Transcripts For BLOOMBERG Bloomberg BusinessWeek 20240713

70 billion leveraged buyout. Jason stocks, bonds, and a bit of basketball. Wall street is looking at Sports Betting. Carol and we have amtraks turnaround plan. You may not like it. Jason here is joel weber on the issue. Lets start by talking about trains. Its a big travel week. Maybe people taking a train, flying, but amtrak is in a bit of a pickle. Joel amtrak has been a money loser for years. It has a new ceo who came from the airline industry, and devin sat down with him to talk about his plan. A lot of people who are amtrak fans dont really like this plan of his. But it could lead amtrak to be profitable. Carol delays, delays. Never on time, right . Jason it is Richard Anderson, the former ceo of delta, not making a lot of friends out there. Maybe some people making friends, or at least feeling better about the economy, is almost everyone. Peter coy talks about this 180 folks have done looking at the economy. Joel just a couple months ago, it was like rain clouds out. Now it is winter, and suddenly the sky seems to be opening up and everybody is like, it does not seem to be so bad. A crazy time for the economy. In the background of this is the trade war. If there is any sort of resolution, even a phase i deal, you might think markets would pop on that. Carol talk about crazy times, big technology, your cover story, talking about what google is up to. I love the line about how Silicon Valley wore as a badge of honor that washington didnt like them, now they want all in. Joel this shows the conflicted nature of being a tech company, that google has reached mid age. Billions of dollars, trillions of dollars out there, and yet there is this other pool of money that they have been unsuccessful in reaching so far, which are government contracts to do department of defense work. This is true throughout tech. The jedi contract we saw turn into a bidding fight and a dispute with amazon and the government is one version of it. This is why we made it the cover story, because of a number of activists at the company who said, we dont want google to do this kind of work. Carol the internal strikes. Joel the internal tension at a tech company. It has broken out into the open at google, and that is what makes that story so sensational. Jason and incredibly timely. There were people fired just this week over their activism. You do wonder, google is such a harbinger for the rest of Silicon Valley, if this portends more stress across the economy. Joel the bigger story here is, how is tech and department of defense going to Work Together . For the industry, for Silicon Valley, they look at this. We have old companies, defense companies, that dont do tech as well as our tech companies. Can the department of defense benefit from tech, but at what cost . That is the ethical and moral dilemma right now, and there are big contracts. Carol the world gets more and more complicated in their relationships. Jason that is why we have joel weber to break it down. Thank you so much. And it is not just an internal dilemma at google. Carol for more on that cover story and big tech competing for business with the military, here is reporter joshua brustein. Josh there are two differences between google and microsoft. The first is an internal difference, which is that google has always had a culture where they debate everything. There is a long history of these Message Boards where everything came up from rigorous debate. Microsoft is a very buttoned up company, top down. The second thing, to allude to your point about how the public looks at them, microsoft has receded as a real consumerfacing company. Most of its business has been in Enterprise Computing recently. Google is one of the things we think of as the internet. People use Google Search every day and they think, they are building weapons . Or they are Building Military something. And that makes people uneasy. It doesnt maybe with companies that are not in their daytoday consciousness. Jason amazon and its lobbying and trying to find its way in a much more complicated Nations Capital, and a Nations Capital filled with lawmakers and politicians who are more skeptical about tech than they were 10 years ago. How does that play into the decisionmaking at google and you have antitrust investigations and this sort of skepticism, and dare i say, techlash . Josh you mentioned that amazon is in a very difficult, although different, situation. For google, what happened was it publicly rejected the military. I dont think that was its intention. But it did it. And google has a lot of enemies on the right who saw this as an opportunity to attack the company as being unpatriotic, especially because it does some work in china. I think there was some genuine confusion and outrage within the pentagon. You saw the senior military officials criticizing a commercial company, which is not usual. And google has basically spent the last year backpedaling, trying to reassure the government and the military specifically that we are good actors here, we are willing to work with you. I get the feeling that within the pentagon, that has been working. Jason interesting. Josh but within the political class, not so much. Carol they are also courting big time. Google wants in. Josh the format of backpedaling is to say, we are backpedaling. We will take your contract, which is what they want anyway. It is selfserving. Jason what do you make of the current state of the internal debate at google . You talked to a lot of people there, as you say, the Message Boards still pretty lively. There has been some action taken against employees around media leaks and other elements here. It still feels unsettled when it comes to the internal politics of the company. Josh it is definitely unsettled. Google has been in a very contentious relationship with some faction of its workforce. You have seen action taken against internal activists, mostly for doing things like accessing information that companys leadership said was confidential, and you see the Company Really not wanting to back down like it did with maven. And at the same time, you see people within the company who want to shape its future trying to extend beyond military contracting into things like border contracts. Even into things like dealing with the oil and gas industry. There is a real tension going on where both sides are trying to claim as much ground as they can in their own internal debate. Carol coming up, we look at a fascinating plan to counter social media disinformation and move the democrats into the 21st century. Jason end of the Economic Outlook seemed dark, but now the bulls are back. What happened . This is Bloomberg Businessweek. Carol welcome to Bloomberg Businessweek. Im carol massar. Jason im jason kelly. Join us for Bloomberg Businessweek every day on the radio starting at 2 00 p. M. Wall street time. You can also catch up on our daily show by checking out our podcast. Get that at bloomberg. Com, or wherever you get podcasts. Carol you can find us online and on our mobile app. The next story is about the media spin on local news. Jason this is josh green from washington. This is a spin on something we have seen really come to the fore in elections the last few years. Tell us what is going on on the left . Josh this is a very in the moment piece, in the sense that democrats are looking forward to 2020. One of the things that digitally inclined democrats are looking at and worrying about is the fact that republicans and trump are absolutely dominating social media. Facebook, google, all these sorts of things, while democrats are busy running for president. I do a profile online for businessweek for the person i think is the most interesting democratic strategist right now on their side, a young woman named tara mcgowan, who is the founder of a nonprofit called acronym, that in order to combat this trumprepublican advantage online has started a company that is launching a series of digital newspapers in swing states that are aimed at reaching and persuading the kinds of voters that democrats think they are going to need to win over in order to prevail in 2020, not just in the president ial election, but in congress and statehouses as well. I take a look at her team and her strategy. Carol it is a fascinating story, and we are definitely living in a different world when it comes to news, digital news, and the impact it is having on elections. How does she recreate that local newspaper that has gone away in droves over the last decade . Josh mcgowan after 2016 did a deep dive look into why democrats lost, and her conclusion was that they had essentially ceded the political battlefield on facebook. There were so many people getting their news and information. The twist that she had was that one reason why this was happening was because of the disappearance of local newspapers. In the past, people had a source of objective, fair mainstream news. But as these papers disappeared, they were turning to facebook, where they were being inundated with conservative propaganda, and that was affecting the votes. She thought the way to balance this out was to basically begin to publish, to fill the news void, the news desert, and build products to reach the voters, give them a source of what mcgowan says is factbased information. She is adamant this is not bogus rumors and lies, but the same sort of things you would ordinarily find in a typical local newspapers. It arms readers with the hope of steering the back to democratic issues, the Democratic Candidates in enough numbers to have a meaningful effect on the outcome of the race. And the fact that she is doing it in the digital realm rather than the oldfashioned way of democrats bombarding you with tv ads in the weeks before an election is an interesting look at the cutting edge of what is happening in politics as we head into 2020. Jason you mentioned objective journalism. This is not objective at the end of the day. This is meant to steer people in a certain direction, to frame issues in a very specific way. Josh this actually touches on two hot button issues. The piece generated a lot of feedback on both sides. On the one hand is about journalism, on the other hand is about partisan politics. Mcgowan is not out here running this news operation, which is called courier newsroom, strictly because she is worried about the death of local news. She has started these newspapers in states like arizona, virginia, soon wisconsin, pennsylvania, north carolina. These are all swing states that will be important, so clearly there is a political intent. The differentiation that mcgowan makes between what she is trying to do and the more extreme conservative sites you see online is essentially she is hiring actual newspaper reporters, actual editors with journalistic experience to publish a simulacrum of what local news used to look like when it was still around. Jason josh green, thank you for that timely story. Carol it is a must read. Markets hitting record highs this week. A story in the economics section looks at what a difference three months makes. Jason a real uturn for the u. S. Economy. Heres economics editor peter coy. Peter there are some changes since august. I picked out one day in august where the Dow Jones Industrials and the s p fell 3 in one session, and the 30 year treasury bond hit a record low. It was like recession talk was in the air on our tv, everywhere. What has happened since then, the fed has already changed its stance. Even at that time in august, they had already put through one rate cut. They have had two since then. That is huge. The most powerful central bank in the world, the European Central bank, resumed buying securities to drive down the long end of their yield curve. We see the bank of japan maybe not as aggressive, but keeping their policy rate in negative territory. I would say that Monetary Policy is the single biggest change since then, and you can fill in a lot of things around that. But if it had not been for that, the economy would still be in a world of hurt. Carol go back to last december, we were talking about the fed raising rates several times. Peter powell was still talking about how we have more to come in 2019. December 24, christmas eve, was a massacre. The stock market was really bad. If you look at the history of the stock market, it is like a deep v. Then everybody took off for christmas, came back with bright smiles, and after stocks shot up because it was around then the fed changed its mind a little bit, and that was the beginning of the rally we are in now. Carol you talk about recession. We focused a lot on that two year and 10 year spread in the treasury market, where we did see an inversion of the yield curve. We have seen that in the past. Peter inversion means the 10 year yield falls below the two year yield, which historically is an indicator that a recession is coming, because usually longterm rates are higher. It did not last very long, though. It was gone within two weeks. And we have had a resteepening of the yield curve, which is a positive sign in ordinary circumstances for the economy. It means conditions are normal, basically. Jason stocks, bonds, and a bit of basketball trading. Firms are looking to play ball. In a sport gambling carol plus, visa ceo on why the u. S. Is lagging on things like tap to pay. This is Bloomberg Businessweek. Jason welcome back to Bloomberg Businessweek. Im jason kelly. Carol and im carol massar. You can also listen to us on the radio on siriux xm, channel 119. And on a. M. 1130 in new york, 106. 1 in boston, 99. 1 f. M. In washington, d. C. Jason a. M. 960 in the bay area. In london on dab digital, and through the Bloomberg Business app. It is not your grandfathers or your fathers wall street. Charles schwab agreed to by Td Ameritrade for 26 billion. It is a deal that will reshape the brokerage business. Carol it is a big one. And that is not the only move. Td ameritrade and some wall street firms, they are looking into sports gambling as legalization spreads. Lets get more from annie massa. Annie wall street firms are dipping their toes in the water of Sports Betting. It is an interesting time because a federal ban on Sports Betting was lifted last year, and you are starting to see about 13 states legalizing the practice, with more potentially to come. You have a couple different firms looking for ways in. Carol i think about many conversations we had with our sports team about this. They were all looking forward to the ruling and what it meant for online betting firms, but i did not think about the potential for wall street firms, and that is what this is about. Annie exactly. There is some overlap for firms. The most obvious example is that nasdaq has licensed some of its Exchange Technology to horserace markets in hong kong and australia and sweden. Carol it is a trading platform. Annie exactly. As they were saying, there is no need to reinvent the wheel when it comes to handling large transactions on these markets. They recently also licensed matching technology to a u. K. Based Sports Betting platform, where you can own stakes in players. That is one way that a wall street firm is getting into this business. Jason talk to us about who is the most interested, and from your perspective, the most interesting name. Annie one really compelling case that we go into in the story is susquehanna, which has created a Sports Betting Division Operating out of dublin. They are betting on the outcome of u. S. Sports. The idea is to make twosided markets on online exchanges that exist in the u. K. , for example. It is interesting because there are some parallels, just as they operate as a market maker in markets, they can do a similar thing in a Sports Betting markets. Carol i think about the potential. The Sports Betting market is a huge one. This is potentially a big revenue stream potentially. Annie it is not as big as other financial markets, which i think will limit its growth. Projections are all over the place for how big this could be in the u. S. But we found projections it could be about 17 billion. If you think for huge marketmaking or hedge fund firms, that is not gigantic. Carol who is likely to get involved . You mentioned susquehanna. Who else might get involved . Annie it seems like a niche opportunity for expert Market Makers where you can leverage some of your technology in these kinds of places. Jason when you think about this more broadly, this is what you look after every day. Your primary burden is looking after blackrock and money managers. Folks are looking for different ways to make money right now. We had a conversation on our radio show with a long time wall street guy, former broker, who was saying, these guys are going to make money somewhere, especially in the age of zero fees. Annie i think that is why you are seeing different firms looking for ways in. While i could not see blackrock getting into Sports Betting, on the brokerage side, there are interesting opportunities. Both td american trade and Interactive Brokers have projects in the works. Carol visa ceo al kelly is weighing in on why the u. S. Lagging on tap to pay is a threat to the industry. Al the u. S. Is lagging because you have to go back about six or seven years where the u. S. Was much slower to adapt the chip in the card. It took so long to adapt chip at that point in time, that people around the rest of the world were moving past dipping the card to actually tapping. The reality is that the other countries have moved hugely ahead of us. You have countries like poland and hungary that are 90 tap to pay. In the u. S. , we have a very interesting situation. The vast majority of the businesses are pumped to be able to facilitate tap to pay. It is replacing hundreds of millions of cards. The banks want to do it on their normal cycle. By the end of this year, we will have over 100 million cards in the United States that will be tap to pay enabled, and by the end of next year, it will be over 300 million. Right now, tap to pay is about 2 penetration. Based on our experience around the world, it will really take off. Carol will we eventually become china . Basically, you have your phone in china, and that is all they need. They dont want cash or any other mode of payment. Is that what we move towards . Al i dont think fully. The interesting thing about payments, it is an extraordinarily local business. It is driven by laws and tradition and history. You look at some of the biggest economies in the world, mexico, germany, japan, they are huge cash societies still to this day. They are slow to adopt, but i think over time that adoption will pick up. I think there is, for a long period of time, places in the world for all kinds of different form factors, certainly a card and a phone continuing to be the predominant ones. Carol what is the biggest existential threat to your company or industry . Al i think cybersecurity. It is always at the top of my list. The bad guys, unfortunately, have access to the same technology the good guys do. As we look ahead to the next decade, you 5g really take off, things take off, Artificial Intelligence and machine language getting to the next level, quantum computing perhaps starting to show up. And all of that technology is going to create enormous opportunity for value to be delivered to consumers, but it will also create potential risks to technologybased infrastructure companies, like we are. Jason coming up, what could be the biggest leveraged buyout in history. Carol we break down kkrs potential 70 billion bid to take walgreens private, and why it is starting to feel a lot like 2007. Jason this is Bloomberg Businessweek. Hey. Hey. You must be stevens phone. Now you can take control of your home wifi and get a notification the instant someone new joins your network. Only with xfinity xfi. Download the xfi app today. Jason welcome back to Bloomberg Businessweek. Im jason kelly. Carol and im carol massar. Still ahead, a new way to run a railroad. The amtrak ceo wont let nostalgia for train travel derail his quest to turn a profit. Jason and undercover at lax. There is a bit of a wild side. Carol but first, the biggest buyout in history. Jason bloomberg broke the story that kkr has formally approached walgreens to take the Company Private in a 70 billion deal. That is according to people familiar with the potential takeover. But can the private equity giant pull it off . Here is our reporter. Private equity has so much money to put to work. I think it Something Like more than 2 trillion in the last couple of years. It has doubled so much money. So they are looking at increasingly bigger and complicated deals to have an edge. Looking at industries they know about and companies they worked with, this is where the ceo of walgreens comes in. He is a maverick and an incredible dealmaker. He started off with one struggling drugmaker. He fixed the business and went on to fix his dads friends businesses. Then he expanded to spain, france, the u. K. , and is now leading the biggest drugstore retailer in the world. Carol how does he get there . You talk about starting at the ground level. How did he get to the point where he was involved with walgreens . Walgreens and boots . He sold his company to alliance boots, and then did a deal with kkr. Eventually, they went on to buy walgreens. They have made, over the nine year association, him and kkr come out of that deal, have made three times their money. They started off with 2. 1 billion. They made 7 billion for investors. Jason it is no surprise that when kkr dealmakers are looking around at what is out there to buy, what do we know, what might be a little bit undervalued, maybe not distressed quite, maybe a little stressed. And, this is a guy we know. Kkr is well known for cultivating these managers. Now that we have dealt with the equity side, lets go to the debt side. The leverage and leverage buyout means you have got to borrow tens and tens and billions of dollars. Is that possible . Analysts are saying you will need about 50 billion of debt. Not for no reason. It is the biggest buyout in history. There are questions about whether that can actually be raised in a leverage loan market, which has traditionally been the market where m a buyouts are funded. People are starting to push back. In the past few months you have seen the single be rated which is where most m a loans are rated. People are selling them off. People are getting worried about riskier assets and gravitating more towards investment grade. If they were to do the deal, they would have to do some kind of Financial Engineering or clever things to make it happen. Carol do they have to pull in somebody else get the deal done . So that may be posing something on the equity side. Could they pull in another person beyond kkr . We know that other private equity firms had also looked at walgreens, so there are probably others out there. Carol does not mean they would. Exactly. They have also been talking to lps about going in with them because Pension Funds and sovereign wealth funds also have a lot of money to put to work. So there are a lot of people looking at this deal. I think they would need about 30 billion of equity. As well as the 50 billion of debt. Jason right. So, the Equity Equation and debt equation are two different things. Looking forward, lets assume this does happen. What has become clear is people are thinking big in this market. If maybe there is not a 70 billion 80 million deal happening, we could go back to an era, when we are thinking about 40 million deals. What are your hearing from bankers about new ideas . Are they saying i hadnt thought maybe this was possible but now we should start doing some books . People are saying you can easily raise 10 million 20 billion in debt, so this is still a big deal. There are so many private equity players looking for assets and they are all doing their own work as well. Private equity is going to be the really big driver of deals in the coming years, because of that firepower that they have. Carol lets get more on m a. It was a really busy week. A very busy week. Granted it has been elevated in terms of m a activity. For the better part of the last year, this is the daily m a transaction, and we have seen spikes in january, earlier in the summer, and this past week we saw more than 70 billion in deals announced on monday alone and 10 of them were worth more than 1 billion. That funding is cheap. We are in a lower rate world and that means that it can be a big driver of m a. Jason another thing we understand is it is a bonus season. In an economy that seems very friendly for deals. Thank you so much. Coming up, riding the rails but maybe they are not so friendly. Carol how amtraks ceo plans to make the system profitable. Jason you might not love the details. Carol this is Bloomberg Businessweek. Jason join us every day on the radio, starting at 2 00 p. M. Wall street time. You can also catch up on our daily show by checking out our podcast. You can get that on bloomberg. Com or wherever you get your podcasts. Carol and, of course, you can find this online at businessweek. Com. It said if you wanted to design a railroad from scratch, you would never come up with amtrak. Americas Passenger Rail system has been a money loser since it began almost a halfcentury ago. Jason so many years, so much money lost. Now, the ceo is promising changes. Here is Devin Leonard with his story, and this weeks business week explainer. Critics say this is no way to run a railroad. Amtrak carried 32 million passengers last year and had an adjusted operating loss of 171 million. The most valuable part of the system is the 457 thousand miles of track between boston and washington. Trains on this route shed a profit, but the long haul routes posted an operating loss that more than offset that. The problem, amtrak does not own most of the 21,000 miles of track it uses. Freight lines do. So passenger trains often have to pull onto sidings to wait. The result is lengthy delays and a 4. 5 decline in ridership. The ceo, who used to run delta airlines, has been battling the freight railroads and trying to cut costs. Anderson wants to break up the amtrak moneylosing roots. Those attract passengers who would otherwise drive or fly. Rail enthusiasts are outraged. Senators in rural states were either voters might lose service, but the ceo cut losses by 82 in the most recent fiscal year. So he probably does not plan on being derailed. Jason for more on whether amtraks plane will take off carol here is our conversation with Devin Leonard. Devin his plan is, lets get amtrak operable. Carol and he has gotten it better, right . Devin yeah. I guess the adjusted losses this year were way down last year was 171 million. He is on track to breakeven next year. What he wants to do is take the money they get from congress and fix the system. Which needs a lot of work. They are already getting a new trains and doing things like that, but the idea is to show congress, look, we can run amtrak efficiently and profitably, so lets do something about addressing the bigger problems, including the northeast corridor which needs 41 million in infrastructure repairs because the system is crushing crumbling. Carol 41 billion. Its interesting and i wonder if he can make this work ultimately. Devin thats the thing. Its the typical problem when you bring in some from the Business World into a Government Agency this is something that has happened at the Postal Service over the years, but people say this thing needs to be run like a business. Lets get some successful corporate executives, so they are bringing them in, but these Government Agencies are not businesses. There are all sorts of red tape and constraints. [over talk] devin so the things he could do at delta, and despite the fact they upset people, he could do them, and if you show they worked, people ultimately accepted them. But here, it is a much more complicated thing. As he said, testifying on the hill to people who are upset with him, senators, like look, you are my boss. But, whatever the term is, having all those bosses is not something we guy like richard something we like something a guy like Richard Anderson is used to. He is trying to do his best, we will see if it works. This is the first time amtrak has had new ideas ever. Certainly, not decades. Not in decades. Its really important system, and it needs to be changed. Its about time some fresh ideas were in there. Jason lets stay with travel and turn to the pursuits section. Carol we have a travel takeover, and for the opener, brandon goes undercover working at allie asked. Here is our editor on what he found. His specialty is going behind the scenes, working undercover at these fancy places. He has done it at nobu, was a butler at the plaza, ski instructor in aspen. Every time, we are always surprised people let him do it. Carol even lax and security was like come on in. Lax was excited. They offered him access to the vip terminal, the male center, food service, the private lounges, everything. He went find the scene for a weekend learned about how it all works. Jason lets start with tsa. I definitely learned some things, some slightly horrifying things. Carol crazy. Jason there are scenes that are hard to get out of your head. What did he learn . Chris people are accidentally trying to bring things through tsa that they dont know our contraband. People bring a prosciutto or a plant, very common. Every day, there is stuff that is really wild, including one thing, a dead body trying to get through. A father died and they were trying to get him back to mexico for a borough burial. Instead of shipping a coffin, they bought a oneway ticket and you cannot take a body on a plane. Full weekend at bernies. They got stopped by security. Carol dad is sleeping. Chris and its not uncommon. Carol where you going to go. There are so many go . There are so many. Chris oh, yes. At one point, a woman was going through and she had strapped to her body rotted fish with these larvae on it. When they opened her clothes, the larvae started jumping around. So she grabbed them and start eating them. Carol oh im sorry. Sorry if youre listening or watching. I was going to go to the guy who had birds on him. Chris if you read the new york post, this is a thing, there are songbird competitions in new york. People have to smuggle in songbirds. So this guy had dozens of songbirds toilet paper rolls strapped to his body. Carol and underneath, he just wore normal clothes. Thinking, hey, no problem. Chris yeah. One time they found a cobra in a pringles can. Can you imagine . Jason lets talk about lost and found. I have lost things in airports and found them, in many cases. I famously left one of my jacket that heathrow. They tracked it down. The size and scope of the lax boston found operation is massive. Chris at any given time, they have 6000 laptops. If you have ever left a laptop at tsa, they are good about tracking you down and getting it back to you, because it happens all the time, but theres stuff like, how did you lose that . A surfboard, or a set of bongo drums, or a chainsaw, which you have not would have not been able to get on the plane. Like, oh, you left your chainsaw in the airport. Carol its nuts. They estimate 70 people a day lose a computer. Thats nuts. Chris its like an apple and there. Jason one thing he also addresses, and this is a very bloomberg thing to do, essentially, why things cost so much at the airport. It is because the infrastructure is really expensive. Chris you might have noticed the food is expensive at lax. There is no mcdonalds. It is always upscale places because there is no storage there, so they have to bring in everything every and cant stop. Stock. Y day and cant and, staff has to be highly paid because it takes them time to even get in and out of the airport, so there is a huge premium on prices there. Where is at like, the portland airport, theres a 0 markup. Jason coming up, finding the perfect fix for your sneakers. You got to get down to the molecular level or quarter sizes. We hear from the founder of adam. Carol plus, thanksgiving is over the Holiday Season is in full swing. We sit down with the radio city rockettes. This is Bloomberg Businessweek. Jason welcome back to Bloomberg Businessweek. Im jason kelly. Carol and im carol massar. You can also listen to us on the radio on sirius xm channel 119, and on a. M. 1130 in new york, 106. 1 in boston, 99. 1 f. M. In washington, d. C. Jason a. M. 960 in the bay area, and london on dab digital, and through the Bloomberg Business app. Carol thats where you can find extended podcasts. Jason like this one, a conversation i had with the cofounders of atoms. They are a married couple from the same pakistani village who created a shoe start up based in brooklyn. They first offered sneakers in quarter sizes. We were like, can we make a shoe people would want to wear everyday . Not that we want to sell. Can we build a shoe people would want to wear every day. Thats where this idea of a casual, simple thing. Extremely comfortable. We were going up to the best of the best on nike and adidas in comfort. We only make one shoe, so we put a lot of effort into the sizing, the quarter sizing, the laces, how high or how small. It took us six months to work on that to just make it come to bowl. Jason six months on the insole. Yes. On the insole. Then we were doing a lot of things. You dont need to tie your shoelaces. It is so easy to slip off. There is copper lining in your shoes, so they wont smell, and the idea of the shoe was to be durable and comfortable. Not combining these ideas. Its not ev easy to talk about that. You can have two different shoe sizes. If youre right sizes 9. 25 and you left sizes nine, you can have two different sizes, and you dont need to pay for two pairs. We were thinking about when we are going to talk about these things to our customers, we need to make our shoes so simple that it can carry on throughout the day as well as they dont like scream, they become part of your life. Jason i want to talk you about the quarter sizing. Its a sort of thing that, when i learned about this, it makes so much sense. Why hasnt anybody done that before . I actually have no idea. [laughter] but i believe its very interesting thing. One of our very good friends, he was talking about this to us that when you are close to the picture, its hard for you to understand what are the opportunities, but People Like Us coming from different backgrounds, when they look at our industry, we actually try to think about what our customer wants and what we can offer them. We were thinking about quarter sizing, and the basic idea was how can we make shoes so comparable. Fit is a very important part of comfort. If your shoe does not perfectly fit your size, you will not feel comfort. Thats comfortable. Fit is a good part of comfort. The shoes do not perfectly fit what you will not feel comfortable. So when we were thinking about the fit of shoes, we were thinking about which ones. 60 of people have a quarter size difference between right and left. So thats how we came up with the idea. Its also embedded in the company name, atoms. We decided on this name because we are willing to go to atomic levels to make shoes better. Jason right. Why do you think, especially having been in the dresher shoe business and now in the sneaker business, why are sneakers having such a moment . America especially and world in general it is so passionate americans are hesitant we have so many young people coming into the world and they are not hesitant. Not hesitant about ideas were movement. Not hesitant about interests or icons, whatever. But we actually have a name for our customer, called the new creative. These are people who are considerate about what they buy, where they buy from, and what things look like. With nike entity does, it was sportsmanship and now we are seeing more entertainment and lifestyle icons. Not only in sports, but in fashion and tech. Even tech celebrities elon musk is not a celebrity for tech, he is a celebrity for a lot of people. Jason from a new kicks to high kicks. Carol on our daily radio show, you can listen to this interview interviews like this one from the radio city rockettes. We are so excited for the season of the Christmas Spectacular. Each year, we try to reinvent the show to make it more exciting for audience that come back year after year. This year, if possible, we have made the finale even more impressive. The finale number was introduced last year, and this year, we have really focused on the choreography, dazzling costumes the rockettes perform in, and the rockettes have a really important really impressive entrance and it is so exciting. I wont ruin it. I feel the Christmas Spectacular is one of those traditions that families can come to year after year. Its a different experience every time you come. If you are sitting, even in the same seats. Jason this is a quintessentially new york thing. You guys, you are not only in radio city music hall, obviously for the show, but you are at the parade. You participated in the world pride events. Events this year. So this is something that is very new york. What is it that connects you to new york, other than 100 years of history . Absolutely. The rockettes first started performing at radio city music hall in 1933. We performed in one of the most iconic theaters in radio city. Its an amazing experience from the moment you walk in the door, especially at christmas. The decorations are drenching the theater. From the moment you walk in the door, the vibe of the theater, you can meet said to meet santa, a rockettes, and we have two live organs playing. They represent i feel like the rockettes are such an iconic staple in new york city. They represent poise, grace, and athleticism. I deftly grew up watching the rockettes perform. I was so inspired by these women coming together from all walks of life, but it is the truth hit me true epitome of teamwork. It is about all 36 of us on stage and its so incredible to be a part of. Carol Bloomberg Businessweek is available on newsstands now. Jason and also online at businessweek. Com. What is your mustread . Carol online, its josh greene. We talk about his reporting. He really digs into his stories and brings us an individual, in this case, and her work about something we did not know about. This could be crucial for the next round of elections. Jason and as he said, it hits this nexus of political and journalistic. Two things that are very interesting for us. Carol absolutely. Yours . Jason i love the amtrak story. Devin leonard always goes deep. Richard anderson, the new ceo, we knew him from the delta days, is a big challenge to an import an american institution. Carol its a good one. Jason more Bloomberg Television starts right now. David you went to Harvard Business school. Steve yes. David and did you enjoy Harvard Business school . Steve no. David did you want to drop out . Steve yes. David you went out to raise a fund, and was that easy to do . Steve i sort of looked at that and went omg, we are going to fail. David in 2007, you decide maybe you should take the firm public. Steve i took it public for a lot of different reasons. I had a sixth sense that something terrible was going to happen in the environment. Would you fix your tie . David well, people would not recognize me if my tie was fixed, but ok. Just leave it this way. Alright