jason: welcome to "bloomberg businessweek." i'm jason kelly. kailey: and i'm kailey leinz. we are inside bloomberg headquarters in new york. jason: this week in the magazine, allegations of gender bias from the new apple credit card and its issuer. we are talking about goldman sachs. why it is the poster child for a bigger issue with algorithms. kailey: john legere. details on that, plus a story about wework's toxic phone booth.

jason: and a special summit on security. they have got a new exhibit called "revealed: the hunt for bin laden." kailey: we have much more ahead on that. we begin with our top stories. in the politics section, it is lights, camera, impeachment. jason: house democrats count on public hearings to bring to life testimony that has already been given behind closed doors. here is billy house in d.c. billy: what we saw was some real concern on the part of state department officials about back channel diplomacy by rudy giuliani, and evidence, hearsay evidence, secondhand evidence of what they were hearing trump was up to. kailey: billy, what's next, and how long can all of this really go on? billy: well, what is directly next is this upcoming week of four hearings, four separate

hearings, including what could be the biggest one, that of eu ambassador gordon sondland, who is the one who may have had the most direct contact with president trump on whether or not he wanted to withhold aid in return for investigations. the house intelligence committee is hoping to wrap up its investigative part of this inquiry by the end of the month and give the judiciary committee a recommendation. they will decide on articles of impeachment, and when or where you to vote on those. by the end of the year, they hope. jason: one of the things we are all talking about is, how is this time different in some ways? this is not something we have seen a lot, impeachment inquiries and public hearings. what are your observations in terms of what it is like in the room and in the capital? billy: it is highly polarized, obviously. after the first week of hearings, both democrats and republicans held vastly different takes, you might say.

republicans basically said yawn, nothing dramatic was revealed, nothing directly linking trump to the efforts to withhold aid in return for investigations. democrats, though, are pointing out this is a process, and adam schiff is setting the groundwork for a case that would allow democrats, and hopefully some republicans, to vote for articles of impeachment. jason: staying with politics and topics we cannot stay away from, and that is trade. markets widely anticipating that president trump would use his speech to the economic club to new york to announce progress on a trade deal with china. kailey: but instead, all he said was an agreement could come soon. here is shawn donnan in d.c. with his economics story on how trump's trade war went from method to madness. shawn: what we tried to do, my colleague, jenny, and i, is to step back and really look at the arc of this thing.

and we have gone, it is worth remembering, from a carefully crafted plan to take on china and force some really fundamental structure changes in china's economic architecture to what is now shaping up as a pretty narrow deal and some more talks to come. we really have gotten there as a result of donald trump and his unpredictabilities, what some would say his impetuousness, and all those tariffs he has thrown on the table. they have really changed the game here, and they will have lasting consequences for what is the most important economic relationship in the world. kailey: it kind of looks like we are going to get back to where we were at the start of all this, rather than somewhere fundamentally different.

shawn: i think there are two big consequences. one is the economic consequence, the disruption we have had from this trade war. there are now tariffs from the u.s. side on $360 billion in imports from china. that is about 70% or so on those imports. that is a big drag on a lot of businesses who rely on components from china or do manufacturing in china. it also has hit, more broadly, business sentiment, and the risk is also consumer sentiment down the line. there is a reason we were talking about fears of recession here in the u.s. in august. one of the big reasons was the trade war. the second big consequence is everyone agrees that the u.s. or a u.s. administration, whoever was in the white house, had to take on china and really had to kind of renegotiate the rules of the relationship.

donald trump went all in on that in some pretty brutal tactics when it came to international diplomacy. there is nothing blunter than a tariff when it comes to negotiating these things. he raised the stakes, and the question is, has he delivered? will he have delivered? and what does that mean for the future? can another american president come in and repair the relationship or have another go at it? that is really going to define the relationship going forward. we have a new level of hostility between washington and beijing we did not have three or four years ago. kailey: for more on this week's issue -- jason: joel weber is here. talk to us about the cover. joel: the story is about ashlee vance and this effort to archive code in a vault in the swedish arctic. it is sort of an incredible one, because maybe you have heard

about this seed vault, about the worst-case scenario, the world as we know it comes to an end, at least there are seeds you can plant. right next to the seed vault is a code vault. kailey: talk about why this is important. joel: earlier this year, microsoft bought github. they are based on this idea of open source. open source has been around for years, and it is ultimately this thing that powers a lot of the things we use, even from little parts in your car are built on open source code. the thinking is that stuff is maybe the most powerful code in the world. let's make sure there is a backup for it. jason: i've got to ask you about the rag story. joel: one of my favorites. we love these stories that are often about things hidden in plain sight that we take for granted. take the rag, the humble rag. there is a modest industry

behind making those rags. there is a book that came out, and this is one of the excerpts we bought from the book. it is a celebration of this little company in ohio that is making rags out of your throwaway hooded sweatshirts or t-shirts. and it turns out there is an amazing amount of quality control required to get you a rag that is actually safe in a lot of industries. jason: and nike. i feel like that is almost another thing we take for granted as well. a very powerful story, in many ways, going on there. also some power in those shoes. joel: there has been controversy at nike of late. this is a slightly different controversy, because there is technology in shoes. this technology has proven to make running 4% easier. that is for you, if you put it on and go for a run, and it is also true at the highest level of sport. a lot of marathon runners who can actually run up to two minutes faster because of wearing these shoes. it reminds me a little bit of the olympic conversation that took place a decade ago, where swimmers were able to wear swimsuits and have an unfair

advantage. rules change. we are not sure what will happen on this side, but nike has clearly established a really dominant advantage that a lot of its runners can use to its advantage. jason: all right, joel weber, thank you so much. great issue. coming up, goldman sachs hits the target of a wall street probe into its credit algorithms, specifically the new apple card. kailey: plus, does nike's sneaker go one step too far? jason: this is "bloomberg businessweek." ♪

kailey: welcome back to "bloomberg businessweek." i'm kailey leinz. jason: and i'm jason kelly. join us for "bloomberg businessweek" every day on the radio starting at 2:00 p.m. wall street time. you can also catch up on our daily shows by catching our podcast. get that on bloomberg.com or wherever you get your podcasts. and you can find us online at businessweek.com, and through our mobile app. kailey: bloomberg learned this week that a wall street regulator is looking into goldman sachs' credit card practices. that, after a programmer claimed that algorithms discriminated against his wife. jason: the card is the joint venture between apple and

goldman. goldman says it is possible for two family members to receive significantly different credit decisions. here is bloomberg finance reporter sridhar natarajan. sridhar: this started with a series of tweets from a tech entrepreneur, david hansson. he applied to the apple card and started complaining that his credit limit was 20 times the size of his wife's credit limit, even though they both share the same finances, have the same spending power, had the same income when apple card was trying to determine the limit. and yet, there was a huge disparity. it immediately gained traction online. to add insult to industry, apple cofounder steve wozniak said, "wait a minute, i have faced the same issue." the regulators are saying, we

want to figure out how these credit risk assessment tools work. we are going to probe goldman and this apple card issue to see if there are biases. kailey: how much blame does goldman have to take here? is it just the algo, or is there something goldman can do to fix it? sridhar: i truly believe that apple and goldman, two marquee names in the world of tech and finance, they have become lightning rods over an issue that has been growing for a while. they are trying to figure out, as has the mission creep of tech, the important regulatory factors to make sure it does not come with its own set of biases. computers are supposed to stamp out those errors. but in other ways, are they reinforcing issues we have faced for a long time? that is what folks are trying to figure out. it is not limited to goldman. it probably affects the credit industry. remember, they have not done this for long. this is new for them. that is why maybe they are facing a unique challenge. jason: now to a different sort of investigation. nike announced plans to look into an athlete's claim that she was abused after joining the company's now disbanded oregon project running program. kailey: it is not the company's only challenge.

it's high-tech sneakers has some critics worried that nike may have tipped the competitive balance. jason: here is eben novy-williams. eben: a couple years ago, nike released shoes that was significantly better than any other running shoe on the market, from a speed and recovery standpoint. it became a big deal for average joe runners, like you and me, but it became a bigger deal for professional circles, where you know the difference can be seconds over an entire marathon. a 4% advantage, you know, that is a huge gap. the shoes became a huge deal in the professional world where the people who were wearing them were setting records and winning races, and a lot of people who were not wearing them were not having the same success. kailey: the question is, is that fair? eben: that is a major question. every other shoe company right now is working to reproduce what nike has.

there is a carbon fiber in the shoes. the forefoot is steeper. it kind of rocks you forward. it is a new, lightweight foam. i have spoken to a number of companies. everyone is working on replicating what nike did. but as they do that, nike is working on whatever is faster and faster. i think the fear in the industry is nike is a $36 billion revenue a year company. most of these companies are much, much, much smaller. nike may be able to keep innovating ahead of the pack and consistently have the fastest shoes on the market. jason: you make an important comparison in your story, going back to something we remember about the olympics, those sleek swimsuits that led to a bunch of records being broken, and then ultimately got banned. eben: exactly. back in the late 2000's, before

2010, those long speedo swimsuits that michael phelps was wearing, over 100 world records were broken in those suits. the big governing body for swimming came out and said, "listen, we can't do this anymore. the swimsuits cannot cover this amount of your body. some of the materials were helping with buoyancy. cannot do that anymore." the reason why the shoe story is interesting is because the iaaf tracks the governing body, and it is looking at the success thing. they have convened athletes and scientists, and they are getting together and saying, do we do anything to clarify our rules? because right now, the rules are opaque. jason: coming up, another problem for wework. we are talking about toxic phone booths. kailey: just to add onto everything else the company has had to deal with this year. this is bloomberg. ♪

jason: welcome back to

"bloomberg businessweek." i'm jason kelly. kailey: and i'm kailey leinz. you can also listen to "businessweek" on the radio on siriux xm, channel 119. also on a.m. 1130 in new york, 106.1 in boston, 99.1 f.m. in washington, d.c. jason: a.m. 960 in the bay area. in london on dab digital, and the bloomberg business app. in less than one year, wework went from having a $47 billion valuation to needing a rescue package to avoid collapse. kailey: and if that is not enough, this week's tech section looks at yet another problem, toxic phone booths. here is bloomberg reporter ellen huet in san francisco. ellen: basically, wework designed the phone booths and gets manufacturers to make the phone booth. and one of their manufacturers, or maybe the only one in the u.s. and canada, was a company called premiere xd. it is a company that makes commercial fixtures for

starbucks and other companies. they were making these phone booths. this was not publicly known, but something we talked about with former employees, that kind of thing. they were making these phone booths, and everything seemed fine until early summer, when one of wework's biggest companies, which used wework to redesign one of its headquarters, some of the employees noticed the phone booths smell funny. "there is a weird smell when i am in them." "maybe i have some eye irritation." they alerted their managers. the company did a test and found these elevated levels of formaldehyde. keep in mind, this is early summer. they did not announce until mid-october. there are several months where ubs had told wework of the issue, wework actually starts talking to vendors in august about replacing future phone booths with new ones, and

actually in september, premiere, the maker of the phone booth, suddenly shuts down without warning. some of its workers are left stranded with no severance. in the background, there are a series of events that lead up to the announcement of the phone booth. that is what we get into in this story. jason: in the saga of wework, we turn from phone booths to a phone guy, who could be the next ceo of this company. john legere is now rumored or confirmed to be at least having discussions for the top job. tell us how that came about and what it may mean for the future of wework. ellen: right. it seems like wework is continuing on the ceo search. john legere is one of many names that they are having under consideration. it seems like wework, to put it in context, is still struggling to find who will be the leader that is going to take them forward out of this really tumultuous time. to take you back a mere two months, they still had the

cofounder and ceo adam neumann at the head of the company. when he stepped down, they replaced him with co-ceo's, sebastian gunningham and chief financial officer artie minson, who were existing executives. these two men stepped up to take over. they were quickly overshadowed by marcelo claure, who was placed as executive chairman of the company by softbank. you may remember him as the former head of sprint. so now marcelo is the one who has been sending out memos, saying, "if you have concerns, talk to me. email me. my email is marcelo@wework.com. i am here for you."

he has taken internally this public safety role away from the co-ceo's, who are still technically there, but do not seem to be running the show. now it seems like the outside ceo search is continuing. this was something we originally had back-and-forth on, whether they would do an outside ceo search. there is a funny twist, which is marcello colore and john legere have a history of going after each other as telecom ceo -- jason: yeah. ellen: and did not always get along and have publicly sparred on twitter. many people were digging up those old tweets on monday when the news was announced. it is unclear if they would be able to work together, but it seems like that is a possibility. they both have very strong ties to softbank, which may be the reason his name is in

circulation. jason: we also spoke with imran khan, the cofounder and ceo of an e-commerce company, verishop. we talked about the ipl, as well as his outlook for the online shopping market. my cohost, carol massar, and i sat down with him in brooklyn. imran: there is no place for consumers to go find and discover new brands. we are creating a brand discovery platform, where you can find brands for your everyday life with the convenience of amazon. we now have the fastest free online shipping in the marketplace. free one-day shipping. we put our customer support number at the top, so you can talk to our customers. i read every customer support email. so we really stand for convenience, we stand for quality, and discovery. carol: what is to prevent somebody from going to your site, then going to the homesite of that brand in the future? imran: some people will do that. you know. the interesting thing is that consumers don't like putting their credit card number into 500 different sites. right? so if you have a relationship with one retailer, that is a great place. jason: you have been watching this market as a banker, as an executive, as an entrepreneur. what happened? what went wrong with wework? imran: the challenge is the public market, you know, the

market is so volatile. investors are softer. i understand the excitement in private markets. but saying that, a lot of great companies were built in the public market. netflix went public very early. i think it is getting more challenging. they are not interested anymore. jason: coming up, we will take you to the second annual securities summit at the 9/11 memorial and museum. also, a preview of the new exhibit there about the hunt for osama bin laden. kailey: this is "bloomberg businessweek." ♪

jason: welcome back to bloomberg businessweek. kailey: the saga is almost over. jason: we hear from the ceo of intercontinental hotels. kailey: the security summit was in new york. jason: it was cybersecurity exports talking about attack prevention and collaboration between the public and the private sectors. we should point out that michael bloomberg is also the chairman of the 9/11 memorial and museum.

let's start with my conversation. >> the theme has been about cybersecurity which is a threat at every level of our lives. what has struck me most is the conversation has bridged both the cognitive, practical, what do you do, what do you do with it, who do you partner with, but also the heart. there has been a lot of conversation today including this morning that is been about the motivation for this awareness of the need for security coming out of personal 9/11 experiences. jason: frank, pick up on that. you so well this morning on a very personal note, your own remembrances, and talk about everything that happened between and the work you are doing now both professionally and in your day job as well as your work here. set the tone in that regard.

frank: it is about preparedness and partnership. if you are in a safer place on 9-12 in that year, you have seen partnership at its highest possible level. people all across america coming together, the bond. when you take that thought and say, we can protect ourselves by sharing and partnering, we will be much better prepared. jason: one thing that was a clear theme was the importance of people in the security. my next guest is a west point graduate and former army intelligence officer and served in both the bush and obama administrations in security and intelligence capacities. >> i see this as a national extension of my career which is defending our economic security

given that banks are so fundamental to national security. the banking sector is ahead of this problem. we had to be because we were attacked significantly in the 20 12 to 2014 timeframe, where a group known and identified with the iranian government were doing what was called distributive denial attacks, launching massive data website so people couldn't get to them and it caused a panic. it illuminated the vulnerabilities. off of the back of that, banking. ahead of this and put in the right programs and processes and technology and started investing in that talent so we could strengthen the sector. some of things that we have done to come together as a sector are

to share information. i was incredibly encouraged to come from the white house to the banking and financial sector to see how much sharing there is, both within the financial sector, so big banks are super competitive about talent and business. they are not competitive about sharing business that will keep the sector safe. there is good sharing between the government and the private sector, and that will continue to grow and strengthen hopefully in the coming years. jason: you heard her talk about cybersecurity which was a big theme. kailey: especially heading into the 2020 elections. jason: what are the most

important voices? here is my conversation with the cofounder and chairman of craigslist. >> i figured out how to gain the rest, meaning they figure out how to introduce disinformation and generally phony news, such that american citizens don't get the information they need to make smart decisions. meanwhile, they are using cybersecurity techniques to attack our voting systems, possibly in subtle ways for example, they are working with there two mystic allies to purge voters who should be purged. we fear they may do things like taking a legitimate voter registration record and

tinkering with it such that when the person goes to vote they have to file a provisional ballot and if a bunch of people have to do that, it goes down the line a lot. that is the thing that can be prevented. people like me work with the people who do the actual operations. my contributions are small. i get people to talk to each other and help out. that is not a big thing in itself but a nerd has to do what a nerd has to do. jason: coming up, more from the 9/11 memorial museum and a look at an exhibition opening this weekend, all about the hunt for osama bin laden. and part of that is the conversation i had with a man involved in that. kailey: this is "bloomberg businessweek." ♪

jason: welcome back. kailey: join us every day on radio. you can catch up on our daily show by listening to our podcast. jason: you can find us online at businessweek.com and through our mobile app. kailey: the raid that brought

the death to the leader brought back memories of a one back in 2011. jason: here in new york, the 9/11 memorial and museum just open an exhibition on the hunt for bin laden. >> for more than a decade, he was america's most wanted, the mastermind of the 9/11 attacks. even before the twin towers fell, the u.s. was after osama bin laden and his terror network. it was the greatest manhunt in american history. the 9/11 memorial got unprecedented access to president obama and the navy seals who took him down. >> it was very clear that we would probably do taking him down. jason: then narratives are told in a multimedia format. visitors will see more than 60 artifacts from the equipment

used by the seals to a vest worn by one of the dogs. it is a story filled with frustration. they came close several times finally intelligence was able to pinpoint his location, which resulted in his death. >> we were waiting until finally we heard it. >> they constructed the exhibit using tall pieces of plywood. they made a military field office and residential compound. throughout the images of redacted and classified memos, the reminders of one of the most important man hats in history. a man central to that mission was admiral mike mullen who was the head of the chief of staff from 2007 until 2011 and was with president obama in the

situation room when seal team six killed the world most wanted terrorist. here is part of the conversation. >> people asked me about that famous picture, and one of the reasons i think it was a famous is that it really does capture is that it really does capture the moment and it was very tense. that said, it was a decision and a courageous decision on the part of president obama because we didn't actually know he was there. we had lots of circumstantial evidence. it was a decision the president made and the night itself, the actual night of the killing was, we were in that operation for a couple of days at that point. it had been going for some time and there had been rehearsals and lots of preparation going on

for literally four months in the event we could pin him down. we had plans down to a level of detail that would in the end allow us to kill him. but one of the things i like to remind people is that same night in afghanistan, there were 14 other missions similar to that that were carried out. and while strategically this one had the highest risk, we had done thousands and thousands of these missions over the course of the years that we have been

fighting. i had every expectation that if he was there we would be able to capture or kill him. that said, it was tense. it wasn't over until it was over. not just the killing and getting him out and back into afghanistan, and taking his dna and positively identifying him, and flying him through pakistani airspace to a carrier at sea, where he could be buried consistent with his religious beliefs which is what we did. jason: when you think about that moment and fast-forward to today, what has it ultimately meant for the war on terror, which has not ended in many ways and has only become in some ways more complicated? >> in terms of having a huge impact on the al qaeda

organization, when you take out a leader like that, just as the very recent killing of baghdadi has had a big impact on the isis organization. it doesn't make the ideas or the aspiration go away, and it hasn't with al qaeda nor has baghdadi's death done that with isis. so i think we have two stay at this. we still are in a situation where we are seen as the evil empire, if you will, from the terrorists' perspective and they continue to come after us. there is a debate if we should stay there. we know that 20 plus terrorist organization who aspire to do us ill live in that border between pakistan and afghanistan. leaving them unattended would be high-risk and very dangerous. jason: i do wonder, because i know it is an issue important to you, the role of the military and the view of the military in society in a lot of ways. certainly, it changed over your career and where do you see it in 2019? >> it is a precious organization

and its reputation which is a political throughout our history is absolutely critical. to your point about i have seen it in a different place coming out of vietnam, which is the first war i bought in and where the military was held in very low esteem, and that has changed over the course of many decades. the institution is held in high regard throughout the country. we need to preserve that. we are going through a difficult time in the country. certainly, in my life i have never seen us so divided and washington so dysfunctional with political leaders on both sides of the aisle unable to deliver for the american people. but it is a system i believe in and don't want to walk away and -- don't walk away from the principles and we need to make sure the governance is correct for us in the future and that the military is in general, certainly the active-duty side, and support of those that the american people elect.

even those that retire often times need to be reminded that it is not our position to take a stand against a president or a policy because i think that confuses the american people because we are seen as military experts. in ways we always speak for the military. so preserving that apolitical aspect of the united states is at the top of my list and retaining that is my priority. jason: make it a memorable season with an approach to giftgiving this year. we have your guide. kailey: plus, more than a decade after it began, the saga of bernie made off may be coming to a close. jason: this is "bloomberg

businessweek." ♪

kailey: welcome back. jason: you can also listen to us on the radio. kailey: it is our annual holiday gift guide and this year it is all about handmade for the holidays. here is our editor. >> every year we try to think of a theme and this year it is things that are handmade. it's nice to give someone something that you know a lot of time went into it, so on the first page of the section we have this amazing poker set. the box has like 800 pieces and cards and its all made with little slivers of wood inlaid into the box. it's 1200 pounds, not cheap, but it is one of 15 so you know not many people will have it. kailey: how do you get one of these if there is only 15 out there? >> you reach out to the artist, and she also makes backgammon

sets, so you see what she's got and then you can give it to a friend. jason: another favorite was the cloth for crustaceans. >> it is the pick of the creditor. so if you are a person that was born in maine, you have grown up eating lobster. you have probably used many different pix. a lot of them are not well designed. you can get them plastic when they are in a restaurant. this woman came by the office and was showing us these and they were silver handcarved lobster picks, which are so

ingenious. they have a little clamshell carved into them so you can put your thumb into it. they don't become slippery when they become covered in butter, and they have a little hook, which most lobster picks don't have, so the meat comes out really easily. i know it sounds crazy, but this item does not exist anywhere else. kailey: so it makes a difference? >> it is a special occasion item. jason: that is a table setting that will set you back before you even go get your lobster?

>> yes, and those are the kind of things that go missing after a party. jason: my cohost spoke with an international ceo at a bloomberg wreck way conference. >> we can't do everything organically, so in this luxury space, we acquired a leading boutique company and so we have luxury brands, ones that have taken decades to build. i was acquiring that brand equity because it would take me a long time to build a lot of capital. then i launched a few where i could build them quickly and just grow the business accelerated, so i combination. >> growth sometimes means taking the underperforming assets out as well.

>> yes, that's probably one of the hardest things in this job because you can really convince yourself to keep bad hotels because they are paying you many. when you are under pressure to show growth and revenue, cash generation, you think should i take these out? but you have to remind yourself, you are the stewards of this business for the long-term and it takes a long time to screw up a brand, bhave done it, it takes a long time to fix it. we are consciously taking out about two and half percent of the system globally every year. >> reevaluating every year? >> every year. if it is the wrong location, to keep moving quality up, you have to do it. if companies do not, they pay for in the long term because customers begin to lose faith.

>> on the back page, the saga of earning made off may be coming to a close. jason: it is a tale filled with billions of dollars. here's the story. >> in 2008 bernie madoff admitted running the biggest ponzi scheme ever. he bilked investors out of billions of dollars and he was sentenced to 150 years in prison. the trustee in the case filed hundreds of lawsuits to recover investments. so far he has been able to clawback over $14 billion per there is still one source of money he has not been able to

get to, about 3.2 billion held by foreign banks. in 2014 a judge ruled that the bankruptcy code did not allow him to go after that money. naturally he appealed but the wheels of justice turn slowly. it was not until last february that a court of appeals overturned the lower court decision and so now the banks are appealing at the high court is expected to decide next month whether to hear the case. one way or another, he has been a big winner. in most schemes the trustee recovers no more than 30% of the funds. he is at 80% now. if he gets back the 3.2 billion he would be close to 100%. jason: bloomberg businessweek is available on newsstands now. kailey: and also online and our mobile app. >> we are here at 70 degrees north latitude for the future arctic code for -- vault is. open the vault. this is how it works, the dated -- the data is stored in the information can be read by a

computer or if need be, with a magnifying glass. >> how long will this last? >> maybe 2000 years. jason: and check out our weekly podcast. kailey: more bloomberg television starts right now. ♪

>> welcome to daybreak australian. >> sophie kamaruddin in hong kong. we are counting down to asia's major market open. paul: here are the top stories we are covering in the next hour. hong kong braces for another chaotic week after violent clashes. police may fire live rounds to end the university standoff. the u.s. and china hold more trade talks as they edged towards a deal.