♪ ♪ carol: welcome to "bloomberg businessweek." i'm carol massar. jason: i'm jason kelly. carol: this week, silicon valley is listening to you. the humans behind smart devices, they are hearing more than you think. jason: and taking a bite out of lululemon again. investorrivate equity returned to help fix it and made a lot of money in the process.

carol: and we hit the red carpet to celebrate the bloomberg 50. it is our annual list of those whose 2019 accomplishments stick out. jason: but first, the biggest ipo, saudi aramco. shares surged to a market value of at their peak. $2 trillion carol: a culmination of a four-year effort from the kingdom. talking about this, with a lot of questions. one thing to point out. now it is publicly traded and it it is an ipo, a publicly held company, but only a small percentage, 1.5% is out there in the public in terms of the company. reporter: the ipo has not turned out the way they expected it to happen. if you remember back to 2016 when they initially announced plans for the ipo, the plan was

to sell as much as 5% of the company. what we really have to look at is what is the purpose of the ipo? it is seen as a means of diversifying saudi arabia away from its oil dependent economy, to raise money from international investors and to deploy that on projects outside of the core energy industry. valuation the they wanted or close to it they did not get it they did not get, but what they did want is attracting international investors into the kingdom. the region as a whole. this is probably a great opportunity to showcase what they have. and also to attract international investors to a scale that has not been seen before. but having said that, the objective has not hit the mark.

saudi arabia managed to complete the ipo with the help of local investors, rich families in saudi arabia and also neighborhood friends, politically countries that are close to the kingdom in the gulf region. they contributed to the ipo. it is still a way far from what they planned initially. jason: thank you so much. carol: let us bring in joel weber. let's start with the cover story. joel: this is a culmination of amazing coverage from the bloomberg technology team this year about the listening devices. americans in particular really love these things. carol: we all have them, right? joel: there have been some privacy concerns that the tech team has done stories on this year and we bring them all together in the cover story. jason: the bloomberg 50 was this week. what a night. joel: you guys looked great. all the participants and everyone on the list. this is a gala meant to celebrate the people on the list

and their accomplishments in 2019. carol: i remember having conversations at my table and we did a broadcast from there. people were loving the eclectic group. they were names that they didn't know about that they should. joel: bloomberg 50 is a way of using what we use better than anybody else, data. looking out across the various world of business, finance, and entertainment to say who has real impact and what is demonstratably that we can point to that is measurable. jason: we will hear from some of those honorees later in the show. i have to ask you about the new red scare. in a way. this is a story that caught our attention. and once you get into it, it is a little terrifying. joel: this is another story that "businessweek" has done multiple times. peter wallman has really delivered on this line of reporting. we did it as a cover story earlier in the year especially around what is happening in the medical and hospital worlds

where we have seen chinese-americans get driven out of the country. that particular research is around cancer. and now, it turns out and this is the latest story in the politics section, the u.s. government has been targeting people who work in military, and in particular there is one gentleman we found who was wrongfully accused and pushed out of the government and army and had to retire. the whole thing looks bad. there was never a case to be made against him. carol: really troubling. thank you so much. another great issue. really appreciate it. editor of the magazine, joel weber. let us get more on that mistrust in the department of defense and how ties to china could prove fatal for applicants' security clearance. >> our conversation with peter waldman joining us. >> this is basically a continuation of work i have been doing all year long on the whole question of whether or not we are overreacting in this country

to the threat of chinese espionage. specifically, the threat of the theft of intellectual property. this week's "businessweek" story is about an army engineer who was harassed, essentially, by the fbi and intelligence from the army. this is a civilian engineer. and ultimately his security clearance was taken away after over 20 years of stellar performance, including developing a software system that the nsa uses for communications and eavesdropping and things like that. this stellar scientist lost his security clearance, forcing him to retire. now, he was of retirement age. it wasn't the biggest body blow, but he was humiliated. he was accused of disloyalty. he had a lot of ties, friends and neighbors who were asked

many times if he was a spy for china. he is a chinese-american individual, and he suffered a great deal as a result of this. i can tell you the end of the story, which is essentially ultimately the pentagon decided he was not a spy and was innocent of their suspicions. so, it is kind of a sad story. carol: this individual -- the question is, and this goes to how you kicked it off, are we overreacting? is this an isolated incident? where folks are being targeted in the wrong way, or is a lot of this happening? peter: the distrust level and that is the keyword -- the level of distrust of chinese americans has soared in recent years and a colleague in the bloomberg data analytics department, andre tartare, did an enormous job of filtering and analyzing some 26,000 cases in the government database of security clearance

decisions, who gets it and who does not. he found that in the past decade, the rate of rejections of chinese-americans essentially for security clearances has gone from something like 44% which was the average of all the countries including other non-chinese countries, to over 60% for chinese. it is a real growth in the rate of rejection for that which is a kind of barometer of suspicion, distrust, and essentially difficulty for these american citizens. carol: coming up, alexa, what is privacy? smart devices, that is what we are talking about. they are listening. jason: and is the new apple card really elite? why the answer matters to the places where you shop.

carol: this is bloomberg businessweek. ♪

carol: welcome back to "bloomberg businessweek." i'm carol massar. jason: and i'm jason kelly. join us every day on the radio starting 2:00 p.m. wall street time. you can also catch up on our daily show by checking out our podcast. carol: and you can find us online at businessweek.com and our mobile app. privacy and big tech, safe to say one of the major themes of 2019. jason: and the cover story for this week focuses on how silicon valley's biggest companies have fooled millions of people into , including us, into letting temporary workers to listen in on their most intimate moments. >> terrifying story to say the least. >> this is a big story about how these devices like amazon echo and their virtual assistant alexa or siri -- if you have these devices in your home or on your phone, this is a story

about how these things work. these tech companies in silicon valley presented these products as sort of automated, using machine learning and computers to answer voice commands. it turns out there is a vast apparatus of human listeners helping to improve these services. when voice commands are submitted to their servers, in some cases they are rerouted to data centers where humans are transcribing your every word to improve speech recognition on these services. carol: there was an assumption that there is just some robot listening and spitting things back. tell me about these humans. what kinds of conversations are they listening to? what are they hearing? you guys talked to a lot of people. >> we talked to dozens of contractors, people that are placed everywhere from ireland to india. in the case of apple, they rely on an i.t. firm in cork, ireland, where dozens of contractors will be listening in on people's recordings. and they told us they feel

deeply uncomfortable listening to this material. often it was very personal. they recalled children in many cases sharing phone numbers or street addresses. you can imagine the concern of parents over that. they overheard couples engaging in sexual activity. very private conversations in your kitchen and bedroom. the alarming thing is how invasive this is and the people on the front lines are often the most low-paid workers in the supply chain, they found it very alarming and disturbing and unethical. jason: what do the companies say? because this has been a story you have been following through the course of the year. as carol said, it is probably one of the defining stories in many ways of 2019. broadly speaking, the discomfort we are starting to have with the relationship with technology. what do the companies say? austin: glad you asked about that.

one of the most profound things to us was the disparity between the contractors were telling us in how they felt this was morally dubious versus what the tech engineers and executives were telling us. when we started reporting this, it was like they did not think it was a big deal. they did not anticipate this. they argued it was like it was par for the course for the industry. everyone was doing it. they said this is just a way of fixing what they called quality assurance issues. they described it as -- you know when your app crashes on your mac, do you get the option, do you want to report this bug? they described it as a voice bug. on a broader level they say, just fyi, these systems are only recording when you activate them. the vast majority of voice commands and the are handled by computers with a small number of them needing human inputs. whether or not that makes you feel more comfortable about using the services, there is no doubt that millions and millions of recordings are still being transcribed by humans. carol: this holiday season is the first for the apple card,

the highest profound new credit card in years. jason: it is exciting for apple and its users perhaps, maybe not so much for the retailers accepting it. carol: we spoke to jenny on what premium plastic means for consumers as well as retailers. jenny: visa and mastercard have several different tiers. they have their basic credit cards that may be don't have a ton of rewards. the next step for visa is visa signature, for mastercard it is mastercard world, and then the kind of premium tier. carol: we are constantly being ranked in society. jenny: we are. this is no different. for visa it is visa infinite, for mastercard it is world elite. every time you swipe, it costs the retailer a little more in swipe fees and it has been years of these huge rewards war going on with banks. more and more consumers are showing up at the point-of-sale with these cards and retailers are like we have had enough. and they are ready to take the vista visa and mastercard. jason: and here comes apple

joining the party. carol: it is an elite card. jenny: it is a mastercard world elite. it is expensive for retailers. it had a huge launch. we saw i think $10 billion in lines extended to consumers in the first month it was out. very popular card. retailers are like this is another thing we have to spend money on. it is holiday season. they are trying their best to compete with the amazons of the world, and this is one more thing in the negative bucket. carol: when we talked about this on our daily radio show during the week, we were both like we did not realize there were these tiers with credit cards. they have different fees in what the merchant pays. with the elite card, there is an assumption that this is someone who makes more money and will spend more. sorry, merchant. you will pay a little more. you will win in the end is the thinking. jenny: and that is historically

what the big banks say to the merchants when they complain. these people come in and have way more buying power. their ticket sizes are on average much bigger than for more basic cards. that has been the justification. retailers have been saying, well, if i am a gas station or a grocer, people with these high reward credit cards are not actually spending more on gas or groceries. those retailers are saying we are reaching our breaking point. our margins are already thin. we need the break here. carol: coming up, turning lemons into lemonade at lululemon again. jason: my exclusive conversation with the lululemon ceo and the private equity investor who wins big on the retailer and comes back to fix it. carol: great story. this is bloomberg. ♪

carol: welcome back to "bloomberg businessweek." jason: you can also listen to us on the radio. sirius xm channel 119, also am 11 in new york. 99.1 fm in washington. carol: a.m. 960 in the bay area. in london on dab digital and always on the bloomberg business app. lululemon earnings are out this week and although the stock dropped shares, it is a remarkable turnaround. it is also a win from private equity

firm. sweat equity. didn't you write your book with those titles? jason: i did. interesting. this is a never before told story of the money behind one of the most influential brands of our time -- talking about lululemon. the pe firm, we are talking about advent. they first invested $74 million, not that much in private equity, and they got eight times as much from that 2005 deal. well, fast forward to 2014 and another deal and a lot more money. i sat down exclusively with advent managing partner david rutherford and calvin mcdonnell, the lululemon ceo, at a store right here in new york city. >> the business had its challenges but at its core, the issue was alignment. so part of the power that private equity can bring is that alignment. and so, in this case, we had a situation where the founder was not aligned with the board and the management team so you had some turnover of the senior management.

you also did not have the company in sync with the ability to make investments. they were following wall street and thinking about what they needed to do that quarter. and so, i feel like what we saw was this fundamental opportunity to help regain that alignment and put the platform in place so the company could establish a really strategic proposition, not just the here and now. but part of the real opportunity is to help them get out of the penny a share game and make some of these investments that had been deferred. jason: i want to get to the moment when calvin came into the company. but leading up to that, you do have a series of ceos. leadership becomes something you have to deal with in terms of the various issues you have to address.

>> firstly, we had a situation where the board really loves this company and wanted to see it succeed. and so, in that regard, when we came back in in 2014, we were able to create some of that alignment pretty easily. and help create the ability to put some of these ideas in place. the idea of a longer term plan. but, you are right, i think some of those challenges with the founder made it hard. so, the point that the founder exited the company in 2015, we were able to begin assembling a world-class management team. and so, with a cfo who initially was stuart now coo and a talent along the way leading to people like glenn and calvin and sun

and a host of really world-class business leaders. and the exciting part is that this business had that potential . it just needed the opportunity and the framework from this point and beyond. it really feels like the business is just getting started. and seeing what calvin and the team have already done with the manifestation of this next step vision in chicago and the membership and loyalty program, you are already beginning to see the seeds of thinking about what the broader vision might look like. jason: what does that look like going forward? it feels like we are at an interesting moment in retail. >> we have a huge runway of growth. we have double-digit growth. new categories.

our women's category and omni guest experience with the digital platform. as good as we are, there is a ton of opportunity to do even more. this is an emotional brand. our online continues to be more transactional. finally, expanding into markets. we still have a lot of opportunity in north america not to mention what is happening in international markets including europe and china. we feel we are in the early innings. we are trying to double our men's business. proving that the brand resonates with men as much as women. >> for our category it is a dual -gender category. there is no reason we shouldn't be able to do that. carol: borrowing money is easy for american corporations even with less than stellar credit. jason: some of the riskiest borrowers out there are massaging a key measure of earnings to make the borrowers appear more worthy of a loan.

carol: let us get to this week's "business week" explainer. >> it is called abbott down -- ebitda. earnings before interest, taxes, depreciation, and amortization. it is a metric that became popular in the 1980's and it gave corporate raiders like carl icahn and saul steinberg a way to evaluate potential targets. ebitda measures the company's ability to generate cash, but it does not take into consideration the impact of debt on the bottom line. and companies are finding more ways to tweak the numbers. axcelis technologies, who marketed to investors based on ebitda of $350 million for the 12 months prior. but based on generally accepted accounting principles, the company lost almost $48 billion in the same period. more recently, office sharing company wework used a community have been adjusted --

ebitda,y-adjusted turning a loss into a positive earnings segment after the adjustments. critics worry about what it is doing to the $2.5 trillion market for junk bonds, saying it blurs the picture of corporate america health and creates a false perception of safety. carol: coming up, the bloomberg 50. jason: from finance and politics, to tech and entertainment, we talk to those that have shaped 2019 in unexpected ways. carol: this is "bloomberg businessweek." ♪

jason: welcome back to "bloomberg businessweek." i'm jason kelly. carol: and i'm carol massar. still ahead, we take a look at a data nerd's guide to doing good. jason: in addition to the gift list, you've got to give away some money this holiday season. plus, provocative remarks. why companies run by women are not always fair to them. carol: that is a must-read. first up though, we have to talk about the bloomberg 50. jason: it is all the people in business, entertainment, finance, politics, and technology, whose 2019 accomplishments merit

recognition. carol: we caught up with a bunch of these names on that list, two of them on the red carpet, alex blumberg and matt lieber, the y are the cofounders of gimlet media. jason: that is the company they sold to spotify for $238 million earlier this year. carol: it made it the biggest deal in the podcast industry. alex: we started the company in 2014, and we were both sort of coming at it from separate perspectives. i was working in podcasting already, i worked at "this american life" and i had started planting money with my co-founder. i was seeing this excitement building around this new on-demand way that audio was getting delivered by people. i saw the excitement building and i was like, somebody should make more of these. then matt was on the other side of the scene, looking and seeing the same sort of thing. carol: is that true, matt? [laughter] matt: our insight was that if

you look over the whole history of media, every time a new medium comes about, a new media company gets built. so, 100 years ago the new medium was radio. and that is an cbs got built, and that is when nbc got built. that's when we felt on-demand digital podcasts were a new medium, and we wanted to build the defining brand for this new medium. that was gimlet. carol: isn't it fascinating, because it is like radio in terms of just listening to a great story being told. i think it is such a simple thing. but it is great. but it harkens back to radio. alex: it harkens even further back than that. if you think about what we are doing in podcasts, it is the oldest forms of media in human existence, it is telling stories to one another. we have been telling stories to one another before there was any other media available. like, many of the oldest stories in human history were oral stories before they were ever written down. they were telling them before human language, written language was invented.

and so, it is very deep and very primal, and i think that was one of the issues when we were first starting this company. everyone was like, but it is just talking, right? no, no, no but it is also on the back of new technology and all these new tools that we bring to it. jason: and so, where are we in the evolution here? because you guys, as we said, were early. a lot of people have sort of piled in, it feels like. i mean, we have a podcast, everybody standing around probably has a podcast. where does this go next, matt? matt: we feel like we are just at the very beginning. the term that i think you have been using is that we are at the dawn of the second golden age of audio. the first golden age of audio was in the 1930's and 1940's. it was when broadcast news was born, it was when you saw fiction, like "the shadow" with orson welles come about. and now, you know, audio hasn't evolved that much in the last 60, 70 years until now.

and now what you have are a couple of big technology changes, so you have smartphones in every pocket, you have connected cars coming online, a lot of listening happens in the cars, and you have got smart home devices that people are listening at home, and even talking to their dashboard when they are in their car. and so all of these things have combined for this whole new kinds of listening of experiences to come out, and new sorts of storytelling. there is a new generation of creators being born now to work for this medium. it is like radio, but it is more intimate. carol: there is something about putting on your headphones and going into your own world. matt: when you listen to a podcast, it feels like you are listening to your best friend hang out with you or tell you a story that's just made for you. carol: let's stay with the bloomberg 50. someone else that made this year's list, boris jordan. jason: he is the executive chairman of curaleaf, one of the world's most valuable cannabis companies. it's the biggest one in the u.s., a market cap of $2.8

billion. carol: jason and i spoke with him at the bloomberg 50 celebration. we talked about a lot of things, including the future of cannabis. boris: you know, i was surprised. i will be very honest with you. i have in the past made some less -- i opened up the russian privatization market, and i was on the global leaders of tomorrow, but the last thing i thought i would make was a cannabis company listed in the bloomberg 50, for cannabis. i think what is great about it is it sort of reflects the fact that people are starting to accept the fact that cannabis is going to be a part of our lives. we have 33 states that have legalized cannabis in one form or another. more and more people are using it. and the fact that bloomberg has recognized that i think is a big deal. and it shows that it is becoming mainstream. carol: boris, i do think about, for a while, we talked about the canadian cannabis companies. i do feel like 2019 was more about the u.s. companies, yours included. what do you think 2020 is going to be when it comes to the cannabis story? we are waiting for, you know, regulations to come out from the government. so i'm just curious what you

think will be coming in 2020. boris: if we get over impeachment, which i hope we will at some point in time, i think it will be a continuation of the u.s. story. and that's not to say anything negative about canada, but it is just a bigger market. the u.s. companies are all turning profitable. you are starting to see more and more of them. i think the numbers that will be put up by u.s. companies next year will be quite big and staggering. and i think that will get recognized not only by washington, but i think also by the markets at large. i think the mainstream investors have largely avoided cannabis until today, and i think you are going to start seeing more of them getting involved as they see these companies put up significant numbers. jason: talk to us about the big companies getting involved, because there has been some twists and turns, shall we say, with some of the bigger u.s. companies sort of dipping their toe in, some making investments. how does this, sort of consumer goods market get more involved in this? how important is it that they

get involved in order to grow this business in a meaningful way? boris: i think they are all going to get involved. for instance, cureleaf, just this evening on bloomberg, we announced that we hired joe bayern, who ran dr. pepper, snapple. before that, he was at seagram's company. jason: he's a real guy. boris: these are guys who have built and run very big cbg businesses that understand rants and understand supply chain. you are starting to see more of those people into this market. i think that is the first sign. the reason they are coming before the big companies is because we are still federally illegal. but i think you are going to get two pieces of legislation in 2020, you will get the safe banking act and the states act. when you get the states act is when you will see the big multinationals take a look at cannabis, because it fits so well with every one of their other products that they sell today, whether it be beverages or food or different additives. and the pharma companies are going to be the last, because

they are really waiting for synthetic cannabis. once you get synthetic cannabis, you will start to see the pharma companies getting involved as well. carol: so what does that mean for your financial model next year? if we get those two pieces of legislation, that sounds like a game changer and then the numbers will start to take off, is that true. boris: the industry, to be honest, we are growing at 300% a year, and we will grow this year from $300 million to over $1 billion. carol: but you can't work across the states. boris: you will still be siloed in the states. but you will have a federal law that allows investors to invest in the sector. but you will still be siloed. it is kind of, to be honest, like gambling in the u.s. you can't go across state lines when gambling in the united states, you have to be siloed in the state you are in. it is state regulated, but it is not federally legal. jason: coming up, more from the bloomberg 50 red carpet. our guest tells us about a supply chain tech company worth almost $1 billion.

carol: plus, we have the economist behind modern monetary theory. we are talking about mmt. jason: we are indeed. this is "bloomberg businessweek." ♪

jason: welcome back to "bloomberg businessweek." i'm jason kelly. carol: and i am carol massar. join "bloomberg businessweek" every day on the radio starting at 2:00 p.m. wall street time. you can also catch up on our daily show by listening to our podcast. find that at apple podcasts, soundcloud, bloomberg.com, everywhere where find your podcasts. jason: you can also find us online at businessweek.com, and our mobile app. total ubiquity. carol: we are everywhere. we want to get back to the bloomberg 50 red carpet. jason: after a trip to bangkok, zilingo ceo ankiti bose, she started a direct-to-consumer fashion marketplace. such a cool company. carol: and her story is pretty remarkable. that went on to become a lot more. ankiti: so, you know, everybody wears clothes.

jason: true. ankiti: the fashion industry, the balance sheet is almost 5% of global gdp, so it is huge. but despite that, very little digitization, very little technology has really touched the entire industry. carol: which is remarkable. ankiti: which is remarkable, exactly. so unlike pharmaceuticals, industrials, the way your iphone is made, unlike any of that, there is very little sustainability, technology, or any amount of transparency in the supply chain in apparel. that leads to all these problems that fashion is accused of, that we are filling up the landfills, that may be little children working in factories in vietnam, or indonesia or bangladesh are making clothes for you. or that the clothing is not sustainable, people are buying too much. all of that is true, and all of that can be solved with technology comment by creating a lot of transparency across the supply chain. that is where we come in.

we provide a technology platform for mills, factories, literally to attract the brand that wants products made by these people and make sure it is done in a sustainable, transparent way. carol: i love that part of it. jason: i love the transparency piece of this. we have spent so much time -- if we think about our big themes of 2019 -- carol: transparency. jason: "fashionopolis," the great book about fad fashion and everything bad, candidly, that has done, and all the bad will it has engendered in the whole category of the population. i have to think that lack of transparency, though, existed for a reason. people didn't want you to know. how hard was this to sort of crack into it? ankiti: you are exactly right. today, the fashion supply chain has about 20 players, and you only need five of them. which means that about 14 or 15 of those guys or girls are just there because they are -- jason: they are all guys. [laughter] ankiti: they are agents, they are traders, they are not even

adding a lot of value in the value chain. jason: that is amazing. i'm sorry, i just need to go back. there are 20 and their need to be five. incredible. ankiti: the five who are adding value, we are adding an immense amount of value to their business, making sure they are hold accountable if they are not following the right practices. carol: to jason's point, how tough was it making your inroads? i feel like it is such an established supply chain that was out there. how tough was it to do this? ankiti: actually, once you go beyond the big manufacturers and you really go into the world of asian manufacturing or south american manufacturing, or even right here in the u.s., it's quite fragmented. so, most of fad fashion is made within a very fragmented manufacturing base. once you start giving them technology and bringing them online, it becomes much more easy for them to find their suppliers and their buyers and transact without agents in the middle. so, maybe it is hard in the

beginning to get a critical mass in a new country or a new area or a new subcategory, like denim or something, but once you do it, there is so much of a network effect. that has spread quite fast, because businesses see the value very quickly. jason: more from the bloomberg 50 now. google searches for modern monetary theory more than quadrupled in early 2019, i think largely because of us trying to understand why this was such a thing. well, it turns out, a lot because of our next guest. carol: everybody wanted to know about it. economist stephanie kelton, she has promoted mmt for years, and nobel prize-winning economist paul krugman really helped raise the theory's profile this year. stephanie: it is kind of astonishing, right, that i think in a lot of ways, what is happening is that people are coming to some sort of terms with the idea that when the next downturn comes, policymakers are not going to be able to reach for the usual toolkits and do what they have done in the past, that we are going to have to

start thinking maybe more creatively, more ambitiously, about what policymakers can do in response to a growing weakness in the economy. and i think for many people, mmt is just increasingly viewed as that alternative that can help us to think about ways to be more ambitious so we don't have to suffer the kind of long, protracted recession that we had last time. jason: were you surprised that this was a year where a lot of people, from alexandria ocasio-cortez to bernie sanders, who carol mentioned, they introduced it? we talk about the overton window all the time, that sort of moves in mmt's favor. carol: i love when you say overton window. it makes me so proud. [laughter] jason: it makes me sound so smart. carol: doors flying off hinges.

jason: but it was a moment. it entered into the political, and i daresay even the mainstream business zeitgeist, to quote our colleague tom keene. were you surprised? stephanie: yes and no, you know? you have been pushing hard to get that breakthrough moment for a set of ideas and you have really worked as a scholar and as an academic and with a number of other people as well. i mean, this is a team effort. we've put heart and soul into this product for more than two decades now. so, at some point, you do expect it to pay off, i guess, you know. but when you have that moment and you have politicians like you are talking about giving some oxygen to these ideas, it really is remarkable. carol: tell us, though, because for everyone like a bernie sanders and some other high-profile individuals who are supporting it, you have had a lot of high-profile names. i know paul krugman you have had certainly a war of words. i am curious if you are having more and more conversations with

more folks that maybe were against date, that are starting to say, hey, you have got an idea here. stephanie: for me, some of the most fun conversations and communications i have are those that are not public. it's the people who reach out to me privately and, were it known who these people are, i think the shockwaves would reverberate in a much more dramatic fashion. but it's just encouraging to know that there are people who are really out there willing to take the scholarship seriously, ask questions when they are not sure, do the ideas justice and not sort of caricature them and create an atmosphere of fear and concern, where these are really just i think very sensible and sound economic principles. jason: coming up, a provocative thought. the problem with female ceo's is not that they are female. it is, arguably, that they are ceo's. we will tell you why. carol: we will indeed. plus, how two individuals are showing the world how to be better at being a billionaire. jason: this is "bloomberg businessweek." ♪

carol: welcome back to "bloomberg businessweek." i'm carol massar. jason: and i'm jason kelly. you can also listen to us on the radio on sirius xm, channel 119. also a.m. 1130 in new york, 106.1 in boston, 99.1 f.m. in washington, d.c. carol: a.m. 960 in the bay area. over in london on dab digital, and of course, always on the bloomberg business app. jason: well, provocative remarks in the magazine this week. carol: they really are, with the headline, "the problem with female ceo's is not that they are female, it is that they are ceo's." jason: we caught up with rebecca greenfield. she drives our diversity coverage at bloomberg news. she has the remarks. rebecca: i noticed something that was happening, which was, there are lots of companies that are run and founded by women, but they also have these missions -- that we offer gender equality and our products will create this gender equality, and that's great. but then there would be these scandals where employees would

say, actually, i am a woman who works with this company and you are not practicing what you preach. and we saw this happen for a few years. we saw it happen at thinx, which is a company that makes underwear for women to wear while they are on their period. we saw this happen at nasty gal, which was a retailer for women. then more recently, we have seen it -- or i wrote about how it is kind of happening at the wing right now, the co-working space. and there has been a huge backlash because there is irony happening, you are not practicing what you are preaching. so i am exploring that phenomenon in this piece and saying, yeah, that's going to happen because women, when they become ceo's, act a lot like men when they become ceo's. carol: so many of these are younger company startups. and that is a valid point, when you are a startup, you are constantly putting out fires. that is an element of it. rebecca: definitely.

i think when you are a startup, the matter who you are, what you run, what your mission is, you are under a lot of constraints. you get a lot of money and you are having to grow really quickly. you are learning how to scale something, and i think they are learning that when you scale, it is hard to have feminism be your mission. that doesn't square with creating a big successful company, and maybe it shouldn't have to, or like, why would we expect that? jason: one of the things i took away from this, there is a distinct difference, and keep me honest here in the telling of this, between the benefits of having women on a board or women in management, versus diversity. that seems to be at the core of what you are arguing here, right? rebecca: yeah. so i think there is a fallacy that we want more women to lead companies because women are more compassionate than men, they are more ethical, they are more moral, they create safer workplaces, and that is just not true. the research has found that is not true, and in fact, that is just another gender stereotype.

i talked to a researcher who just put it out there and said, women are not different than men in the way that they lead. and that is the reality. and the benefits of diversity come, not because women are different than men, because they are not that different than men, but because they are diverse and in that they are different than the 10 men who are in the room. and that's what we want from diversity. we want a mixture of different types of people, different point of views, to push back on the kind of homogenous thinking that leads to bad decisions. jason: this week in our "pursuits" section, two individuals are showing the world how to be better at being a billionaire, and maybe some tips for the rest of us. carol: i really love this story. let's get more from editor chris rovzar. chris: the arnolds were very, very private until i think this year, basically. basically, they made their money first through enron then through centaurus, and john arnold is a legendary energy trader. his wife is also a super

high-powered mergers and acquisitions lawyer. they are on the bloomberg billionaires index. they have got a couple billion dollars of their own, and a couple billion with their foundation. and basically, they have sort of set out to reform criminal justice. also the pharmaceutical industry. and they do it by doing a ton of research. and they are not liberal and they are not conservative, or they try not to be. and they just do studies until they find the inequalities that are out in the system. carol: hence the data, right? they are data-driven in terms of what they are going after and maybe their approach? chris: yes. they hire experts, and they really don't go after something -- it is really important if you have that kind of money that you can't just try to address everything that someone asks you to address, so they picked the things that they focused on. through studies, they are really obsessed with data. so they did this thing one time where they redid 100 different studies from psychological journals to see if they could be reproduced, and only 40% of them could. so they were like really testing

theses all throughout this. one of the things they are focused on is criminal justice reform and bail and parole. and they think that the criminal justice system is one of the systems that knows the least about itself, so they are trying to get some visibility into that. carol: there is a section about venice. chris: yes. venice had its highest aqua alta since 1966 last month, actually, and it really did some serious damage. not only because places were flooded, but the force of the waters actually moved some stonework. and so save venice, which is a great organization working to save the treasures of venice since after that first 1966 flood, worked with us to sort of explain what they spend money on if you give money to them. $500 will get you a days work from a conservator, like an expert, not just a cleaning person, who comes in and figures out the issues. and for $1.1 million, you can renovate a whole basilica. and it is everything in between. there are obviously titian

paintings, there's old mansions that have been damaged, so there's a lot you can do, and the money is ready to be spent. jason: "bloomberg businessweek" is available on newsstands now. carol: it is indeed. it is also online. your must-read? jason: the cover story. that is the latest in a series of stories. bloomberg has really been out ahead on this idea that people are listening to us. carol: yeah. and i don't think we realize to the extent they are. jason: unbelievable. carol: yeah, it is unbelievable. it is definitely a must read. my must-read, i love what you did with lululemon. jason: thank you. carol: i feel like this story has gone through so much over the last 10 years, and you really get to where we are. and private equity has made a lot of money from it. jason: well that's something i found really interesting, the coalition of things i am really interested in. the private equity story has never been told before. if you want to hear more on that story, check out our extra podcast this week. it is a longform conversation with the lead director and the ceo together for the first time. carol: once you listen to the

podcast, then check out -- because he has written a couple books on private equity, just putting that out there. more bloomberg television starts now. ♪ here, it all starts with a simple...

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welcome to daybreak australia. kathleen: we are counting down to asia's major market open. paul: here are the top stories we are covering. the u.s. and china welcome their trade deal and say new tariffs are off the table. robert lighthizer warns important problems remain. the u.k. heads for brexit before christmas. boris johnson insists he will get the job done before -- next year.