostess exactly if
• 8:11
  Speaker 2: it's summers to a Twinkie maker.
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  Speaker 1: That's what I say. When you hear Tom Keene mentioned
• 8:14
  Speaker 1: Twinkie and AI in the same sentence, you know something's up,
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  Speaker 1: all right, Mandy, thanks so much for joining us men
• 8:19
  Speaker 1: deep seeing he's a senior analyst. He runs all of
• 8:21
  Speaker 1: our technology research where you have tech analyss literally all
• 8:24
  Speaker 1: over the globe Europe, North America and of course Asia
• 8:28
  Speaker 1: and Mendeep kind of runs that business for us, and
• 8:29
  Speaker 1: we appreciate that.
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  Speaker 7: You're listening to the team. Ken's live program Bloomberg Markets
• 8:35
  Speaker 7: weekdays at ten am Eastern on Bloomberg dot com, the
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  Speaker 7: iHeartRadio app, and the Bloomberg Business app, or listen on
• 8:41
  Speaker 7: demand wherever you get your podcasts.
• 8:45
  Speaker 4: We have Rick Caruso with us.
• 8:47
  Speaker 2: He's the founder and executive chairman of Caruso, starting out
• 8:50
  Speaker 2: life as a lawyer and then transition to Kruso affiliated holdings,
• 8:55
  Speaker 2: and they own, among other things, The Grove, which was
• 8:59
  Speaker 2: ranked number two on Fortunes's list of the ten highest
• 9:02
  Speaker 2: sales generating shopping centers across the country.
• 9:05
  Speaker 4: I've always been a fan.
• 9:06
  Speaker 2: Of the mall you haven't, Yeah, I love the Westchester
• 9:10
  Speaker 2: up in White Plains, Jersey.
• 9:11
  Speaker 1: Person nosey, we do malls in New Jersey.
• 9:13
  Speaker 2: Yeah, I'm from the great state of Ohio. Of course,
• 9:15
  Speaker 2: we have traditionally had a big mallsley state. They started
• 9:18
  Speaker 2: I think when I was a kid, so I kind
• 9:20
  Speaker 2: of grew up with them fast times. Ridgemont High was
• 9:22
  Speaker 2: like the story of my middle school. Rick talk to
• 9:27
  Speaker 2: us about the current state of commercial real estate because
• 9:30
  Speaker 2: it had been, you know, kind of the one of
• 9:34
  Speaker 2: the big fears I would say of twenty twenty three.
• 9:37
  Speaker 2: But it seems to be fading a bit as a fear.
• 9:41
  Speaker 8: Well, thank you, I think on the retail site listen,
• 9:43
  Speaker 8: we do outdoor malls, so all of our properties are
• 9:46
  Speaker 8: not covered. I think that's a very different sector. But
• 9:49
  Speaker 8: what we're seeing on our properties consumer is still strong,
• 9:52
  Speaker 8: Consumer spending is still up. Our growth on our properties
• 9:56
  Speaker 8: is double digit in terms of attendance, and our sales
• 9:59
  Speaker 8: per square foot is up. So we're having a very
• 10:01
  Speaker 8: good year. My fear is that with inflation, with rising
• 10:07
  Speaker 8: interest costs, I don't know how long that lasts. But
• 10:09
  Speaker 8: right now we're running at at a really good pace.
• 10:13
  Speaker 1: What's the occupancy of your malls in general today? Maybe
• 10:17
  Speaker 1: relative to pre pre pandemic.
• 10:18
  Speaker 9: We're very unique.
• 10:20
  Speaker 8: So I'm going to tell you this and you won't
• 10:21
  Speaker 8: believe it, but we run at one hundred percent with
• 10:23
  Speaker 8: a waiting list. But our properties are incredibly productive. We
• 10:26
  Speaker 8: have three in the top ten in the United States.
• 10:31
  Speaker 9: We're a different business. Yeah, you know, it's a very.
• 10:33
  Speaker 4: It's not strip malls.
• 10:35
  Speaker 1: Well, what's the term thing?
• 10:36
  Speaker 2: It's like Ridge Hill we have up in Westchester, Polaris.
• 10:39
  Speaker 4: And Columbus is like this. What do you think different
• 10:41
  Speaker 4: in downtown centers?
• 10:42
  Speaker 7: Yeah?
• 10:43
  Speaker 9: Like downtown Okay, So.
• 10:44
  Speaker 4: Well, what makes it different than a covered mall?
• 10:47
  Speaker 8: Because we're creating an environment. Listen, a covered mall is
• 10:50
  Speaker 8: an artificial atmosphere that you're asking somebody to go into.
• 10:53
  Speaker 9: Right, And people always say.
• 10:54
  Speaker 1: Well, we have a good one over in New Jersey,
• 10:56
  Speaker 1: the mall of what's it called the Dream Mall.
• 10:58
  Speaker 4: Well, you and I have never been there. Happens, that's good.
• 11:01
  Speaker 9: That one through a lot of problems.
• 11:03
  Speaker 7: I know, I know, but I.
• 11:05
  Speaker 8: Think the difference is we're creating an environment for people
• 11:07
  Speaker 8: to come and enjoy themselves, relax, have fun, create an
• 11:11
  Speaker 8: environment very very different. We have dwell time. We want
• 11:15
  Speaker 8: people to stay, we want people to just relax, and
• 11:18
  Speaker 8: people respond to it. You know, we're tapping into the
• 11:20
  Speaker 8: consumer experience, which I think is all important.
• 11:23
  Speaker 2: They'll go without even knowing, without even thinking we're going
• 11:25
  Speaker 2: to the mall. They'll go because they want to visit
• 11:27
  Speaker 2: a restaurant. We're not even drive through occasionally.
• 11:30
  Speaker 8: We're not designing it with the idea that we want
• 11:32
  Speaker 8: people to shop. We're designing it with the idea that
• 11:34
  Speaker 8: we want people to enjoy themselves, and then they're going
• 11:37
  Speaker 8: to go shop because they're there.
• 11:38
  Speaker 2: Why do you think though the grove is so popular?
• 11:40
  Speaker 4: I mean, where is.
• 11:42
  Speaker 9: The grove in Los Angeles? Los Angeles?
• 11:44
  Speaker 8: Okay, it's it's popular because it just it makes people
• 11:47
  Speaker 8: feel better. It sounds corny, but it enriches your life.
• 11:51
  Speaker 9: And you can go.
• 11:52
  Speaker 8: There and hang out and have a cup of coffee
• 11:53
  Speaker 8: and read the paper and really not spend a dime.
• 11:56
  Speaker 8: Or you can go there and spend the day and
• 11:58
  Speaker 8: spend a lot of money. But it's the trees, it's
• 12:01
  Speaker 8: the fountain, it's the lawn, it's the flowers, it's everything.
• 12:04
  Speaker 8: And the shopping is incidental to it in the restaurants,
• 12:07
  Speaker 8: and it's curated with the best retailers and restaurants in
• 12:10
  Speaker 8: the business.
• 12:11
  Speaker 1: Are you adding new malls? Are you taking over existing malls?
• 12:14
  Speaker 8: How we've got we've got a pipeline of new projects
• 12:17
  Speaker 8: that we're doing, all in the format of outdoor centers,
• 12:21
  Speaker 8: and we're going strong with it.
• 12:23
  Speaker 1: Are you putting them all in the Austin Texas of
• 12:25
  Speaker 1: the world, the nationals and where.
• 12:27
  Speaker 8: We're now We're we're growing in southern California and we're
• 12:31
  Speaker 8: going to continue to do that.
• 12:32
  Speaker 9: Now.
• 12:33
  Speaker 8: Listen, we're looking in Florida, and we're looking in other areas.
• 12:36
  Speaker 1: There are your primarily in southern California?
• 12:37
  Speaker 9: Yeah?
• 12:38
  Speaker 1: Gotcha? Okay, So I mean, so give us a sense
• 12:41
  Speaker 1: of how southern California. Is you got strikes all across
• 12:44
  Speaker 1: Los Angeles and all that type of thing. Give us
• 12:46
  Speaker 1: a sense of to southern California general, because we have
• 12:48
  Speaker 1: someone here at Bloomberg in our editorial who's very bullish
• 12:52
  Speaker 1: on California.
• 12:53
  Speaker 4: H Matt Winkler, the guy who founded Blooo News.
• 12:55
  Speaker 1: He found a Bloomberg News and he's written a number
• 12:57
  Speaker 1: of editorials extolling the virtues of not only Los Angeles,
• 13:03
  Speaker 1: but you.
• 13:03
  Speaker 2: Can strength of the California economy essentially exactly exactly.
• 13:06
  Speaker 8: I think the California economy, listen, is strong. It's a
• 13:08
  Speaker 8: massive economy right globally, but the reality is we have
• 13:12
  Speaker 8: enormous challenges in California.
• 13:13
  Speaker 2: I have a viewer writing in for a question with
• 13:16
  Speaker 2: a question for Rick, and essentially it comes down to
• 13:20
  Speaker 2: the same thing.
• 13:20
  Speaker 4: It's about the economy.
• 13:22
  Speaker 2: Viewer, listener, we have you know, we're a radio, but
• 13:25
  Speaker 2: we're also streaming on YouTube. He asked, is do you
• 13:29
  Speaker 2: anticipate hiring to slow on your properties as the economy slows,
• 13:33
  Speaker 2: or as inflation remains higher, or as the consumer weekends.
• 13:37
  Speaker 2: Are you looking forward with concern to any of those things?
• 13:41
  Speaker 8: Well, I'm concerned about the consumer weekening. The consumer has
• 13:44
  Speaker 8: to weaken, right, I mean, you've got rising interest rate
• 13:47
  Speaker 8: and you still have inflation, and prices are high, and
• 13:50
  Speaker 8: savings are getting lower, and the default rates on credit
• 13:53
  Speaker 8: cards are coming up, which we've seen that data.
• 13:56
  Speaker 9: So it has to happen. It's just a question of time.
• 14:00
  Speaker 8: But I think all of us have to reorganize our
• 14:02
  Speaker 8: companies around the fact that we've got a higher tenure
• 14:05
  Speaker 8: and it's probably going to remain high for a while,
• 14:07
  Speaker 8: and it's chewing into free cash flow of every company,
• 14:12
  Speaker 8: and so we have to be smarter about how we
• 14:14
  Speaker 8: spend our money, which may mean slowering our hiring and
• 14:17
  Speaker 8: slowering growth and slowering cap X. I mean, it's going
• 14:20
  Speaker 8: to have an impact, which I worry about.
• 14:22
  Speaker 1: Theft is something that I've heard more from retailers earnings calls,
• 14:27
  Speaker 1: and they call it shrink. It's just been extraordinary and
• 14:31
  Speaker 1: it looks organized.
• 14:32
  Speaker 9: It's insane.
• 14:33
  Speaker 1: So can you give us a sense kind of from
• 14:34
  Speaker 1: your perspective what this means for the industry.
• 14:37
  Speaker 8: Well, here's a problem. In Los Angeles County. We have
• 14:40
  Speaker 8: a no bail system, so you can get arrested and
• 14:43
  Speaker 8: you're out within an hour, even if it's a felony.
• 14:47
  Speaker 8: If you steal under nine hundred and fifty dollars plus
• 14:49
  Speaker 8: or minus, it's a misdemeanor. And these theft rings are organized.
• 14:55
  Speaker 8: I mean, it's organized crime, and they're mobs, and we've
• 14:58
  Speaker 8: got to change the rules, and we've got to get
• 15:00
  Speaker 8: elected officials that actually have some backbone and say we're
• 15:03
  Speaker 8: not going to allow this to happen anymore. And let's
• 15:06
  Speaker 8: hold criminals accountable. They need to be incarcerated if they're
• 15:10
  Speaker 8: a ring and they're repeat offenders. And then of course
• 15:13
  Speaker 8: we've got to give people a chance for you know,
• 15:15
  Speaker 8: rebuild their lives and whatnot. But what's happening in southern
• 15:19
  Speaker 8: California right now with the smash and grabs are in
• 15:21
  Speaker 8: San Francisco. You can't tolerate that.
• 15:23
  Speaker 9: In business, do you?
• 15:25
  Speaker 8: I mean, and it's killing small business, big business.
• 15:28
  Speaker 2: If you if you own you know, you know, essentially
• 15:32
  Speaker 2: an outdoor shopping community like the grove, do you bring
• 15:35
  Speaker 2: in an extra you know, police force, auxiliary cops. Do
• 15:39
  Speaker 2: you try and you know, get the employees to do
• 15:43
  Speaker 2: something about it?
• 15:44
  Speaker 4: I mean, how do you how do you We don't.
• 15:46
  Speaker 8: Want we don't want employees to engage. But what we
• 15:48
  Speaker 8: do on all of our properties, we have armed security
• 15:51
  Speaker 8: and we have extensive camera systems. We have equipment that
• 15:55
  Speaker 8: can actually identify people, and so we're very sophisticated in
• 15:58
  Speaker 8: our properties. But the problem is ninety percent of the
• 16:02
  Speaker 8: businesses in LA are small businesses. They can't afford to
• 16:05
  Speaker 8: do that, and they get one smash and grab that
• 16:07
  Speaker 8: could be their monthly profit. So what's happening I think
• 16:11
  Speaker 8: in Southern California LA is the responsibility to keep people
• 16:15
  Speaker 8: safe is getting pushed to the private sector because we
• 16:18
  Speaker 8: have a shortage of cops and we have a shortage
• 16:20
  Speaker 8: of again, elected officials. I think that are actually dedicated
• 16:24
  Speaker 8: to making sure that our communities are safe, and we're
• 16:27
  Speaker 8: picking that up, and that's not good business.
• 16:30
  Speaker 9: We're smart for the community long term.
• 16:32
  Speaker 1: Is that one of the biggest challenges for Southern California
• 16:35
  Speaker 1: in general? Do you think?
• 16:36
  Speaker 8: I think so. I think it's a big challenge for
• 16:37
  Speaker 8: California in general.
• 16:39
  Speaker 2: For New York right even though we have an ex
• 16:42
  Speaker 2: cop here in office, and I think a lot of
• 16:43
  Speaker 2: people expected the crime to change on the day he
• 16:45
  Speaker 2: came in and it hasn't.
• 16:47
  Speaker 8: Yeah, and you have a big police force, which we
• 16:50
  Speaker 8: don't have in LA Is that right? Yeah, I mean
• 16:52
  Speaker 8: you have almost five times as many cops as we
• 16:55
  Speaker 8: do in Los Angeles.
• 16:56
  Speaker 1: Really I didn't know that. Okay, very interesting stuff there, Ricrusia,
• 17:00
  Speaker 1: thanks so much for taking the time to join us
• 17:02
  Speaker 1: here today. Really fascinating discussion.
• 17:04
  Speaker 4: We ought to do the show from the growth. We
• 17:07
  Speaker 4: should do that.
• 17:07
  Speaker 2: Let's go, let's go get out, get out to the
• 17:09
  Speaker 2: west coast and really dive into the economics and businesses
• 17:13
  Speaker 2: of California.
• 17:13
  Speaker 1: I think we can do that and get some support.
• 17:15
  Speaker 4: I would like to do that.
• 17:16
  Speaker 7: We hope they have you all right, Rick.
• 17:17
  Speaker 1: Thanks so much for joining us. Ricruso is a founder
• 17:19
  Speaker 1: and executive chairman of Cruser talking about the retail business
• 17:22
  Speaker 1: and the retail business on the outdoor malls, if you will,
• 17:26
  Speaker 1: quite vibrant relative to kind of what you hear from
• 17:28
  Speaker 1: other parts of some of the retail. But retail in
• 17:30
  Speaker 1: general has been good, the consumer has been good. The
• 17:33
  Speaker 1: question now is just kind of going forward with the
• 17:35
  Speaker 1: higher rates and all that type of thing.
• 17:38
  Speaker 7: You're listening to The tape cats are live program Bloomberg
• 17:41
  Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the
• 17:44
  Speaker 7: tune in app, Bloomberg dot Com, and the Bloomberg Business App.
• 17:48
  Speaker 7: You can also listen live on Amazon Alexa from our
• 17:50
  Speaker 7: flagship New York station, Just say Alexa play Bloomberg eleven thirty.
• 17:56
  Speaker 1: Big Takes story right down Matt's alley. Here, Monica Raymlandt
• 18:00
  Speaker 1: joins this. She's the auto industry disruption reporter. How about
• 18:04
  Speaker 1: that with Bloomberg News. She's got the story out there
• 18:07
  Speaker 1: entitled Germany Frets Volkswagen is heading down the wrong or
• 18:11
  Speaker 1: down the road to nowhere. Yeah, so, Monica, thanks much
• 18:14
  Speaker 1: for joining us via zoom her. What's kind of the
• 18:17
  Speaker 1: thesis thesis of your story? I thought v Volkswagen's going
• 18:21
  Speaker 1: all in EV.
• 18:23
  Speaker 10: Oh, definitely. I wouldn't say that they're not focused on
• 18:27
  Speaker 10: their EV strategy. But really, what the concern is is
• 18:30
  Speaker 10: that Volkswagen is sort of atrophying market share in China
• 18:35
  Speaker 10: when it comes to EV's, when it comes to competing
• 18:37
  Speaker 10: with Tesla, when it comes to competing with BYD, and
• 18:40
  Speaker 10: basically the company needs to sort of catch up and
• 18:43
  Speaker 10: redo their strategy and figure out how to deliver to
• 18:47
  Speaker 10: the Chinese market what the Chinese have come to expect
• 18:51
  Speaker 10: it's a unique situation because basically during the pandemic, when
• 18:54
  Speaker 10: everyone was sort of triaging their own issues back at home,
• 18:59
  Speaker 10: China really went all in with EV's, with their infrastructure,
• 19:02
  Speaker 10: with supporting their their startups there, and the scene completely changed.
• 19:06
  Speaker 10: They made leaps and bounds when it came to software technology,
• 19:09
  Speaker 10: when it came to infotainment, when it came to in
• 19:12
  Speaker 10: car experiences, and now Volkswagen and other legacy carmakers are
• 19:17
  Speaker 10: looking at the market and realizing, you know, the Chinese
• 19:20
  Speaker 10: are doing it really, really well when it comes to
• 19:23
  Speaker 10: when it comes to EV's, and they have to sort
• 19:25
  Speaker 10: of find a way to catch up. And the bigger
• 19:27
  Speaker 10: picture is that this is a big concern for Germany
• 19:30
  Speaker 10: because the auto industry plays such a huge role in
• 19:32
  Speaker 10: the macro environment, in the economy, and you know, if
• 19:36
  Speaker 10: Folkswagen fails to get this right, it's going to have
• 19:38
  Speaker 10: an impact on, you know, on their domestic situation, on
• 19:41
  Speaker 10: the domestic.
• 19:42
  Speaker 2: I mean, I think it's an amazing story on so
• 19:44
  Speaker 2: many levels, Monica. The first thing that I that I
• 19:48
  Speaker 2: was wondering about is did Deese, Herbert Deese leave Folkswagen
• 19:52
  Speaker 2: in the situation, or is Bluema, you know, not executing
• 19:56
  Speaker 2: on the d strategy well enough. Then I also thought about,
• 20:00
  Speaker 2: you know, if this is a security issue for Germany
• 20:03
  Speaker 2: as well as an economic issue, how much ConTroll does
• 20:06
  Speaker 2: the state feel like it can take over this behemoth?
• 20:09
  Speaker 2: Because if things go wrong, it's not just for the
• 20:13
  Speaker 2: Porsche piche family a problem, It's a problem for the
• 20:18
  Speaker 2: entire country and economy. So I think there's so many
• 20:20
  Speaker 2: different threads that are fascinating. What happened to the tens
• 20:24
  Speaker 2: of billions of dollars that Deese was investing in becoming
• 20:29
  Speaker 2: an EV maker, becoming a software company. I remember headlines
• 20:33
  Speaker 2: out from Rauvoald that were like thirty billion dollars or
• 20:36
  Speaker 2: fifty billion dollars? Are they spending that money? Is it
• 20:39
  Speaker 2: getting them anywhere?
• 20:41
  Speaker 3: Yeah?
• 20:42
  Speaker 10: Absolutely great questions all around on the investment question.
• 20:46
  Speaker 2: Sorry, I just thought the story moved me. Honestly, I
• 20:48
  Speaker 2: really really think it's fantastic. I recommend to our listeners
• 20:52
  Speaker 2: and viewers to check it out. I just it blew
• 20:55
  Speaker 2: me away this morning, So I should have read it
• 20:57
  Speaker 2: last night. I wouldn't have been able to sleep if
• 20:58
  Speaker 2: I did.
• 20:58
  Speaker 4: All right, So the.
• 20:59
  Speaker 10: Money right, So on the money part No, and the
• 21:03
  Speaker 10: investment is money is still there. Volkswagen is an investing
• 21:07
  Speaker 10: I think total over the next five years something like
• 21:08
  Speaker 10: one hundred and eighty billion, and two thirds of that
• 21:11
  Speaker 10: is going to evs. Don't quote me on that, I
• 21:12
  Speaker 10: have to The numbers are a bit fuzzy.
• 21:14
  Speaker 4: In my head, it's a lot, but.
• 21:15
  Speaker 10: They're still it's a lot. Yeah, and you're absolutely right.
• 21:19
  Speaker 10: Deese was, in my mind and in my assessment, totally
• 21:23
  Speaker 10: the innovator. He had the long term vision for where
• 21:27
  Speaker 10: the where the car industry was going and where it
• 21:29
  Speaker 10: needed to go, where Volkswagen needed to go if it
• 21:31
  Speaker 10: really wanted to compete with Tesla and you know, eventually
• 21:34
  Speaker 10: the Chinese and one of his big you know, one
• 21:38
  Speaker 10: of his big strategic plans or moves, was this idea
• 21:42
  Speaker 10: of vertical integration. We got to get control of the
• 21:44
  Speaker 10: battery supply chain and that was you know why he
• 21:47
  Speaker 10: really went all in with Power Code, creating their own
• 21:49
  Speaker 10: battery company. He thought, you know, we have to go
• 21:52
  Speaker 10: in all in on software. We have to create our
• 21:54
  Speaker 10: own software unit. We have to control that as well,
• 21:57
  Speaker 10: in order to control the profit pools that subsequently come
• 22:00
  Speaker 10: from in car entertainment, and so he was all about
• 22:03
  Speaker 10: sort of focusing on what Volkswagen could do on its own,
• 22:05
  Speaker 10: making Volkswagen into sort of more of a tech company.
• 22:08
  Speaker 10: As you know, the car becomes more of a sort
• 22:12
  Speaker 10: of a living room on wheels or sort of more
• 22:14
  Speaker 10: like a mobile phone on wheels. That people's expectations, customer
• 22:18
  Speaker 10: expectations have sort of moved in the direction of smartphone
• 22:21
  Speaker 10: apps and services, and you needed to be able to
• 22:23
  Speaker 10: offer that in car. And so his strategy was, well,
• 22:27
  Speaker 10: let's do it on our own so we can control
• 22:29
  Speaker 10: more of the more of the profit pools. And that
• 22:32
  Speaker 10: maybe turned out to be sort of the Achilles Heel
• 22:36
  Speaker 10: of Deese in addition to his his management style. That
• 22:39
  Speaker 10: I would say, there's a big difference. There's a difference
• 22:41
  Speaker 10: between Dsee and Bluma, and that Dees, You're right. Deese
• 22:44
  Speaker 10: did bring a lot of these innovative projects into the
• 22:48
  Speaker 10: company and Bluma is now sort of carrying those forward
• 22:51
  Speaker 10: and bringing those along. And I would say, you know,
• 22:54
  Speaker 10: Bluma has totally Oliver Blooma, the new CEO, who is
• 22:59
  Speaker 10: also currently the CEO of Porsha, he is really he's
• 23:05
  Speaker 10: he's going all in with the battery strategy. He's still
• 23:07
  Speaker 10: supporting Carriot the software unit and saying we're still gonna,
• 23:11
  Speaker 10: you know, back carry it's efforts one hundred percent to
• 23:14
  Speaker 10: to create the premium platform for the Audi and Porsha vehicles,
• 23:17
  Speaker 10: for the Emacon, for the Q six Etron, and then
• 23:22
  Speaker 10: you know, using the company's resources to to you know,
• 23:25
  Speaker 10: broaden their their offering for electric electric vehicles.
• 23:29
  Speaker 2: I feel like that just they're they're slow to catch
• 23:33
  Speaker 2: up and they can't really knock the ball out of
• 23:35
  Speaker 2: the park when it comes to you know, range, they
• 23:39
  Speaker 2: don't do as well as GM has four hundred and
• 23:42
  Speaker 2: fifty miles of range in their EV pickup trucks. Now
• 23:46
  Speaker 2: they have gigantic batteries to support that two hundred ten
• 23:48
  Speaker 2: kilowatt packs, but still they have it right, And.
• 23:54
  Speaker 4: It doesn't seem like, uh.
• 23:56
  Speaker 2: Porscha should only have one EV model out at this
• 24:00
  Speaker 2: stage in the game. Why don't they already have an
• 24:02
  Speaker 2: EMA Coon, Why don't they already have an E version
• 24:05
  Speaker 2: of the nine to eleven?
• 24:06
  Speaker 11: Like?
• 24:06
  Speaker 4: What is taking them so long?
• 24:08
  Speaker 10: Yeah, it's definitely the software issue. So by creating, you know,
• 24:13
  Speaker 10: by having a legacy car maker that really knows German
• 24:15
  Speaker 10: engine engineering really well. To have them pivot and suddenly
• 24:19
  Speaker 10: start doing software, it's a completely different process. It's a
• 24:21
  Speaker 10: completely different ballgame, it's a completely different sport, and they
• 24:25
  Speaker 10: had to sort of learn from zero how to do it,
• 24:28
  Speaker 10: how the processes work, how you develop software, and that
• 24:32
  Speaker 10: led to, you know, delays when it came to the
• 24:36
  Speaker 10: launch of the platform that the EMA coon is going
• 24:40
  Speaker 10: to be based on. It was supposed to be out
• 24:42
  Speaker 10: I think about two years ago already, and that was
• 24:45
  Speaker 10: that was one of the things ai Audi and Pousha.
• 24:47
  Speaker 10: These models that are coming out for Audi and Posha,
• 24:52
  Speaker 10: these electric models, the models that are going to come
• 24:54
  Speaker 10: from between twenty twenty four and twenty twenty eight, are
• 24:57
  Speaker 10: supposed to make up about fifty percent of folks swagging
• 25:00
  Speaker 10: revenues in that time period. So there, you know, if
• 25:04
  Speaker 10: they don't do that premium.
• 25:05
  Speaker 4: Platform, eleven or twelve brands.
• 25:07
  Speaker 10: Right, yeah, exactly. No, I mean Audi and Pousha are
• 25:10
  Speaker 10: really the you know, the big money makers. I mean,
• 25:12
  Speaker 10: Poorsha is no longer technically a cash cow since the
• 25:15
  Speaker 10: I p O they're no longer sharing their profits with Volkswagen.
• 25:18
  Speaker 10: But for Audi it's really key, it's really critical that
• 25:21
  Speaker 10: they get this this platform, this uh premium platform from
• 25:25
  Speaker 10: carry it out to build their their their model lineup,
• 25:29
  Speaker 10: and they haven't been able to do that because of
• 25:31
  Speaker 10: the delays. Basically it was it was a struggle for
• 25:33
  Speaker 10: carry it for the software unit because they've they've had
• 25:37
  Speaker 10: to do one one software platform for the Volkswagen, this
• 25:40
  Speaker 10: other premium platform for for Audi and Pousha, and then
• 25:43
  Speaker 10: they also had this SSP platform, this scalable unified platform
• 25:47
  Speaker 10: for all the brands. That's sort of the longtime vision
• 25:49
  Speaker 10: that Deese had and that's you know, sort of up
• 25:52
  Speaker 10: in the air at this point about if and when
• 25:54
  Speaker 10: that's that's going to come to Fruition.
• 25:56
  Speaker 1: Hey, Monica, thanks so much for joining us. Really appreciate
• 25:58
  Speaker 1: getting some of your time. Is Matt med a fantastic
• 26:01
  Speaker 1: piece of work there, Monica Raymond, Auto's industry disruption reporter
• 26:04
  Speaker 1: for Bloomberg News. Out the Big Take story today on
• 26:09
  Speaker 1: the Bloomberg terminal entitled Germany Fretz Volkswagen is heading down
• 26:13
  Speaker 1: the road to nowhere. So check that out on the
• 26:15
  Speaker 1: terminal or Bloomberg dot com slash Big Take. Those are
• 26:19
  Speaker 1: really deeply reported stories, great stuff. Highly recommend it.
• 26:24
  Speaker 7: You're listening to the Team Can't Live program Bloomberg Markets
• 26:28
  Speaker 7: weekdays at ten am Eastern on Bloomberg dot com, the
• 26:31
  Speaker 7: iHeartRadio app and the Bloomberg Business app, or listen on
• 26:34
  Speaker 7: demand wherever you get your podcasts.
• 26:39
  Speaker 1: There are old sky divers and Bold skyde divers, but
• 26:43
  Speaker 1: there are no old Bold skydivers. That's a good one.
• 26:47
  Speaker 1: I guess you can apply that to investing as a certainly.
• 26:50
  Speaker 1: Our next guest does that very well. Jessica Rabe joins us.
• 26:53
  Speaker 1: She's a founder of Data Trek Research. We love the
• 26:55
  Speaker 1: folks at Data Trek. Lots of really smart research comes
• 26:58
  Speaker 1: out of there.
• 26:58
  Speaker 2: Now, you said Rabe, think it's Raba.
• 27:02
  Speaker 1: Let's hear Jesse here. Let's say you Jessica Rade.
• 27:06
  Speaker 5: You are correct. Thank you so much for having me, Matt.
• 27:09
  Speaker 5: I'm very excited to be.
• 27:10
  Speaker 1: On all right, Jessica. I like how you kind of
• 27:12
  Speaker 1: bring together the skydiving thing, which, by the way, we
• 27:15
  Speaker 1: have to talk about that at some point. Who does
• 27:16
  Speaker 1: that willingly end investing? So how do you bring the
• 27:20
  Speaker 1: two together?
• 27:22
  Speaker 11: Sure? Yeah, so to me, skydiving is an amplified version
• 27:25
  Speaker 11: of life and even investing in that.
• 27:27
  Speaker 5: It's a masterclass in risk management.
• 27:30
  Speaker 11: So, like you said at the top, they saying they're
• 27:33
  Speaker 11: in skydiving is very common. One. There are old skydivers
• 27:36
  Speaker 11: and bold skydivers, but there are no old bold skydivers.
• 27:40
  Speaker 11: So no matter anyone's experience, both skydiving and investing are processed,
• 27:44
  Speaker 11: driven disciplines with small.
• 27:46
  Speaker 5: Margins for air for error.
• 27:49
  Speaker 11: So ultimately it helps helps teach you how to confront
• 27:52
  Speaker 11: natural human fear and overcome it by sticking to a process,
• 27:56
  Speaker 11: staying president and it's very important to remain calm and
• 28:00
  Speaker 11: high pressure pressure situations.
• 28:03
  Speaker 2: All Right, So I have to say that I love
• 28:06
  Speaker 2: now you skydiving, but I'm not licensed, so I still
• 28:09
  Speaker 2: have to get strapped to a big man's back or
• 28:12
  Speaker 2: to his chest, unlike Jessica, because I've gone seven times
• 28:18
  Speaker 2: and uh, Jessica, I'm guessing you've done more. Uh.
• 28:23
  Speaker 11: Yes, I'm still a baby in the sport, but I've
• 28:25
  Speaker 11: done one hundred and fourteen solo skydis at this point.
• 28:29
  Speaker 2: Wow, and do you pack your own shoot or how
• 28:31
  Speaker 2: does that all work?
• 28:32
  Speaker 4: I'm wondering.
• 28:33
  Speaker 11: Yep, that's part of getting licensed. You have to know
• 28:36
  Speaker 11: how to how to pack pack your own parachuting and
• 28:39
  Speaker 11: quite frankly, you want to you want to know your
• 28:41
  Speaker 11: own equipment, and uh, you want to know how to pack,
• 28:44
  Speaker 11: because then you're the way that your can it be
• 28:46
  Speaker 11: opened is more reliable.
• 28:50
  Speaker 1: I was strung.
• 28:51
  Speaker 2: I read your note as soon as I saw it
• 28:53
  Speaker 2: hit my inbox, and I.
• 28:54
  Speaker 4: Thought it was really cool.
• 28:55
  Speaker 2: The parallels between investing in skydiving that I'd never thought of.
• 29:01
  Speaker 2: The only difference for me and probably for most people
• 29:04
  Speaker 2: listening in terms of retail investing is I don't pack
• 29:07
  Speaker 2: my own shoot in the markets, right. I don't even
• 29:10
  Speaker 2: have the ability to know how to do that. I
• 29:13
  Speaker 2: need to leave it to people like you and Nick
• 29:15
  Speaker 2: to pack my shoot for me because I just don't
• 29:17
  Speaker 2: have the time to do the research, if you know
• 29:19
  Speaker 2: what I mean.
• 29:21
  Speaker 5: Yeah, sure, absolutely, and yeah I mean so, there's.
• 29:24
  Speaker 11: So many parallels between investing in skydiving for and for
• 29:29
  Speaker 11: really all levels of experience.
• 29:31
  Speaker 5: So you know, one of those is just sticking to
• 29:34
  Speaker 5: a process.
• 29:35
  Speaker 11: There are fundamentals in skydiving that that keep you safe,
• 29:38
  Speaker 11: whether it be checking your gear, remaining altitude a wear,
• 29:42
  Speaker 11: or knowing how to fly in and land in different
• 29:45
  Speaker 11: conditions so you can do most of the skydive right
• 29:49
  Speaker 11: but make one wrong move in the last two hundred
• 29:51
  Speaker 11: feet or so and face serious consequences. The same as
• 29:55
  Speaker 11: when it comes to investing straight from core guidelines for
• 29:58
  Speaker 11: idea generation to taking profits or losses, and any type
• 30:02
  Speaker 11: of investor from a novice to a twenty year year
• 30:06
  Speaker 11: veteran can can pay the price.
• 30:08
  Speaker 1: All right, So I like this one. Anticipate other participants.
• 30:12
  Speaker 1: So I guess in skydiving you're going to be have
• 30:14
  Speaker 1: that situational awareness of no what's around you. But I
• 30:17
  Speaker 1: guess that kind of makes sense in investing as well.
• 30:20
  Speaker 11: Oh yeah, so I can do everything right on a jump,
• 30:24
  Speaker 11: but get hurt by another skydiver, whether that be colliding
• 30:27
  Speaker 11: under free fall or under canopy. So you really have
• 30:30
  Speaker 11: to prepare, not just for yourself, but you have to
• 30:33
  Speaker 11: anticipate other people. It's it's just like riding a motorcycle,
• 30:37
  Speaker 11: which I also do. You constantly have to have your
• 30:40
  Speaker 11: head on a swivel. And that's much of investing, too,
• 30:43
  Speaker 11: is anticipating not just what you're gonna do, but what
• 30:47
  Speaker 11: other markets participants are going to do, especially when it
• 30:51
  Speaker 11: comes to how they respond ering crises. That's how a
• 30:54
  Speaker 11: lot of volatility is created. Is by other market participants
• 30:59
  Speaker 11: and how they respond under pressure.
• 31:01
  Speaker 2: Yeah, I would argue in motorcycling, especially I mean motorcycling
• 31:05
  Speaker 2: on the highway or in you know, public roads, paying
• 31:08
  Speaker 2: attention to what other people are doing is far more
• 31:11
  Speaker 2: important than paying attention to you know, I'm not going
• 31:15
  Speaker 2: to make many mistakes. The motorcycle stays up by itself
• 31:17
  Speaker 2: as long as you know, I'm putting in the right inputs.
• 31:20
  Speaker 2: So the most important thing is.
• 31:22
  Speaker 1: Watch out for that car ture, one of those crazy
• 31:24
  Speaker 1: people in the Garden State Parkway that zoom in and
• 31:26
  Speaker 1: out of cars doing like one hundred twenty miles an hour.
• 31:29
  Speaker 4: I try not to.
• 31:31
  Speaker 1: Jessica is laughing over there.
• 31:33
  Speaker 2: That's like a bold skydiver, right, Those people don't last
• 31:35
  Speaker 2: very Yeah.
• 31:36
  Speaker 5: That's yeah. You don't want to you don't want to
• 31:38
  Speaker 5: be too bold.
• 31:39
  Speaker 11: And that's why I mean the motorcycle riding too, is
• 31:42
  Speaker 11: a perfect example. Whether it be skydiving or motorcycle riding
• 31:45
  Speaker 11: or investing, is you just you have to plan for
• 31:47
  Speaker 11: diverse events. There are certain forces out of our control,
• 31:50
  Speaker 11: whether it be weather or other skydivers and skydiving, or
• 31:54
  Speaker 11: economic and geopolitical shocks and investing the best we can
• 31:58
  Speaker 11: do is stay aware of the risks plan for them.
• 32:01
  Speaker 11: I see skydivers with thousands of jumps, still practicing their
• 32:04
  Speaker 11: emergency procedures and the plane ride up to altitude so
• 32:08
  Speaker 11: that way muscle memory kicks, and should they need to
• 32:13
  Speaker 11: cut away their main parachute and deploy their their reserve parachute.
• 32:17
  Speaker 5: In the event of an equipment malfunction. And the same
• 32:20
  Speaker 5: with investing.
• 32:22
  Speaker 11: People know at data Track we have a long standing
• 32:24
  Speaker 11: recommendation to add risk exposure when the VIX gets to
• 32:28
  Speaker 11: twenty eight, thirty six, and forty four because these are one,
• 32:31
  Speaker 11: two and three standard deviations above the long run mean
• 32:35
  Speaker 11: and therefore.
• 32:36
  Speaker 5: Signal excessive investor fear.
• 32:38
  Speaker 11: So yeah, investing, skydiving, motorcycle riding, you always have to
• 32:41
  Speaker 11: have to be on your toes and be ready for.
• 32:45
  Speaker 1: Anything, all right. So I'm looking at some of the
• 32:47
  Speaker 1: photographs use attached to your note here, and they're making
• 32:49
  Speaker 1: my stomach literally queasy as I look at them. What's
• 32:52
  Speaker 1: the highest altitude that you've done a jump from?
• 32:56
  Speaker 5: So I jump at Skydives Sussex.
• 32:58
  Speaker 11: And the nice thing about that drop soon is they
• 33:00
  Speaker 11: go all the way up to fourteen five hundred feet.
• 33:05
  Speaker 1: Yeah, is that you hanging off like a helicopter or
• 33:07
  Speaker 1: a plane or something like that.
• 33:09
  Speaker 5: Yeah.
• 33:10
  Speaker 11: Yeah, I did my first few helicopter jumps a few
• 33:13
  Speaker 11: weeks ago, so that was certainly.
• 33:15
  Speaker 5: Very very fun.
• 33:16
  Speaker 11: That is because the jumping out of a helicopter is
• 33:19
  Speaker 11: different than a plane. With a plane, you have all
• 33:21
  Speaker 11: the relative wind coming at you. With a helicopter, you
• 33:24
  Speaker 11: jump into the dead air.
• 33:26
  Speaker 4: Jesus, that sounds like fun.
• 33:28
  Speaker 2: Yeah, now this I mean I was wondering if if
• 33:31
  Speaker 2: you make these parallels. You know, with skydiving you want
• 33:36
  Speaker 2: to be pretty conservative, and in investing you do have
• 33:39
  Speaker 2: a little bit of a risk tolerance, right, So how
• 33:43
  Speaker 2: do you limit yourself or how do you stop yourself
• 33:45
  Speaker 2: from just buying ten year treasuries right now?
• 33:49
  Speaker 5: Yeah?
• 33:51
  Speaker 11: I would say that you have to inscat both skydiving
• 33:55
  Speaker 11: and investing. You have to assess your abilities honestly. So
• 34:00
  Speaker 11: in skydiving it's very important to know your skill level
• 34:03
  Speaker 11: and also stay within your personal risk tolerance. So that
• 34:06
  Speaker 11: means only jumping in wins or or or or joining
• 34:11
  Speaker 11: group formation skydives that you believe that you're confident enough
• 34:16
  Speaker 11: to be able to land safely, or also confident in
• 34:19
  Speaker 11: others abilities that you can actually execute the skydiving plan
• 34:24
  Speaker 11: plans safely. There's a saying in skydiving it's better to
• 34:28
  Speaker 11: be on the ground wishing you're in the sky than
• 34:30
  Speaker 11: be in the sky.
• 34:31
  Speaker 5: Wishing you're on the ground.
• 34:32
  Speaker 11: That's been part of a part of the job for
• 34:34
  Speaker 11: investors or financial advisors is just doing what will keep
• 34:38
  Speaker 11: your clients in the game by knowing your own limits
• 34:41
  Speaker 11: or your client's limits.
• 34:43
  Speaker 5: Just because you can doesn't mean you should.
• 34:45
  Speaker 11: And virtual currencies are are a great example that many
• 34:49
  Speaker 11: many people are in that heart lesson over the past
• 34:51
  Speaker 11: two years.
• 34:52
  Speaker 4: So virtual currencies.
• 34:54
  Speaker 1: So what's the like, what's the next step for you
• 34:57
  Speaker 1: in terms of skydiving.
• 35:00
  Speaker 11: Uh, there's there's so many disciplines in the sport, so
• 35:04
  Speaker 11: there's just always ways to constantly to constantly improve.
• 35:10
  Speaker 5: And uh and and learn something new.
• 35:13
  Speaker 11: So yet people a lot of people wonder they think
• 35:15
  Speaker 11: they see they think skydiving is crazy.
• 35:18
  Speaker 5: You know what, what's the appeal?
• 35:19
  Speaker 11: And I'd say they're There are three main appeals to skydiving,
• 35:22
  Speaker 11: at least for myself.
• 35:24
  Speaker 5: Number one, I like.
• 35:25
  Speaker 11: Pastimes that push limits and require mental focus. So skydiving
• 35:31
  Speaker 11: obviously fits that description, as does motorcycle riding. As we discussed,
• 35:36
  Speaker 11: the other thing about skydiving is it's a really wonderful.
• 35:39
  Speaker 5: Diverse and welcoming community. I have friends in the sport
• 35:43
  Speaker 5: from all walks of life.
• 35:44
  Speaker 11: One's a famous rapper the the helicopter jump that.
• 35:48
  Speaker 5: That you referenced.
• 35:49
  Speaker 11: I did my first helicopter jump with the rapper Redman,
• 35:52
  Speaker 11: so that was super fun. Other people are yeah, other
• 35:56
  Speaker 11: people are computer coders to helicopter pilots.
• 36:00
  Speaker 5: I've met a bunch of women in the sport and
• 36:02
  Speaker 5: we all connect.
• 36:03
  Speaker 11: Around a common passion, all right. Well, and thirdly, it
• 36:07
  Speaker 11: just it allows me to be present and take a
• 36:09
  Speaker 11: fun break from the grind of Watch Street as much
• 36:12
  Speaker 11: as I love it. So in portfolio construction terms, I'd
• 36:15
  Speaker 11: say it's my uncrrelated asset with high returns on invest
• 36:18
  Speaker 11: Very nice.
• 36:19
  Speaker 1: I'll let you go with that. Jessica Ray found our
• 36:22
  Speaker 1: data track research. Appreciate getting some of your time you're.
• 36:24
  Speaker 7: Listening to the tape cans are live program Bloomberg Markets
• 36:27
  Speaker 7: weekdays at ten am Eastern on Bloomberg Radio, the tune
• 36:31
  Speaker 7: in app, Bloomberg dot Com, and the Bloomberg Business app.
• 36:34
  Speaker 7: You can also listen live on Amazon Alexa from our
• 36:37
  Speaker 7: flagship New York station, Just say Alexa play Bloomberg eleven thirty.
• 36:43
  Speaker 1: Let's talk hole man. We talk a lot about you know,
• 36:46
  Speaker 1: eco kind of green energy. We want to talk a
• 36:49
  Speaker 1: lot about Cole. It gotta be tough to be in
• 36:52
  Speaker 1: a cold business in a world that's going green. But
• 36:54
  Speaker 1: we have found someone who does that very well, Randall Atkins.
• 36:57
  Speaker 1: He's the CEO of Romanco Aramaco Ramica Resources trades on
• 37:02
  Speaker 1: the Nasdaq, etc. I get it, I get the ticker
• 37:05
  Speaker 1: met Cole. He joined his live here in our Bloomberg
• 37:08
  Speaker 1: Interactive Brokers studio. Of course the highlight of his career
• 37:10
  Speaker 1: obviously graduated of the Duke University. But I finally found
• 37:13
  Speaker 1: somebody who did it before I did. I mean so not,
• 37:17
  Speaker 1: you know, just landed there.
• 37:18
  Speaker 4: Randall.
• 37:19
  Speaker 1: I'm looking at your background. It's not like you're one
• 37:21
  Speaker 1: of these people that came up in the coal business.
• 37:22
  Speaker 1: In your entire life, a lot of banking, a lot
• 37:24
  Speaker 1: of investments, a lot of finance. Why did you get
• 37:28
  Speaker 1: into the coal business.
• 37:29
  Speaker 12: Got into the coal business because it was sort of
• 37:31
  Speaker 12: a distressed business.
• 37:33
  Speaker 4: It was to play that.
• 37:34
  Speaker 12: Frankly, we stepped back. Even five years ago, most of
• 37:38
  Speaker 12: the public companies were all in bankruptcy. So if you
• 37:40
  Speaker 12: could start one from scratch, kind of reverse engineer it
• 37:44
  Speaker 12: correctly with little debt and sort of maximize the asset quality.
• 37:50
  Speaker 12: You know, we have proven that you can make a
• 37:52
  Speaker 12: very good go in this business. And it's our expression
• 37:56
  Speaker 12: is we view coal in a manner which coal is
• 37:58
  Speaker 12: too valuable to burn, so we approach it a little
• 38:01
  Speaker 12: differently than most.
• 38:03
  Speaker 2: So how do you address what I assume must be
• 38:09
  Speaker 2: a shrinking market?
• 38:10
  Speaker 4: Is it in this country? Do we use less and
• 38:12
  Speaker 4: less coal every year?
• 38:15
  Speaker 12: Split the market into two different pots, one is thermal coal,
• 38:18
  Speaker 12: And that answer to your question is yes, it's probably
• 38:21
  Speaker 12: a declining market. Met coal, which is what we focus on,
• 38:25
  Speaker 12: is basically a precursor to make steel, so that business
• 38:28
  Speaker 12: is not declining.
• 38:29
  Speaker 4: And indeed, internationally, where.
• 38:31
  Speaker 12: We probably placed upwards of two thirds of our market
• 38:35
  Speaker 12: is growing. Obviously the Asian market is the principal growth factor.
• 38:40
  Speaker 1: So okay, So two thirds of your businesses outside the
• 38:42
  Speaker 1: US correct?
• 38:43
  Speaker 4: Okay, So.
• 38:46
  Speaker 1: Just about just the competitive landscape, I can't even think
• 38:48
  Speaker 1: of other coal companies out there. Who else is out
• 38:52
  Speaker 1: there that you compete with like who is the competitive marketplace?
• 38:56
  Speaker 4: Is it other US bulletin? Yeah?
• 38:58
  Speaker 1: I guess yeah, So what's competitive LAK.
• 39:00
  Speaker 12: They wouldn't compete so much in the in the Australian market,
• 39:03
  Speaker 12: which is pretty much got a lock on a lot
• 39:05
  Speaker 12: of the Asians just because of the proximity of logistics.
• 39:08
  Speaker 12: But domestically we would compete with companies like Alpha Arch
• 39:12
  Speaker 12: to a lesser extent, Peabody Warrior, those would be some
• 39:15
  Speaker 12: of the names.
• 39:17
  Speaker 2: So met coal, cocin coal still desperately needed to create
• 39:23
  Speaker 2: to produce all the steel that we need. What does
• 39:26
  Speaker 2: the growth in that industry look like?
• 39:27
  Speaker 12: The growth in that industry is basically I always say
• 39:31
  Speaker 12: met coal is a proxy for steel. Steel is a
• 39:33
  Speaker 12: proxy for GDP. So if you look at basically general
• 39:36
  Speaker 12: economic trends, whether it's in the US or overseas, it
• 39:40
  Speaker 12: pretty well ties to medical ties to the growth in
• 39:43
  Speaker 12: the generally economic situation most of the countries.
• 39:47
  Speaker 1: All right, So I'm looking at your financials here on
• 39:50
  Speaker 1: the FA function on the Bloomberg terminal. I got top
• 39:52
  Speaker 1: line going kind of mid single digits ibadam margins mid
• 39:56
  Speaker 1: mid twenties, free cash a positive. What's the growth driver
• 40:02
  Speaker 1: for your business, you acquire additional minds, do you develop
• 40:06
  Speaker 1: further what you've got? How do you grow your business?
• 40:09
  Speaker 11: Sure?
• 40:09
  Speaker 12: Well, we're actually the only domestic coal company that's projecting
• 40:13
  Speaker 12: the doublin size from where we sit right now.
• 40:16
  Speaker 10: So we have.
• 40:17
  Speaker 12: Decided to grow organically without buying existing minds. We basically
• 40:23
  Speaker 12: have taken properties where we're in essence by the reserve
• 40:27
  Speaker 12: and developed that planet and then.
• 40:29
  Speaker 4: Market it from there.
• 40:30
  Speaker 12: So we will jump from about two and a half
• 40:33
  Speaker 12: million tons last year to about three and a half
• 40:36
  Speaker 12: million tons of production this year, ultimately to about six
• 40:39
  Speaker 12: six to seven million tons.
• 40:41
  Speaker 4: What do you I mean?
• 40:42
  Speaker 2: I look at the stock price and I wonder what
• 40:44
  Speaker 2: happened two years ago? You know, all of a sudden,
• 40:47
  Speaker 2: it just goes boom on the rise at the August
• 40:52
  Speaker 2: September twenty twenty one part of the chart.
• 40:54
  Speaker 4: What happened there? Basically after that.
• 40:57
  Speaker 12: You had sort of an economically decline you had after
• 41:01
  Speaker 12: effects of COVID, You had a different market situation. Basically
• 41:05
  Speaker 12: in the August and September periods is when you find
• 41:09
  Speaker 12: almost one hundred percent of the domestic sales occur in
• 41:12
  Speaker 12: the US. So that was a tough period in domestic sales.
• 41:16
  Speaker 4: A lot of the coal companies dropped in that same time. No,
• 41:19
  Speaker 4: but you jumped. I'm looking.
• 41:20
  Speaker 2: So twenty twenty one, your stock went from two fifty
• 41:26
  Speaker 2: to I'm going to say twelve at the end of
• 41:30
  Speaker 2: the year. It was the end of the pandemic, which
• 41:34
  Speaker 2: is why I think it's so interesting. Usually you see
• 41:36
  Speaker 2: these stock moves right around twenty twenty, depending on what
• 41:40
  Speaker 2: the company is. But you climbed high into twenty twenty one,
• 41:45
  Speaker 2: twenty twenty two, and now you're holding it about eight
• 41:47
  Speaker 2: dollars right.
• 41:49
  Speaker 12: Our jump was primarily based on a market recognition that
• 41:53
  Speaker 12: we had gone from being sort of a small time
• 41:56
  Speaker 12: producer into coming into the ranks of a larger When
• 42:00
  Speaker 12: we get to the six to seven million ton size,
• 42:03
  Speaker 12: we will be almost an equal size in terms of
• 42:06
  Speaker 12: the met coal production with most of the major coal companies,
• 42:09
  Speaker 12: which frankly still have got a predominant thermal mix. And
• 42:13
  Speaker 12: that's frankly, the drag on most coal stocks is that
• 42:16
  Speaker 12: there's not a market differentiation between thermal and met.
• 42:19
  Speaker 1: So what's the future of coal in this country?
• 42:22
  Speaker 4: This energy?
• 42:24
  Speaker 11: You know?
• 42:25
  Speaker 1: I mean, is there always going to be a place
• 42:27
  Speaker 1: for coal, or it just seems like, you know, if
• 42:29
  Speaker 1: you talk to some of the more cleaner energy folks,
• 42:30
  Speaker 1: they would like to see that go to zero.
• 42:32
  Speaker 4: Yeah.
• 42:32
  Speaker 12: So I have been a proponent for about ten years that,
• 42:36
  Speaker 12: as I said, there's a higher and better use for coal.
• 42:39
  Speaker 12: Coal is too valuable to burn. I go back to
• 42:43
  Speaker 12: really one hundred years ago when coal was used for
• 42:46
  Speaker 12: a variety of things that had more of a chemical nature.
• 42:49
  Speaker 12: So we have been working with the Department of Energy
• 42:51
  Speaker 12: in some of the national labs in creating new uses
• 42:54
  Speaker 12: for coal where you can convert it into things like
• 42:56
  Speaker 12: synthetic graph fight and graphenes, carbon fiber, and frankly, that
• 43:01
  Speaker 12: took us into the rare earth business, where you know,
• 43:04
  Speaker 12: ten years ago, I didn't know the difference between rare current,
• 43:07
  Speaker 12: rare coins, and rare earth, but we have found that
• 43:11
  Speaker 12: connected to coal seams. So the future of coal I
• 43:14
  Speaker 12: see as having three legs of the stool, one for
• 43:17
  Speaker 12: thermal production for combustion, one for steel production, and the
• 43:22
  Speaker 12: third leg of the stool will be higher tech uses
• 43:25
  Speaker 12: for alternative carbon products.
• 43:28
  Speaker 2: What are the rare earths that you're finding and how
• 43:30
  Speaker 2: are you doing it? Getting them out.
• 43:33
  Speaker 12: We have found a spectrum of about fourteen different rare earths,
• 43:37
  Speaker 12: and frankly, thirty percent of what we found are concentrated
• 43:41
  Speaker 12: in the heavier magnetic rare earths, which are frankly the
• 43:44
  Speaker 12: more valuable ones. Rare earths are measured in parts per million,
• 43:50
  Speaker 12: so it's you know, it's unlike the bulk coal business.
• 43:54
  Speaker 12: It's more like you're looking for diamonds almost, and it's
• 43:58
  Speaker 12: more of an industrial chemical business than that's a mining business.
• 44:01
  Speaker 12: Because once you find it, that's only half the battle.
• 44:04
  Speaker 12: The trick is to separate the rarer and get them
• 44:09
  Speaker 12: processed in a way that they then become commercially usable.
• 44:12
  Speaker 1: Hey, Randal, thanks so much for joining us. Really appreciate
• 44:14
  Speaker 1: you coming in here. We don't talk about cole that office,
• 44:16
  Speaker 1: so it's fascinating discussion. Randall Atkins, he's the CEO of
• 44:19
  Speaker 1: Romanco Resource Ramico Resources. Thank you, Symble, M E. T.
• 44:24
  Speaker 7: Seed. You're listening to the tape kent'sur live program Bloomberg
• 44:28
  Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the
• 44:32
  Speaker 7: tune in app, Bloomberg dot Com, and the Bloomberg Business app.
• 44:35
  Speaker 7: You can also listen live on Amazon Alexa from our
• 44:38
  Speaker 7: flagship New York station, Just say Alexa Play Bloomberg eleven
• 44:42
  Speaker 7: thirty JM.
• 44:45
  Speaker 1: Smucker agreed to acquire Twinkies maker Hostess Brands for about
• 44:48
  Speaker 1: five point six billion dollars, furthering a growing consolidation trend
• 44:52
  Speaker 1: among the companies that stock the shelf stable aisles at
• 44:56
  Speaker 1: the heart of supermarkets. Do we have an expert on
• 44:58
  Speaker 1: this business? We appsolutely do, Diana rossettopenya. She's an equity
• 45:02
  Speaker 1: research channels follow all the consumer space for Blueberg Intelligence. Diana,
• 45:06
  Speaker 1: you're like one of our first bianos. You're like an
• 45:09
  Speaker 1: original original. You're aging me absolutely. I mean you're there
• 45:13
  Speaker 1: from just the get go, and she's just become one
• 45:16
  Speaker 1: of the top annos out there covering the consumer space. Diana,
• 45:19
  Speaker 1: What do you make of this deal? Smucker's buying Hostess.
• 45:22
  Speaker 1: What's going on here? Strategically?
• 45:24
  Speaker 6: Yeah, Well, strategically for Smucker, this will be a more
• 45:29
  Speaker 6: of a mixed deal for Smucker in terms of on
• 45:34
  Speaker 6: the cells side, it's definitely positive. It's a company that
• 45:39
  Speaker 6: is growing in the mid single digits compared to consumer foods.
• 45:42
  Speaker 6: The consumer foods segment for Smucker, which is growing in
• 45:46
  Speaker 6: the low single digits, So definitely on the cell side
• 45:49
  Speaker 6: is going to be a positive. Now if you go
• 45:52
  Speaker 6: down the P and L, that's probably going to be
• 45:54
  Speaker 6: a little bit more complicated.
• 45:56
  Speaker 1: Why is that.
• 45:57
  Speaker 6: Because Ebida margins are not necessarily going to be as
• 46:03
  Speaker 6: as as positive as the company is stating in our
• 46:07
  Speaker 6: view the company, the company's call these mornings said that
• 46:13
  Speaker 6: they host this had a twenty three percent of that margin,
• 46:16
  Speaker 6: which is going to probably be about uh the same
• 46:20
  Speaker 6: as the consumer food segment for the company going forward,
• 46:24
  Speaker 6: So we don't necessarily see a lot of accretion on
• 46:28
  Speaker 6: that end.
• 46:29
  Speaker 2: I feel like there's a there's room for real improvement
• 46:33
  Speaker 2: on execution of Hostess product sales.
• 46:37
  Speaker 11: You know.
• 46:37
  Speaker 4: I we have interviewed the CEO Hosts a couple.
• 46:40
  Speaker 2: Of times, and as a result, I always go out
• 46:42
  Speaker 2: and look for their products and stores and I see
• 46:44
  Speaker 2: that they do have like sometimes separate areas or specific displays,
• 46:51
  Speaker 2: but the products aren't stocked very well and there's just
• 46:54
  Speaker 2: not enough attention drawn to them in the in the
• 46:58
  Speaker 2: in the points of purchase.
• 46:59
  Speaker 4: Couldn't they improve that?
• 47:01
  Speaker 6: I think that is something that attracted smockery. It seems
• 47:05
  Speaker 6: that Hostess has been increasing innovation and points of sale,
• 47:11
  Speaker 6: as you mentioned, and I think they're probably going to
• 47:15
  Speaker 6: benefit from the supply chain leverage that Smucker has. And
• 47:20
  Speaker 6: it's also in terms of Smocker, you will give them
• 47:23
  Speaker 6: a little bit more exposure on the convenience side, which
• 47:27
  Speaker 6: is about forty percent of Hostess sales.
• 47:31
  Speaker 1: So I'm a big fan of the Hostess brands. But
• 47:34
  Speaker 1: there's some people out there that maybe even during the pandemic,
• 47:37
  Speaker 1: I don't know, maybe they went to more of those
• 47:40
  Speaker 1: you know, ringings and all that kind of good stuff
• 47:42
  Speaker 1: that we all love, but maybe now they're coming back
• 47:45
  Speaker 1: and going back to more healthier food. What are the
• 47:47
  Speaker 1: trends you're seeing out there?
• 47:48
  Speaker 6: So basically it's consumers in the United States. They say
• 47:53
  Speaker 6: they want one thing and they actually do another. So, yes,
• 47:59
  Speaker 6: you're right, people want to be healthier. And definitely the
• 48:02
  Speaker 6: pandemic was a big catalyst for people going and purchase
• 48:07
  Speaker 6: more of the indulgence snacks. I think there's still a
• 48:12
  Speaker 6: little bit of growth on that aspect. People seem to
• 48:15
  Speaker 6: be a little bit more permissible in the indulgence side,
• 48:20
  Speaker 6: and I think that is probably going to fuel growth
• 48:24
  Speaker 6: going forward.
• 48:25
  Speaker 2: I mean Twinkies obviously, and then the cupcakes. I like
• 48:29
  Speaker 2: the orange ones, but they have the chocolate and the
• 48:33
  Speaker 2: ding Dongs are a classic. The ho hosp can't forget
• 48:38
  Speaker 2: about those. I have always been a fan of the
• 48:40
  Speaker 2: chocolate dial, which is a twinkie essentially dipped in chocolate.
• 48:46
  Speaker 2: I've never really liked the snowballs, but they're there, the
• 48:49
  Speaker 2: Zingers and then I mean they're just like classic brands.
• 48:55
  Speaker 2: I feel like instead of just selling them at you know,
• 48:59
  Speaker 2: the seven eleven or the Dwayne Reid, they should be
• 49:02
  Speaker 2: sold in you know, these trendy like urban outfitters should
• 49:07
  Speaker 2: sell these things, right because.
• 49:09
  Speaker 6: But you can't fit on their clothes though, so that
• 49:11
  Speaker 6: would be a little bit of lack of synergy.
• 49:14
  Speaker 1: Why is James muckerstock down six percent today?
• 49:16
  Speaker 6: Well, obviously it has, as you know, there's also the
• 49:21
  Speaker 6: acquirer curves playing into that. But like I said, I
• 49:25
  Speaker 6: think it's more of investors try it and I don't
• 49:29
  Speaker 6: want to say not believing, but being a little bit
• 49:31
  Speaker 6: wary about the bottom line for this acquisition and how
• 49:35
  Speaker 6: accreative is going to be on the epidem margin.
• 49:38
  Speaker 1: Are we are we seeing more consolidation in the I
• 49:41
  Speaker 1: don't know, the grocery space, If so why or what's
• 49:45
  Speaker 1: happening out there?
• 49:46
  Speaker 6: Well, we actually, I mean I have been fairly active
• 49:50
  Speaker 6: in terms of writing because Campbell's SUPA a few weeks
• 49:53
  Speaker 6: ago bought Solos, So that is right, that's right. Yeah,
• 49:57
  Speaker 6: So that is definitely it seems that because decisions seem
• 50:00
  Speaker 6: to be ramping up in the second half of the year.
• 50:05
  Speaker 6: It really is in terms of it's not unusual. I
• 50:10
  Speaker 6: think we're going back to patterns compared to before the pandemic,
• 50:14
  Speaker 6: that all of these big companies are looking for growth
• 50:17
  Speaker 6: and they're paying a pretty high price for it.
• 50:22
  Speaker 1: How can host this, I mean going to bankruptcy not
• 50:26
  Speaker 1: just once but twice?
• 50:28
  Speaker 10: Was that just?
• 50:29
  Speaker 4: I mean who can sell?
• 50:31
  Speaker 1: Yeah, who can sell twinkies?
• 50:32
  Speaker 4: What happened?
• 50:32
  Speaker 1: I mean there's maybe before your time, but was it
• 50:35
  Speaker 1: just again it's mass suggested maybe just some bad management there.
• 50:37
  Speaker 6: Yeah, it was a commination of bad management. And at
• 50:41
  Speaker 6: the same time, you know, it was lack of innovation.
• 50:45
  Speaker 6: The brands were falling out of flavor. And I think
• 50:50
  Speaker 6: you know, now with more innovation and with the strong
• 50:53
  Speaker 6: supply chain leverage, I think that they're probably going to
• 50:56
  Speaker 6: be expanding into that.
• 50:59
  Speaker 1: You expect more or m and a going forward in
• 51:01
  Speaker 1: this space.
• 51:02
  Speaker 4: I think.
• 51:02
  Speaker 6: So I'm a little worried about the premiums that we're
• 51:06
  Speaker 6: seeing and the leverage expansion. Obviously, Smucker it's their balance
• 51:12
  Speaker 6: sheet is going that net leverage is going to be
• 51:15
  Speaker 6: four point four after four point four times, that seems high.
• 51:18
  Speaker 1: After yeah, it's fine from my industry, the media industry,
• 51:21
  Speaker 1: because we grow our EBITDA fifteen to twenty percent. You
• 51:23
  Speaker 1: guys don't grow your IBITAD that fast exactly.
• 51:25
  Speaker 6: And usually we should be able to see leverage in
• 51:30
  Speaker 6: the three times. But now when we're looking at deals
• 51:34
  Speaker 6: that are expanding into four times, it makes people a
• 51:37
  Speaker 6: little nervous.
• 51:38
  Speaker 4: I wonder, what the what are the other brands out
• 51:40
  Speaker 4: there that are on the block. Do we know Hostess
• 51:42
  Speaker 4: was on the block? Do we know? Or was this
• 51:44
  Speaker 4: a surprise?
• 51:45
  Speaker 6: Well, apparently according to Smocker management, the acquisition was a surprise.
• 51:50
  Speaker 6: There they themselves actually divested some of the food brands
• 51:55
  Speaker 6: for pet so divestitors seem to be also be on
• 51:59
  Speaker 6: the blog.
• 52:00
  Speaker 2: Smuckers has coffee, right, They make Duncan coffee for sale.
• 52:05
  Speaker 2: They have folders, They obviously do Jeff peanut butter, and
• 52:09
  Speaker 2: the and the jelly.
• 52:10
  Speaker 1: You're a Jiff guy.
• 52:11
  Speaker 2: I love I will eat gift peanut butter straight out
• 52:14
  Speaker 2: of the jar in a spoon. I'm a jiff Wow.
• 52:17
  Speaker 2: So you the tie and Crunchy, but Smuckers also does
• 52:21
  Speaker 2: meow mix and milk bone.
• 52:23
  Speaker 4: Right, Are they getting out of that the pet food business.
• 52:26
  Speaker 2: Yes, they are.
• 52:27
  Speaker 6: Actually they're concentrating on the pet snacks category, which is paperoni,
• 52:33
  Speaker 6: yes exactly, yes, milk bone. So, but that is I
• 52:39
  Speaker 6: think one of the arguments against the deal is that
• 52:42
  Speaker 6: is this going to be a big heart pet brand?
• 52:45
  Speaker 6: A two point zero Back in twenty fifteen, the company
• 52:49
  Speaker 6: acquired these company pig big Heart brands for five point
• 52:55
  Speaker 6: something billion dollars. Leverage was also four four times ABDA,
• 52:59
  Speaker 6: so it and now they're divesting a lot of brands
• 53:03
  Speaker 6: of it. So you know, people are concerned about that.
• 53:06
  Speaker 1: What's what's your thoughts on Chewi We'll get about twenty
• 53:08
  Speaker 1: twenty seconds Chewy.
• 53:10
  Speaker 6: They're growing on their nut cells per active consumers and
• 53:16
  Speaker 6: active consumers seems to be a painful point for them
• 53:18
  Speaker 6: so far.
• 53:19
  Speaker 1: All right, good stuff. A reader just kind of writes
• 53:21
  Speaker 1: in Peter Pan peanut butter is word's.
• 53:24
  Speaker 2: At That's not the case that a strong well, you
• 53:27
  Speaker 2: know what, I don't.
• 53:28
  Speaker 4: Actually, it's spent a long time.
• 53:29
  Speaker 2: I'll go I'm gonna go out right now because I'm leaving, okay,
• 53:32
  Speaker 2: and I'm going to go get a jar of Peter Pan.
• 53:36
  Speaker 2: I'll go over to the d Wayne Read and pick
• 53:38
  Speaker 2: one up and see. I think Jeff is still the
• 53:40
  Speaker 2: raining champ.
• 53:41
  Speaker 1: All right, Dan sat Open Equity Research channels for Bloomberg Intellent,
• 53:45
  Speaker 1: just breaking down this deal.
• 53:46
  Speaker 7: You're listening to the tape Cat's are live program Bloomberg
• 53:49
  Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the
• 53:53
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• 53:56
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• 53:59
  Speaker 7: flagship New York station, Just say Alexa play Bloomberg eleven thirty.
• 54:05
  Speaker 1: Let's talk about ad tech, digital advertising, all that fun stuff,
• 54:10
  Speaker 1: the part of the advertising pie that continues to put
• 54:12
  Speaker 1: up some really solid numbers. And you think about the
• 54:15
  Speaker 1: digital advertising, the you know, the facebooks, the Googles, I
• 54:18
  Speaker 1: use it the old school words, not meta or whatever
• 54:22
  Speaker 1: the other one is. But there's technology behind that, and
• 54:25
  Speaker 1: that is a fascinating part of the business. Our next
• 54:27
  Speaker 1: guest is all over that stuff. Megan Clarkin joins us.
• 54:30
  Speaker 1: She's the CEO of Crytao or Critio Critia Critio. It's
• 54:35
  Speaker 1: a Nasdaq traded company. C rt O is the ticker
• 54:38
  Speaker 1: to put into your Bloomberg terminal. It's a French company
• 54:41
  Speaker 1: based in Paris. Megan, thanks so much for joining us
• 54:43
  Speaker 1: here in a Bloomberg interactive broker studio.
• 54:45
  Speaker 4: What do you guys do it?
• 54:46
  Speaker 13: Critio we're in at tech company. As you said, we
• 54:49
  Speaker 13: focus in on commerce media, retail.
• 54:51
  Speaker 1: Media, retail media.
• 54:53
  Speaker 13: What is retail media, Well, retail media is the lighting
• 54:55
  Speaker 13: up of advertising on retailer sites or even broader commerce
• 54:59
  Speaker 13: sites like Uber. They're now selling advertising and it's incredibly successful.
• 55:04
  Speaker 13: It's the fastest growing area of digital advertising. What Critio
• 55:08
  Speaker 13: does is we enable all of that for them. We
• 55:11
  Speaker 13: make sure that the right ads gets to the right
• 55:13
  Speaker 13: person on the right side at the right time, and
• 55:15
  Speaker 13: we also make sure that their inventory is shown up
• 55:18
  Speaker 13: for the demand side, or the advertisers and the agencies
• 55:22
  Speaker 13: who are looking to spend their advertising dollars across sites.
• 55:26
  Speaker 13: So it's competing, if you like, with traditional traditional media
• 55:31
  Speaker 13: and advertising. It's competing with Google it's completely copeeding with search.
• 55:34
  Speaker 13: It is the new wave of advertising across retailers.
• 55:37
  Speaker 1: What's a typical advertiser in that part of the marketplace.
• 55:42
  Speaker 1: Is it a Coca Cola trying to do some brand advertising.
• 55:45
  Speaker 1: Is it a car agency trying to get me to
• 55:47
  Speaker 1: go out and buy something tomorrow.
• 55:48
  Speaker 4: Yeah, it's all of that.
• 55:50
  Speaker 13: So they now see a real opportunity getting in front
• 55:53
  Speaker 13: of audiences.
• 55:54
  Speaker 1: Who are actually shoppers.
• 55:55
  Speaker 4: They're actually on.
• 55:56
  Speaker 13: Their buy a journey, and they're really close to the
• 55:58
  Speaker 13: point of sale posed to on a social site where
• 56:03
  Speaker 13: it's a conversation that's happened, and they might happen to
• 56:07
  Speaker 13: see the pepsi ad and it might spark a sort
• 56:10
  Speaker 13: of thought to go. If you're actually on Costco and
• 56:13
  Speaker 13: you're getting a pepsi ad and they stop Costco, you're
• 56:16
  Speaker 13: very close to that point of sale. So it's a
• 56:18
  Speaker 13: very viable advertising channel for all of those brands.
• 56:22
  Speaker 1: So your clients are the Costcos of the world as
• 56:25
  Speaker 1: opposed to the Pepsis of the world.
• 56:27
  Speaker 13: Well, we service both because we light up the advertising
• 56:30
  Speaker 13: for Costco, for Macy's, for Best Buy, for half of
• 56:34
  Speaker 13: the biggest retailers in the US. We power that advertising,
• 56:37
  Speaker 13: but we also make that advertising inventry available to the Pepsis,
• 56:41
  Speaker 13: to the Cokes, to all of We have twenty six
• 56:44
  Speaker 13: hundred brands that we support to try to bring their
• 56:47
  Speaker 13: dollars into that retail media space.
• 56:49
  Speaker 1: All right, how has that market that's been When you
• 56:52
  Speaker 1: think about the global advertising pie, and you take the
• 56:54
  Speaker 1: traditional media not growing, declining depending upon what you're looking at,
• 56:58
  Speaker 1: and you look at the digital piece continues to grow
• 57:01
  Speaker 1: and that was when I used to cover this four
• 57:03
  Speaker 1: or five years ago, still growing at twenty percent. Where
• 57:06
  Speaker 1: is a digital dollar spend growth rate kind of over
• 57:09
  Speaker 1: the next several years.
• 57:10
  Speaker 13: From your Well, if we think about retail media, retail
• 57:13
  Speaker 13: media marketplace is by twenty twenty five going to be
• 57:17
  Speaker 13: worth about one hundred and ten billion dollars. Now, if
• 57:20
  Speaker 13: you think on top of that, there's a star player
• 57:23
  Speaker 13: in there right now, which is Amazon. And Amazon's been
• 57:26
  Speaker 13: doing this for six to ten years now. Amazon have
• 57:31
  Speaker 13: last quarter posted about it eleven billion dollars worth of
• 57:34
  Speaker 13: advertising and have a run rate to about forty billion
• 57:37
  Speaker 13: dollars by the end of the year. And if you
• 57:39
  Speaker 13: think of traditional TV over all of the TV players,
• 57:44
  Speaker 13: that's a sixty six billion dollar market. So Amazon in
• 57:47
  Speaker 13: the retail space forty billion. All of TV over all
• 57:50
  Speaker 13: of the years that it's been playing about sixty six.
• 57:53
  Speaker 13: Is this real opportunity in retail media that's just exploding.
• 57:57
  Speaker 1: How are retailers in general, how are they as clients
• 58:00
  Speaker 1: adapting to this whole concept of you can monetize your
• 58:06
  Speaker 1: kind of your user base, that whole concept through advertising.
• 58:09
  Speaker 13: Another thing, Well, it's interesting because they're not media players.
• 58:12
  Speaker 13: You know, there are retailers, but they look at Amazon,
• 58:15
  Speaker 13: and they look at Walmart, they look at instacart, and
• 58:18
  Speaker 13: they look at how valuable this proposition is. And this
• 58:21
  Speaker 13: is where critio comes in because we come into them
• 58:24
  Speaker 13: and say, hey, we've got this platform, we will represent you,
• 58:27
  Speaker 13: we'll make sure that the ad tech works for you,
• 58:29
  Speaker 13: and we'll make sure that you're seen as compared to
• 58:31
  Speaker 13: others for all of the advertisers that we represent and
• 58:36
  Speaker 13: all of the agencies, the five big holding companies that
• 58:39
  Speaker 13: we represent. So we create an ecosystem around retail media
• 58:43
  Speaker 13: and they love that because they don't have to think
• 58:45
  Speaker 13: this through themselves.
• 58:46
  Speaker 1: Right, how do the agencies think about retail media. It's
• 58:49
  Speaker 1: not going to ABC and buying a thirty second spot
• 58:52
  Speaker 1: on the Super Bowl or whatever. So it's a different
• 58:54
  Speaker 1: type of channel. How do they view it?
• 58:56
  Speaker 4: Yeah, it's different.
• 58:57
  Speaker 13: These are all tactics. So if you think of an agency,
• 58:59
  Speaker 13: their job is to make money for their brand. And
• 59:01
  Speaker 13: so depending on what the brand is and what they're
• 59:03
  Speaker 13: objective is, they'll either go to broad based advertising, brand
• 59:07
  Speaker 13: advertising across traditional TV, or they'll go into a big
• 59:11
  Speaker 13: audience on a social environment or a search environment, or
• 59:14
  Speaker 13: they'll go to a precision a point of sale across retailers.
• 59:17
  Speaker 13: And so they think about that as a new way
• 59:20
  Speaker 13: to get a return on investment for those brands, for
• 59:23
  Speaker 13: those advertisers.
• 59:24
  Speaker 1: So we think about retail, I think you know Amazon
• 59:27
  Speaker 1: or Walmart, but there are adjacent retail industry, travel, hotels,
• 59:31
  Speaker 1: all that kind of stuff. How's that business evolving because
• 59:34
  Speaker 1: people are spending a lot of time on.
• 59:36
  Speaker 13: This exis well definitely, So we see retail media as
• 59:39
  Speaker 13: sort of the core of this, and then there's this
• 59:41
  Speaker 13: broader opportunity called commerce media. And that's exactly what you're
• 59:45
  Speaker 13: talking about. So Uber was a client that we signed
• 59:48
  Speaker 13: last quarter. And if you go to uber eats, you
• 59:51
  Speaker 13: see critio and action, you see the sponsored ads appearing
• 59:55
  Speaker 13: when you're searching for a product. You see their display advertising,
• 59:57
  Speaker 13: their video advertising, and they look for all intensive center
• 1:00:01
  Speaker 13: person purposes like Amazon.
• 1:00:03
  Speaker 9: When you go there.
• 1:00:04
  Speaker 13: So it's really interesting to see how that's going to unfold.
• 1:00:07
  Speaker 1: It's interesting we see this a lot companies, platforms have
• 1:00:11
  Speaker 1: this audience, this unique audience, and the question is how
• 1:00:14
  Speaker 1: do you monetize it. The current example I have, and
• 1:00:17
  Speaker 1: I've mentioned this to the company is Peloton. They're searching
• 1:00:20
  Speaker 1: for revenue, and I'm like, you've got X number of
• 1:00:22
  Speaker 1: millions of people and they're crazy people. Because I am
• 1:00:26
  Speaker 1: one of them and as is my household. There's no
• 1:00:31
  Speaker 1: you need to go down to Peloton people and start
• 1:00:32
  Speaker 1: pitching them to monetize starts putting some ads on there.
• 1:00:35
  Speaker 4: But it's so true.
• 1:00:36
  Speaker 13: I mean, they're a valuable audience and they're if their
• 1:00:39
  Speaker 13: shoppers or they're in that mindset, go sell me fire
• 1:00:42
  Speaker 13: product related to physical fitness, and their prime candidate that.
• 1:00:46
  Speaker 1: Is that That is kind of kind of what you
• 1:00:48
  Speaker 1: guys do and kind of what a lot of smart
• 1:00:50
  Speaker 1: people in the ad tech space are trying to enable.
• 1:00:53
  Speaker 1: Is the for folks to monetize their audience. Megan Clark
• 1:00:56
  Speaker 1: and thanks so much for joining us. Megan is the
• 1:00:57
  Speaker 1: CEO of Cridio again Ada traded stock. You know, I
• 1:01:01
  Speaker 1: like to flip these things around all the time. Crt
• 1:01:04
  Speaker 1: OH is the ticker seven buys six holds on the
• 1:01:08
  Speaker 1: stock and oneself, so a little bit divided street there.
• 1:01:11
  Speaker 2: Thanks for listening to the Bloomberg Markets podcasts. You can
• 1:01:14
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• 1:01:18
  Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
• 1:01:22
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• 1:01:24
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• 1:01:26
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• 1:01:29
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