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Host 1
When we go into a new region, networks matter. Experience matters.
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For an inside look at the global connections that help businesses succeed, search for.
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Host 1
Turning Point Brought to you by Bloomberg.
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Host 2
Media Studios and HSBC Every business starts with an idea. How can you go from daydreamer to industry leader? Amazon Business accelerates your journey with smart business buying. Get everything you need to grow in one familiar place, from office supplies to IT essentials and maintenance tools. And Amazon Business takes the buying experience you know and love from Amazon plus tools that help you save costs and make insights based decisions ready to bring your visions to life. Learn how@AmazonBusiness.com Hiscock Small Business Insurance Knows there is no business like your business. Across America, over 600,000 small businesses, from accountants and architects to photographers and yoga instructors, look to Hiscox Insurance for protection. Find flexible coverage that adapts to the needs of your small business with a fast, easy online'@hiscox.com that's his c o x.com there's no business like small business. Hiscox Small Business Insurance Bloomberg Audio Studios Podcasts Radio News this is Bloomberg businessweek Daily reporting from the magazine that helps global leaders stay ahead. Insight on the people, companies and trends shaping today's complex economy. Plus global business, finance and tech news as it happens. The Bloomberg businessweek Daily podcast with Carol Massar and Tim Stanwick on Bloomberg Radio.
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Host 3
Well, big banks are kicking off earnings season the week after next, and one thing that may come up on earnings calls analysts wondering if the financials are working with the sprawling Trump family empire. After all, the president and his family have been outspoken about how they say they have been treated in recent years by U.S. banking giants. Here's President Trump at Davos in January, speaking to a panel that included bank of America CEO Brian Moynihan.
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Public Service Announcer
I hope you start opening your bank.
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Lucas Shaw
To conservatives because many conservatives complain that.
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Public Service Announcer
The banks are not allowing them to.
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Lucas Shaw
Do business within the bank and that included a place called bank of America.
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Public Service Announcer
You and Jamie and everybody, I hope.
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Lucas Shaw
You'Re going to open your banks to conservatives because what you're doing is wrong.
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Scott Wisniewski
They did everything they could to try and cancel us. They did everything they could. I'm talking about traditional finance to put.
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Lucas Shaw
Us out of business.
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Scott Wisniewski
I got dozens of letters and I'm talking about the biggest banks anywhere in the world. Again, bank of America, right? You know, Capital One, JP Morgan, where for no reason other than the fact that my father wore a red hat that said Make America great again.
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Host 3
Well, they have it. That was Eric Trump speaking with us just two weeks ago. And President Trump in Davos in January, just days after his second term started. The big banks may be changing their tune. As Todd Gillespie and Annie Masa were first to report. President Trump's money has found a new home at Citi after being shunned by major banks. Doug Gillespie is a Bloomberg News banking reporter. He joins us here in the Bloomberg Interactive Brokers studio. What did you find?
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Todd Gillespie
Yeah, thanks, Tim. I mean, one of the really interesting things that has come out of our reporting is that a new banking relationship has essentially appeared between the Trump family and Citigroup. You know, as President Trump, as we've just heard, has said many times, he has had issues in the past, particularly after business dealings, after criminal convictions, after reputational issues that followed the January 6 riots where big banks on Wall street and across the globe have refused to do business with him and his family. Our reporting has shown today that actually Citigroup has now established a new banking relationship with Eric Trump since the election. We know Jane Fraser reached out to congratulate Trump like many corporate America CEOs did right after the November election. And since then, Eric Trump has signed up as a client of Citigroup and has established a trust that contains some of his father's money. We understand. And obviously, you know, that, you know, any bank right now would want to be coveting top billionaires, you know, in the US and obviously the Trump family wealth has, you know, seriously grown since the, since the last campaign thanks to all of these crypto ventures and, and associated business dealings in the Trump family. So it's certainly a new emergence. Maybe a tide is turning or an evolution of the minds maybe in the, in the banking sector in the U.S.
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Host 2
You know, it's interesting to Todd, as I think about the first Trump White House, there were a lot of executives, there were business roundtables from different industries and we saw a lot of executives and I think most of the big financial types were there. You don't see that as much this time around, but you do see select individuals, we tech CEO certainly prominent at the inauguration. But Jane Frazier, the head of Citi, she actually went on a recent trip with the president.
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Todd Gillespie
She did, Yeah. I mean she was Only one of two US bank CEOs who attended the state banquet in the UK during Trump's visit there. You know, including hosted by the King, King Charles the Third at Windsor Castle. Her and Brian Moynihan, the chief executive of bank of America were there 160 odd person dinner, about 10 White House officials. Jane Fraser did happen to be sitting next to one of those, according to the seating plan that we obtained, one of the White House deputy chiefs of staff. So, you know, there are signs there that there is certainly at least a cordial relationship there, certainly something that's less aggressive than Trump slashes out that he's had with bank of America and JP Morgan.
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Host 2
You said that Jane Frazier was placed next to Nicholas Luna. You guys, in your reporting, a White House deputy chief of staff according to that seating plan. Luna is married to the former assistant of President Trump's son in law, Jared Kushner, whose family has also done business with Citigroup.
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Todd Gillespie
Yeah, exactly. I mean, bear in mind, you know, Citigroup is the third largest lender in the US So we can't necessarily draw these lines and suggest that there's, you know, introductions and yada, yada, yada all the time. But certainly, yeah, I mean, there are, you know, there are, Citigroup has, has had its fingers in lots of pies over the years. Citibank, you know, before the big merger of Citigroup in 1998, Citibank was one of the largest lenders on some of the Trump deals that went sour on the Trump shutt, you know, expedition that, you know, maybe not expedition, but adventure, business adventure that Trump did, trying to turn to, to run this airline that went badly and some of the business dealings in New York real estate that went, went sour as well. Citibank was one of the largest lenders on some of those deals, too. So the bank and its entities have been burned in the past, it seems like, you know, gradually now, obviously, with the stability and wealth that comes with the presidency and the family that sort of, you know, back in the good books, maybe.
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Host 3
So there was a period of time leading up to the election, as you mentioned, the past history of the Trump Organization in banks. But also there was, after the first election, there was the second election, there was January 6th. And there were banks that cut ties with the president following the January 6 attack. What happened during the Biden years?
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Todd Gillespie
Yeah, well, we know, for instance, that banks like Deutsche bank, like other more regional banks in the US as well, that had relationships with the Trump family, basically backtracked. And they said they don't want to do business with the Trump family. Banks rejected their deposits, for instance, particularly Donald Trump's money. So there was sort of this wilderness period, perhaps. Bear in mind this was the time when Trump was undergoing civil fraud cases, you know, was under, you know, pressure from the New York attorney general, had financial penalties that were eventually sort of thrown out by appeals courts. But, you know, obviously, that was those Biden years were not a pleasant time from a legal and risk perspective for anyone dealing with the Trump family.
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Host 3
In your reporting, did you uncover any evidence that any financial institutions did not do business with the organization or with conservatives as a result of political leanings?
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Todd Gillespie
That's never, I don't think anyone has ever concretely, as far as I'm aware.
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Host 3
The reason I ask is because that's what Eric Trump had told us in an interview a little over two weeks ago.
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Todd Gillespie
I think you can understand that there's some nervousness over, you know, the tensions around certain actors and the way and that the, you know, maybe dealing with actors who are maybe a bit more forthright and maybe stoking tensions, for instance, or you might have concerns over, you know, might have concerns over political actors that come into play here. There are some banks which obviously are more conservative than others when it comes to this. We know Axos bank, for instance. We've written my colleague Max Abelson has written extensively about Axos bank, which sort of prides itself as being a, you know, a sort of a lender to people who are largely less banked. So that, you know, there are, you know, there are lenders who will step in at these times, too.
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Host 2
I am curious, to be fair. You know, what you've heard certainly from Citi on this, as you guys have reported this out, what, what they're saying.
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Todd Gillespie
Yeah, Citigroup have declined to comment for our story. Obviously, I think, you know, when they're dealing with, you know, sensitive information regarding clients, I don't think they would necessarily comment. But Citigroup also in a position now where, you know, they have a delicate, they've, you know, every company has a delicate line to tread here when it comes to relationships with the administration. And they've got relationships with regulators that they need to manage, too. So that's why they are.
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Host 2
Is debanking, though, a problem in general? We talk about it a lot in terms of those who are left out of the financial system. But I do wonder, you know, banks have responsibility, fiduciary responsibilities when they think about who they want to bank with. Right. In terms of clients, you don't want a lot of loans that sour and so on and so forth. So you understand that, especially if you're a publicly traded entity and also banking regulation. But is, is there, you know, I don't know this, these debanking charges or allegations.
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Todd Gillespie
Yeah, I mean, I don't think anyone has really comprehensively established the strength of that argument to the point that I think, you know, Eric Trump has, has accused the sector of I think it is hard to, it is hard to insinuate that there is some kind of widespread caution purely on the basis of ideology.
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Scott Wisniewski
Right.
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Todd Gillespie
You know, you have banks that maybe based on ideology, they then see, well, you know, the political tensions right now mean X, Y or Z or the politically exposed people mean X, Y and Z. And then from that level of risk, you then might want to take some action. But right. Purely on ideological grounds. It's hard to make that case.
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Host 3
Should note too that in the piece you and Annie wrote, the White House spokesperson Anna Kelly said, quote, the president's personal assets are in a trust managed by his children and have nothing to do with his presidential decision making. So that's what we heard from the White House. Todd, congratulations on the story. A most read on the Bloomberg Terminal Todd Gillespie, banking reporter for Bloomberg News, joining us here. Stay with us. More from Bloomberg Businessweek Daily coming up after this.
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Host 2
What's the secret to navigating uncharted waters in business?
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Host 1
Meet Sami Sriram from Clearbot, a startup reshaping autonomous sh.
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Host 2
Hear her take on the real key to success, frictionless user experiences that move your business forward.
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Host 1
When we go into a new region, you need to make sure that the experience of using something new is good.
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Host 2
Because if not, then you make the bad first impression. They never try it again.
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Host 1
We are just trying to find the right partner, somebody who knows the right people to speak to, somebody that is.
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Host 2
As invested as we are.
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Host 1
For more on what it takes to.
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Host 2
Unlock global growth, search for turning Point.
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Scott Wisniewski
That intention really matters.
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Host 1
We want to build something that becomes the norm. Brought to you by Bloomberg Media Studios and hsbc. Wherever your business takes you, HSBC can help.
- [12:04]
Public Service Announcer
You're thoughtful about where your money goes. You've got your core holdings, some recurring crypto buys, maybe even a few strategic options plays on the side. The point is you're engaged with your investments and public gets that. That's why they built an investing platform for those who take it seriously. On public you can put together a multi asset portfolio for the long haul. Stocks, bonds, options, crypto, it's all there. Plus an industry leading 3.8% APY high yield cash account. Switch to the platform built for those who take investing seriously. Go to public.com and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com paid for by Public Investing. All investing involves the risk of loss, including loss of principal brokerage services for U.S. listed registered securities options and bonds in a self directed account are offered by Public Investing Inc. Member FINRA and SIPC. Crypto trading provided by Bakkt Crypto Solutions, LLC. Complete disclosures available@public.com disclosure Introducing the all.
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Host 2
New Adobe Acrobat Studio now with AI powered PDF spaces do more with PDFs than you ever thought possible. Need AI to turn 100 pages of market research into 5 insights with a click. Do that with Acrobat. Need templates for a sales proposal that'll close that deal. Do that with Acrobat. Need an AI specialist to tailor the tone of your market report to sound real smart in real time. Do that with the all new Adobe Acrobat Studio. Learn more@adobe.com do that with Acrobat. You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business Apple or watch us live on YouTube. Well, if you think of satellites in space, you often think about Elon Musk and Space X. And yet there are a few other players in the space among them AST Space Mobile shares of the company. Man, they are taking off this week up about 30% in the past two days, hitting an all time high today up 210% year to date. It is a nearly 23 no it's more than $23 billion market cap. It's a wireless telecom company deploying satellites in space to be accessible for smartphones and just Barclays raised the firm's price target to $60 a share from 37 and keeps an overweight rating on the share stock at 65 and change. Delighted to have with us Scott Wisniewski. He is president of AST Space Mobile, as we said, joining us from Boston. So great to have you here with us, Scott. You've got to be busy. It sounds like you're super busy. If I do a search, there's like various press releases coming out. Your Bluebirds satellites 8 to 16, they're in various stages of production. My understanding is you guys have planned launches every 1 to 2, 3 months on average this year and into next year. You're on track to complete 40 phased arrays by early next year and expect 45 to 60 satellites in orbit by the end of 2026. Tell me if I've got it all right? And tell us about this build out and capabilities and who ultimately is signing up to use it.
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Scott Wisniewski
Well, thank you for having us. You know our company is entirely focused on this opportunity of Providing wireless access from space directly to the phone in your pocket. So to do this we're vertically integrated, we build our own satellites, as you were just discussing. We're based in Texas here in the United States and we're partnered with over 50 mobile network operators globally. That's how we go to market because those are the folks who have the customers today, nearly 3 billion of them with the partners that we have. So we're focused on building this network out. We have about an eight year history as a company. We have over 3,700 patent and patent pending claims on developing this new technology. It sounds far fetched at first talking to your regular small phone in your pocket from low earth orbit. But that's the capability that we have and this is really important I think for everyone because there's 6 billion phones out there in the world. And as we know, we depend on connectivity so much and it's very important that that phone works whether it's convenience, peace of mind or emergencies. And that's what we're focused on.
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Host 3
Starlink has partnered with T Mobile, you have partnered with AT&T and Verizon. What can you tell customers about when they can actually expect continuous coverage nationally and perhaps even globally as a result of this partnership?
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Scott Wisniewski
Right. And so we actually have investment from about six different mobile network operators around the world, as well as American Tower, who's the largest tower company in the world, and Google. And so in the United States, yes, like you said, we're partnered with AT&T and Verizon, both investors. And it's very important for us to have that close relationship because the way we've built the company, our services built, purpose built for the mobile phone in your pocket. So that just works. And the key there is to be deeply integrated with the operator and solve the operator's problem so they can deliver value to their customers. So we're organized today around getting service out next year. And we're currently have about five satellites in orbit. We just announced our plans to deliver number six and seven to the launch pad. And as you said earlier, we're looking to put up 45 to 60 by the end of next year. And so this capability is just very important in the United States, but also around the world.
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Host 2
Well, tell us like who, who you anticipate or who are right now your biggest customers. I'm curious about commercial, residential and I'm also curious about government.
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Scott Wisniewski
No, that's right. And the important thing about our company too is space has historically been a bit of a niche. If you Live in a rural area or if you're on a plane and you want connectivity, there are nice little markets there. But this is about going to the mass market, the 6 billion mobile phones in the world. And so that goes for people who live, work and travel, go in and out of coverage, who have greater ability to pay and want that convenience, as well as people who live perhaps in rural areas who don't have good connectivity or are willing to pay a little bit more a month. Have cellular broadband. Again, this is not a text service. This is a cellular broadband service that we'll be selling. So that's our US and really developed economy story. When you go around the world, there's many countries though where there's, there's over 2 billion people today who don't have good 3G or better service on their phones. That means 2G or nothing. And so market by market, our services valuable to the, to the users and to the operators who support those, those end users. And then you mentioned US Government. That's been a relatively new add to our story in the last two years. But given the defense and space backdrop in the United States, this is something that's been front and center for us for the last two years. And we're already providing services to the US Government for more.
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Host 2
So, Scott, you probably know this little company called Space X that is out there and I'm just curious. They did a deal with EchoStar. They became the first company to amass control of the satellite constellations in outer space, the launch infrastructure to deliver them there, and the potential for direct connections with mobile devices on the ground. So there's SpaceX, they're kind of the big behemoth there, the big player. There's you guys, there's Amazon.com, there's Global Star in the race for ubiquitous coverage. How do you plan to compete with Starlink, which already has thousands of satellites in orbit?
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Scott Wisniewski
Right. And I think for the, for the layman, it's important to distinguish between service to a dish that you might put on your house or, or on a car or on a plane and then the phone in your pocket. Right. We all have WI fi at home and then we have a cell phone for when we're on the go. So this is a market, the cellular market from space, that's, that's brand new. You've seen some players start to enter it, including Apple and in Starlink. But we've been at this for about eight years. The solution is tailor made, purpose built for this solution. This is not an add on new service for us, this is all we do. And that's why we've been able to garner such incredible support from network operators globally like, like AT&T and Verizon in the US Vodafone in Europe, Rakuten Mobile in Japan, Bell Canada, who we just announced cellular broadband testing in from Canada today with who's, who's also an investor in US. So these are, these are capabilities that have been developed with the network operator in mind. We are focused on making their network better so that they can deliver the value to the customer.
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Host 2
Are you not saying that you're competing with, with SpaceX and Starlink, that you're completely different businesses?
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Scott Wisniewski
Well, we plan to go after the cellular user through the mobile network operator. They also have a strategy, as you said, that they're pursuing. But this is a market that we think is big. It's going to be worth tens of billions of dollars. There's 6 billion phones out of there out in the world that go in and out of coverage. And all of us know that feeling when we don't have a signal, it's you're helpless. And so we think that in all of our over 50 network operator partners think that this is something that really enhances the value of the cellular plan that almost all of us have, certainly in the United States. And so that is a strategy that's good, that's going to be a nice robust market. And we expect with our technology to be the leader in that because we're doing broadband from space.
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Host 3
You mentioned your work with the US Government over the last two years. Can you expand on that a little bit? What exactly are you doing for the US Government?
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Scott Wisniewski
Yeah, so it's probably worth taking a step back. You know, we currently operate the five largest satellites in low Earth orbit commercially. You know, that low Earth orbit for the layman is, you know, that's where the space station is. It's much closer to the planet. It's that, that lag you experience when you have a geosynchronous satellite. LEO solves all that. So we have the largest satellites deployed in low earth orbit. The one we're shipping to the launch pad in two weeks is three times the size, over 2,400 square feet. So this is a unique technology that was developed to talk to the small phone and to do it well and to navigate crowded cellular airwaves. But it also has other applications with our US government business. We see up to 10 different use cases, both communications and non communications, that can support the US Government mission for Defense. And importantly, one of the ones we're testing in orbit today has, and we've been doing it for over a year, has really strategic and valuable implications, including potentially for the Golden Dome project.
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Host 3
You also mentioned the notion that it's not just texting and being able to make calls. This is broadband delivered from a satellite to wherever you are in the world. That's the idea here. What is the experience using the phone in that environment? And how could that be different or similar than using a 5G LTE network? What are the speeds we're talking here?
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Scott Wisniewski
That's right. And so from the beginning, and again, this is why we've been partnered with the network operators. They've been in the room with us testing and developing this tech for five plus years. And what means is we're integrated on the back end. You remember, everyone's got a vision in their mind of calls in the old days where someone would be connecting the call and doing this. Well, that technology still exists in the world. It's just done with servers and with software. And so we're deeply integrated on that side of the business so that the phone just works. And so this is a native cellular broadband experience. The user doesn't know that there's a difference unless we want them to. And they can do text calling, native calling, video streaming, and they can do all these applications. And it feels just like you're using your phone on an LTE and 5G network.
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Host 3
So how fast? Like, what are we talking megabits per second here? Up and down?
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Scott Wisniewski
So we've tested over 20 megabits per second to the cell in the past couple of years with our satellites in orbit, with the. You know, there was mention of a spectrum deal a moment ago. We did our own spectrum transaction earlier this year. Very similar type of spectrum, which is about 40 plus megahertz in the United States. And with 40 megahertz, we can deliver 120 megabits to the cell on the ground. Now, how you manage all the network traffic and how do you go to market is. Is a critical decision we make with our partners around the world, including in the United States. But there's only one way to get broadband capabilities from space, and that's with a big satellite. And we have the biggest on the.
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Host 3
Connection side of things. We're wondering too about the experience of being inside and outside. Anyone who's used, like a Garmin head unit, for example, on a bike, knows that you have to use it outside to get the cell signal. Can this coverage go inside buildings that's right.
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Scott Wisniewski
We can do one wall in. So some of the success factors for that are the fact that again we have a big satellite and we also use low band spectrum. That's part of our partnership with AT&T& Verizon is combining some low band spectrum that they have from decades ago. And so the low band spectrum propagation characteristics are the best. And as you go into mid band even then it's still pretty good. So we can do about one wall in, which means a building, means a car, means a plane.
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Host 2
Okay, that's what we were because I think there were some folks like kind of messaging. What is he talking about? Hey, you mentioned that you guys have picked up spectrum 40 MHz. Do you want to buy any more if some comes up for auction?
- [24:59]
Scott Wisniewski
Well, in, in the space world, there's two big bands of spectrum that matter. It's called L and S. We just purchased long term access to the L band in the United States and Canada earlier this year and that gives us a big chunk of spectrum, the biggest available and the most valuable wireless market in the world, which is the US we also purchased an international filing that allows us to go around the world and pick up other pieces of spectrum for space. So we're pretty happy with our spectrum position. Now for those two moves. This again is consistent with our historical strategy of sharing cellular spectrum with the operators, but it gives us more lanes of traffic and the ability to do better services to more subscribers. So we like our strategy in both of those two bands that matter.
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Host 2
All right, we've got to run, so appreciate this deep dive. I hope you'll come back. Keep us abreast of what you guys are working on and how things are going. Scott, thanks. Have a great rest of the week and weekend. Scott was new ski. He's president of AST Space Mobile joining us here.
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Host 3
Stay with us. More from Bloomberg Businessweek Daily coming up after this.
- [26:04]
Public Service Announcer
You're thoughtful about where your money goes. You've got your core holdings, some recurring crypto buys, maybe even a few strategic options plays on the side. The point is you're engaged with your investments and public gets that. That's why they built an investing platform for those who take it seriously. On public, you can put together a multi asset portfolio for the long haul. Stocks, bonds, options, crypto, it's all there. Plus an industry leading 3.8% APY high yield cash account. Switch to the platform built for those who take investing seriously. Go to public.com and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com paid for by Public Investing. All investing involves the risk of loss, including loss of principal. Brokerage services for U.S. listed registered securities options and bonds in a self directed account are offered by Public Investing Inc. Member FINRA and SIPC. Crypto trading provided by Bakkt Crypto Solutions, LLC. Complete disclosures available@public.com disclosure introducing the all.
- [27:05]
Host 2
New Adobe Acrobat Studio now With AI powered PDF spaces do more with PDFs than you ever thought possible. Need AI to turn 100 pages of market research into 5 insights with a click? Do that with Acrobat. Need templates for a sales proposal that'll close that deal. Do that with Acrobat. Need an AI specialist to tailor the tone of your market report to sound real smart in real time. Do that with the all new Adobe Acrobat Studio. Learn more@adobe.com do that with Acrobat. How can you grow your business from idea to industry leader? Bring your vision to life with smart business buying tools and technology from Amazon Business. From fast free shipping to in depth buying insights and automated purchase approvals, they deliver everything you need to achieve your goals. It's not easy to stand out from the crowd. Simplify how you stock up to get ahead. Go to amazonbusiness.com for support. You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.
- [28:15]
Host 3
Well, if you haven't heard of Beast Industries, maybe you've heard of the company's namesake founder, Mr. Beast. No, that's not the name that he was given at birth.
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Host 2
No, it was not Jimmy Donaldson, I believe.
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Host 3
Jimmy Donaldson YouTube is the most popular place to watch videos in the world and Donaldson is its biggest star. His main channel has more than 430 million subscribers. It's more than the population of all but two countries. The empire, not just YouTube videos that get hundreds of millions of views. It's Chocolate Snacks, a thriller being co written with James Patterson, a reality show on Amazon, and more. Lucas Shaw profiles Mr. Beast for the current issue of Bloomberg Businessweek magazine. It's the COVID story of the Screen Time issue. Lucas is Bloomberg News Managing Editor for Media and Entertainment. He's also the author of the Screen Time newsletter. Check out the current issue of the magazine. You can read it on the Bloomberg terminal and@Bloomberg.com Businessweek Lucas joins us from our LA bureau. Lucas, for the uninitiated, who is Mr. Beast?
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Lucas Shaw
He is a twenty something YouTube mogul. He's a six foot five kid from Greenville, North Carolina, a community college dropout who has been obsessed with YouTube since he was twelve years old. Ten years old, really. A student of virality who starting five, six years ago to get a lot of attention to his videos and now has sort of grown to a size and scale that we've never seen on YouTube for any company, for any channel, and is also trying to be, I think, the first YouTuber to turn that attention and that audience he has into kind of a multi pronged media business.
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Host 2
All right, so Lucas, Tim and I would love to have 430 million subscribers. We too would love to be a YouTube star. We're kind of a YouTube star within our niche. I just want to say we are on YouTube, but I mean, come on, how the heck did he do this?
- [30:12]
Lucas Shaw
You know, it's often hard to say. I profiled a lot of the most popular YouTube channels over the years, and I think that their stories tend to share some commonality where at a certain point people start to be interested in what they're doing and then the algorithm takes over and they just keep getting bigger and bigger and bigger. I mean, what makes his videos distinct or unique is he sort of. He mashes together a lot of genres that have already been popular in reality television. So his videos are, you know, they're a little bit survivor. They'll, you know, they'll strand people in a particular situation for a long period of time. They're a little bit of fear factor in that they're, you know, they're chained together or they like. It's not just you're on a deserted island. It's like you're on. You have to survive in a supermarket for 100 days and like, figure out how to survive there and all. And you can leave early and get some of the money, but not all of the money or. When I was visiting his facilities in North Carolina, they were shooting a video where they had two exes chained together in a room. And over the course of 30 days, the chain got smaller and smaller, so they were closer and closer together. And there were opportunities for sort of one to take some money and screw over the other one. But because they had this emotional history and there's clearly a little bit of residual feelings, they didn't want to do that. So it's psychological, it's kind of crazy. And it works really well with young people. Like the cadence of his speaking and the videos, they're not, frankly, not something that I would always Want to sit down and watch for a long period of time. But like boys in particular, 12 to 24 cannot get enough of it.
- [31:51]
Host 3
He's got a big team, as you write, working on this, as you mentioned, you visited the headquarters. The company's worth $5.2 billion. I was shocked at that figure, but I was even more shocked to see that it's just hemorrhaging money three years in a row. More than $110 million lost last year. How?
- [32:12]
Lucas Shaw
Why? Because they spend so much on their videos. Some of it is just the mistakes and exuberance of a startup. They construct these very elaborate videos. The average cost of one of their YouTube videos went from 300,000 in 2020 to more than 3 million last year. And there's only. Even as popular as he is because the ad rates on YouTube are pretty low, there's only so much you can make from one video for YouTube, which is one of the reasons he wanted to go make a show for Amazon, which spent even more than that. And by the way, he still managed to lose money on it. And so the process that they're working on now is trying to bring some of the traditional approaches to entertainment that help you save money so that their YouTube videos don't lose as much. Right. It used to be like, okay, we want to involve a Lamborghini. We're going to buy it from our local dealership and we're going to destroy it. And we're not going to have a wholesale rate with the local dealership to help us save money, because we know we're going to want more Lambos in the future. Or like, we're going to use a school. We're going to build it up and tear it down. Not thinking, well, maybe a school is a set that you'll use multiple times in the year, and instead of having to rebuild it every six months, you just have one. And look, his offices or his studios now on 100 acres. So he's got a lot of land to play with.
- [33:31]
Host 2
All right, so enter the parent in the room. Tell us about Jeff Howsenbold, who he is. He's been brought in. Can he fix this? What is he going to do to fix this and make it profitable?
- [33:42]
Lucas Shaw
Yeah, he's. He's a Silicon Valley guy. Has. Has worked at. At ebay, among other companies in the Bay Area. Was an investor on behalf of SoftBank for a while. Has relationships with companies like Uber and DoorDash. And until recently, I mean, he would still say that the Bay Area is his place of residence. But he basically lives on a plane these days. You know, I think he is bringing in a lot more of professional leadership and management. There's sort of an executive team at the corporate level that they didn't have before. To me, the big question is, can he get Jimmy Donaldson, Mr. Beast, to trust him to make the changes that need to be made, and can they do that without sacrificing whatever the secret sauce is? My understanding of how that organization typically works is they can say all they want about there being a new CEO and someone else in charge, but ultimately it's Jimmy's name on the door. He owns more than half the company. He makes the final say. He's got to get comfortable with some of the new ways of doing things that can make it a more functional operation.
- [34:47]
Scott Wisniewski
He.
- [34:47]
Lucas Shaw
He told me that he is. But the proof is usually in the pudding and in the practice.
- [34:52]
Host 3
You spent a good bit of time reporting this out. What is Mr. Beast like? What is Mr. Beast's mom like?
- [35:03]
Lucas Shaw
His. Look, his mom is Sue. I spent. I'm not going to exaggerate. I probably spent 20, 25 minutes with her. She seemed very nice. She loves her son. You know, she. She feels a little bit like the last boss in a video game or the bodyguard, who's sort of like, looking after her son's best interests. You know, when Mr. Beast had Jeff Hasenbold come and visit, and little did Jeff know that Jimmy was, in a lot of ways, sort of auditioning him for a job. After he left, Jimmy asked Jeff to come back and spend some time with his mom, clearly seeing that as sort of the last check. See, I like this guy. Does my mom like him? If my mom likes him, we'll hire him. You know, I think that Jimmy is probably a pretty tough boss and a tough person to work for, but the things that make him demanding and the fact that he does not turn off. He's always working. But I'm not gonna see that firsthand as a reporter. I'm gonna get a little bit of the sanitized version, but I can hear that from some of the people who've worked with him over the years.
- [36:01]
Scott Wisniewski
Well.
- [36:02]
Host 2
And she's glad he's not selling knives anymore, right?
- [36:05]
Lucas Shaw
Very glad that he's not selling knives anymore. And, look, she wasn't always a believer in this YouTube thing. She wanted him to go to college. She wanted him to take a more traditional path. But obviously, when your son starts making millions of dollars a year, you're okay with what he's doing.
- [36:17]
Host 2
Yeah. And for that knives reference, Just going to have to read the story. I'm just going to say, hey, before.
- [36:22]
Host 3
We let you go and before we talk about screen time next week, which we are super excited about, just a little bit on what it takes to be a content creator today. Does it take a line of chocolates? Does it take snacks? Does it take writing a novel with a best selling author? What does it take?
- [36:39]
Lucas Shaw
It depends on what you want. There are plenty of successful podcasters or YouTube creators who do just that. Right. They're happy. That is what they want to do. But Mr. Beast has ambitions of being an entrepreneur. He looks up to. When I first interviewed him five years ago, he had a picture of Steve Jobs behind him on the wall. He's very fond of Elon Musk. These are people that he looks up to. And so he is now trying to use that audience. He has to pursue those dreams. It's not like he grew up saying, I want to be a chocolatier, but he has five, six, seven, eight different businesses that he's trying to spin up. I think he's somewhat unique in that regard. But we do live in an era where a lot of celebrities are trying to use the influence that they have to build these other businesses because it holds the opportunity of making tens or hundreds of millions of dollars more than they would just from their regular career.
- [37:33]
Host 2
All right, we got to talk about screen time. This event, you put it together, you bring together incredible content creators from all walks of life. It's next week in Los Angeles, October 8th and 9th, and you got some really big names coming.
- [37:50]
Lucas Shaw
That's. That's the goal every year. Yeah, Year three. I mean, the two I'm probably most interested in are Jimmy Kimmel, just given all the news that he's been in lately, and David Ellen, because he's sort of the new mogul in town right now. But very excited to talk to Ryan Coogler, the director of Sinners, really one of the most interesting movies released this year. Excited to hear from music mogul Irving Azoff and Robert Kinsel. My colleagues will be interviewing both current LA Mayor Karen Bass and the person she defeated at the most recent election, Rick Caruso. So we've got a good mix of a little bit of politics. We've got tv, we've got music, we've got some filmmakers, the creators of Nobody Wants to this one of my favorite new shows on Netflix, so it should be a good time.
- [38:28]
Host 3
And Adam Mosseri, the head of Instagram, met a platform. Somebody who's been at the company for years. Instagram, of course, has an outsized influence when it comes to your world. How do you think about the melding of technology and sort of what we think about as traditional tech or new tech and also Los Angeles, Hollywood, content creation and old tech?
- [38:48]
Lucas Shaw
Well, look, I always like to tell my boss, even though he doesn't like to hear it, that two of the biggest tech companies are actually media companies. Meta and Google make pretty much or Meta and Alphabet make pretty much all of their money. Monetizing attention and that is the definition of a media company. Instagram and YouTube are two of the biggest video platforms in the world. We had YouTube CEO Neil Mohen year one and so obviously very excited to have the head of Instagram here year three. And I think people sleep on how big video is on Instagram these days. It's probably now the thing that people spend most of the time of their time on Instagram doing.
- [39:20]
Host 2
Hey, no pressure. I just can't wait to see your first question to Jimmy Kimmel. I'm just going to put that out there. Great stuff. We cannot wait to be there with.
- [39:27]
Host 3
You Thursday, Wednesday night, next Wednesday night.
- [39:29]
Host 2
You got to go there for day night Thursday.
- [39:32]
Host 3
Yeah.
- [39:32]
Host 2
Unbelievable stuff. Lucas, thank you so much. Be well and we'll see you next week. Lucas Shaw, of course, Bloomberg News Managing editor, Media and Entertainment, the author of the Screen Time newsletter. He is also the author of the COVID story of the new issue of Bloomberg businessweek. So be sure to check it out and join us. Will be there broadcasting from 1 to 5pm Wall street time.
- [39:54]
Host 3
And if you want to go, maybe there are still tickets. Check it out. Bloomberg live.com screentime also highlights here on Bloomberg TV and radio and on TV go on the terminal. This is Bloomberg. Stay with us. More from Bloomberg Businessweek Daily coming up after this.
- [40:13]
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- [41:14]
Host 2
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- [43:11]
Lucas Shaw
Yeah, right.
- [43:12]
Host 3
Yeah, it's, it's been a little, I don't know, it's just, it's kind of, it's just strange to me that. Well, I guess it's kind of what John Van Eck told us earlier this week that the government shutdown is not really something that he thinks will have a significant impact on markets. Yeah, it's not going to affect fiscal policy significantly or monetary policy. The Fed is working. I think Molly reminded of us of that yesterday, so.
- [43:37]
Host 2
Yeah, exactly. And I think, you know, if it becomes a long shutdown and then we start to get into some issues. Let's see what our guest has to say.
- [43:45]
Host 3
Adrienne Maki is founder and managing partner of Strategic Wealth Capital. The Firm has about $230 million in assets under management. She works with high net worth and ultra high net worth individuals. Good to have you with us this afternoon. We were interested in talking to you for a lot of reasons. We love having you join us. But you work with a lot of folks, our understanding is who are in technology or have worked for some of the high flying tech companies. The high net worth and ultra high net worth individuals. We have a story about OpenAI reaching a new valuation today, $500 billion topping Elon Musk's Space X. Are you seeing some of that money come into your firm now that these employees are allowed to sell shares on the secondary market?
- [44:29]
Host 1
We're seeing actually. So that's one of the firms. There are also some other firms where our clients are seeing also tech companies. IPOs likely coming over the next couple of quarters. So we're definitely gearing up towards a lot of tax planning, especially with a lot of changes in the tax bill and, and we're just preparing for that. So. Yes, I mean, that's loosening up a lot of funds.
- [44:53]
Host 2
Sure.
- [44:53]
Host 3
How do you plan with these individuals? Let's say the vast majority of their net worth is tied up in a private company valuation that has just soared in recent years. How do you manage that or de risk that capital?
- [45:08]
Host 1
The first thing, and this is going to sound, this is sort of like a plumber trying to explain kind of where the pipes go and all of it. So it's a little technical, but we always start. It's like running a business when you work with a family. The first thing we start with is what is their burn rate? What do they need? So for so many of our clients, it's funny, they're saying my net worth is 10 million, 20 million. How is it? I don't feel like I have any money. Well, often, I mean, their stock's locked up, it's not liquid. But then they also have quite, quite big taxes. I mean, our clients are New York City, San Francisco on top of it. So the first thing we do is we determine, okay, what is it you need for housing, funding, schools, the basics. We basically back out and we say, this is the amount we cannot have at risk. This is your burn rate. This is an emergency amount in addition. And then we figure out, okay, this is what we can take extreme risk with, which is often what they have in lockups after an ipo. And then in the middle we have very traditional, which are very strong. We have indexes and bond funds. So it's very much like running a business where it depends so much on what the clients need and when.
- [46:12]
Host 2
Are you a lot more busier though, this year because of the number of IPOs, like the IPO market finally feeling like it's opened up. So do you have more clients related to initial public offerings that we've seen this year?
- [46:26]
Host 1
So we're, we're super busy this year. Well, for a lot of reasons. One is most of our clients, as you imagine, have very, very high incomes. They're in the top tax brackets, state and California. And we've had strong markets. So even so, our clients who have new, relatively new public company stock, but also our clients who work for Fortune 50 companies and have it's been, and the stocks have been appreciating so much, it's the same exact problem, which is I have so much of my liquidity in one company. What are we going to do about it? And then the new tax bill, for what it's worth, opens up a lot of planning opportunities. So it's been trying to smartly manage that huge risk in a tax efficient way. It does open up a lot of possibilities. So we're doing a lot of donor advised funds, we're doing a lot of giving, foundations, gifting. So we're very, very busy because as the, as those positions get larger and larger as a percentage of wealth, we have to address it so that, you.
- [47:31]
Host 2
Know, it's kind of interesting because you always do see this. You know, we talk about the lockups, right? And when that's over and insiders and, and execs can sell shares or you also, you know, we'll see an executive selling shares and will always be told it's part of estate planning. But is that also a way for a client, you know, kind of reading between the tea leaves of saying, I don't want to be just exposed to my company, I believe in it, I work in it, but I don't want to be that exposed to it because as we know, things can go wrong.
- [48:03]
Host 1
Such a good question. So I was just in D.C. last week where I work with several board members and sea levels of a Fortune 50 company. And the hard part is our clients are often very visible. So just to your point, it's still a really big danger. I mean, these are families who have kids in college, kids in private school. They are on other nonprofit boards. I mean, they need funding. They're often in very expensive cities because that's where the headquarters are. But they don't want to shock up the markets by selling huge chunks. So. And that's, it's very important. Right. For signaling. So 10 B51 plans, for example, a couple of my clients, I'll have executive lockouts. And then in addition, when the company is going through a potential acquisition, they are in a special lockup. So a 10B51 plan, for example, is a plan that is, it's pre planned. The plan that's pre planned, preplanned, and it allows executives to sell a certain tranche. There is a specific window of dates, but it is and it's public. So irrespective of what the market is doing, irrespective of earnings and news and etc. The clients that we sell, and that works very well because we're peeling off some of the riskiest stock. We can decide which tax tranches. So we do a lot of tax planning underlying it. And then it doesn't shock the markets because first of all, a number of executives do this and then people can see ahead of time and then it's not, it's not a surprise, which is often what does cause concern for analysts.
- [49:40]
Host 3
I remember speaking to you in the wake of the so called Liberation Day and you talked a little bit about the comments you were getting from clients, the calls you were getting from clients. We only have 30 seconds left. But what are the calls that you're fielding right now? How has the tone or the mood shifted? 30 seconds.
- [49:55]
Host 1
So 30 seconds. One thing I loved was the piece you guys had a few days ago on consumer spending. In short, the thing that bothers me or that scares me the most because markets have still been strong is inflation. I mean, it's like a perfect storm of downward pressure on interest rates. I don't think it's warranted. It's what it is. Tariffs. Only some of the tariff costs have been built into goods we're spending and it's going to be pushed off next year by these tax refunds. But the point is in six to 12 months, six, nine months. Yeah, all of the stuff that the three of us are going to be buying a lot of. It's going to cost more as these things are built into it that will slow a lot of the earnings. That's what I'm worried about.
- [50:33]
Host 2
Looking forward to that, Adrian. Thank you so much. Adrian Maki, she's founder of Managing Partner Strategic Wealth Capital, joining us here on Bloomberg businessweek Daily there in San Francisco. This is the Bloomberg Business Week Daily podcast available on Apple, Spotify and anywhere else you get. Your podcasts listen live weekday afternoons from 2 to 5pm Eastern on Bloomberg.com, the iHeartRadio app, TuneIn and the Bloomberg Business App. You can also watch us live Every weekday on YouTube and always on the Bloomberg Terminal.
- [51:11]
Lucas Shaw
Foreign.
- [51:18]
Host 3
I'm Barry Ritholtz, inviting you to join me for the Masters in Business podcast. Every week we bring you fascinating conversations with the people who shape markets, investing and business. CEOs, fund managers, billionaires, Nobel laureates, traders, analysts, economists, everybody that affects what's going on in the market. Whether you own stocks, bonds, real estate, commodities, crypto. You really need to hear these conversations. Sometimes it's behaviorists like Dick Thaler or Bob Shiller. Sometimes it's fund managers like Peter Lynch.
- [51:56]
Host 2
Bill Miller, Ray Dalio. Sometimes it's authors. Michael Lewis, author of the Big Short and Moneyball.
- [52:03]
Host 3
Regardless of the conversation, these are the folks that make move markets each week. That's the Masters in Business podcast with me, Barry Ritholtz. Listen on Apple, Spotify or wherever you get your podcasts.