Bloomberg Businessweek Weekend - October 25th, 2024 - Bloomberg Businessweek

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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news.

Speaker 2 (00:08):
This is Bloomberg Business. Wait inside from the reporters and
editors who bring you America's most trusted business magazine, plus
global business, finance and tech news. The Bloomberg Business Week
Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.

Speaker 3 (00:26):
Hi, everyone, Welcome to the Bloomberg Business Week Weekend podcast.
The countdown to election Day. It is on, and as
we approach the final home stretch to November fifth, we'll
hear why one outspoken billionaire Trump supporter is now the
democrats new supervillain.

Speaker 4 (00:41):
We're talking, of course, about.

Speaker 5 (00:43):
Elon and speaking of Elon Musk, big tech earning season
it is here. Tesla reported a solid quarter. Maybe that's
an understatement. More in the company's results just a little.

Speaker 3 (00:53):
Later on bit of a surprise, safe to say, okay,
from Tesla to its Chinese competitor that Elon Musk once mocked.
We talk next hour on BYD's rise from battery maker
to auto colossus.

Speaker 5 (01:05):
Plus she's responsible for banking, supervision, consumer protection and fintech
in Italy. The Deputy Governor of the Bank of Italy
stops by all.

Speaker 3 (01:13):
Of that to go, and we begin with US politics.
We are a little over a week away from the
US presidential election between Donald Trump and Kamala Harris. As
the nominees enter the final stretch, both are deploying novel tactics,
from podcast cameos to star studed concerts as both try
to scrounge up undecided voters and basically win this election.

Speaker 5 (01:33):
Another tactic writing a giant million dollar check to persuade
voters to turn out. That's what Elon Musk has been doing,
and it's raised the question from some federal officials as
to whether or not it's actually legal. The latest federal
filing show that Musk has poured at least seventy five
million dollars into his America pack, making him one of
the top donors overall this cycle, and that.

Speaker 3 (01:54):
Has caught the ire of Democratic voters, who now view
him as a political supervillain. Bloomberg BusinessWeek national correspondent Josh Green.

Speaker 5 (02:03):
Josh is also the number one New York Times bestselling
author of Devil's Bargain, Steve benn and Donald Trump in
the Storming of the Presidency, and more recently, The Rebels
Elizabeth Warren, Bernie Sanders aoc in the rise of the
New Left, but.

Speaker 6 (02:15):
In terms of politics, he has become so fiercely identified
with MAGA and with Donald Trump. The Democrats and liberal
groups have stood up and taken notice, and he's such
a polarizing figure and so emblematic. I think of the
kind of rich, dark money billionaires that liberals like to
demonize in their political ads that Elon has been popping

(02:37):
up in more and more ads across the country, whether
it's from Kamala Harris's campaign, or congressional candidates, or unions
or liberal super packs, more and more of them are
featuring Elon in their political ads. A lot of them
are even featuring the same footage of him in a tuxedo. So,
as I write in the piece, he's kind of eclipsed

(02:59):
the kochbra as the leading villain among Democratic ad makers,
and it's clear that it's resonating with liberal voters.

Speaker 7 (03:07):
Without giving the full piece away, because of course, we
want everyone to go read Bloomberg Business Week, you know,
what are some of those tactics that the Democratic parties
using when they are painting Elon Musk as the super
villain here? What are they really touching on?

Speaker 6 (03:22):
Well, there are two themes that democratic ad makers really
key in on, and Elon happens to encompass both of them.

Speaker 8 (03:30):
You know.

Speaker 6 (03:30):
The first is Democrats obviously for decades have been going
after what they would call, you know, greedy corporate billionaires.
Elon Musk is the world's richest man, certainly fits that billing.
The other thing that I think has become more popular
among liberal ad makers in the time of Trump is
raising fears of kind of right wing media manipulation, and

(03:54):
of course Musk, with his ownership of Twitter, also fills
that bucket. So in a lot of way, he's kind
of emerged as this cycle's perfect democratic villain. And the
fact that he arouses such intense emotions and liberals causing
them either to click and give money or to volunteer
for democratic campaigns, I think just shows that he's really

(04:17):
an important new player in politics the cycle in a
way that most people I don't think would have anticipated
even a year or two ago. Yeah, I think that's
certainly fair to say, Josh, you mentioned that it's resonating
with Democratic donors, with the electorate. What do we know
about polling in the way that Democrats versus Republicans feel
about Elon Musk well, perhaps not surprisingly, Elon Musk is

(04:37):
very very unpopular with Democrats and especially younger liberal Democrats.
And we know this because the Bloomberg News Morning Consult
Swing State poll actually went last month and asked people
about their favorable and unfavorable ratings on Elon Musk the
same way they would with a politician like Trump or Harris.
And sure enough, Elon is becoming viewed in much the

(05:01):
same way that a partisan politician would, where Republicans their
views of him have improved, a lot of them like
what they hear from him, where as Democrats, who are
once very positive about Musk because of his association with
Tesla and electric cars and environmentalism, now have turned on
him very sharply. And he's deeply underwater. I think something

(05:21):
to the extent of seventeen percent are favorable and something
like seventy nine or eighty percent unfavorable. So he's every
bit as unpopular or almost as unpopular with Democrats as
is Donald Trump.

Speaker 7 (05:32):
And what do we know so far about how effective
it is for the Republican Party to be using Elon
Musk in a positive light as opposed to the Democratic
Party kind of using him in negative campaign advertisements.

Speaker 6 (05:45):
Well, it's a great question. I mean, we do have
some indications that Elon is effective. That Donald Trump's campaign
sends out literally daily emails offering to sell the Elon
Musk Dark Mind hat, the black make America Great hat
that Musk wore his rally with Trump and Butler Pennsylvania.

(06:05):
A couple of weeks ago. I get a barrage of
emails from the Trump campaign touting is association with Elon
or Elon's offer to match funding. And so the Trump
campaign seems to feel that he's a very effective fundraiser
because they keep pumping out these emails. So, you know,
as one of my Democratic sources told me in the piece,

(06:26):
you know, Elon is basically a walking content factory you
can't look away from. So I think the story here
really is that whether you're a Republican campaign or a
Democratic campaign, Elon Musk has become such a central figure
that it's advantageous to put him in political ads, whether
that's touting his association with Donald Trump or attacking his

(06:47):
association with Donald Trump. It can raise money either way.

Speaker 5 (06:50):
Josh, I think what's notable about this is you know,
your story comes out on the same day that The
New York Times writes about how somebody like Jamie Diamond
over at JP Morgan is supporting Kama Harris, but his
resident reticent to come out and even say so for
fear of alienating and people who work for and for
fear of alienating customers and the like. Elon Musk doesn't
show any of that fear, and he runs or is

(07:14):
at the helm of several companies. And you don't often
see people in positions in business take a stand such
as Elon Musk is doing. And I wonder what your
view is on that and what's unique about this case
and unique about Elon Musk. The Koch brothers certainly had
the money and they were donating the money, but they
weren't out there jumping around on stage at rallies.

Speaker 6 (07:36):
Yeah, that's right. Look, the kind of old style democratic
villain were these reclusive fossil fuel billionaires like the Koch brothers,
who didn't want to be in the media, didn't want
to be featured. And you know, now we have this
new style villain in an Elon Musk, who seems as
eager to be out there and in front of the
cameras and being the center of attention as anybody's maid,

(08:00):
the Democrats job really easy for them. As to why
Musk has decided to identify himself so strongly with the
MAGA movement Donald Trump, I really can't say. I mean,
I know anecdotally and you can see it in the
polling numbers that we have that liberal Tesla owners are
very upset about this. Democrats don't like him. Presumably this

(08:21):
is going to have some effect on the margins of
his companies, but he has decided for whatever reason, maybe
because he has so much money, maybe because he's such
a true believer in Trump and what he stands for
that he doesn't care and he's going to go out
and do this anyway. And I think that's one reason
why Musk has unexpectedly emerged as one of the most
fascinating figures and my bead of presidential politics. He's a

(08:44):
new character. He's out there and he's demanding that the
spotlight be on him, and I think as a result,
it is on him, and we're seeing all the different
influences and effects that he can have on a presidential race.

Speaker 7 (08:55):
And of course one of those influences is the money involved.
Tim had mentioned this. Latest federal filings show that Musk
has poured at least seventy five million dollars into the
pack that supports Donald Trump. How does that stack up
with other donors and then other campaigns that we know
Musk has been involved in.

Speaker 6 (09:15):
Well, it immediately makes him one of the single largest
donors in American politics. You know, it's remarkable. Before this cycle,
he wasn't known as a major donor, and in fact,
he was kind of reputed among people in DC in
my world to be kind of a chief skate who
talked a lot but didn't write a lot of checks. Well,
now he has decided that he wants to be one

(09:35):
of the biggest donors in American politics. And I think
you can see the effect that that's had. Just in
the opening segment you guys showed of all the clips
of Trump mentioning Elon Musk, he brings him up again
and again in public and in private. And so if
Trump is elected, I think that Musk stands to be
a very important figure in the Trump administration and that

(09:57):
he'll essentially have bought himself a level of influence that
most people, even very very rich people are reluctant to do,
to try and come out publicly and declare their association
give this much money. Elon is really plowing new ground
here and it'll be interesting to see what kind of
effect that has if Trump makes it back into the

(10:17):
White House.

Speaker 5 (10:18):
Yeah, I do wonder what he would want to see
when it comes to his own influence or what he
would want to do, Which brings me to my next
question about unions, Josh, because they play a central role
in your story, and Elon Musk has had a contentious
relationship with unions given that Tesla is not a union shop,
and other US automakers are talk a little bit about

(10:39):
that and what we've heard from unions when it comes
to Elon Musk.

Speaker 6 (10:42):
Yeah, I started noticing a few weeks ago Elon kind
of popping up in these political ads, and I remember
thinking to myself, like, this is not something we would
have seen before this cycle. So I wound up doing
a very deep dive looking at the Elon Musk political ads,
and some of the earliest ones that ran were buy unions.
The Service Employees International Union was one of the first.

(11:05):
They had run ads around Elon even before his MAGA
and Trump associations because he was sort of the personification
of what they would consider the greedy, corporate union busting boss.
He was in a big fight with Swedish unions at
a time, and I think that really kind of gained momentum.

Speaker 8 (11:24):
You know.

Speaker 6 (11:24):
I found other ads from Teamsters against Trump and all
sorts of local unions using Musk to kind of highlight
this idea that greedy bosses are screwing union workers and
Elon Musk sort of stands for everything we're fighting against.
I talked to one union president for the piece who
says he Musk is the personification of everything that our

(11:47):
polling tells us middle class, ordinary workers don't like, and
so it's very easy for us to feature him in
our political ads because he tells the story that we're
trying to tell.

Speaker 5 (11:57):
Hey, Josh, speaking of stories, you wrote the book on
Steve Bannon, and we'd be remiss if we didn't ask
you about Steve Bannon and his influence or lack thereof,
on the election this time around, Given that he's been
serving a one hundred and twenty day sentence in federal prison.
He set to be released from that next week, what
are your thoughts on how Steve Bannon's influence, who had

(12:18):
such a big one in twenty sixteen, has loomed over
this cycle.

Speaker 6 (12:22):
You know, it's a great question. I think if you
look at how outrageous some of the Trump claims have been,
some of the events, the kind of lack of inhibitions
that we see in Trump's campaign visa vi what we
would see from an ordinary Republican candidate. I think a
lot of that goes back to Bannon and the style
of politics that he pioneered. From what I understand, he's

(12:43):
getting released from prison in a week, so he will
be here for the final week of the campaign. And
you know, who knows, wouldn't surprise me at all to
see him out at a Trump campaign rally on stage
with Donald Trump leading on the crown in the days
before the election, But we'll have to wait and see.

Speaker 7 (12:59):
We also just gotten news that Donald Trump is expected
to record an interview with Joe Rogan at his studio
in Austin, Texas. That's according to Politico. What do you
make of that? I mean, how effective is going on
a podcast as big as Joe Rogan's. And the political
report also said that Kamala Harris is also in talks
to go on that podcast as well.

Speaker 6 (13:20):
Yeah, look, I mean I think it's smart for both
candidates from the standpoint that young men in particular tend
to be low propensity but Trump friendly voters, So Trump
going on Joe Rogan makes a lot of sense to
kind of reach these young men and try and motivate
them to get up off the couch and show up
at the polls on November fifth. For Harris, I think

(13:42):
the story is very much the same, is that the
reason she would go on that show would be to
try and make a last bid to these young men
not to go support Donald Trump, but maybe to find
a reason to support her, or at the very least
not be so outraged and provoked by her that they
decide to go vote for Donald Trump. I think for
a lot of Harris people, they would be fine having

(14:03):
Joe Rogan's listeners just stay at home, But basically they
want to fight Trump to a draw when it comes
to winning the hearts and minds.

Speaker 9 (14:10):
Of young men.

Speaker 6 (14:11):
So it looks like now that Joe Rogan's podcast is
kind of going to be the arena for that battle
to be fought, you know, ten fifteen days before voters
go to the polls.

Speaker 5 (14:21):
Josh, last question. I'm not going to ask you to
make a prediction here, but given your reporting and what
you've heard from your visits around the country as you
report out your stories, is the election indeed as close
as the polls are telling us?

Speaker 9 (14:34):
Yeah?

Speaker 6 (14:35):
I mean, I've been privy to a lot of private
polling from Democrats, Democratic groups, and some Republicans over the
last couple of weeks. Everyone that I've seen shows the
race to be absolutely as close as the public polls
that we're seeing. So my assumption is that those polls
are largely accurate, and that we mean to not know
for a day or even several days who the winner
of the election actually is.

Speaker 5 (14:55):
All right, Josh Green, Hopefully we get him one more
time before polls close two weeks from tonight. Josh, really
appreciate you taking the time. Josh Green is Bloomberg Business
with National Corresponding. He's the author of the number one
New York Times bestseller Devil's Bargain, Steve benn and Donald
Trump and the Storming of the Presidency. Also The Rebels
Elizabeth Warren, Bernie Sanders, AFC and the Rise of the
New Left.

Speaker 2 (15:22):
You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 10 (15:36):
I do want to give some some rough estimate, which
I think twenty to thirty percent vehicle growth next year,
you know, notwithstanding negative external events.

Speaker 3 (15:47):
That's Elon Musk from this week's Tesla earnings call, as
the company reported better than expected profits in the third quarter.
Now Tesla's shares surge the most in more than three
years after the carmaker reported surprisingly strong earning and forecast
as much as thirty percent growth in vehicle sales next year.
Elon's saying that on the earnings call.

Speaker 5 (16:06):
The third quarter results were boosted by the cybertruk generating
a profit for the first time, lower material costs and
expanding energy business, and sales of regulatory credits to automakers
that need help complying with emission's limits. With more on
Tesla's surprisingly strong earnings, we were joined by Bloomberg News
Global Autos editor Craig Trudell.

Speaker 8 (16:24):
Musk was in sort of rare form. I think you know,
you often can sort of can count on him being
quite positive, and you know, sometimes he gives people reasons
to bid the stock up. Other times, you know, he's
less careful. I think he wasn't necessarily careful. He at

(16:47):
one point said something about, you know, I'm going to
take a risk and offer you know, this upbeat outlook
for next year. He also, you know, sort of couched
this later on he talked about, you know, his forecast
for how many cyber cabs they'll make, you know, a
couple of years out as just his best guesses. So

(17:09):
that being said, you know, there was a lot to
like about this quarter in terms of, you know, sort
of the breadth of what went well. I think expectations
were quite low in terms of what revenue and earnings
were going to be, and they beat expectations on a
lot of metrics, and it was kind of widespread. It
wasn't just the car business. They're doing well on the
energy side as well.

Speaker 11 (17:30):
Well.

Speaker 3 (17:30):
That's what I wondered, you know, Craig, is this a
report where we were all managed so well going into
it and had very low expectations, and so when Tesla
comes in stronger than forecast and above those low expectations.

Speaker 4 (17:44):
We were all just like, WHOA really surprised?

Speaker 3 (17:46):
Or is this a report where Tessa the business is
actually doing well?

Speaker 8 (17:50):
I think it's a little bit of all the above.
I mean, is it a you know, twenty one percent
move up in the shares sort of report. I'm sure
oct by this, but you know, what do I know,
I'm just a journalist. I think uh, I think it is.
It is, you know, the case that the stock has
has gotten, you know, roughed up a little bit the

(18:12):
last couple of weeks since the ROBOTAXI unveiling. I think
there was really high expectations going into that because Musk,
you know, had sort of spent months hyping up you know,
all the work that they've done on AI and and
you know years now on on self driving. Uh, and
we don't actually have you know, necessarily clear indications that

(18:34):
you know, some of the promises he's made or uh,
you know predictions that he's made are close. You know,
you you do. You don't have to look very far
to see you know, people who use the product that
the company calls full self driving, you know, acting up
not working so well. You know, they recognize some revenue

(18:55):
this past quarter from deferred revenue related to that business.
And and you know, one of the features that they
rolled out actually smart Summon, which is an interesting acronym.
You know, we're seeing reports of people trying to summon
their cars and parking lots and getting into scrapes, and so,
you know, there's there's still you know, a lot left

(19:17):
to be said about you know, just how much longer
this company, you know, needs to work on this technology
to get it to where it's safe.

Speaker 5 (19:25):
Hey, Craig, there were a lot of questions ahead of
the earnings call you about whether or not analysts would
ask any questions related to Elon Musk's political activities, the
seventy five million dollars he's given to the America pack
and support of foreign President Donald Trump during this election cycle.
What did we hear from Musk on the call about
a potential second Trump administration? How did he weigh in

(19:48):
on politics?

Speaker 8 (19:49):
Yeah, it was it was interesting. I think you know,
Tesla solicits investor questions, you know, going into these calls,
and there were a lot of questions submitted having to
do with politics and wanting to you know hear Musk
address his support for Trump and just how outspoken he's been.
He didn't utter Trump's name at once, which was a

(20:12):
little surprising to me. But he did allude to this
idea of, you know, maybe if he were to be
appointed the head of the government efficiency department that he
and Trump talked about on X a while back, and
maybe he would work on you know, national rules for
getting robotaxis on the road. So he sort of gave

(20:34):
investors a little bit of a taste of how he would,
you know, potentially be able to tip the scales after
after becoming such a huge benefactor of Donald.

Speaker 3 (20:43):
Trump, investors who wanted something today got better than expected
profit and guidance for growth on deliveries and deliveries that
was from Gene Munster over a deep water asset management.
He said, the long term investors got the golden carrot.
So is the golden carrot on the delivery numbers?

Speaker 4 (20:59):
Is that what it is?

Speaker 8 (21:00):
I think that was a big one. I mean, you know,
there's there's I think real legitimate concern as to whether
or not the company will deliver more cars this year
than it did last year. You know, through the first
three quarters of the year that that the deliveries are down,
and they're going to need a real substantial jump in
the fourth quarter to get to where they're They're positive.

(21:23):
I think the company surprised people by saying they do
expect some slight growth for this year, so they're really
going to have to finish strong and then twenty to
thirty percent. I think, you know, that sounds great. I
didn't necessarily get, you know, a strong sense of how
exactly this company is going to pull that off, because
they have not specified what sort of product is coming

(21:47):
that that could possibly you know, paste that.

Speaker 5 (21:50):
What about the affordable more affordable car that was promised,
and what was the first half of twenty twenty five.

Speaker 4 (21:56):
Didn't we kind of say something about that.

Speaker 8 (21:57):
He's alluded generally to new vehicles, including more affordable models,
but what those models are, we have no idea. It's
not going to be a twenty five thousand dollars Tesla
with a steering wheel and pedals, because he was very
dismissive of a question posed about that. So I, you know,
I think I think it's pretty clear at this point
they're going to you know, refresh the model Y and

(22:19):
you know, maybe offer some cheaper versions of of the
model y and the Model three and are counting on
you know that that, you know, getting growth going again.

Speaker 5 (22:28):
And we know Carol that steering wheels and pedals are
not the future.

Speaker 3 (22:31):
So I'm thinking it's a cheaper cyber truck like you
get into like discounted version.

Speaker 8 (22:36):
I don't know, No, that's definitely coming to it's got too.

Speaker 4 (22:39):
Yeah, good stuff.

Speaker 3 (22:41):
Craig Drudale, Thank you so much, Global Autos editor at
Bloomberg News. Joining us from our bureau in London.

Speaker 12 (22:47):
Now.

Speaker 3 (22:47):
One especially vocal Tesla shareholder, cyber truck owner, and frequent
guest on our air is Ross Gerber. He's the co founder,
president CEO Gerbert Kawasaki Wealth and investment management. Ross in
recent has expressed doubts about Tesla's ability to meet its
sales goals, dismissing bullish claims about the company's robotics and
self driving technology. Well, he joined us right after Tesla's

(23:10):
latest earnings release on Wednesday.

Speaker 13 (23:12):
You know, really Tesla runs into the problem of cannibalizing
its other cars, and that I think is what's causing
them to pause. Now, what I've been saying is if
they would have put a steering wheel on that robocab.

Speaker 9 (23:24):
It would have been a much.

Speaker 13 (23:25):
More exciting launch for me and I think for customers
knowing that this two seater, cheaper car could be something
we could actually just buy and drive. The robotaxi business
is not a business that I'm excited about. It's not
really what I think Tesla should be doing. There already
are robotaxes that exist called Weimo, and Uber is already
the master of transportation. So to me, Tesla should be

(23:49):
selling EV's focusing on making great evs with great software
and not trying to pivot into being some sort of
robo taxi company. But you know, once again, I think
people want to buy the car, and if they worried
about selling the cars, they'll do just fine.

Speaker 5 (24:02):
Russ elon Musk and politics. He's donated, He's one of
the largest donors to the Trump candidacy, to the Trump campaign.
He's got his America Political Action Committee as super Pack,
He's become incredibly active. I'm wondering, from the perspective of business,
if in a time when we're so divided as a nation,

(24:25):
if taking such a clear stance and doing so much
to elect one candidate is a risk to the company.

Speaker 9 (24:33):
Yes, of course, you know why are you laugh strategic?

Speaker 13 (24:37):
Well, because I think it's an absurd risk to put
your company in that you could avoid. Right, So, you know,
I've personally tried to stay out of this election. I
don't get any positive from my clients expressing my liberal opinions,
which are liberal, and you know, I think people who
work at my firm know that. And but you know,
as a business person, it doesn't really serve. My purpose

(25:00):
has to espouse my liberal beliefs on everybody. And that said,
Elon's extremely right wing beliefs turn.

Speaker 9 (25:07):
Off a lot of his core demo.

Speaker 13 (25:08):
Now a lot of people don't believe that's happening, but
I mean, look at what the effort they have to
do to sell a car today, and they still refuse
to advertise.

Speaker 9 (25:16):
So taking this stance for Elon is kind.

Speaker 13 (25:20):
Of a lose lose for TESLA because if Trump wins,
he doesn't give a crap about EV's. He supports oil,
and Elon's gonna learn about Trump, which.

Speaker 9 (25:28):
Is that he's a liar. And so all this.

Speaker 13 (25:30):
Money Elon's putting into Trump to hopefully have some power,
he's gonna learn the hard.

Speaker 9 (25:36):
Way about Trump. Just asked Juliani.

Speaker 13 (25:39):
So that's a lose, and if Trump loses, it's a
disaster for Elon just personally and for his personal brand
and for everything that he's been working on. And it
really puts Tesla in a tough position because the administration
isn't going to do anything to help them, that's for sure.

Speaker 9 (25:57):
So I don't I don't get it other than I guess.

Speaker 13 (26:00):
He thinks the America is in this horrible place, but
the stock market's hitting all the time highs every day,
and I think America is in a wonderful place.

Speaker 9 (26:08):
But it's all a matter of perception.

Speaker 2 (26:09):
You know.

Speaker 13 (26:10):
And I think this is the most political I've ever
seen a CEO. And that's one of the reasons we've
lowered our position in Tesla is we do think it
affects sales and affects the brand and ultimately margins. And
we're excited about margins going up instead of going down
for a quarter, which is great news, you know. But
this is coming from the fact that the car market

(26:31):
is so difficult that the cost of goods has gone down,
not because Tesla is making more margin because people are
willing to pay more for a Tesla.

Speaker 14 (26:39):
I want to talk a little bit more about Elon Musk.
Matt Levine calls it the attention auction that you know,
there's just a lot of things competing for Elon Musk's attention.
And this has been discussed before, but I am curious
to hear your opinion on whether or not the fact
that Elon is so spread thin across these different efforts,

(26:59):
how you're thinking about that when you're taking to look
at your Tesla position.

Speaker 13 (27:02):
Well, this is probably one of the biggest issues is
he doesn't actually work at Tesla, you know, like you
go to work at your company every day like you're
the CEO. I don't think that's what he does. And
I don't think that Elon gets more hours in a
day than you or I do. So he might sleep
four hours a day instead of eight. Well, you know
where that's going to cost him is at the end
of his life, because it's super unhealthy to live this way.

(27:24):
You know, there's this sort of opinion that he has
some superhuman ability.

Speaker 9 (27:28):
He doesn't.

Speaker 13 (27:29):
So he's spending his time working for Trump right now
and doing politics, and he's not spending his time getting
his full self driving to work, which it still doesn't
and So this is really the issue for me as
an investor is shouldn't the CEO of your company be
there every day or at least pretend you know. And

(27:50):
then the second thing is this lack of attention to
what needs to be done, especially around full self driving,
is really troubling to me because I s the competitors
all over the place. I'm here in the heart of
EVS right and Rohogue Taxis, They're everywhere. They're working in
extremely difficult driving conditions that my cyber truck can't even

(28:11):
come close to tackling.

Speaker 9 (28:12):
Russ.

Speaker 5 (28:13):
We gotta go, We gotta let you get back to work.
We do appreciate you joining us. It's always a treat
when you are on our air, especially post test learnings.
Ros Gerber, President and CEO of at Gerber Kawasaki Wealth
and Investment Management.

Speaker 2 (28:26):
You're listening to the Bloomberg Business Week podcast. Listen live
each weekday starting at two pm Eastern on applecar Play
and Android Auto with the Bloomberg Business ad. You can
also listen live on Amazon Alexa from our flagship New
York station, Just say Alexa Play Bloomberg eleven thirty.

Speaker 4 (28:44):
The European Central.

Speaker 3 (28:45):
Bank recently lowered interest rates for the third time this year,
as a hastier retreat in inflation allowed it to offer
support to the regions stuttering economy. We got some economic
news just this past week on showing how the European
Zone is struggling.

Speaker 5 (28:58):
In an exclusive interview with Bloomberg, ECB President Christine Laguard
said that the bank is quote rather satisfied with how
inflation is slowed below the two percent goal, but that
the central bank will remain cautious and not jump to conclusions.

Speaker 9 (29:12):
At the moment.

Speaker 15 (29:13):
We are not totally unhappy with what we see, because
it looks very much that inflation is on the right
track of des inflation. You know, we come from very
high numbers, as high on average for the whole of
the euro Area as ten point six percent, and the
latest reading we had for the inflation in September was

(29:35):
one point seven and we're looking at a lot of
data to make sure that this disinflationary process continues to
be well on track.

Speaker 5 (29:43):
That was ECB President Christine Laguard speaking exclusively on Bloomberg
Television in Washington, DC.

Speaker 3 (29:49):
We get another view on the rate cut in Europe
and more specifically the Economy of Italy with Alessandra Petzeli,
Deputy Governor of the Bank of Italy, the Italian Central Bank,
Tim and Bloomberg's Emily Garfao began with her take on
the easy B decision to cut rates.

Speaker 1 (30:04):
Well, you know, this was expected and follows like a
very long period of unprecedent, you know, very restricting monetary
policy that has taken us in twenty two, twenty twenty
three to an unprecedent situation since the Euro was introduced.
So it's kind of too soon to understand how this

(30:25):
is going to play both for the banks and for
the system as a whole, for the stability of the
system as a whole. What I can say is that
this was expected and we will see how, you know,
it goes forward in the coming in the coming months.
It's clearly a situation that has been quite interesting for

(30:46):
supervisors like myself. You know, we have been seeing banks
making unprecedent you know, profitability in the last years they
were rocket high, something that has of course created a
number of impacts on the market and has you know,
given us supervisors a little bit of a red flag

(31:07):
on everything like credit risk and liquidity risks, and these
are the issues that right now are under the limelight
of the ECB, the SSM ARM which is the supervisory
arm of the ECB, and of course also Bankavilly that
participates to the Eurozone and in the SSM.

Speaker 16 (31:28):
So we know that.

Speaker 7 (31:29):
Spain, Portugal and Greece are among the countries helping you
keep the Eurozone out of a recession. How would you
describe the economy in Italy right now?

Speaker 1 (31:38):
Well, right now, what we've see is, you know, the
economy is being growing, you know, in the last year.
Predictions are you also bring in the economy steadily? I
would say for the next quarters. The banking system in
Italy has been strong and able to support the economy

(32:02):
and this is due to the work that has been
done you know in the last years together with the SSM.
So we are looking at a you know, with some
positive expectations as to the next quarter. So I would
say that between Spain, Portugal and Italy we are you know,
pretty much going the same direction.

Speaker 5 (32:23):
What about when it comes to immigration in Italy? This
is a huge topic here in the US ahead of
the presidential election. Our own Bloomberg News team reporting that
Italian prime Minister Georgia Milleni's government is pushing through new
legislation to salvage it's controversial plan to curb undocumented migration
after a court blocked to project to divert asylum seekers
to Albania. How do you look at the role of

(32:45):
documented migrants and undocumented migrants in the Italian economy?

Speaker 1 (32:49):
Well, this is a very difficult issue. That's difficult in Italy,
you know, given also the fact that we have you know,
borders that can be easily sort of you know, penetrated,
and this has been an issue that has been brought
by a number of our governments at European and European level.

(33:09):
We are I think that we are in the process
of understanding and this issue of you know, uh, catering
for external aid in order to take care of undocumented
immigrants is on you know, as being very much wanted
by the government. I know there right now there are
some you know issues that also concern the judiciary is

(33:32):
a ve that decision. We will see how it goes.
For sure, this is something that europe needs to tackle together.
I mean, there isn't something that every single country can
take care of. It's a European issue. As much as
an American issue.

Speaker 5 (33:46):
That's it's interesting, That's that's my question because here in
the US, I think it's fair to say, and you know,
a lot of economist would agree, there are jobs that
Americans who are born in America typically will not do
in the United States, jobs that traditionally go to migrants
and migrant labor. Do those jobs exist in Italy?

Speaker 1 (34:06):
More and more I would say yes. I think that
Italians are not, you know, taking those jobs that were
traditionally there for maybe you know, lower income classes and
lower income people. It's slowly becoming the same as it
is here, maybe not with the rhythm and with the

(34:28):
growth you know, they have seen and experienced in the
United States.

Speaker 7 (34:34):
I want to pivot to financial regulation because Bloomberg News
is Laura Nonan had written earlier in October that Germany, France,
and Italy had urged the EU to show restraint in
financial roommaking and instead focus on boosting the competitives competitiveness
of the banking sector. That was the Treasury, and so
we're wondering if the Bank of Italy kind of shares

(34:57):
that stance when it comes to balancing competition relation.

Speaker 1 (35:01):
Well, I think that if we look at the last
couple of years and what happened in Switzerland and what
happened with the US regional banks, we clearly see that
there has to be a balance between regulation and competition.
But regulation is we believe, you know, the most important tool,

(35:21):
together with supervision in order to keep you know, financial
stability in the eurosystem. And you know, I think that
we prove that the full implementation of Basil three has
given it to supervisors a harmonized set of schemes of
you know, reporting that has been extremely helpful in the

(35:44):
years that follow the crisis of twenty oh seven twenty eight. Today,
if you look at the European banking market, you see that,
you know, the banks are very stable and able to
support the economy, and that's exactly the job they should do.

Speaker 5 (35:58):
I want to talk a little bit inv and fintech
in particular, because here in the United States you have
regulators trying to figure out the role that fintech should
play when it comes compared to big banks. For example,
what do you think the priorities for the next Commission
should be when it comes to the future of finance
When it comes to fintech companies that I speak of.

Speaker 1 (36:17):
Well, in Europe, we definitely have to complete the capital
market union. That is very very instrumental to you know,
innovation because it creates all the you know, the financial
tools to finance innovation. What we see happening in Italy
right now that the competition is shifting, you know, it's

(36:38):
not among banks anymore, but it's also between banks and
those tech companies that come from other sides.

Speaker 9 (36:46):
Of other industry. Here in the US, it's the same.

Speaker 1 (36:49):
As in the US, and there's a lot also coming
from the payment system industry. So if we look at
the number of licenses that we've been granting in the
last few years out of like say eighty seven two
or for banks and eighty five for other type of
financial institutions. So the thing is really how do banks

(37:11):
cope with legacy when it comes to the it, you know,
with it legacy and how also they are entering more
and more into contracts with third parties, providers that come
from like tech industry, and they're becoming extremely relevant also
for the kind of concentration you know, in the European market.

Speaker 5 (37:30):
But do you think your colleagues and do you think
regulators in Italy are doing the right thing when it
comes to embracing this technology.

Speaker 15 (37:36):
I think.

Speaker 1 (37:37):
So we have had a lot of changes, you know,
within our own institution in order to cope with this,
you know, and created a way to talk to the
market and understanding of what kind of regulation is needed.
The European Commission has issued a number of vertical and
horizontal regulation that are extremely interesting and that we are

(37:58):
now implementing their and trying to organize sort of innovation
in a way which does not create instability at the market.
But at the same time, we don't want to stiffle it.
We want newcomers, we want innovation, we want to create
new industry.

Speaker 7 (38:13):
We're talking about fintech and an issue that comes up
a lot is cybersecurity, and I'm wondering how the ECB
plays a role in protecting both consumers and corporations, including banks,
from this emerging threat.

Speaker 1 (38:28):
Well, there are now a couple of peace of legislation
that have been put together in the EU that look
after explicity, after a security of infrastructure, and that is
of course, you know, an issue that concerns banks, but
concerns also utilities and other important networks of the country.

(38:49):
The one thing that you know, it's very important. The
kind of risk that we're looking at is how interconnected
the platforms are becoming and how this role of third
party providers are are is you know, increasingly important when
it comes to create you know, new ability for companies,

(39:09):
for banks to provide these services. So I think this
is main top issue on the U legislator agenda and
on ours.

Speaker 5 (39:18):
We have a story by our team here at Bloomberg
News about central makers losing sleep over europe souring economies.
Have another worry looming large, how much more damage Donald
Trump could cause if he returns to.

Speaker 9 (39:29):
The White House.

Speaker 5 (39:30):
We're two weeks away from the election here in the US.
How are you watching it?

Speaker 1 (39:33):
Well, you know, we concern like everybody else. And I
think that you know, one of the issues for US
regulators is that you know, deregulation will see what happened
with the US regional banks. You know, there are huge
banks compared to European size, and you know, the the
lack of application of Basil three, the sort of like

(39:54):
the light touch supervision. I think it's something that worries
the international markets. You know, the you don't need to
be a non internationally active bank in order to create
a wave that touches and other countries and other industries.

Speaker 5 (40:13):
So your concern is mostly about regulation when it comes
to smaller banks in in.

Speaker 1 (40:18):
You know, I would say so, yes, definitely, that is
an area that has been clearly, you know, something that
has created concern in last year when you know, Silicon
Valley Bank and the other regional banks that didn't hit
the press too much, but we knew about it, and

(40:38):
this is of course something that we don't know whether
there can be a contagent, you know, and how that's
going to work. Also going towards Europe.

Speaker 5 (40:47):
Alessandro Petzzlli, Wuty Governor of the Bank of Italy, the
Italian Central Bank, Joining us here in the Bloomberg BusinessWeek Studio.

Speaker 2 (41:00):
on Apple car Play and then brought auto with a
Bloomberg Business act or watch us live on YouTube.

Speaker 3 (41:13):
Plenty ahead in our second hour of the weekend edition
of Bloomberg Business Week, including the high schooler who kind
of schooled us. He created a method to detect pesticide
residue on produce using a handheld detector with some AI
thrown in. We're just kind of liked Tim and I like, wait.

Speaker 4 (41:29):
What how old are you and what did you do?

Speaker 3 (41:32):
I truly every time I wash fruit or eat fruit,
I think about his device and I want one.

Speaker 9 (41:36):
Plus.

Speaker 5 (41:36):
The CEO of Lifewave Foods on tapping into the dairy
resurgence among American consumers Kafir anyone.

Speaker 4 (41:43):
I know, we're still trying to figure it out, right, it.

Speaker 5 (41:44):
Doesn't matter how you say it, it tastes good.

Speaker 4 (41:46):
Ah, nice to know.

Speaker 3 (41:47):
First up this hour, what started as a battery company
in the nineteen nineties in Shenzhen, China has now become
one of the best selling EV brands in the world.
And now the company's startling growth has made it a
global player, and that has sparked tariffs from the United
States and the EU.

Speaker 5 (42:03):
We're talking about Chinese automaker BYD it stands for build
your Dreams. They've seem to figure out something that the
rest of the auto industry has not, and that is
build an affordable EV for the masses.

Speaker 7 (42:14):
Yeah.

Speaker 4 (42:14):
I feel like that's the holy grail in the EV world.

Speaker 1 (42:16):
All right.

Speaker 3 (42:17):
This story is the cover of the upcoming new issue
of Bloomberg Business Week and is by Bloomberg News auto
reporter Gabby Coppola, who joined us to talk about China's
EV offensive.

Speaker 12 (42:26):
BYD was founded in nineteen ninety five by a Chinese
battery scientist named Wan Chuanfu. And he was basically a
government researcher who saw that, you know, the Chinese economy
was opening up, and he decided to move to Shenzen
in the south of China, which is today kind of
one of the like a Silicon valley of China. And
he started out making batteries for mobile phones, but his

(42:48):
dream was to.

Speaker 4 (42:49):
Electrify the auto industry.

Speaker 12 (42:51):
He always thought that you could make you know, battery
powered vehicles, and it took a really long time from
nineteen ninety five to up until about twenty twenty for
him to make that a reality. But the story is
really about how he did that. And you know buid
because they are kind of the poster child for China's
EV offensive around the world. I mean, they're not the
only one by any means. There's lots of Chinese EV

(43:14):
companies that are now trying to export around the world.
You know, we see a lot in Europe but also
in Southeast Asia, the BID is kind of the strongest
and the biggest, and you know, they're the biggest EV
seller in China. And I think because we're in this
moment of trade war and talking about tariffs and tension
with China, there's a tendency by people in the West
to kind of think that, oh, this is all because

(43:36):
of Chinese subsidies. And I'm not at all saying that
there aren't Chinese subsidies involved. I mean, the Chinese economy
is not a free market economy. There's a lot of protectionism,
and the scale of subsidies that they use is much
higher than what other, you know, free market democratic countries do.
But if they were just subsidies, there would be twenty
byds and there's really just one. And you know that

(43:56):
is the due to the innovation and the sort of
long term vision of Tuan Fu and the other key
people in the company.

Speaker 3 (44:02):
Well, Gabby, get to it, because it does feel like
the thing, the nut that they figured out how to crack,
the holy grail, if you will, is to build an
affordable EV for the masses, which we keep getting promises
from the likes of Elon Musk and others, and yet
it hasn't happened. BYD though figured it out.

Speaker 4 (44:21):
How is that? Is it just getting the cost of
batteries down? What was it?

Speaker 12 (44:24):
You know, it's not just one things. I think it's
a confluence of things. But you know, one thing I
learned in researching this story, Carol, is that you know,
we look at the US now and we say, oh,
evs aren't taking off. Look at this, sales are down.
China went through that too for like ten years. Like
China also was engineering incentives. But the thing is BYD
never stopped. I mean they had a vision to do

(44:45):
this and they kept doing it when it was not popular,
when they weren't selling. One thing that's really key is
they also sell hybrids, so they're not like Tesla, where
if EV demand drops, that's all they got. You know,
if you got range anxiety, BYD's got to plug in
hybrid for you. But I think the key, the key
to what they've achieved is a lot of it has
to do with vertical integration. You know, UBS did a

(45:06):
report that their vehicles are twenty five percent cheaper to
make than basically the rest of the auto industry, and
a lot of that is because they make so many
things themselves in the house. This is not just a battery,
This is not just a car company. They make semiconductor chips,
they make solar panels, they make components for consumer electronics
for companies like Apple. I mean, they're manufacturing Titan really

(45:27):
in China. But the other part of it is they
had a battery breakthrough. Like I said, Wan Chuanfu is
a battery scientist. And I think China gives a lot
of subsidies for research and investment, you know, R and
D and investment. That's a big part of their economy.
And so I mean he I visited. I did visit
their headquarters in chen Jin, and I felt like I
was at an academic campus or like a national lab,

(45:48):
because there was just the museum of what all the
things they've invented and researched is.

Speaker 4 (45:53):
There's a lot there.

Speaker 5 (45:54):
What's the give us an idea of what's there apart
from vehicles that we've seen pictures of because we know
we're not driving these things here in the US. We'll
get to that in just a minute.

Speaker 12 (46:02):
Right well, And keep in mind, like they're not letting
an American journalist in to see behind the wall and
see all their secrets. But I mean, one thing that
Wan Chuanfu is very proud of is they always do
this nail test where they have you go in the
museum lobby area and there's this glass wall, and there's
a lithium ion battery with nickel, and then there's the
BID battery, which uses LFP or lithium iron phosphate. That's

(46:26):
kind of a key part of their success is they
decided early on to work with this battery chemistry LFP,
which is more stable and less fire prone than the
nickel based batteries we've seen the Koreans and everybody in
the West using. So when you go into this museum,
they have this like robot arm that comes down and
sticks and nail right through the battery, and on the
nickel side you see the thing explode, and on the

(46:48):
bid LFP battery nothing happens. So that's like probably one
of Wangwan Fu's greatest achievements is who's saying, look, I
made this battery that you know can actually be used
for long range vehicles, but it could and I and
I look, they call it. They branded as the safe
Thing No batteries A hundred percent you know, zero fire risk,
and I think if you were to google you'd find

(47:08):
that's true for BID two. But you know that is
a key part of it. But the you know of
suspension systems, you know, research on materials, polymers, so many things,
I mean, the engineering, you know, all these things. But
another thing I should mention in my story. You know
what a scoop that we uncovered myself and our our
you know star Apple or reporter Mark German, is that

(47:30):
actually BID and Apple worked together, uh for a battery
system for the Apple car when that project was still going.
And our reporting showed that that work that Apple and
BYD did together did influence and you know, impact somewhat
of BID's own blade development, cause at one point both
companies had access to this very similar technology. Apple decided
to shelve it cause who wants to get into the

(47:52):
car business these days, I guess, and BID was all
went ran with it, you know. And to be clear,
you know BYD developed the blade battery by themselves. There's
no Apple ip in that blade battery. But the two
companies work together. You had some of the best and
brightest minds in this field working together, and BYD is
the one that commercialized it, and now they're, you know,
the biggest carmaker in China thanks in part to that

(48:13):
battery breakthrough.

Speaker 3 (48:16):
I well, listen, you know, I my husband and I've
been looking at EV's for a while and they're just
crazy expensive and it's just hard to get it and
I kind of want to do the right thing for
the environment.

Speaker 5 (48:30):
Well, you're not going to get a bid.

Speaker 4 (48:31):
I'm not going to get a byd Listen.

Speaker 3 (48:33):
We only have about forty five seconds left hair Gabby
and I highly recommend everybody check out the magazine because
there's so much detail in this and it's a company
that we talk about so much. Thirty forty seconds, so
take away before we have to say goodbye.

Speaker 12 (48:46):
If the West, if US and Europe European companies want
to compete with China, they have to be honest about
what they're up against. And it's not just subsidies. It's
a very competitive company. You know, we're down a few points,
quite a few points in the fourth quarter, but the
game's not over. There's still a chance. But you know,
companies need to get honest with themselves about the kind
of cultural change and technological change that needs to happen

(49:08):
for them to compete with BID.

Speaker 4 (49:10):
I wonder how many automakers are somehow, you.

Speaker 3 (49:12):
Know, seruptitiously like getting a BYD car and pulling it
apart and like understanding everything that's in it and trying
to figure out what they need to do right.

Speaker 4 (49:21):
Gab Business and do it in teardowns.

Speaker 12 (49:23):
Yes, that's happening.

Speaker 3 (49:25):
Great reporting the Apple scoop too as well. Unbelievable Bloomberg
News Auto reporter Gabby Copola. She's of course got the
cover story of Bloomberg Business Week.

Speaker 2 (49:35):
You're listening to the Bloomberg Business Week Podcast. Listen live
each weekday starting at two pm Eastern on Apple car
Play and Androyd Auto with the Bloomberg Business App. You
can also listen live on Amazon Alexa from our flagship
New York station Just Say Alexa, playing Bloomberg eleven thirty.

Speaker 3 (49:54):
Sticking with the automotive space, General Motors had its best
day in four years this past week after it signaled
colid us demand for its highest margin vehicles. Even as
a broader auto market softens.

Speaker 5 (50:05):
Well, some rival automakers are cutting prices and boosting incentives
to reduce inventory. GM has been able to hold the
line on high demand vehicles like it's old school gas
powered GMC Yukon suv and the Chevy Silverado pickup. For
more on GM's success, Eligrafey and I spoke to Bloomberg
News auto reporter Keith Notten.

Speaker 17 (50:23):
Well, they're making a lot of money in the home
market with their traditional vehicles, with gas fueled pickup trucks
and sport utility vehicles, and that's helping to offset losses
that they have in electric vehicles, and losses that they
have in China, and losses that they have with their

(50:43):
autonomous unit crews. So they're selling a lot of traditional
vehicles at high prices and high margins.

Speaker 5 (50:51):
Who's buying these vehicles? These are these cars? I mean,
they're not as expensive as the evs, but these are
expensive cars now.

Speaker 17 (50:59):
Well for sure. I mean, you know, cars average almost
fifty thousand dollars these days in price and interest rates
still remain sort of stubbornly high, though the FED has
begun to lower rates that will hopefully pull down car
loan rates. But you know, the American consumer, at least
in GM's experiences, remaining incredibly resilient and continues to buy

(51:23):
really well outfitted cars, which is, you know, driving profits
up for them. And you know they, as you said,
they raised their guidance. It's the third time this year
that they've raised guidance. They've beat earnings estimates for seven
quarters in a row, so consumers have not stopped buying cars.

Speaker 7 (51:43):
So is this more a story about the resiliency of
the US consumer in general or is this a GM
specific kind of I guess optimism.

Speaker 17 (51:56):
Well, GM is definitely out gunning its Troit rivals Ford
and Stilantis. Neither of them have beat estimate seven quarters
in a row and are not raising guidance. So you know,
GM is doing especially well. But what new car buyers
are buying these days are more well outfitted cars and

(52:19):
larger cars that have higher sticker prices, and that has
driven up margins. You know, everybody is expecting pricing to
soften because inventories are finally replenished after you know the
shortages of the pandemic era. But still consumers are paying
up for new wheels.

Speaker 5 (52:36):
Hey, we got thirty seconds left, Keith. You know I'm
going to go there. Evs How ugly is it for GM?

Speaker 17 (52:43):
Well, you know it's interesting with GM, Tim because they
are coming out with lower priced evs like the Equinox,
and those are really resonating because you know, they're not
too expensive. So GM is having some success with its evs,
and Mary Barrow, the CEO, said they're going to reduce
those losses on ev substantially next year.

Speaker 5 (53:03):
Keith Notton, Bloomberg News Auto reporter, joining us from Detroit, Michigan. Keith,
thanks for joining us. Always good to see you. General
Motor shares hire by ten point three percent as we speak.

Speaker 2 (53:16):
live weekday afternoons from two to five pm Eastern. Listen
on Apple car Play and and Brout Auto with a
Bloomberg Business app, or watch us live on YouTube.

Speaker 5 (53:30):
Well, you can find our next guest products in the
dairy section of your local supermarket LifeWay known for its kaffir.
You know what it's like that yogurt like drink compikable
yogurts movie.

Speaker 4 (53:41):
Oh okay, it's kind of yeah, drinkable gotten.

Speaker 5 (53:43):
Sorry, maybe because you don't have critics young critters.

Speaker 4 (53:47):
Right, I have older critters older.

Speaker 5 (53:50):
It's a bubbly traded company about Foydard million dollar market
cap but Julius and Lanski is the second generation of
her family to run the company after her father started
it and took it pup like a couple years later
on the Nasdaq. Julia is chairman, president and CEO of LifeWay.
She joins us from Los Angeles. Julie, how are you welcome?

Speaker 16 (54:09):
Good?

Speaker 18 (54:09):
Thank you so much for having me.

Speaker 5 (54:11):
Yeah, thanks for joining us. You've got a really cool
story and the company is a really interesting one because
it's not often that you find publicly traded firms that
have such a narrow focus in terms of products. Give
us an idea of how business is right now and
where areas of growth are for you.

Speaker 18 (54:30):
Sure, well, it's an exciting time to be at LifeWay.
Our category is the probiotic dairy functional food space and
we are seeing just a booming explosion of business. Just
the last nineteen quarters have been year over year consecutive

(54:52):
growth years for us, and that trend is not slowing
down anytime soon.

Speaker 5 (54:56):
Is that because of what's happening in terms of of
the way people think about products such as yours or
are you doing things internally when it comes to product development,
when it comes to placement, distribution and the like, what
are you attributing that to.

Speaker 18 (55:11):
Yeah, I mean, I think it's both. I think, first
of all, to just step back a little bit, I
think people really want to know where their products are
coming from, where the brands originate from. And I think
LifeWay is really the embodiment of the American dream. It's
just a remarkable story. As you mentioned, my dad came
from the We all came from the former Soviet Union,

(55:34):
and we were the first of forty eight families that
were settled in Chicago. And you know, this idea of
living the American dream was something my father aspired to.
And when he walked the grocery stores in America, he
noticed that there was no Kiffeir, which was a staple
product for two thousand years, for two thousand years, something

(55:57):
that my ancestors, my grandmother's passed down generation to generation,
and it was simply non existent in the United States.
And I think that, you know, and so that's how
LifeWay was started, and then he took it public two
years later. But I think consumers really love that heritage story.
They want to know that their brand came from someplace

(56:18):
authentic and real, not just out of an ai private
equity office or something like that. And so I think
that thirty eight years of legacy that LifeWay has been
bringing to American consumers and consumers globally is part of
the reason. Additionally, you know, with this really wonderful, storied product,

(56:39):
past of my ancestors, knowing intuitively that kafir improved their
well being, their health, they attributed their centurion you know,
living to one hundred years of age based on their
consumption of keyfer And it wasn't until nineteen oh eight
when Elie Mechnipoff, doctor Ellie Mechnikoff, did the first round

(57:00):
of science and research on kaffir and probiotics and fermented
dairies like Kiffer, and he found that it did indeed
help improve the body's health. And today modern science is
only just catching up on the microbiome friendly bacteria, probiotics
and kafir specifically, and so there's so much exciting medical
research and we're LifeWay is a brand that meets the moment.

(57:24):
We are on every grocerysource shelf across the United States,
from Whole foods and ultra premium markets to Walmart and Costco.

Speaker 5 (57:34):
Yeah, that's what I wanted to talk about because I
was talking to somebody recently who has a startup ish
food company. They've raised quite a bit of money and
they're pretty prominent, but she was telling me how difficult
it is to get shelf space at some of these
prominent retailers. How do you do it? As you know,
you're not independent in the sense of a startup, You're
far from it. You're a publicly traded company, but you're

(57:56):
you know, you're not Danin by any means. You know,
you're not like Talless. So so how do you do it?
How do you compete with the big players?

Speaker 18 (58:04):
Well, I think they compete with us. I think they
aspire to be relevant like LifeWay is. You know, we
have been very passionate and trend setting from day one,
and we still operate very nimble, and we are trend setting.
We aren't just following trends, but we're creating the trends.

(58:25):
We have been, you know, dedicated to putting a bottle
of LifeWay Keeper in everybody's hand, every consumer's hand, from
cradle to grave, generation to generation, and you know, building trial,
showing up at culturally relevant events, yoga. You know, we
were one of the first brands to partner with yoga

(58:46):
studios across the country. You can try our samples, our
products at Lallapalooza at Austin City Limits, all different, you know,
really amazing cultural moments that are relevant for concers. And
the way that we show up to our consumers, educating
them on the importance of gut health is one of

(59:06):
the reasons why we have had such tremendous success.

Speaker 3 (59:10):
So so okay, so really interesting story, family story. Publicly
held company, small market cap about three hundred and ninety
million dollars. Stocks almost doubled year to date, Julia, I
am curious, so tuck us through some of the metrics,
the type of growth that you're seeing, revenue, top line growth,

(59:30):
earnings growth, cash coming in. What do you do to
kind of keep growing the company?

Speaker 18 (59:37):
Yeah, I mean, you know, we have had the most
incredible historic quarters. The last five quarters were record breaking quarters.
Like I mentioned, nineteenth consecutive quarters of year over year
top line growth. We just hit our the second quarter
this year, we almost hit fifty million dollars, which has

(01:00:01):
been a number we've had long circled in our aspirations.
Up more than twenty five percent this year. Our twenty
twenty nineteen, revenue went from about ninety three million to
almost two hundred million right now two hundred million run rates,
So we've doubled our revenue. While I don't obsess about

(01:00:22):
the share price at all, I am very proud of
the fact that in the last five years our share
price is up over almost over twelve hundred percent. So
you know, these are some remarkable numbers. Our gross profit
improved to a ninety two percent increase. You know, our
gross margin was up two hundred and ninety basis points.

(01:00:44):
So the metrics that prove that, you know, consumers are
looking for Lifewaykeeper. We are taking market share away from
other brands of other types of functional beverages or other
kind of old stale products like yoga.

Speaker 16 (01:01:00):
I think we're the.

Speaker 18 (01:01:01):
More trendier, fashionable, healthier cousin of yogurt.

Speaker 3 (01:01:05):
Hey, one thing we wanted to ask you is you
know nifty function on the Bloomberg where you can look
at you know, your top shareholders and denote North America
has about what about a twenty twenty three twenty I
guess yeah reported that back in September, and they, you guys,
confirmed a receipt of a proposal from denote they offered twenty.

Speaker 4 (01:01:29):
Five dollars a share.

Speaker 3 (01:01:30):
You guys right now change trade at twenty six dollars
forty cents a share.

Speaker 4 (01:01:35):
Is there an offer?

Speaker 16 (01:01:36):
Is like?

Speaker 3 (01:01:36):
Is there is that the future that you ultimately will
maybe connect with this company danone will own you?

Speaker 4 (01:01:43):
Or is the plan to kind of keep going alone?

Speaker 18 (01:01:46):
Well, while I can't comment on that, I would like
to point to the incredible success that we're having at LifeWay.
We're on a really strong growth trajectory with a really
long runway, and in terms of growing both our flagship
product of but also an incredible exciting emerging category which
is not new for us, but new for the American people,
which is farmers cheese and farmer sheees. Is so exciting

(01:02:09):
because maybe you've noticed that last year cottage She's went
viral on TikTok and it's all over everyone's making blended cottage.
She's in various recipes like that on social media. And
our farmer sheeese is one of our legacy products that
we've been making for over thirty eight years. It's something
my grandmother's made. Like I mentioned footwog in my language,

(01:02:32):
it's called footwog and Farmers Cheese is exploding and we're
really excited to be growing that category where the largest
manufacturer of Farmers She's today and it's going to be
really exciting to scale that into all of our locations
where our Kifer is currently sold and bring this new
new category in the dairy space. You know, bioavailable, high

(01:02:54):
quality protein is something that consumers are really looking for
in their craving and that's something that Lifeboys really has
been pioneering and paving for a long time in the
natural food space, organic food space, which is now mas market.
So that's a really exciting time for us.

Speaker 5 (01:03:12):
We only have about a minute left, but what's your
product pipeline look like expansion beyond Farmer Cheese and Keifer.

Speaker 18 (01:03:20):
Yeah, well, we are scaling our pro Bugs, which is
a pouched product for kids, Pouchkifer product for kids that
we innovated over ten years ago, and we've really invested
in some equipment and machinery to really scale that. You know,
we disrupted the entire baby food packaging space by launching
the first ever pouch in the United States for kids,

(01:03:43):
so we're excited to scale that into mass market right now.
It's a whole foods nationwide. We also just announced the
expansion of ten exciting new trendy flavors lactose free. That's
another big concern in the dairy space. People are looking
for lactose free products, which Lifewi offers, but they're really
exciting flavors like taro ube, Macha, latte, leachy, you know,

(01:04:07):
really on trend, snackaball easy, instagrammable types of new products
that we're exciting to scale. Excited to scale that nationwide
as well. And then we have just like a long
long trajectory of new products in the pipeline which I
can't discuss us yet, but look for more things connected
to skin gut access. We know that abiotics work really

(01:04:30):
well on the skin or inside out, so some kind
of skin and friendly products good Brain's okay.

Speaker 3 (01:04:39):
We'll come back and tell us more when you can
give us some of the specifics, because that's super interesting.

Speaker 4 (01:04:46):
Julie Smolanski, CEO at LifeWay Foods, joining us from LA.

Speaker 2 (01:04:52):
You're listening to the Bloomberg Business Week Podcast. Catch us
on Apple car Play the Android auto with a Bloomberg
Business app or want us live on YouTube.

Speaker 5 (01:05:06):
It is Bloomberg Business Week, And I want to know,
Carrol Masser, Yes, what you were doing when you were
in ninth grade?

Speaker 2 (01:05:13):
For sure?

Speaker 4 (01:05:13):
High school?

Speaker 15 (01:05:14):
Yeah, I don't know.

Speaker 3 (01:05:15):
Just trying to gymnastics, gymnastics, cheerleading, trying to get a's,
getting a's.

Speaker 5 (01:05:20):
You were you anywhere close to creating an AI based
handheld pesticide detector?

Speaker 4 (01:05:24):
That would be a no, okay.

Speaker 5 (01:05:26):
That's what sirrich Subash has been up to. He's in
ninth grade and that creation helped crown him the winner
of the twenty twenty four to three M Young Scientists Challenge.
Also includes a nice twenty five thousand dollars cash prize,
a trip here to New York, YEP to Ring the
Belt in New York Stock Exchange, and yes, gets to
hang out with us, which I think is just the

(01:05:47):
biggest prize.

Speaker 9 (01:05:48):
That's their round.

Speaker 3 (01:05:49):
Siries Shabash is the winner of the twenty twenty fourth
REEM Young Scientists Challenge and Aditya Banerjee is Senior Research
Energy of the Corporate Research Process Lab. Over at three am,
they both join us in our Bloomberg Interactive Broker Studio.
Very cool to have you both here. Congratulations Soris. First,
I want to ask you aditya tell us about this challenge,

(01:06:11):
how long you've been doing it, how it came about,
and why you're doing it.

Speaker 19 (01:06:15):
So the Three and Young Scientist Challenge has been around
for seventeen years. This is my first year doing this mentorship.
So I'm just awfully lucky to be paired with Series
and it has been an awesome experience. Our goal as
part of the Three and Young Scientist Challenge is to
nurture and just work with such young, bright, young minds

(01:06:40):
and just help them bring their imagination their creations to life.
So I mean we live by science applied to life,
so they have all the science innovations in their mind.
We have some experience in getting the science to people's hands,
so we hope that we can breach the gap for

(01:07:00):
them to take his concepts to hands off consumers and
help them in any way possible to make that journey smooth.

Speaker 5 (01:07:08):
Well, Series, tell us about what you have sitting in
front of you, because it looks like an iPhone attached
to some sort of gizmo. Here, what's going on?

Speaker 11 (01:07:17):
So my device, my project, it's called PESTI scanned and
so what it is is at home people can scan
for pesticide residues on their produce items. That's the real
core concept here because there's a lot of contaminants like
pest side residues they can stick around on produce after
washing where they've been linked to health issues like certain

(01:07:37):
cancers and Alzheimer's, Parkinson's, near degenerative diseases along those lines.

Speaker 5 (01:07:43):
You can pick that up and you can there's a
camera right there in front of you for those watching
on YouTube, Elizabeth's going to get a shot of this thing.

Speaker 9 (01:07:49):
It's pretty cool. So there's an app.

Speaker 5 (01:07:52):
That goes with it. There's also some hardware there. It
uses a type of technology I practice so many times
saying this type of technology say it? Can you say it.

Speaker 16 (01:08:01):
For me please? Spectro photometry.

Speaker 5 (01:08:04):
Spectro photometry, Yeah, and what does that do?

Speaker 11 (01:08:07):
So the idea is different materials reflect and absorb different
wavelengths of light. So PESTA scan can look for those
wavelengths that are reflected and absorbed by pest said residues.

Speaker 3 (01:08:19):
So okay, so we are very lucky that we have
a lot of food here at Bloomberg and a lot
of fresh fruit and we all tap into it. I've
just had a banana and often tap an apple or
some other things.

Speaker 4 (01:08:30):
We had some grape fruit this morning.

Speaker 3 (01:08:31):
You picked up an apple in our food court up
in the link on the sixth floor, and so tell
us show us how it works and what you do
and then what you found out.

Speaker 11 (01:08:40):
So for using the actual device, you just connect the
app to the device.

Speaker 16 (01:08:45):
You just turn both on.

Speaker 11 (01:08:48):
You point the device at the protocetem and then you
tap scan and then a couple of seconds the results
are back. And this apple had no pested residues on
it at all.

Speaker 5 (01:08:59):
Score, which amazing because I don't know if these are
organic apples.

Speaker 4 (01:09:02):
I don't know that they are either.

Speaker 5 (01:09:04):
But that's good to know it does. There is a
sign upstairs that says please wash fruit before eating it.

Speaker 9 (01:09:09):
But that's what least do.

Speaker 5 (01:09:10):
Sometimes, you know, people go and like check the peaches
to make sure they're soft.

Speaker 4 (01:09:15):
I check out a few things. It's really fascinating.

Speaker 3 (01:09:17):
So how did you how did you kind of come
up with the idea, how did you pull it together?
And how did you use your mentor to help you.

Speaker 11 (01:09:24):
So the whole concept really started when I was having
a conversation with my mom so she was insisting that
I washed my produce before consuming it, right, And yeah.

Speaker 4 (01:09:33):
Okay, mom, you gotta wash your produce, so go ahead.

Speaker 11 (01:09:36):
And my question was why and how effective is it?
So looking into that, I saw that there were a
bunch of caeminists like Pesta residues that can be on produce,
but washing isn't necessarily completely effective, like the residues do
stay on afterward. So the idea is if we could
detect them, we could make sure that we weren't consuming them.

(01:09:58):
And that's really where the idea for Pestis came from.
So after I started building the device and I joined
the three Mek Scientist Challenge, my mentoralitya has been really
helpful with this, especially when I've gotten stuck. One big
time was when I was designing my machine learning models,
and these are what take the actual data from the
sensor and then turn that into results. What you'd see

(01:10:20):
on the screen whether the device has pest said residues,
whether the predecess pest said residues or not. And he's
helped me when I get stuck, He's helped me get unstuck.

Speaker 4 (01:10:30):
Did you I want to ask you, So, what's the.

Speaker 3 (01:10:34):
Balance of here's how you do it and solving the
problem and helping him to say, you've got this problem,
let me steer you so that you figure it out yourself.

Speaker 19 (01:10:44):
You got that exactly right. Like I said, our goal
is to help nurture them. So I would pose it
as le a, have you thought about this? Have you
thought about that? And he, being a very meticulous and
very energetic person, he would do his homework and he
would make sure he follows up on that and next

(01:11:06):
next week when we chat, he would inevitably come up
with a solution.

Speaker 5 (01:11:10):
So, Sirish is in uh is in Georgia, Snellville, Georgia.
You're in Minneapolis.

Speaker 16 (01:11:18):
Yep?

Speaker 5 (01:11:19):
Were you guys meeting like on zoom once a week?

Speaker 2 (01:11:21):
How was it?

Speaker 9 (01:11:21):
How did this work?

Speaker 16 (01:11:22):
Yep?

Speaker 19 (01:11:22):
We would meet after his school's done once a week
and have a conversation about what he has been up
to last week, anything he wanted to discuss with me,
any next steps and stuff like that.

Speaker 5 (01:11:35):
Can you talk a little bit, Sish about how you
got introduced to this program, because it's my understanding that
you've known about the Young Scientists Challenge from three AM
since you were in second grade.

Speaker 16 (01:11:49):
Yes, this is I had.

Speaker 11 (01:11:51):
I learned about the Third Big Scientist Challenge when gitan
Lei Rau got nominated as Time Scard of the Year,
and when I learned about it and what the challenge
really stood for what it was doing, I thought that
this would be a great place for me to submit
my inventions. That was really because I wanted I've always
wanted to have to leave an impact on the world

(01:12:12):
nice and a good way to leave society a better place,
and that was I thought three at the Cremning Science
Challenge would be a great place for me to start
with that. So I skipped fifth grade, so I wasn't
able to put it in then sixth grade, our family
was in India and we weren't able to get things
figured out. Seventh grade I did apply, but it didn't

(01:12:34):
quite work out. And this year I was able to
get it in and everything worked out.

Speaker 16 (01:12:41):
Yeah.

Speaker 4 (01:12:42):
Did I hear you say inventions plural?

Speaker 16 (01:12:45):
Yeah? So I've worked on a couple of things before.

Speaker 11 (01:12:47):
Okay, PESTI Scan maybe the one single project that I've
put my most time into.

Speaker 16 (01:12:53):
So I've built a couple things before.

Speaker 11 (01:12:55):
I made one robot to deliver books that that was
probably the runner up to this and how much time
I put into it that took. I've spent four or
five months on that. I've spent about a year on
this latest version.

Speaker 4 (01:13:08):
So what's the commercialization of this?

Speaker 3 (01:13:10):
Because I think I could see I would love to
have one in my home and I'm sure.

Speaker 5 (01:13:13):
You would, or even just an app that could do
this using technology that exists inside a phone already, right, Like,
so you're at the grocery store, You're like, oh, this
is good to.

Speaker 3 (01:13:21):
Go exactly right, Like we do barcodes of things to
find out pricing or whatever or information.

Speaker 4 (01:13:26):
So did you how do you guys.

Speaker 3 (01:13:28):
Think about like just three AM, who's known for like
all their different products and it's not just posted, it's
a lot of different things. So I'm just curious, do
you see something like this and say, okay, there's commercial applications?

Speaker 9 (01:13:39):
Well for sure.

Speaker 19 (01:13:40):
I mean part of our conversations was how do you
simplify the prototype? That was one of the driving questions
that he seek to answer during the summer. He started
off with making the module simpler, something that you can
just clip onto your phone, right so that it can
be used for consumer He did a lot of work
in driving down the unit cost of each of the modules,

(01:14:03):
and he already has plans to drive it down even lower,
so he is already on it.

Speaker 4 (01:14:08):
Well, what do you guys do next?

Speaker 3 (01:14:09):
I mean, these guys know I'm like super obsessed with
shark Tank and when people pitch their ideas.

Speaker 4 (01:14:14):
But what do you do to help him?

Speaker 1 (01:14:16):
Maybe?

Speaker 3 (01:14:17):
Is it on his own or do you guys work
with him to kind of get it to the next step.

Speaker 19 (01:14:21):
So he would be driving a lot on his own,
but we are always there to support him whenever there's
anything that we can help out. Me personally, three AM
as a company, we would definitely be more than happy
to help him out. And also the three and Young
Scientists Challenged Alumnize. They have a grant program that has
been set up, so there are a lot of alumnizs

(01:14:41):
who leverage that to fund their programs in the future
as well. So that is something that's all set up
that can be used.

Speaker 5 (01:14:49):
So what do you want to do?

Speaker 3 (01:14:51):
Like our venture capitalist knocking on your door, You've got.

Speaker 5 (01:14:53):
A few more years, I imagine you want to continue
your education? What's the plan here?

Speaker 11 (01:14:58):
So the big big next steps are I'm trying to
scale shrink this quite a bit to where it would
be far more portable and easier for a consumer to
carry around. And then from there also just dropping the
cost to where it could easily go into people's homes.
That was that's those are my key plans for this device.

Speaker 5 (01:15:17):
In particular, how much what's the cost associated with this prototype?
Like how much would this device cost as is now?

Speaker 11 (01:15:24):
So as of now for this setup if I were
to make a hundred of them, that would be seventy
five dollars?

Speaker 4 (01:15:30):
Is that that?

Speaker 11 (01:15:31):
But for I have a plan laid out to where
there's there's a solution I can put this onto a
printed circuit board, which would make this all one singular piece,
and that would bring the price down to roughly thirty
five dollars. But I'm looking forward to in the future
reach your price, Stager, maybe twenty dollars.

Speaker 3 (01:15:52):
Cool, right, Like I don't yeah, I just think about, Oh,
do you have it in the supermarket where people can
I don't know, or does everybody have their own and
check it out?

Speaker 4 (01:16:00):
Really really cool?

Speaker 3 (01:16:02):
One thing I want to ask you. We often talk
with folks about the importance of STEM education and companies,
whether it's they're out in Silicon Valley, or thinking about
the next generation of workers that they need. Is this
part of why three M is looking.

Speaker 4 (01:16:15):
To do this?

Speaker 19 (01:16:16):
Yes, yes, absolutely. I mean we have a we if
we seek to educate or reach out to folks about
science and how it's integral part of our life. We
have a great science advocacy team if within three them
as well. And that's also one of the reasons why
during this program we get to meet young brilliant minds

(01:16:39):
like him, and we try our best to, like I said,
nurture and mold him and inspire them to do something
like he said, like science is part of it. Merging
with the society. That's another huge thing that we see.
So what he's doing pretty close to society. Bigger, Yeah,
y better, that's what we hope.

Speaker 4 (01:16:59):
For, the bigger impact.

Speaker 3 (01:17:01):
Srich congratulations, sabash Aditya Banerjee of three AM.

Speaker 4 (01:17:05):
Guys, thank you so much. This is Bloomberg.

Speaker 2 (01:17:08):
This is the Bloomberg Business Week podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live weekday
afternoons from two to five pm Eastern on Bloomberg dot com,
the iHeartRadio app, tune In, and the Bloomberg Business app.
You can also watch US live every weekday on YouTube
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Bloomberg Businessweek Weekend - October 25th, 2024

Episode Transcript

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Tim Stenovec

Carol Massar

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