Carol and we hit the red carpet to celebrate the bloomberg 50. It is our annual list of those people whose 2019 measurable accomplishments stand out. Jason all of that still ahead. But first off, the worlds biggest ipo. We are talking saudi aramco. Shares surge to a market value of 2 trillion. That magic 2 trillion come at that peak. Carol a culmination of a fouryear effort from the kingdom. Our correspondent is in london to talk about this. A lot of questions. Now it is publicly traded and it it is an ipo, a publicly held company, but it is only a small 1. 5 that is out there in the public in terms of the company. Nini it is. The ipo has not turned out the way they expected it to happen. If you remember back to 2016 when saudi arabia initially announced plans for the ipo, the plan was to sell as much as 5 of the company. More importantly, what we have to look at is what was the purpose of the ipo. The ipo was seen as a means of diversifying saudi arabia away from its oildependent company, to raise money from International Investors, and to deploy that on projects outside of the core energy industry. Aty managed to do the ipo the valuation they really wanted, or close to it, but what they do. Manage was to attract International Investors into the kingdom. For the kingdom as a whole, this is probably a great opportunity to showcase what they have. In the form of companies in the region. And also to attract International Investors to a scale that has not been seen before. Having said that, the objective has not hit the mark. Saudi arabia managed to complete the ipo with the help of local investors, rich families in saudi arabia, and also, neighborhood friends, we can say, politically countries that are close to the kingdom in the gulf region who participated in the ipo. It is still a way far from what they planned initially. Jason thank you so much. Carol for more on that, lets bring in editor joel webber. Lets start with the cover story. Joel this is a combination of amazing coverage from the Bloomberg Team this year about all those listening devices. Americans in particular really love these things. Carol we all have them, right . Joel we just keep buying them and buying them, it is christmas season, and it yet, there have been some privacy concerns that the tech team has done and we bring it all together in this cover story. Jason the bloomberg 50 was this week. What a night. Joel you guys looked great. So did all the participants and everyone on the list. Carol thank you. Joel yeah, this is a gala meant to celebrate the people on the list and their accomplishments throughout 2019. Carol i remember having conversations at my table and we did a broadcast from there. People were loving the eclectic group. They were names that they didnt know, names they didnt know about but that they should. Joel bloomberg 50 is a way of using the thing bloomberg does it better than anybody, data, and looking out across the world of business, finance, and entertainment to basically say who had real impact, and what is demonstrable that we can point to that is measurable. Jason we will hear from some of those honorees later in the show. I have to ask you about this new red scare, in a way, a story that really caught our attention. And once you get into it, it is a little terrifying. Joel so this again is another story that businessweek has done a multiple times this year. Peter wallman has really delivered on this line of reporting. We did it as a cover story earlier in the year especially around what is happening in the medical and hospital worlds , where we have seen chineseamericans actually get driven out of the country. That particular research is around cancer. And now, it turns out and this is the latest story in the politics section, the u. S. Government has been targeting people who work in military, and in particular, there is one gentleman we found who was wrongfully accused and pushed out of the government and army , and ended up retiring, and the whole thing just look like a bad look when there is actually no case there was never a case to be made against him. Carol really troubling. Joel, thank you so much. Another great issue. Really appreciate it. Editor of the magazine, joel webber. Let us get more on that mistrust in the department of defense and how ties to china could prove fatal for applicants security clearance. Jason here is our conversation , he joined uslman from san francisco. Peter so basically, this is a continuation of work i have been doing all year long on the whole question of whether or not we are overreacting in this country to the threat of chinese espionage, and specifically, the threat of the theft of intellectual property. This weeks businessweek story is about an Army Engineer who essentially, by the fbi and military intelligence from the army. Way,ilian engineer, or the and ultimately, his security clearance was taken away after over 20 years of stellar performance, including developing Software Systems that the n. S. A. Uses for her medications and hes dropping and things like that best uses for communications and eavesdropping and things like that. He was of retirement age, it wasnt the biggest body blow, but he was humiliated and was accused of disloyalty. He had a lot of ties, friends and neighbors who were asked many times if he was a spy for china. He is a chineseamerican individual, and he suffered a great deal as a result of this. I can tell you the end of the story, which essentially is that ultimately, the pentagon decided that he was not a spy, and he was innocent of their suspicions. So it is kind of a sad story. Carol so this individual, i guess the question is, and this goes to hell you kicked it off, peter, are we overreacting . Is this an isolated incident . Where folks are being targeted in the wrong way, or is a lot of this happening . Peter the distrust level and that is the real keyword in the story, the level of distrust of chineseamericans has soared in recent years. A colleague in the bloomberg Data Analytics department, andre tartare, did an enormous job of filtering, analyzing some 26,000 cases in the government database of security clearance decisions, who gets it and who does not. And he found that in the past decade, the rate of rejections of chineseamericans essentially for security clearances has gone from Something Like 44 , which was the average of all the countries including other nonchinese countries, to over 60 for chinese. So its a real growth in the rate of rejection for that which is a kind of barometer of suspicion, distrust, and essentially difficulty for these american citizens. Carol coming up, alexa, what is privacy . Smart devices, that is what we are talking about. They are listening. And so, too, are humans. Jason is the new applecart really elite . Why the answer really matters to the places where you shop. Carol this is Bloomberg Businessweek. Carol welcome back to Bloomberg Businessweek. Im carol massar. Jason and im jason kelly. Join us for Bloomberg Businessweek everyday 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 anywhere where you get your podcast. Carol and, of course, you can find us online at businessweek. Com and our mobile app. Privacy one of the major themes of 2019. Jason absolutely. And this weeks cover story focuses on how Silicon Valleys Biggest Companies have fooled millions of people, including us, into allowing temporary workers to listen in on their most intimate moments. Carol what it terrifying story to say the list. The reporter joins us with the story. This is a big story about how these devices like amazon echo and their Virtual Assistant siri, or if you use apple, or Google Assistant or what have you, if you have these devices in your home or on your phone, this is a story about how these things work. These Tech Companies in Silicon Valley presented these products as sort of automated, they were using Machine Learning and computers to answer our voice commands. It turns out there is a vast apparatus of human listeners hoping to improve these services. When voice commands are submitted to their servers, in some cases, they are sometimes rerouted to data centers where humans are transcribing your every word in order to improve speech recognition on these services. Carol there was an assumption that there is just some little robot listening. About these humans, what kind of conversations are they listening to, what are they hearing . You talked to a lot of different once. Austin we talked to dozens of contractors, people that are placed everywhere from ireland to india. In the case of apple, they rely ied on an i. T. Firm in cork, ireland, where dozens of contractors will be listening in on peoples recordings. And they told us that they felt deeply uncomfortable listening to this material. Often, it was very personal information. They recalled children in many instances sharing personal information like phone numbers, or street addresses, which you can imagine parent concerns over that. They heard couples engaging in sexual activity. Very private conversations in your kitchen and bedroom. So really, the sort of alarming thing is just how invasive this is, and the fact that people that are on the front lines are often the most lowpaid workers in the supply chain and they found it very alarming and emotionally unethical. Jason what do the companies because this has been a story you have been following really through the course of the year, and as carol said, it is probably one of the defining stories, in many ways, of 2019. , broadly speaking, the discomfort we are starting to have with the relationship with technology. What do the Companies Say . You askedam glad about that. One of the disparities was the difference between with the contractors were telling us in how they felt this was morally dubious versus what the tech engineers and executives were telling us. When we started reporting this, it was like they did not think it was a big deal. They did not anticipate this. They argued it was like it was par for the course for the industry. Everyone was doing it. Fixing Quality Assurance issues. They described it as similar to the, you know when youre app crashes on your mac, do you want to report this bug . They described it as a quote voice bug. On a broader level they say, hey, just fyi, these systems are only recording when you activate them. And the vast majority of voice commands are actually handled by computers, with just a small number of them needing human input. Whether or not that makes you feel more comfortable about using the services, there is no doubt that millions and millions of recordings are still being transcribed by humans. Carol this Holiday Season will be the first for the applecart. The highest profile new credit card in years. Jason it is exciting for apple and its users perhaps, maybe not so much for the retailers accepting it. Carol we spoke to Bloomberg News finance reporter on what premium plastic means for consumers as well as retailers. Basically, visa and mastercard have several different tiers. They have their basic credit cards that maybe dont have a ton of rewards. The next step for visa is visa signature, for mastercard it is mastercard world, and then the kind of premium, premium tier. Carol we are constantly being ranked in society. Jenny yes we are, this is no different. Called theseis infinite, for mastercard, it is called last across world elite. The elite you pass cards, it costs the retailer a little more in swipe fees. It has been years of this huge rewards war going on with banks. More and more consumers are pointing up at the point of sale with these cards and retailers are like, weve had enough, and they are just ready to take this to visa and mastercard. Jason and here comes apple joining the party. Carol it is an elite card. Jennifer it is a very elite card. It is expensive for retailers. It had this huge, highprofile launch, we saw 10 billion in lines extended to consumers in the first month it was out, a very popular card. Retailers are like this is another thing we have to spend money on. To you you guyss point, it is the Holiday Season. They are trying their best to compete with the amazons of the world, and this is one more thing in the negative bucket. Carol when we talked about this story on our daily radio show during the week, i think both of us were like, yes, i didnt realize there were these incredible tiers in terms of designations with credit cards, right . With the elite card, there is an assumption that this is probably someone who makes more money and will spend more, so sorry, merchant, you will pay more, but you will win in the end is the thinking. Jennifer i think historically that is what visa and mastercard have thought. They say, these people come in, they have way more buying power. Their average ticket sizes are bigger than the ticket sizes on the other credit cards. That has been the justification. Now, retailers started to come back and say, if i gas station am a or a grocer, people with these high rewards credit cards are not actually spending more on gas or groceries because they have these rewards. Those retailers are saying, look, we have reached our breaking point. Our margins are thin already. We need a break here. Carol turning lemons into lemonade at lululemon again. Jason my exclusive conversation with the lululemon ceo and the private Equity Investor who wins this retailer, and then came back to help fix it. Carol great story. This is bloomberg. Carol welcome back to Bloomberg Businessweek. I am carol massar. Jason and i am jason kelly. You can also listen to us on the radio on sirius xm channel 119, including am 11 in new york. Carol a. M. 960 in the bay area. In london on the dab digital radio, and of course, as always, on the Bloomberg Business app. Lululemon earnings are out this week and although the stock dropped shares, it is a remarkable turnaround. Also a bostonbased private equity firm. Sweat equity. Didnt you write your book with those titles . Jason i did. Interesting. [laughter] this is a never before told story of the money behind one of the most Influential Brands of our time talking about lululemon. The pe firm, we are talking about advent. They first invested 74 million, not that much in the world of private equity. They got a times their money back from the 2005 deal. Fastforward to 2014, another deal, and more money. I sat down exclusively with David Rutherford and calvin mcdonnell, the lululemon ceo, at a store right here in new york city. The business had its challenges but at its core, the issue was alignment. Part of the power that private equity can bring is that alignment. And so, in this case, we had a situation where the founder was not aligned with the board and the Management Team so you had some turnover of the senior management. You also did not have the company in sync with the ability to make investments. They were following wall street and thinking about what they needed to do that quarter. And so, i feel like what we saw as this fundamental opportunity was to help regain that alignment and put the platform in place so that the company could establish a really strategic proposition, not just the here and now. But part of the real opportunity is to help them get out of the penny a share game and make some of these investments that had been deferred. Jason i want to get to the moment when calvin came into the company. Leading up to that you do have a series of ceos. So leadership becomes something at the top level that you also have to deal with, in terms of the various issues you have to address. Firstly, we had a situation where the board really loves this company and wanted to see it succeed. And so, in that regard, when we came back in in 2014, we were able to create some of that alignment. Pretty easily. And help create the ability to put some of these ideas in place, the idea of a longerterm plan. But, you are right, i think some of those challenges with the founder made it hard. So at the point that the founder exited the company in 2015, we were really able to begin assembling a worldclass Management Team. And so, with a cfo who initially was stuart, now coo and a talent along the way, leading to people like glenn, calvin, and a host of really worldclass business leaders, and the exciting part this business had that potential, it just needed the opportunity and the framework from this point and beyond that really feels like the business is just getting started. And seeing what calvin and the team have already done with the manifestation of this next step vision in chicago, and with the membership and loyalty program, youre already beginning to see the seeds of thinking about what the Broader Vision might look like. Jason so what does that look like Going Forward . It feels like were in an interesting moment in retail. We have a huge runway growth. Not only is our womens business continued to grow at double digits, with Growth Opportunities coming in new categories. And into our omni Guest Experience with the digital platform. Is aod as we are, there ton of opportunity for even more. This is an emotional brand, and online continues to be more transactional. And then finally expanding into , markets. We still have a lot of opportunity in north america not to mention what is happening in internationally in europe as well as china. Innings inare early everything we are trying to create we are trying to double our mens business. Proving that this business resonates as much with women as men. For our category it is a dual gender category. There is no reason we shouldnt be able to do that. Carol borrowing money is easy corporations,cans even for those with not so stellar credit.