Streets of chile. We put together a holiday cover for you guys. Quite a cover talking about softbank. We think this is one of the biggest stories of the year. It started with we work, which the magazine covered early on. Coverage developed and went on and on, there was another story we started think about, which was softbank. Softbank, we did talk about it so much this year. What i love about the story, you go into the layers of softbank. Obviously the leader of the role, but there are other players. The guy who is the visionary at softbank, especially the vision fund. This outsized force in silicon billion that can do a lot of things because it has so much money. It can go into we work and basically bankroll we work, which is a Business Model that might not have been right for the long haul yet. You were aggressive. Go big or go home was the strategy behind softbank. Sometimes that worked. Other times it doesnt. This story reveals the culture within softbank and the vision fund where there is a lot of tension. Not always great decisions. It is a great story. This week we turn 90. We are old. You look great. The magazine has been around for 90 years. We honor that with an essay looking at how businessweek has covered business through the decades. Is a 1979 cover about the death of equities that for a couple of years afterwards it looks pretty good. In hindsight it does not look so good now. It is an amazing accomplishment that this magazine has been around for this long. It wasink, and interesting talking to some of the people who put together that essay, their combined tenure is almost 90 years. 1929 do not go back to when we started before the crash, but the people who worked on this essay can trace their lineage back to people they have worked with who worked back then. In the course of three people, we can actually expand the generation. One of the things they point out in their essay is these seminal moments and how businessweek tracks what was going on, the zeitgeist in economics, the boardroom, technology, so many things. Women. Black business. There are so many stories when you look at how we have covered it, it shows the evolution of the magazine and the country and the world. Those conversations remind us some of the issues we talked about over the decades, we are still talking about them today. It is amazing how much stuff comes up that feels contemporary from economics to women in business and finance, all of them have been with us for years. Thank you a lot. More coming up. Lets get back to the cover story of softbank. We work is a small part of their total investment portfolio. We make the point in the article that their advisors whether much more cautious about we work. They only committed 4. 4 billion to we work, compared to the rest of softbank that invested more than 10 billion in we work. The vision Fund Commitment was relatively small. Theyve got we work. They have got some much smaller ,ompanies that have gone wrong but because they unfolded around the same time, people are paying a lot of attention to them. And brainlessgged are Consumer Companies that the only invested a few hundred Million Dollars in, but because they are high profile, people are paying a lot of attention to those. In a lot of funds when companies fail, they often fail pretty early on in the life of the funds. We are at this interesting Inflection Point where they also have a number of Promising Companies that are not quite at the point in their lives where we can point to them and say these are spectacular companies. A big retailer in south korea has a lot of promise, and another one in asia is very promising. The promise has not been delivered yet. The disasters have. It is just a bad time for them. It is a bad time. I feel like you dig into how Investment Decisions are made. You have some insight into masa as he is universally known. You say you get one masa and sometimes you get the other. Masa can be extremely charming and interesting and engaging, or he can get in a bad mood and pepper people with questions. One time onstory of a call where he paraded an investor at softbank berated an investor at softbank about a company in china that is making good and steady progress. Masa thought it could grow a lot faster and was telling the investor you have to figure out a way to make it grow even faster than it is now. Other people on the call were cringing and felt that investor got the brunt of his ire. Particularly people who go to pitch masa, if you lecture company, you can walk out feeling like you are walking on air. Sometimes he tells young startup founders, you are the next jack ma. They leave feeling so good, especially if it is a company where they have been rejected many times before. What sets the vision fund apart from other venture capitalists is that when the vision fund and masa decides to be all in, they invest the time, and a push they pushed the founder or entrepreneur to be more aggressive. They give them the kind of money where they can expand much quicker than they would have been able to do otherwise. A company that might have been looking for 50 million or 60 million and up getting several hundred Million Dollars from softbank. Softbank wants you to deliver. Lets say you were planning to roll out in one state. Now they want you to do a National Rollout and think what is your overseas Expansion Plan . They set it up for a company to grow very fast, but not every ceo can deliver on that. Up, me too has yet to have its moments on wall street. Why some in the finance industry still dont get it. This is bloomberg. Welcome back to Bloomberg Businessweek. Im carol massar. I am jason kelly. Join us every day on the radio at 2 00 p. M. Wall street time. You can find us online at businessweek. Com and on our mobile app. In this weeks financed section, a story on the me too movement and wall street. They have been following this story closely throughout the course of the year. Abouts a sobering article how the finance industry still does not quite get it. Sometimes we sit and look at each other and we are like where is me too in the Financial Services industry . We know from years of chronicling hedge funds and banks and private equity finance hasthat profound imbalances, and women say they are harassed and destroy terminated against that discriminated against harassed and discriminate against. This piece is about the machine of silence that we have discovered piece by piece. After me too in the entertainment world, without wall street is next. It did not happen. I have a word for you, arbitration. Arbitration is one of those things, we have known each other for years. If you brought that word up to me two years ago, i would have more or less drawn a blank. I was on a phone with a wall street veteran who said to me if you really want to understand why we are not saying me to on wall street, you have to look at the invisibility cloak. Arbitration. That is the system that is parallel to the court. It is behind closed doors. It is basically a private Justice System. They used to be relatively obscure. Itself helped it expand so that it now covers essentially two out of three workers at big u. S. Companies. Wall street, unlike other u. S. Industries, runs its own arbitration hearings. Wall street is a master of arbitration. The finance industrys mastery of this system, meaning force arbitration, has prevented the revolution of the past two years from reaching it, meaning the me too revolution. I talk about this all the time. Men and women . The Senior Executives are all men. I have dealt with wall street detectives who are women. Say, look, arbitration is quicker. It is cheaper. It is quieter. It is just as fair. That is what they will say. That is their defense of arbitration. Women say it stops us from banding together, learning about each other, and instituting major change. The classaction lawsuits we have written about, you cannot have those with arbitration. Lets talk about systemic and cultural aspects as well. Piece, into this in this the cultures of a lot of these firms are set up in a way, structurally and egos wise, it does not feel like a safe place to bring these complaints, even the advocates, who would be advocates within the firm, hr are not really on the side of the employees. They are on the side of keeping things quiet. Our story focused on three crystallizing moments. Fisher,fitzgerald, ken who has the famous comments now, and the third was london. Amazing work out of london. Jealous. What is upsetting about it, and we talked about this with our editor, what is upsetting about the lloyd story is not just a picture of guys behaving extremely badly. What is profoundly upsetting about the lloyd story and another story from london is that it gives you the sense that women went to hr and talked about being assaulted were accosted, and hr was basically like it will be bad for your career if you say anything. Dont smile around him. That was a liberal response from a big institution, dont smile around him. Dress differently. Change your behavior in order to avoid these situations in the future. Coming up, how Climate Change primed chileans for an uprising. The cost of a controversial weapon. This is bloomberg. Welcome back to Bloomberg Businessweek. You can listen to Bloomberg Businessweek on the radio, on a. M. 11 30 in new york, 106. 1 in boston, and 9. 1 fm in washington, d. C. And in london on dab digital. A controversial weapon of sorts against Climate Change. Controversial, but the concept is pretty cool. Capture carbonto from the air. Climate change is an economic issue. How do you solve this problem . There are some obvious things you do. You build more windmills and solar plants and so on. The people who believe you can capture carbon directly from the air say that has to be part of the solution as well. How does this work . InCarbon Dioxide is an asset acid in chemical terms, so it binds with basis. Air through it with big fans, the Carbon Dioxide formswith this chemical, a salt, and then you run the salt through another equation in the plants, and then you get a different salt, and then you can run that through a forms a salt, and then you heater, and that splits off the Carbon Dioxide into a stream of Carbon Dioxide, and then you send that line, which gets hydrated and puts back into the process. This is the periodic table at work. This goes back to basic chemistry. It makes so much sense, very logical. Why arent we doing it already . We are doing it in an experiment the basis. I focus on three companies, Carbon Engineering in british columbia, klein works based in switzerland. The one that is out front is Carbon Engineering. Work ofg up the design a plant that can pull out one million tons of Carbon Dioxide per year. Sounds like a large amount, is it . It is a huge amount compared to what has been done before, but it is a pittance compared to the size of the problem. Why not do this . Expensive compared to other solutions. The cost has come down a lot, so it is no longer on the highend. It is cheaper than other options like batterypowered airplanes that we have talked about in the magazine. , there will come a point where we have run out our strength on some of the Solutions Like reducing putting Carbon Dioxide into the air. At that point, we have to think about supplementing with taking some out of the air. That could be covered i was produced by your grandparents that has been sitting in the atmosphere. An important part of this it complement or supplement what is already being done in terms of combating Climate Change. That is a really good point. I went into this thinking maybe someone reads this and thinks pollute all you want, we will vacuum it out. Thee talked about controversy. Some people say it is the wrong message, dont tell people they have a free ticket to pollute. Definitely not. You want to be doing everything. The low hanging fruit and some of the high hanging fruit. I like that you refer to this as the high hanging fruit, which you dont usually read and talk about. How likely that this gets adopted any meaningful way . I think it is very likely. It sort of has to happen. Nothing else is going to do the job. It will be expensive, but we have seen the cost curve on solar and wind come way down. I think this will come down as well. Staying with Climate Change, there is another story about how a decadelong drought sparked a popular revolt in chile. Here is editor christina lindblad to explain. Most of these protests are focused on the satisfaction over the economic model and how it leads to meager pensions, and how people feel the Education System is producing inequality. The usual suspects. We looked at the backdrop of this, which is the 10 year megadrought. That has been affecting central chile, which is where most of the population is. The north is already very area. Arid. We look at these water fights that have been playing out and how these protests, cannot say a jumped, but there has been this echo of unequal access to water, unequal access to education, unequal access to opportunity. Think about farmers in chile, how has this readout . Played out . We talk to people who lost more than half of their livestock in the last couple of years. Avocado farming has spread to the this Global Demand for avocados. Becauseinstance, it is the avocado farmers are being accused of exploiting their water rights that they required years ago. All these Small Farmers in the area, rainfall has been lacking, so they dont have anything to water the crop. Avocado farmers are fine. If you look at the photos, it is stark. You will see these brown hills, should not be grown in these places. One thing that this brings to mind is that income inequality obviously, but also this notion of political and economic choices that favor businesses over consumers. What most would argue is a basic human right. I think people were initially surprised about the violence of these demonstrations in chile of all places. They have often been cited as a model for the rest of latin america. Constitution dates from the time of the dictatorship, pinochet. Yes. The waterlogged gives people rights to water in perpetuity. People have them forever. They can trade them. Once upon a time, the thought was free markets will help people be careful in the management and use of finite resources, but that has not been the case as we have seen in some places. Mining and export oriented agriculture have the government has prioritized those uses for water. We have communities in chile that depend on water getting trucked in. When they open the fossa, nothing comes out. It is amazing. I wonder what is the political backdrop . A lot of this unrest, as you said at the beginning of the conversation, has been tied to the political situation. Is there any sense that may change soon . The outcome may be quite radical. Legislators have agreed on two possible means of rewriting the constitution. Is consensus in the country that the constitution needs to be rewritten because it in shrines this model that has caused distortion. It is essentially not valid for the country. Not started to talk about how water is going to feed into that, but it is a complete rethinking of what do you want to have . Tracesmberg businessweek its origins to 1929. What a year to be born. Not an easy year to make a debut, but we look back on the decades of the magazine. This is bloomberg. What are you doing back there, junior . Since were obviously lost, im rescheduling my Xfinity Customer Service appointment. Ah, relax. I got this. Which gps are you using anyway . A Little Something called instinct. Been using it for years. Yeah, thats what im afraid of. He knows exactly where were going. My whole body is a compass. Oh boy. The my account app makes todays Xfinity Customer Service simple, easy, awesome. Not my thing. Welcome back to Bloomberg Businessweek. Still ahead, Silicon Valleys take on tax haven. An arms race of sorts between two suburbs north of new york city, the target, millennials. The magazine this week is turning 90. To celebrate, looking at how the magazine has covered business through the decades. It is a sprawling tale. To share the highlights, here is jim ellis. We were a different magazine, different place, different owner. A lot of things were surprisingly the same. There is always been and big thought that we do more than report the news. We want to add insight and analysis so that the reader can not just have a chronicle of what happened this week that also why it is important, why it matters, and what might come of it in the future. That is the value add that i think has gone through the years. There are three people, the section kicks off identifying three people that span the entire lifetime of the 90 years of business week. What is fascinating is this whole idea of editors passing that is the valuedown the histoe magazine. That is the fascinating thing about our magazine. I have talked to people that i have literally known for 30 years. One of the nice things about that is we have seen a lot of things happen in business. There is a lot of context that we already know. Around, myrushing gosh, what is it. I was at the opening of disney world. I covered that. I have been the editorial page editor. A lot of us can easily shift between stories. Hopefully we can add a lot when we work with younger reporters because we have seen a lot of the stories before. You were dealing with all the outline bureaus, which for so long, that feeds the magazine and a lot of ways. That was far beyond new york. We have been picking up information that has often been difficult to get. Having people in asia that before hong kong. Allowed us to be early on stories like that and allowed us to look at why things happen very fast. We benefited from having those euros back in the day and we benefit from that now because bloomberg has a huge editorial staff. Tell us more about bringing women into the magazine and the consumer, how it has evolved. New businesses were popping up. Industries, things that were more consumer focused. What happened is we had to figure out ways to cover that, and management had to figure out ways to manage that. The idea of the professional manager came up. We were covering women. We initially covered women who were a handful of entrepreneurs. Who invented the first nonsmear of all lipstick. The marketing chief at tupperware made the cover. About the get serious challenges for women until 1975 when we did a large project, a bunch of stories that i think are still great. This project,for and i was surprised that a lot of the things that people say today, a man says one thing, a woman says the same thing, and it is considered to be shrill. Those could have been said this year. 40 years ago, and we are still talking about that. We started out talking without a lot of coverage of the minority business. I had a chance to go back and read some of the early stuff. In the 1950s and 60s, because of the rise in the streets, everyone decided we are going to think about that. We started thinking about black empowerment in business. Sophisticated, and by the time the 1970s came along, we were doing a lot more coverage instead of wondering about not just the positives, but what about the economic changes that seem to be stalling out. We have been good about saying this is how society goes. For more on business weeks to niversary, we turn it was a book that was largely covering industrial america. He brought in women and gave us bylines. He did a lot of things to liven it up. It became the forerunner of the Bloomberg Businessweek that we see today. I think he used to think it was separate. Politics and business and technology, now it is all interconnected. They serviced everything from modern plastics to engineering news. People had a very trade mentality instead of a narrative mentality or profile mentality or investigative mentality. The Washington Bureau really changed the look and feel of business week. It does feel like the late 1980s into the early 90s was this seminal moment when washington seemed to wake up and say there is business going on that maybe we need to keep an eye on. Kravitzabout henry showed up on the cover. Mike milken and henan kravitz crashed onto the scene. Probably corporate of america called for. Ceos had imperialistic fleets of airplanes. There were takeover battles. In the matter of the era. You have these people like mike milken who used the junk bonds and henry kravis who landed on the cover in 1988 as king henry. That and shookf up the ceo world. It went a little too far. Henry kravitz is still going strong. Some of these people involved were shady characters. Big business got its start, but so did consumer advocacy. It was not just decades of greed. You had consumer advocacy that came off of ralph naders 1960s book. He burst a whole generation of people who would then go to run advocacy organizations or agencies in washington like the Environmental Protection agency. It was the era when Corporate Governance came into being. Voicehareholders got a and could vote on resolutions and could turn out ceos and approve mergers. Consumerismra when rose up. It was the era when the Retail Investor came to be because manage their retirement money through 401 k . You finally had an investor democratization thing going on. From floating tax havens twoputting many city states on to putting mini city states on land. This is Bloomberg Businessweek. Welcome back to Bloomberg Businessweek. Joined Bloomberg Businessweek every week on the radio. You can listen to our podcast at Apple Podcast and bloomberg. Com. To technology. A former Google Engineer and International Waters expert is negotiating with officials to put as many city states in their countries. This is a real thing. It is a real thing. Have you heard of the sea studying, this case in Silicon Valley libertarian circles that you would build these little floating fortresses just far enough offshore that they would not be subject to u. S. Law. Tax havens. Is that what this is about . That is one part of it, but to hear them tell it, that is not the biggest part of what they are after. Who cofounded the sea studying institute more than a decade ago with money from thiel. Silicon valley guy who is also president with president trump. Friendly with president trump. Thiel. This was a while before he torched that relationship. The idea behind this institute was that they would build the economic and Legal Framework to set up these islands fortresses off the coast of wherever and let 1000 libertarian tax havens bloom. That did not go well for the obvious reasons that it attracted charges of neocolonialism and tax avoidance from local authorities. Cite to haveot these places pop up outside their home, the most notable was the case where the private company organized and withheld the sea studying institute off the coast of tahiti. Objectedian government on the grounds that this would be disruptive to canoeing and surfing and towards him and business. Lets make the pro and con case. What is good about do this . This is related to his new venture, whereas peter thiel has not talked about it in interviews, as our reporter talks about in this piece. The organization that Peter Friedman has just started is very much on the peter thiel donor list. Ofwill put up more than half the 9 million to get started. Case who wants this . Is there demand . For friedman and some of the people who are working with him on the ground, they say there is organizations, little Economic Development groups who are just interested millionaires to set up these kinds of city states. Pitch is the sales that they are not working directly with any of the local governments. They are leaving that to secondary agencies. You would set up these semiautonomous regions and under british common law as adjudicated by retired judges, they would hire to run things. Be immune toen local law. Interesting,at is the Justice System is more important than the tax breaks. Someman talks about lossrces of functional being a leading indicator for economic success. There will be some law or something, but there are a lot of freedoms as well, and it is going to be economically successful. s argument is that the rule of law is the most important thing and also that the british common law system as adjudicated by retired british judges is the whyl model over any other that as opposed to any other code of law or ethics . He did not have the best answer. He got as far as saying we could solve poverty. That is a pretty big claim. That is one of the loftiest of the sales pitches. You mentioned peter thiel is invested, so is Marc Andreesen and other wellknown folks. , serious bitcoin advocates the guy known as bitcoin jesus, and folks that are into the idea of building their own system. A couple of new york city talking about juncker is an new rochelle. They have their eyes on young professionals. This is Bloomberg Businessweek. Welcome back to Bloomberg Businessweek. You can listen to us on the 119, on sirius channel xm 99. 1 fm in washington. In london on dv digital and always on the lumber business app. A real estate arms race is heating up for suburbs north of new york city. The two biggest towns in Westchester County are betting on affluent urbanites who are sick and tired of feeling poor in the big apple. They are not very cool places to live, but these cities are in an arms race trying to compete with new millennials and younger professionals who are finding they cannot afford to live in manhattan and brooklyn and jersey city anymore. They are spearheading a number of new developments. They are building thousands of new units and luxury sky rise apartment buildings, and they are hoping people will start to move into these new units and Start Building a family. What is fun about this story is the amenities that are being involved. There is asked throwing. They are trying to do things that appeal to a younger generation. Exactly. Both cities would like to open ax throwing bars. That is something they think will be attractive to younger professional people who are moving from manhattan. It is such an interesting evolution to me. I live in the suburbs. A little north of where we are talking about. Been not everyone can be as hip as carol and live close to the city. It has only been very binary. You either live in the city or go to the burbs. This is trying to find that middle ground and expanding the footprint of new york city. It is and the drawing point for both of them. They would say this. They are 25 or 30 minutes from manhattan. You can hop on the train and be at work just as fast or faster than living in brooklyn. That is an important distinction. I have thought about this a lot when i talk to colleagues here who live in far brooklyn, and my commute is shorter and a little more civilized on the commuter train then many of those because those bureaus have pushed further out. That is what they are betting on. They are hoping there will be this mass migration of people moving in. This is the place where the tax base was all about in the 1970s hollowed out in the 1970s and 1980s. I have spent a fair amount of time in new rochelle. What is interesting is you go around those cities, and they are huge. You can see the streets that are troubled and the retail that is having a hard time. You can see the results from those decades in the 1970s when things were doing well and then came undone. They are trying to reinvent themselves. It is not easy. There are risks. One is that they are going to have so many new units that there is going to be this huge amount of inventory they might not be able to fill. Walking around the streets and talking to people who currently live in new rochelle, they are afraid that their landlords will look around and say maybe i can do some Minor Renovations in the buildings that i currently own and hike up rents. A lot of those residents are fearful their cost of living will have to go up over the next months or years, and they will be driven out of those areas. From luxury housing to luxury watches. Just in time for the holidays. Luxury the ceo of watchmaker dennis. Keep youngnt to generations interested in mechanical watches and not have them not wearing a watch or only a smart watch, we have to build the future. That is what we are doing. Watches are having a moment. People are rediscovering the craftsmanship and carol was alluding to. Why are people pivoting back . We live in such a fast world between internet and social media, dont forget a mechanical watch is one of the few objects that will last forever. In 1000 years, if you have a watch and a watchmaker able to put in oil, it will still work. Phone orbuy a cell smart watch, you know the minute you buy it, it is already obsolete. Sometimes people need to attach themselves to something that will last forever. I wonder about the conversations we have, that kind of disposable society we have become where we used to hold something. I wonder if we are channeling back to that. What do you see in terms of your consumer . You talk about you have to invent to bring in a younger generation. I think they buy history. Bombarded by the Marketing Communication everywhere. They want to buy something with substance. They often ask us questions about how it is made, basically what is behind the brand and what is behind the price. We have to show them how many hours a watchmaker is working on the watch. That is important. We need to show them creativity. Bloomberg businessweek is available on newsstands. The 90th anniversary. I love talking to those guys. 90 years, not a millennial to say the least. It has had a huge amount of influence on issues of the day, still the issues of the day. That is remarkable, whether it is about racial issues, women on wall street, those issues. It is important that you talk about influence. That is key in terms of pushing government policy. This is the word of record. And continues to be. That is why we love it. Check out our daily business week podcast. It is available at bloomberg. Com. More Bloomberg Television starts now. Up, the years most confounding discussions. Leading figures in Financial Markets argue as a 10year boom ebbs. I would almost call this a goldilocks moment where it is not so bad, not so good. Fed has spun 180 degrees from tightening to accommodation. The pivot was hardly smooth. We can be patient and flexible. The chairman is doing a good job