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- [00:11]
A
Hello, welcome to the ironic normcore Trifle episode of Slate Money, your guide to the business and finance news of the week. I am Felix Salmon of Axios. I am here with Emily Peck of HuffPost. Hello, I'm here with Anna Shymansky of Breaking Views.
- [00:33]
B
Hello.
- [00:34]
A
And rather excitingly, we are here with one of the most English people you will ever hear on this show and one of the smartest people you will ever hear on this show, the great polymath, Mr. Ben Schott. Ben, introduce yourself. Who are you and what do you do?
- [00:52]
C
Watto I am a writer and a designer, a columnist for Bloomberg Opinion. You know a man about town when I'm allowed out.
- [01:03]
A
You're also the second coming of PG Wodehouse.
- [01:06]
C
Ah yes, this is true. I was granted permission by the Wodehouse estate to carry on the Jeeves and Worcester novels. And volume two is out in just under a month, I think.
- [01:16]
A
Exciting. I can as someone who may have got a sneak peek of volume two, it's fantastic. Ben has written a glorious piece of cultural criticism about Bland. You will find out what Blands are in section three of this here podcast which is one of the best sections we've recorded in many, many episodes. So stick around for that. We are also going to talk about Citigroup and how it's doing. We're also going to talk about Breed awards, the parents versus non parents fight that's going on at Facebook and Twitter and more generally, what kind of responsibility companies have to their employees and especially the employees who are parents in these Covid times. We have a Slate plus all about Nicola which winds up segueing into a disquisition on the nature of trust in institutions. It's a jam packed episode and I hope you will stick around for all of it. Coming up on Slate Money. Anna. Yes, we had big news this week that our good friend Mike Corbett, the CEO of Citigroup, has unexpected announced his retirement in February. There's a whole bunch of stuff to talk about here. Where would you like to start?
- [02:41]
B
I suppose we should start where everyone else is starting, which is with his replacement, Jane Frazier, who is making news because she is the first woman to head a major US bank.
- [02:56]
A
It's been a long time coming. There are like four or five, however you want to count it, major US banks. None of them have managed to find a woman to run them or even like probably top 10 to be honest. Jane Fraser is a Scot. She made her way up through the very standard kind of Harvard Business School and McKinsey and reached into Goldman kind of channels. She was the one who came in and finally sort of managed to get control of Banamex, which is the biggest part of Citibank in terms of the number of branches. So twice as many. Citigroup has twice as many bank branches in Mexico as it does in the United States. And it was always run as this kind of very independent fiefdom by Mexicans. And New York HQ had very little control over it basically until she came in and called and renamed it City Banamax, which I'm not sure was a good idea, but she did show her sort of managerial chops there. And now she gets to run the whole bank.
- [04:02]
C
Yeah.
- [04:02]
B
And it's not surprising that she's getting to run the whole bank, as this has been very clear for a while. It's surprising that it happened this quickly. Most people did not expect that a corporate was going to step down this early, and especially during a crisis. It's often been said that women are brought in when something is failing, and this, this perhaps may be another example of that happening. Although I think we should start with the idea that this is good. I think we're always complaining that there are no women in these positions. So I think when a woman is actually in one of these positions, we should say, yes, this is a plus.
- [04:38]
A
And I would push back on the idea that Citigroup is failing. Certainly its share price is kind of, you know, a bit miserable, but like, this is not like a woman being brought in to fix Wells Fargo and fix something that's obviously broken. Citigroup has made a couple of errors and we talked about one of the biggest errors on the show a few weeks ago, where they accidentally wired $900 million to a bunch of bondholders of Revlon, which, according to reporting from cnbc, might have been a contributing factor actually to Mike Corbett's departure, on the grounds that apparently the Fed has been telling Citigroup for years that it's IT systems aren't really up to snuff and he hasn't been doing anything about it. And now the Fed is like, well, we told you so. And he can't really push back on that. So he's like, okay, probably enough of my cost cutting. We should get someone in and someone else in.
- [05:32]
B
Yes, and I agree that Revlon is not Wells Fargo. This is not a total disaster. However, this is a very difficult environment for banks. Moving forward, this is probably going to be a difficult environment for banks. And Citigroup has been a laggard. So she certainly does have her work cut out for her, which is not necessarily a bad thing, just the reality. I would like at some point to talk a little bit more about the Revlon issue because I actually think that is perhaps a big reason why Corbett was pushed out or left at the moment that he is leaving. But I think that even though Frazier is being brought in at a time where succeeding is not going to be the easiest thing in the world, I think that if you look at her background, obviously she was, as you said, central Abamex. She's been involved in consumer banking, which is an area where Citigroup really, really needs to work on improving in order to get in line with a lot of their competitors. So I think that she's a good choice. I think she's well positioned. Is anyone going to be able to succeed? Well, at this moment, I don't know.
- [06:35]
D
I think I was really struck, too, in the CNBC piece that the Revlon screw up was pivotal in moving up the timeline on Jane Frazier taking over. And I immediately, like Anna said, thought, oh, glass cliff, which is the term coined when a woman or a person of color is brought in to lead a company or a country at a time of crisis. So I was like, oh, okay, it's like a glass cliff moment. And it is striking that this is the first woman to lead a big bank, because only last year, I think it's like six CEOs of the major banks, including Jamie Dimon, including Corbett, the city CEO that Jane Frazier is taking over for, went before Congress and were asked to raise their hand if they thought that a woman or person of color would succeed them as CEO. And none of them raised their hands. And it is worth pointing out just how behind the times these banks are when it comes to gender equality and parity. I mean, you could see it in the coverage of Jane Frazier's appointment. Like in the Times, there was a bank analyst who told them, Mike Mayo. Mike Mayo. She has gotten this role because of her merits and not merely because she is a woman, which is like, It's just damning with faint praise. It sort of implies essentially that she did in fact get the job because she's a woman. It's just a very.
- [08:03]
A
Or that she could have done theoretically, that somehow women have an advantage in these situations, which clearly they do not. If you look at everyone who's got these jobs in the bus.
- [08:11]
C
Right. Exactly.
- [08:13]
D
Like, and there was a quote and like, they're just so like. Jamie Dimon is also quoted in this New York, New York Times Feast as saying a few years ago, like, it turns out women do like to travel for work. Like, you need to ask them. Which indicates that he had just always assumed they didn't want to travel for work because they are moms. And he only said this a few years ago. And it just shows you how backwards the thinking still is on Wall Street, I think. So I feel like no one should be, like, resting on the laurels of finally woman becoming the CEO of a bank. Like, I don't think this actually, I think it's good, but it moves. No needles here. Like, this is a culture that needs a lot of. Of work and change. And. And even in the way this woman, Jane Frazier speaks, it just shows, like, an unwokeness, as Felix was saying earlier. Like, she's out there saying, like, women can have it all. And, like, these very antiquated and honestly, like, misogynistic ways of, like, looking at the challenges women face on Wall street as a logistical challenge of, like, balancing work and parenting, when really the challenge is attitudes like Jamie Dimon has where he's like, women, they travel, they like to do work.
- [09:25]
B
Who knew?
- [09:26]
D
You know, it's like the whole system there is so messed up. This isn't. I doubt gonna do much, although it's good.
- [09:34]
C
Yeah.
- [09:34]
B
I mean, the one thing I would say is that I think sometimes critiquing analysts for pointing out that she's a woman is a little unfair, seeing as all the coverage of her is the fact that she's the first female. People have to mention it. They have to talk about it in some way. So I would say we might be a little unfair critiquing the fact that someone will say she got this on the merits and she also happens to be a woman. There's not an easy way to make that story, because the reality is the fact of her being a woman in this specific instance probably did help, if we're honest. Like.
- [10:07]
A
Well, I mean, what helped was the fact that there was one other person every other time. Oh, yeah, I just jump in here. The main. Let's just be very clear about this. The thing that helped was that there was this guy who was the heir apparent at Citigroup, Jamie Farese, who left, and then she became the heir apparent. Like, it was like she got it kind of by default.
- [10:32]
B
Maybe. I would just say that we are definitely at a moment where I think a lot of companies, and this is a moment that is far overdue. I'm not saying that we haven't and don't continue to have a massive problem in terms of women in leadership roles. I'm just saying that to suggest that her gender probably played no role in how people thought about who they were going to appoint. I don't think is true.
- [10:53]
D
But the thing is that every time someone else was appointed to be the CEO of a bank, gender played a role. Every man that was appointed to be a CEO of a bank was appointed because of his gender, make no mistake. And no one ever, ever would say anything like that in a story. No one ever say, Jamie Dimon, a man was, was chosen for this role because men are the ones who get chosen for the role. It's just, it's, it's boring.
- [11:24]
A
Well, I mean, although we did actually, analysts, we did have that this week with the new CEO of Sephora, which I believe the staff of Sephora are 96% female, but somehow they still managed to appoint a new CEO who was a guy. I mean, it's amazing how the, how the fashion industry does this. But I want to take advantage of the fact that we have Ben here and ask you, Ben, there are basically four big banks in America. There's Citibank, Chase Manhattan, Wells Fargo, bank of America. What's your opinion of like, those four in general? And is there any kind of difference between them? Like someone who looks a lot at, like, how brands are kind of like seen by the general public and the way they present themselves Here on this show we talk a lot about, well, obviously Wells Fargo and JP Morgan are completely different things. Is that how normal people think or are they all considered to be basically exactly the same?
- [12:26]
C
I think, I mean, speaking as a banking expert that I am, I think people aren't looking at the board of a bank. I think they may be looking at interest rates, they may be looking at branding, they're probably looking at where is the local branch, where is the nearest atm? I mean, it's that banal and human that we all do. The thing that interests me about this story was actually, it reminded me of another story that's come out this week that has looked at how female leaders and male leaders are stacking up in their response to COVID 19. And there's some early preliminary research from University of Liverpool and reading that match 19 countries led by women against their nearest neighbours and did some comparisons and the ones that were run by women suffered half as many COVID 19 deaths in the days leading up to May 19. Now, the data is early and it hasn't been peer reviewed, but what's interesting about COVID is you Have a. Normally, like with a bank or any company, you can't have two CEOs at the same time and then compare them. But Covid is going to be fascinating because you have literally a world of data. We'll never know more about any disease because we have so many companies, so many on it, so many cases, so many governments studying it. And I think we will be able to look at male and female leadership in Covid, and it'll be a unique test. And you'll be able to compare, say, the leadership In New Zealand vs Trump and Bolsonaro and even Boris, that kind of macho male confidence as opposed to probably the early leadership of female caution. And it's a rare example, I think, that you can make sort of simultaneous comparisons of leadership styles.
- [14:05]
D
I've actually thought a lot about that. And I think one reason maybe that women leaders have done better on Covid kind of relates back to what I was just saying, which is that men are elected on a curve, like we elect idiot men like Trump, because men get to be leaders. But in order for a woman to ascend to leadership, typically she has to be competent and better. Like, you'll hear, like Jane Frazier even, I think is quoted as saying, like, I feel like I have to be 120% good at my job or something. So it's like in order for a woman to get a position of power or a leadership role because of sexism, she has to be very, very, very good at what she does. Whereas, no offense, in order for a man to get that role, it's just like there's more of. There's more of a curve. Like men are judged by potential more than accomplishments. So it's more likely that they're going to mess up at times like these because the ones that we allow to lead us maybe aren't as competent instead of any kind of inherent character traits of men and women.
- [15:11]
B
Yeah, I agree with that because I tend to be a little wary of the stories about how women are so much better at men than doing things because those are inherently relying on stereotypes about how women act versus how men act. But I think you're right that while it's not always the case, frequently now when you have women in positions of power, it has probably been a lot harder for them to get there. Now, that is not the case for all female leaders. I would just like to say. Cristina Fernandez dukechirchner. I'm just saying not all female leaders are fantastic. But I think you're right. I think that it'll be Interesting. And I think we can go back a little bit to the corporate world as well, that when we look at female leaders is part of the reason that you see a number of female leaders potentially doing well. You see this with potentially, sometimes portfolio managers is just because they have to be so much better to get into that role.
- [15:57]
D
The other thing I was going to say is the CNBC piece on Citibank and how it's in trouble, pointed out the one thing Ben was talking about, which is that they haven't built as many branches in places, so they're, they're struggling. And like, it is really this banal thing where it's like, if you want the bank to have business, you have to have a lot of banks all around because it's, it's a. It's about convenience. Like, I used to have a Citibank account and it was such a pain in the butt because I could not find an ATM or a Citibank anywhere near my job or my apartment. And I finally just gave up. And I saw, like, with my eyes how many Chase Banks there were around. And I was like, oh, forget it. I'll just do Chase Bank. Like, it's that simple.
- [16:38]
A
And this is something where I think is a reasonable criticism of Mike Corbett. I think the thing which he really excelled at, the thing where he massively outperformed everybody's expectations and did incredibly well, was when Citi bank, sorry, Citigroup, basically split in two in the middle of the financial crisis in 2009 and split itself into a good bank and a bad bank. And the good bank was what was being kept as the core Citigroup. And then the bad bank was all of the nuclear waste that they decided they really couldn't even with anymore, and they just needed to get off their balance sheet. And the idea was that the bad bang probably had negative value, but they just needed to bite the bullet and get rid of it. And they put Mike Corbett in charge of getting rid of all of that nuclear waste at the lowest possible cost to Citigroup. And he did such a good job at it that he actually made a substantial profit on that. And ever since then, he's really been operating from a point of efficiency and saving money. And that's why he hasn't been opening branches and that's why he hasn't been investing in technology. And that's, you know, probably the Revlon mistake happened. It's because he's still in that kind of be safe, save money kind of mindset, rather than the, like, we need to go out there and grow and start, you know, competing more aggressively mindset. So presumably that's Jane Fraser's job now going forward, is to really start competing rather than just not falling into the sort of horrible morass that Citibank, in its various incarnations over the decades, has fallen into many times. It's one of the most serious. It's like the Argentina of banking. It has failed so many times that maybe now is the time to be hopeful again. So I want to go back to what Ben was saying about the way in which leaders display concern and responsibility for the people that they are responsible for, because the there's a big fight at Facebook right now between, I guess you would say the breeders and the non breeders and in general. And Dan Kois on Slate's very own mom and dad are Fighting, had a little rant about how he thinks that companies should really just not be worrying about making money this year and should really just concern themselves with looking after their employees and especially the parents during what is clearly like the toughest time for parents that anyone can remember. And there's this kind of, I don't want to say in loco parentis role that CEOs have, but there is this idea that, like, on some level, a company should look after its employees. Emily, explain what the terms of this debate are, and is it even a debate?
- [19:44]
D
It's a debate among a very privileged sect of workers. So the New York Times had a piece this weekend about fights taking place inside Facebook and also Twitter to an extent over parents getting extra benefits right now to deal with the fact that kids are at home all the time and schools are a shit show. So at Facebook, they're giving parents 10 weeks paid time off to deal with childcare issues. And I mean, they're also giving 10 weeks for if you need to take care of like a family member, you have someone home from a nursing home and stuff like that. Anyway, this has engendered a lot of ill will between the parents and the non parents, the non parents or the child free people feel like they're working really, really, really, really hard while the parents are working not as hard because they have all these pressures at home. And there's all this resentment apparently at Facebook in particular about this. So, you know, people are like, parents get all these benefits and we don't get any. And again, this is among probably the most entitled and privileged class of workers in the United States that are making like six figures plus in salary that are getting their full bonus this year, even if performance isn't good and are even getting $1,000 a stipend to buy stuff so they can work from home comfortably. Like, it's crazy to me that these people, there's resentment among these people. But just goes to show you something, something. I don't know what to say about that. And so the piece came out this weekend and one thing it doesn't get into is the gender aspect here because you have to imagine that at Facebook and these tech companies, it's when we say parents, most of the time we're probably talking about mothers, although fathers are under a lot of pressure too. But from what I've been seeing and in my reporting, it's women who are bearing the brunt of this basic childcare crisis. You can see it in the jobs numbers too. So I wanted to talk about it because I have kids, but I know Felix and Anna don't. And I wondered if they were feeling the resentment or what they thought about that, if it's the justified feeling. And Anna said that this was a great topic and she wanted to talk about it.
- [21:59]
B
Well, I do think it's interesting. I think there's a difference between, to a certain extent, Covid time and non Covid time in this topic. Because I think in Covid time, most reasonable people that I know, whether they are parents or whether they are non parents, understand that no matter what situation you are in in Covid time, it's tough whether you're alone by yourself in a 450 foot studio all the time or whether you're surrounded by kids and have to balance all of these different things. They're both hard in different ways. And when people are not online and they're talking about this amongst themselves, they tend to be reasonable. When they're online talking about these things, they tend to be crazy people. And to a certain extent, I think it's because we are all going crazy during COVID and we have all of this anger that we need to express towards someone and it's very easy to express it towards whoever we think is having an easier time of it. So I think that is probably somewhat of what is happening here. And as you said, it is a little bit hard to feel sorry for any of these people because they are the world's most privileged people. And the fact that they are complaining is slightly ridiculous when you have all of these people losing their jobs. I would say that as a single person, it is fairly obvious to me that in this moment it is harder to have kids. It just is. Having two jobs is harder than One job. Them's the facts. Outside of COVID times, I think that's a slightly different conversation sometimes where if you are a childless, especially a childless woman, sometimes it's expected that you will be able to do things and that you're outside of work. Activities don't matter in the way that they do for either people who have children or even sometimes single men. But I would say in Covid times, it is incumbent upon single people to understand that we do probably have it a little bit easier.
- [23:45]
A
My point of view here is that the resentment comes when the non parents are asked to do a lot of extra work, to pick up the slack, whatever they're saying, when the parents can't do it. And there are two different things that companies can do to try and deal with the chaos that is Covid. One of them is to try and help parents as much as they can by giving them leave and support and allowing them to maybe contribute a little bit less professionally while all of the chaos is going on. And then the second one is like to simply hire people, pay people to come in and fill that empty space. And I think what some of the complaints are is basically people saying you're perfectly happy allowing the parents to do less work, but you're not hiring anyone to make up for it, and you're making everyone else just do more work. And that what you should be doing is, I guess, more what Dan koius was saying on mom and dad is fighting, which is don't put the burden on the non parents. Just, you know, there's a lot of unemployed people out there right now. Just go out and hire people to do that extra work. And I do know companies that have done that, but I do get the feeling that that isn't happening quite as much.
- [25:20]
B
Probably depends on the type of job, though. It's not like you can just go out there and hire a bunch of software engineers that are just hanging out, unemployed. I would say that, yes, what you're saying is correct in certain areas, but it's not always that simple. If you're in the middle of a project, you can't just be like, okay, we'll just hire somebody else and then they'll do it. No, the person who's already involved in it.
- [25:39]
A
It's not always that simple, but it's not always that complicated. We have decades of experience with, you know, parental leave, which is a similar situation. And companies know how to deal with parental leave, and often they hire people to, you know, step in for the person who's on parental Leave rather than just making everyone do more work. It does happen.
- [26:01]
B
Are you sure about that?
- [26:04]
A
As someone who works for a company which is hiring a bunch of people for exactly that purpose, yeah. But Ben, what's your. What do you think of this?
- [26:14]
C
I think it's fascinating. It's sort of odd that companies know whether you have children or not. I mean, why does a company know. Why does a company know whether you have inherited wealth? What does a company know? I mean, it strikes me there's a similarity between physical disease and mental illness. Not to compare having children with disease, but this notion of some things are obvious, that children are things, but people live all sorts of strange and complex lives with ill relatives or mental health issues or caring for others that we don't necessarily structure into work. But children are there and they're obvious, so we do structure that. So I essentially think it's none of your employer's business whether you have children or not. And everyone should be treated pretty much identically. And if the system doesn't work like that, then the system is broken. But to Emily's point about these jobs and the kind of, the 1 percentness of it, the kind of bigger picture for me is these jobs are all going to disappear anyway. So this is like dancing as the Titanic falls. So many of these white collar jobs aren't going to exist. This is the sort of last hurrah for many, many, many people who work in these large companies who are just going to go away.
- [27:27]
D
Facebook is just going to go away. Ben?
- [27:29]
C
I think a lot of the jobs are going to go away. I think huge amounts of jobs are going to be automated out and a lot of people. So this is essentially a white collar debate. The blue collar people have been working through childcare and no one really cares. You have a shift, you do your shift, you don't turn up, you don't get paid. I think we're about to see a tsunami of white collar unemployment which will render a lot of this, not all of it, but a significant proportion of this moot for lots and lots of.
- [27:56]
A
Ben. Ben, are you a fully signed up member of the robot apocalypse tribe?
- [28:02]
C
No, I'm a signed up member of. You have. And I think Covid is going to be very interesting. I think it's going to accelerate. A lot of people, lots of HR departments are going to be taken over by people using HR apps, I think. I'm not saying this is mass, necessarily, mass robotification, but I'm saying a lot of these jobs in lawyers jobs and sales are going to be either automated out or just people. Once you have an HR department of 100 people and you furlough them, you think, why am I going to hire all 100 people back? Do I need exactly 100? The systems I've worked out over the last six months, maybe they're better, maybe I need 20. And that changes everything.
- [28:44]
A
I just read the new Reed Hastings book. The CEO of Netflix. Don't ask me why. Do not take this as a recommendation. But he has this story which is his sort of aha moment, his light bulb going off moment, where he's running Netflix and it's having cash problems and he has to fire a bunch of people. And then he discovers that after he fired a bunch of people, like suddenly the whole business does better and it's much more productive. And he's like, what you should do is just keep on firing people. And this is all he's ever done for the rest of his career. It's just become this like, firing machine. And he just fires people willy nilly all the time for any or no reason. And I think you're right that on some level, people, when there are layoffs, sometimes they are genuinely harmful and it is obvious what the harm to the company has been. Sometimes it's not so obviously harmful. And the managers are like, yeah, why would we ever go back to having lots of employees again? I do think both things happen.
- [29:51]
C
No, I mean, I'm just. I just think you rarely get an opportunity to start. So I was talking to a friend who owns nine restaurants and they've obviously all been shut for Covid and they're sort of struggling with, you know, all the obvious things, eating outside and take her out and delivery and this kind of thing. And I said, you're going to open up online. He's like, you've got to be kidding. You really get a chance to start from scratch again. And would you have closed three restaurants? No, probably not. They ticked along there. Right. Would you reopen them? Absolutely not. And I think what we're going to see with the layoffs and the furloughs is, well, you wouldn't necessarily fire these people and could you? And huge amounts of problems, not to mention corporate morale and this kind of thing, but rehiring people is a completely different mindset. And I don't know, I mean, I hope I'm wrong, but I think this is going to accelerate a trend that was already happening in a huge way.
- [30:44]
D
Just to go back to one thing you said, Ben, which was you think all companies should treat all workers the same. And if that doesn't work, then there's something wrong. I feel like I don't agree. I think all employees are people and throughout their lives they're going to have personal issues. Like you said, someone might have kids, someone else might have a sick parent, then you might yourself get sick. You can't always keep that from your employer because you're gonna need that cushion or that time to step away from the workforce.
- [31:11]
C
No, no. I mean, I'm not saying that everyone should be treated equally badly. I'm saying everyone should be treated equally well. And this notion that I do think it's akin to physical and mental health, it's very easy to have sympathy with someone with a broken leg. It's because there it is, it's in a cast and they can't walk and they've got to be wheeled around and can they come up to a meeting and can they go to Davos? Who knows? But someone who's going through depression or even someone who's going through, I don't know, cycles of ivf, you know, these things are subtle and complex and difficult. And I think it's incumbent upon companies, while they still have employees, to treat them all with decency and dignity and to maybe realize that there are all sorts of hidden struggles that are not as obvious as the struggles, which I totally acknowledge, of having kids in a time of COVID or having kids period.
- [31:58]
D
And I'm also thinking about the kind of contradiction between the Dan Kois take that companies should just be nice to their employees right now and like, give them a break. And the idea that for a lot of parents, like, doing a good job is just not on the menu right now at work, concurrent with the idea of like, well, companies are going to lay a lot of people off, like they're going to see they don't need as many of you so that the ones that maybe get laid off or do don't get to come back after a furlough are the ones that are struggling the most right now. So it's kind of sad. You know what I mean?
- [32:32]
A
It is sad and there is an absolutely fun because we live in a country where companies really are responsible for their employees livelihoods in a way that it's not just like a contractual exchange of, you know, labor for money. Right. Like, most obviously, this is. This shows up in the fact that it's very difficult to get health insurance if you're not employed. So if you fire someone, that often means they lose health insurance. If you fire someone who's here on visa, who's an immigrant, that might mean they get deported. Like, there's real, like, huge implications to losing your job, which go well beyond just, oh, now I'm not getting paid by this person. I should have to go off and get paid by someone else sort of thing. And I don't know very many companies that have really grappled successfully with that because on the one hand, they do employ people purely for the services they provide and the contribution they can make to profits. And on the other hand, once you started doing that, you're responsible for those people's families on a real, real level, I think, yeah.
- [33:51]
D
Companies are the social safety net in the United States. Your employer is your social safety net, and it's so fragile.
- [33:57]
C
And if there's one silver lining which is in this cloud, it's that America may realize that, you know, with 30, 40 million people are losing their health care. And that also means children up to the age of what, 21, 25? I think it depends. You know, this is a completely untenable way of running a society. You simply. It just will not work.
- [34:20]
A
So, Ben, I don't know how many podcasts you listen to, but I can tell you that the global podcasting industrial complex is built on a bunch of ads from direct to consumer companies and coupon codes. And I don't know where podcasting would be without, like, the early support of Blue Apron and mailchimp. You have just come out with the most spectacular piece of cultural criticism in Bloomberg Opinion, all about what you call blands, which are basically these directed to consumer companies and a few others. What is your take on should they exist? And if they don't exist, is podcasting doomed?
- [35:05]
C
Okay, well, let's start from the beginning. So the idea of blands is this notion that there is this identikit army of supposedly disruptive direct to consumer startups now, the vanguard of which you've got companies like Casper and Oscar Warby, Parker, Harry's away, and there's a vast infantry behind them of wannabes and copycats. Quip. The subscription toothbrush now has at least half a dozen wannabe quips, including one called Hum, which had just been launched by Colgate. So what you have is you have these companies who all pretend to have this unique, disruptive, one off, absolutely independent take on the world. And they all follow this absolutely rigid formula of look and feel and tone, of voice and sensibility, and that's what interested me. And weirdly, seeing you mention podcasts, it doesn't feature in this article. But podcasts are actually all. You could write a very similar article about podcasts, from the happy, cheerful music to the tone of voice to the way the segments are split up. I mean, podcasts also have their own bland genre. In fact, maybe that's the next article. And the fact that they are sort of interconnected is maybe no mistake. Also, they appeal to a. They both appeal, or initially, before they sort of went mainstream, they both appeal to a sort of millennial Gen Z audience who felt themselves to be somehow immune and above marketing. The normal tricks of marketing didn't appeal to them. And somehow you communicated them by pretending there was no marketing about these incredibly polished, neutral, pastel, post consumer, recycled brown box companies. And so there is something similar in the look and the feel and the tone of voice actually, interestingly, between brands and also podcasts.
- [37:03]
A
Right? I mean, in one, on one level you can draw the distinction in terms of the look and the feel and the copywriting, which is something you do really well in your piece. On another level, you can just draw the distinction in terms of is this a brand that advertises on television or is this a brand that advertises on like the New York City subway and Instagram and podcasts?
- [37:27]
C
So it's actually so it's interesting. I mean, so one of the key things about brands, rather is most of them are hugely venture capital backed. They have vast, vast, almost incomprehensible sums of money behind them, often for the most flaky and absurd ideas. Juiceroo had $135 million for a pulp extraction machine until Bloomberg pointed out that you could squeeze the pulp from their sachets with your hands, therefore negating the point of this $600 machine.
- [38:00]
A
But your hands are very bad at reading a QR code, Ben.
- [38:03]
C
I know, but you have to move them really fast to get the screen to recognize them. And actually in the piece, I compare MyPillows with some of these brands because in some ways MyPillows, I don't know if your listeners are familiar with this remarkable brand is a brand, it's direct to consumer. They sell a single product. They advertise relentlessly and aggressively on television as it happens. But the reason why it's not a bland is because its look and feel is very sort of, I would say sort of almost deliberately ugly. I mean, it's very sort of old school branding. It's got a kind of cursive logo. You've got Mike Lindell hugging it, hugging his MyPillow. And of course he said that President Trump was chosen by God to become president. And this notion of a very politically active CEO is antithetical to the uniformly liberal, bland political views that brands have to espouse. All brands are pro community, all brands are pro environment. All brands, the look and the feel have a huge mix of age and race and ethnicity and ability. And the idea of taking any stand politically would sort of instantly immolate their founders. So it plays into the whole sort of gestalt of what it means to be neutral in this very, very partisan environment.
- [39:20]
B
Is this really though, any different than any other period? Isn't it always that if you look at any period in history and you look at advertising and you look at the way companies market themselves, there's a pattern, there is something that people respond to and when they respond to it in certain companies and other companies ape that. And you can tell when things were created in the early 60s versus the later 60s versus the later 70s.
- [39:41]
C
Absolutely, absolutely. Sorry. I'm not saying that brands who've created advertising, I'm just saying that this is what they've done is, is, I suppose the slight differences with parity products, there was always a sense of Coke versus Pepsi. There was always a sense of oasis versus Blur. There was a sense of. But each brand, although they are absolutely slavishly following this formula, there's a kind of Soviet post totalitarian, sorry, post apocalyptic view. There is only one mattress company, there is only one disposable razor, there is only one chef grade dog food. And their promise is total uniqueness. It's like no one's ever thought of this before. And of course you step back and you realize there are literally dozens of all of these, each pretending to be unique and the only one for you. So yes, all advertising has fashions. This one I think is particularly interesting because it pretends not to.
- [40:35]
A
The thing which interests me is the, is the sense in which when this started, you could almost believe them when they were like, we're selling direct to consumer, we are cutting out the middleman. We have super high quality, we have an origin story. You know, you are finding us directly on the Internet. You don't need to believe in, you don't need to worry about the retailers or the, you know, all of this kind of stuff. And then we entered the world of, you know, dropshippers on Instagram who don't make anything but use all exactly the same language. And they're like, buy your, you know, handmade leather shoes or whatever. And they have the same language even Though all they're doing is just providing a very thin veneer over like a back end which orders shoes from China and ships them to you. And it's very difficult, if not impossible, to really tell the difference anymore. And it makes. It's created, I think, on some level, this sort of crisis of trust. Like If I see 14 different kitchen knives and they're all direct to consumer and they're all telling me how unique and special they are, at some point I'm like, I have no way of. I just can't believe any of them anymore.
- [41:53]
C
I think there's also the sense that they all have this gloss of community, environment, public service, and many of them are based on essentially slave labor, either incredibly cheap production in the Far east or gig economy workers. I mean, it's all very tenuous and it feels like sort of the last hurrah of something. The idea that everything can be cheap but also perfect, everything can be glossy and very, very convenient. And on the whole, the convenience for the consumers is based on massive inconvenience for those who actually supply and make these products.
- [42:33]
A
There was a great line you had in your piece, Ben, which I have forgotten, but basically said they're like ironic normcore trifles.
- [42:43]
C
I have it for you. I have it if you want.
- [42:46]
A
Yeah, bring it.
- [42:47]
C
Okay. For the rich, blands are an ironic normcore trifle. For the aspiring middle, blands offer a feeding facsimile of prosperity. And for the poor, blands are either the products they make or the services they provide.
- [43:00]
D
Yeah, I love that part about affordable luxuries and premium mediocre. Like it's a sign of how far we've all fallen that for luxury now it's like avocado toast or a pair of. Of of denim jeans from, you know, Everlane or something. That's all we can afford. And we pretend it's fancy. Whereas in the days of like Coke and Pepsi, it was like, here are brands that everyone can afford altogether. Like, this is. These are American companies selling stuff for everyone. And now it's like kind of like these are fancy companies selling fake, fancy stuff for only a few people.
- [43:34]
A
Or more to the point, they're fancy companies selling real fancy stuff, but like trying to persuade us that it's cheap. I think what we see a lot of is, you know, you find, you know, some disruptive artisanal cast iron skillet company, you know, and they're like, you can buy this disruptive artisanal cast iron skillet for a mere $85 and everyone's like, wow, that will last me a lifetime. $85 is cheap. Without realizing that you can, you know, buy a very good cast iron skillet for like 10 bucks. And there is this sense that I think especially among the the ironic normcore rich, they just don't know how much skillets and sheets and knives actually cost. And they believe the marketing when the marketing tells them that it's cheap, even when it's expensive.
- [44:23]
C
I think one of the things that interested me as I wrote this was this notion that each bland implies the next. So it would almost be hypocritical to use your cool quip toothbrush with FMCG Colgate toothpaste when you could be using mint and Matcha from this new hipster startup called hello Quote. Things just got mintresting. Quote. And so this notion that you wake up on your Casper, you throw back your brook linen, you chug a soylent, you log onto Slack, you grubhub your sweet green, and then suddenly that's your day. You become this homo blandis, this Swiss army knife of blands. And each one implies the next. And somehow not to then have a bland product. It's sort of like, wow, I'm now part of the military industrial complex, even though they are all part of the military industrial complex because they all fund each other. I mean, the sweetgreen people were invested in the Warby Parker people, sweetgreen then invested in the small door. There is this whole ecosystem and I didn't get into this, this piece for Bloomberg. It could have been four times as long. I became obsessed with it. And then I love it is when they then open up shops, they're like, hey, we're direct to consumer. We're about the low overhead. We're all about keeping. Oh, and actually, yeah, we have got shops everywhere also. Don't worry about the overhead. That's fine. But then the shops have to then look like the Instagram posts that they then inspire. So then you are taking photographs for your Instagram in a shop that were designed to look like an Instagram post. The whole thing is just bizarre. The kind of, the overview that makes it fascinating to me is it was all designed really for people who thought themselves not only sort of immune, but somehow allergic to marketing. I mean, I don't know who's read Pattern Recognition, the William Gibson book. And there's a character, the female character, who is literally allergic to branding and brands. Bring her in. And if she has a visceral sort of horrific reaction to a brand, they won't use it because she's got, she's so sort of sensitive and there's an entire generation who think themselves case from William Gibson's patent recognition and of course they're all buying identical things and they're feeling happy and secure with it.
- [46:36]
D
Has this Covid been good for Blands?
- [46:41]
C
I think it has probably been good for some. I mean it's interesting. So the bricks and mortar, the brands who have gone to bricks and mortar I think are going to, it's going to be interesting to see if they suffer. I mean Rent the Runway I think has just pivoted from shops to drop dropboxes. So I think that's going to be interesting. I think it probably has. I think, you know, don't forget a lot of people who haven't lost their jobs now have a lot of money because they haven't spent anything and they're going online and they're, you know, they're using, they're. I think they're sort of flexing their credit cards because they're not going to restaurants and they're not traveling. So I think and more to the.
- [47:15]
A
Point they're not going to shops. That there has been also that huge. Like the one thing that Blands really do have in common is that they all are based in E commerce. Well, if Covid has been good for E commerce then. Well, I mean even, even the ones with brick and mortar stores, I mean I remember when bonobos opened up their brick and mortar stores and you could go in there and you could try on a pair of trousers but you couldn't buy a pair of trousers. They would bring out an iPad and they would be like we will ship you a pair of trousers. What.
- [47:48]
C
Their line is leave the shop empty handed. It's like a selling point. Interesting.
- [47:56]
A
But the, the, you're absolutely right. But the point of the stores is to basically be physical Instagram ads and the reason they open up these stores is because the stores are actually cheaper than Instagram ads. Instagram ads are horrendously expensive. And so insofar as we have now started really embracing e commerce, you know, we've sort of leapt forwards four or five years in terms of e commerce. In the space of just a months that's going to be good for any brand that is mostly based in e commerce rather than people walking into an old fashioned shopping mall and buying a thing and putting it in their car and driving it home.
- [48:37]
C
I think what's tough is these brands. So these brands, they're in it to exit. I mean very Few of them are in it for the long haul. What they want to do is accelerate customer acquisition to launch velocity before launching an IPO or being bought out basically by one of the targets of their disruption. A friend of mine said it's essentially blackmail. You set up a company that creates cheap razors, you grow it to a size where the big razor people have to buy it out from you because you've stolen all of their people. So there's this sort of. It's pure capitalism. But the problem about that is customer acquisition, which is why when Casper's IPO documents came out, someone calculated they're losing $160amattress because it just costs so much to get customers now. Also returns and stuff. But as soon as you see one of these brands taking over a subway car, you know they're in trouble because their customer acquisition costs have just accelerated beyond any kind of logic. So in a sense, the more they advertise, the tougher it is.
- [49:42]
B
I was just going to say, though, Billy, razors really are better than any other razor. That's putting that out.
- [49:48]
A
The razor thing is interesting because there are only, if you look at the successful exits, Ben's absolutely right that all of these people are in there for the exit. There have only been $2 billion exits in this entire category of blands, and both of them have been razors. And one of them is under antitrust scrutiny right now and might not happen. Raises seem to have been like the one category of all of these millions of categories that has successfully done this sort of blackmail business model correctly. The rest of them have mostly failed precisely because of what Ben is talking about. Because the barriers to entry are so low and because there's so much competition and because customer acquisition is so expensive, very few of the other ones have been able to really make a success of it or to exit the Casper ipo. Casper's been down into the right for a while and it's trading well below the valuations that it had before it went public. So while they have certainly taken over New York City subway cars, we've talked about this on Slate Money in the past. The real winners here are Shopify and Stripe and the companies providing sort of the back end services to these plans.
- [51:00]
D
An addendum to Anna's point about the razors and Felix, is your point about the only companies successful are the razor companies. The razor business really was ripe for disrupting. Buying a razor in a store was a pain in the butt. Like they locked them up behind a case. It was annoying. They were too expensive. I was ready for disruption.
- [51:22]
C
Except, I mean, they've been absolutely screwed by Covid because no one's going into work and no one's shaving.
- [51:27]
D
That's a good point too.
- [51:29]
C
So I mean, you know what disruption gives, disruption takes away.
- [51:34]
A
All right, let's have a numbers round. Ben Schott, did we tell you about the numbers round? Do you know about the numbers round.
- [51:40]
C
And all about the numbers round? I am the numbers round.
- [51:43]
A
All right, what's your number, Ben?
- [51:45]
C
So my number is actually from 2017 and it's $140. And $140 was the cost of a rack of lamb at the Beatrice Inn when I ate there in 2017. And I remember looking at this and I looked around the room and you know that thing in poker which is if you look around the table and you can't spot the schmack, it's you. I looked around the restaurant and thought, I'm the only person not on an expense account paying with actual post tax income and I'm the idiot. And that was when I thought, this cannot last. New York is basically just waiting for the music to stop. And what we discovered in the last three or four months is the music has stopped. And I think a lot about that $140 rack of lamb because that struck me as just being a moment of madness. And everything that I think is going to happen to New York was summed up by that single menu item for me.
- [52:37]
D
Are you saying New York is over, Ben? Are you one of those people?
- [52:41]
C
I'm saying I don't think New York is tenable, I think, and not in a sort of daily mail post apocalyptic. I'm just saying, I think if you take parking fines, toll money, business rates, tax take, I think restaurants are not going to be able to survive the winter. So that's another four or five months, I think with no cinemas, with no restaurants, with no bars, with no theater, with no museums, with no tourism for six to eight months. I just don't see an economic way forward. And what's always happened in the past in New York is that there have been areas that people have gone into. The artists, this whole thing. Oh, in the 70s, the artist came and they took over the. There are no loss, there is no space, Everything is owned, everything is expensive. And what worries me about New York is that there's no hinterland for people to regenerate. It's just ossified and stuck. And it's stuck at a very expensive level.
- [53:40]
A
I'm going to take the other side of this one, Ben, which I'm going to say that the hinterland is midtown Manhattan. The hinterland is rents that have, you know, are coming down very quickly, both in terms of residential and even more in terms of commercial and especially for, like, restaurant spaces. I think that this is an amazing event that is going to be the event that brings down the rents, that forces the restaurants to charge $140 for a rack of lamb. And a vibrant restaurant scene in particular, and certainly a vibrant theater scene and various other things, is all predicated on the idea that you can have workers who aren't paying too much in rent for that for where they live, that you can have restaurants that aren't paying too much in rent for where they're based. And all of that went away over the past couple of decades as New York became ridiculously expensive. If those rents come down substantially, which it looks like they are doing, then that means that we have an incredible opportunity to bring people back, to bring businesses back that don't need to charge $140 for a rack of land.
- [54:49]
D
That is a lot of money.
- [54:51]
A
Emily, what's your number?
- [54:54]
D
My number is speaking of lamb, My number is $13,494. That is the amount that Smithfield Foods was fined for failing to protect its workers at its meat processing plant in Sioux Falls, South Dakota, where more than a thousand people tested positive for Covid and four died and a bunch were hospitalized. This is a very small amount of money, if it's not clear to you already. This company makes $14 billion every year in revenue. And the fine again was $13,000. And the fine came months after, you know, all the workers got sick and the workers died. And it's just kind of. It's a good indication of how most workers were treated as expendable in this crisis. Trump issued an executive order keeping the meat processing plants open when there were outbreaks of COVID in them, endangering the lives of so many people and showing that the government, federal, and at the state level, too, there are stories of different states doing bad stuff as well. Prioritized meat, not just rack of lamb, that's very expensive, but like all kinds of meat prioritized over the lives of human beings who process the meat.
- [56:14]
A
One of the things that I've noticed when I've been talking to business owners, mostly small and medium sized business owners, is there is this incredible worry they all seem to have about what if someone gets Covid and sues me? And I always just look at them and go like, that's like, there are lots of things to worry about right now. But I don't think the litigation risk is in your top, like 300 things to worry about.
- [56:46]
D
Yeah, it's incredible. And Mitch McConnell was hyper focused on protection from litigation for companies for Covid. And it's like, just tell companies that they have to protect their workers and they will. And like, I think there's an expectation some people will still die of COVID But I think the litigation risk would be mitigated if people saw that companies were actually taking care to protect their workers. And one of the aspects of this fine is that OSHA didn't create any new rules around Covid. You know, regulators didn't come in and say, you must do social distancing or you must. You have to close down if there's. There was XYZ number of cases, like, there were no new regulations around this at all. Order. There was no care put into just issuing a few rules to say, like, to keep workers safe. There was only this rush to protect companies from litigation, which, as you said, isn't even that big of a risk.
- [57:45]
A
It's almost as though the federal response to Covid was somehow subpar.
- [57:49]
D
It's weird.
- [57:50]
A
Anna, what's your number?
- [57:52]
B
Well, so my number actually kind of jumps off of Emily's number. So My number is 314 plus 7. So 314 are the number of PEMEX workers who've died of COVID and then seven contract workers. It's actually the most of any company in the world from one company. And it's actually more than the combined of all other major energy companies put together, which if you know anything about how Pemex, the state run Mexican oil companies run this shouldn't be overly surprising, but it was still a little surprising. Mexico has obviously done a very poor job in their handling of the coronavirus crisis. There's a long story in Bloomberg Businessweek about this and just how poorly this was handled, especially workers who were basically on these tankers out at sea in essentially cruise ships almost environments. And just how many of them have died? It's really pretty shocking. As you said, it was four at this US and that's horrible. Here it's at 314. And you can imagine that it's probably actually quite a bit more than that. If you look at a lot of the Mexican Covid statistics, which you always have to say, well, this is the number, it's probably three times more than that.
- [59:05]
D
That was just four workers at the one plant in South Dakota. I think industry wide, it's more like 100, but still not that Pemex. You blew me away with that.
- [59:14]
A
My number is a little bit of a teaser. It's 37%, which is the amount that Nikola stock fell between Tuesday afternoon and Friday morning. Nikola being this company that makes electric trucks or says that it will make electric trucks. Do they eventually, perhaps, which went public via spac. It's an amazing story and I think that's what we're going to talk about on this week's Slate Plus. So if you are into Nikola, which had a lot of news this week, we're going to talk about Nikola on Slate Plus. Otherwise, thank you so much for listening to Slate Money. Thank you so much to Ben for coming on and ranting in a particularly eloquent way about the bland. I can't wait for the subsequent installment about podcasts. And thank you everyone for writing in. We Love your emails. Slatemoneylate.com finally, thank you to Jessamine Molly for producing. If I sound particularly good this week, it is because I am in her studio, See Play Nomada in Brooklyn. It's all due to her. And with that, we'll wrap up the main show. Hope you stick around for Slate Plus. And thanks for listening to Slate Money.