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tv   Bloomberg Business Week  Bloomberg  January 27, 2018 3:00pm-4:00pm EST

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carol: welcome to bloomberg businessweek. i'm carol massar. we are inside of the headquarters in new york. in this week's issue, the next generation of digital currency. america eyes energy independence, and an inside look at one of london's most secretive members clubs. all that ahead on "bloomberg businessweek." ♪ carol: we are here with the editor in chief of "bloomberg businessweek." joel webber. a lot of great stories in the
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issue this week. >> i try. carol: and you succeed. i want to start with finance, first of all, the digital currency world. while we spend time talking about bitcoin, there's another currency that you guys have been looking into. >> part of this is, the crypto boom and maybe the proceeding of -- receding of said boom that has created a lot of confusion. it seems like bitcoin is a hot thing, and then ethereum and ether. where am i supposed to get into this? another one that has caught a lot of attention recently is ripple, so we wanted to take a hard look at ripple. one of the things we did is, in talking to the banking community -- because ripple says it is a banking solution -- we talked to the banking community and they say they don't know what this is for. carol: not so much? joel: xrp, the digital currency affiliated with ripple, the thing is sort of like, what is this going to be for? there is a lot of enthusiasm but
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there's still reason to be really skeptical. carol: it makes you scratch your head a little bit because we know the financial community says we are looking into digital currencies, doing collaborations or looking at blockchain's. we know that there is activity and momentum. joel: what will stick? what is going to be real, and what is the application for it? with ripple, they say one thing , the company is very enthused about is the potential, the company says they are very enthused about it but the potential client base is not. carol: another story is dealing with climate change and taking a look at the rating organizations and how they are incorporating disaster scenarios potentially in ratings. joel: which is big business. that is what this boils down to. the rating agencies have been on both sides of it, this is a chance for them to step up to
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the table and maybe reevaluate some of the things they have been doing good -- they have been doing. carol: it makes sense. if you look at some of the weather situations we have had, hurricanes, floods, fires, this is adding up to a lot of costs impacting cities in the country. that is why they are thinking it is time to interest rate it. joel: it can only get worse. it shows productivity on their part to address some thing that could be snowballing. carol: the bottom rating agencies, they missed enron, they did miss the subprime mortgage meltdown. you wonder where they are in this curve. joel: and this is maybe showing that they've recognized some errors of their past ways and they are actually trying to chart a new course. carol: speaking of new course, the cover story this week takes a look at the new world energy order. who would have thought that the u.s. might be a leader when it comes to oil domination? joel: this is a story i was really excited to get in the magazine, and the moment i heard about it i was like, let's do it.
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there's a stat we found out that the u.s. is almost on the brink of passing 10 million barrels of oil a day. carol: give us some perspective on that. what does that mean? joel: we've not had that number since the nixon administration. we are talking decades. it shows how dominant the u.s. has become in producing oil and that challenges the geopolitical order of things. opec and russia are less relevant, and as the price of oil has climbed up to $65-ish, 10 million barrels a day. that is a disruptive element , at the same time, this is oil. should we be doing this? is this good for the world? carol: you have an administration and president talking about expanding into offshore drilling, going into the arctic national wildlife refuge. there's implications of that.
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joel: there's a job element to this, the economic growth that comes with it, which is why we boiled it down to our cover line, "good for the u.s., bad for the world." carol: fascinating. i want to go back to what you say about geopolitical considerations. we have, as a nation, and this is in the story about tiptoeing around being an oil supplying nation, which has put us at a disadvantage when it comes to dealing with other parts of the world, particularly the middle east or russia. joel: it really shows american ingenuity as well. fracking -- and this is largely via fracking -- this is a technology that has been around for a bit, but we have perfected it and moved it into a place that kind of makes us the envy of the world. and it is true, it is the driving force behind all of this. carol: what is it going to mean for the middle east specifically? there is another story in "business week" that takes a
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look on what has been happening in saudi arabia, the corruption , crackdown, and that is a country that is trying to involve and think about the past and the path forward because they've been hurt by declining oil revenues and other situations. what does it mean potentially for relations with the middle east? joel: i think for the u.s. it just shows we are inching towards energy independence. we are not there yet, but between the growth and renewables, this is a viable diversification and it does put saudi arabia and a different place. in a does put saudi arabia different place. keep in mind saudi aramco ipo, we don't know if it will be this year or next year, it will be the biggest ipo ever. we don't know how much oil they have. they are not going away anytime soon. carol: making oil a cover star was the job of creative -- of the creative director.
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>> oil stories are particularly challenging because every business magazine has done them many times in the past. we wanted to get at what made this story different. it is not only the fact that there's an oil boom in america, what other repercussions in the rest of the world? not great. carol: exactly. there's a good and bad side to this. >> exactly. we didn't want to make it this big celebratory thing or just show a shining oil barrel as a new hope for the american economy. we wanted to show both sides of that, which we did by mostly by making the headline large, was fairly clearly get that that. carol: but if you look at the magazine one way and then flip it the other way, is the whole idea that there's two sides to the story. >> exactly. it is obviously very intentional that the good for the u.s. is at the top, and at the bottom in the murky oil in red type is a little more sinister, that it is actually bad for the world. carol: coming up, a look inside saudi arabia's ritz-carlton jailhouse. a growing threat from india's
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sacred cow. this is "bloomberg businessweek." ♪
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♪ carol: welcome back to "bloomberg businessweek." i'm carol massar. you can also find us online at and on the mobile app. some of saudi arabia's richest citizens have been held captive and bloomberg news was invited to tour the hotel. here is editor matthew philips. matthew: it was unannounced and happened overnight. hundreds of people were rounded up, some of the most prominent, richest members of saudi arabia's princes and billionaires and cabinet of
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-- officials were rounded up and put in the ritz-carlton in riyadh, one of the world's nicest hotels. it is a 5-star prison, and they've been there since then. no access has been granted to anybody since then. they are slowly making their way through this group of people and coming up with settlement terms, and they let our reporter in over the weekend, who wrote this, who is based in dubai. he got a call and they said, we want to bring you in and talk to you. he quickly flew to riyadh, went on a sunday night around midnight. he describes the scene. it is kind of eerily empty and there are saudi officials around the lobby with arabic music being piped in. they are kind of going through a headcount. the attorney general of the country is sitting on a couch by himself, and basically looking at who has been released, who remains, and how much they actually expect to net from this.
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the number is pretty shocking, about $100 billion of settlement deals that they've been able to negotiate with these people. carol: huge question i have when i was reading the story. now you've told me how he got access to the hotel, why did they let him in? matthew: that's a great question. he is one of the few journalists who's actually been granted access to this. the whole hotel has been a lockdown compound for the last couple of months. they had a story to tell and they chose bloomberg to tell it. they are winding this thing down, and their story is that this is great for investor confidence, a clearly long overdue anticorruption crackdown, although there are those who think that it's a little bit of that, but also this naked political purge that the crown prince mohammad bin
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salman, the youngest son of the king, organized behind the scenes. carol: i feel conflicted. the crown prince has really been embracing change, bringing about modernization to saudi arabia, allowing women to drive. he's really been trying to move the country forward. at the same time there was so much secrecy in this crackdown, and it doesn't seem like a lot of transparency since november about what was going on. matthew: that's right. that's the big question, how the markets and investors feel about this? right now as davos is going on, the ceo of saudi aramco, the ipo of which is a big part of the kingdom's economic revitalization, he is there talking about how this is great for investor confidence. see, the country is cracking down on corruption. however, there's another undercurrent that is more nefarious, that there is no transparency here. we were unable to meet with any
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of the detainees, they will not discuss individual cases. in fact, one of the most prominent of the detainees, the richest saudi, we don't know where he is. there are a lot of conflicting reports about where he is. we have sources telling us he is still at the ritz, and sources telling us that he's been taken to another site and is still in negotiations, and that he balked essentially at the kingdom's plans to take control over his $9 billion holding company. carol: in the economic section, cows are considered sacred by many in india's hindu majority, but that is causing issues with the country's plans to expand its milk industry. here is the editor. >> the majority of those in india consider cows sacred. since the 2014 election of a , thoseationalist party groups have much more activity
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around the protection of bovines. carol: talk about the stuff that has come out of the government that has ramped up the protection of cows. reporter: in may, the government issued a ban on the transport and sale of cows at animal markets because they said the treatment was particularly bad in those settings. the india supreme court stopped the ban from taking effect, but the message that seems to go out to people who support protecting cows that this is a priority for the government. in effect, the ban is being enforced by vigilante groups which have been targeting cattle traders and sometimes transporting a cow from one village to the next can get people to become targets for these attacks. carol: people have been killed over this. reporter: yes. last year there were i think almost 200 attacks, and 11 of them were deadly.
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it is gruesome. but modi has come out against the vigilante groups, but there's still the feeling that there's this sentiment that is taking root. carol: what is happening -- and you guys write about this in the story -- for farmers in india, a lot of them are actually abandoning their cows and opting for water buffaloes to produce milk. reporter: 20 million cows are being abandoned in india right now because if you are a dairy farmer -- and we are talking -- actually, india has the world's largest dairy industry, a $53 billion industry -- a lot of it is very small farms and small herds. if you are a farmer and that cow is no longer producing milk, you would send it to get slaughtered and recover the cost of raising
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it. certainly you really can't afford to pasture it forever. most of them can't, so they are letting them loose. that creates problems for other farmers because they eat crops. that is why we are seeing these rescue shelters like the one in new delhi. there's about 5000 new ones that have cropped up since 2011 to take care of this growing population of stray cows. carol: up next, the deal that bought u.s. lawmakers time to keep the lights on. plus, how hedge funds secretly manipulate the government to make investments go their way. this is "bloomberg businessweek." ♪
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♪ carol: welcome back to "bloomberg businessweek." i'm carol massar. you can also listen to us on radio on sirius xm channel 119, 106.1 in boston. in the future section, an investigation into the dci group and how it helps hedge funds influence lawmakers. we talked to a reporter. >> this is the house subcommittee of the house of foreign affairs. they're thinking about international issues and specifically latin america. what can we do to try to build prosperity and economic growth in latin america? their lead witness is this guy, james k. glassman, this silver-haired, washington wise man who's a former top ranking u.s. diplomat.
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he founded a think tank. he has this incredible resume. he published in, "the new republic" and, "the atlantic" in the old days, so really guy.dible he comes in and has these very specific points to make about latin america. he says argentina is mistreating its bondholders and it needs to change. he says now puerto rico is threatening to do the same thing to investors in this public utility that it had. and by the way, there's also this tax dispute with this bank in puerto rico, and the government is wrong there. they need to fix that. and is in it too bad what happened to the general motors bond owners? carol: but very specific. zach: yes.
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and at the same time he is speaking -- and this doesn't come up at the hearing -- he is working for this company that is essentially a kind of affiliate or front group for a public affairs firm that represents people in all four of those cases. carol: this company is called dci. we will dig into this. this individual sounds like someone we in the media would want to talk to when it comes to latin america because he sounds very informed. why does he have access? just because lawmakers reach out to him? zach: that's a good question about how that hearing got put together. i don't know if we will ever know the full story, but james glassman has been, since about 2000, taking positions, thousands of op eds, testimony before congress, and writing studies. during almost all of that time he's been working for one company or another that is affiliated with this one public affairs firm that has clients who have interests that line up with the positions he's taking. carol: tell us about this
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company, dci. who are they? you say they are public relations firm, that sounds not very threatening, yet as they say they work pretty closely with the hedge fund community. zach: this kind of covert influence operation has been around washington for a long time. people call it astroturfing sometimes. it has been around for decades. what is relatively new is a new client base coming in, of hedge funds. rather than, say, tobacco or telecom companies, traditional users of astroturfing, you have a hedge fund that makes a bet in the market, buy a stock or bond, and government has an opportunity to make a decision that could make the value of stock go up, and so the goal of these campaigns is to influence government not to benefit a company, but to essentially benefit the price of
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a security. carol: interesting. through policies or policy changes. zach: that is right. carol: so what is the difference -- as you said, companies have been sending people to talk to lawmakers, testified before committees, or doing lobbying for a long time. it is kind of a way of doing business. what is different about the way massive companies would do it and what hedge funds are doing? zach: great question. in terms of techniques they are similar. if you think of the interests of hedge funds and how they are different from corporations, exxon mobil, there's been certain kinds of regulations they disliked. they disliked them in the 1980's, 1990's, and today, and probably 10 years from now. that is just part of being an oil company. there's a certain kind of regulations that you see as unhelpful. very different for a hedge fund, which might make a bet in the market, pursue a lobbying campaign to make that payoff, and then turn around and sell that security at any point,
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maybe go short. it kind of makes corporate lobbying seem quaint. carol: staying focused on capitol hill, we take a look at how a land made up of immigrants is fighting so much over immigration. peter: this is fairly new for the u.s. to have this kind of partisan divide. you sort of take it for granted on a day-to-day basis. of course republicans are strongly against immigrations and democrats -- it was not that way as recently as 2006, according to the pew research center polling, there is only a few research points gap between voters on their favorability toward immigrants. carol: so republicans and democrats alike are ok with immigration and immigrants. peter: right. neither party was all in, strong in favor, but kind of very close. what has happened since then in the past dozen years, democrats have taken a much more
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favorable, and republicans a little less. not way less. what has happened is that has made immigration into a wedge issue for both parties that they can use to try to drive and consolidate the people on their side and try to pull them away from the other side. carol: how did this happen? peter: that's a great question. i think there's a lot of factors that went into it. one is that organized labor, the afl-cio, was traditionally a little anti-immigration on the grounds that the incoming workers would be taking jobs away from -- especially on the low skilled end of things. around 2000 or so, they reassessed and said actually, a lot of people who are in our unions now are themselves immigrants, and some of them are undocumented.
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maybe our interests have shifted and what we should be trying to do is make sure that employers don't discriminate against those people. we don't want huge numbers of them coming in, but -- that was one big change. carol: it is interesting you talk about the republican party in the business groups out there and how republicans will listen to those groups on issues like taxes. peter: and deregulation. carol: immigration? peter: on immigration, the two powerful voices, the business roundtable and the chamber of commerce, both are quite open to immigration. they see it as a force of, like the japanese said, vitality. they put out the press releases, but they are getting ignored by the republicans on capitol hill and the white house. carol: just ahead, nigeria goes old-school when it comes to cryptocurrency fraud protection. and a look at the cost of free speech. this is "bloomberg
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businessweek." ♪
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carol: welcome back to "bloomberg businessweek." still ahead, china defines the laws of economics. in the u.s., cities and schools bearing the costs of protest and counter protests. and the private british club hoping to plant flags in new york. that is all ahead on "bloomberg businessweek." ♪ carol: we are here with the editor-in-chief of "bloomberg businessweek," joel webber. many more must reads in the magazine. there is feature story on china
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talking about how they are maybe getting around the laws of economics. joel: the chinese, i think it is just a fascinating story. we can basically do a china issue every single week. i think this is a particularly interesting one because there is a lot of questionable data. carol: yeah. joel: when we were talking about this story, i said i think the thing that really resonates with me about this is that the writer basically says we don't understand why this is happening, and yet maybe they actually figured out something that no one else has figured out, which is part of a conversation i think we haven't had before. carol: there's some basic rules of economics. china continues to defy that. you guys talk about their growth, still there but slowing down dramatically. joel: it is almost too perfect. carol: and talk about a steady line, their mountain of debt continues to grow. some would argue you need to overhaul their system.
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joel: this is probably the year of deleveraging which will be an ongoing conversation i know bloomberg news will be focused on and "business week" as well. that is ultimately what the economic story is here. what everyone is trying to wrap their head around, what is the outcome going to be here? every other time something like this, a debt grows like this, it ends badly. carol: you think about they dole out a lot of subsidies to corporations. they are continuing to that, if not ramping it up. tighter controls if you look at the internet. so what do the economists that -- all of that would go against how you fix it. so what do the economists that you guys have talked to say? joel: it is a first-person story. there is this other theme that i think is really important with china, which is almost the further you get away from beijing, sort of the more bearish people get about china, which is interesting sort of a subtlety to this conversation.
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i would think he falls in that camp. and yet he says i've always been a bear on this, yet have been wrong? -- yet have i been wrong? he is saying, let's talk about this. carol: you think about some of the things china does. when there is a problem, they got a ton of money they can throw at something. they have thrown a lot of money like it is something like infrastructure. joel: maybe their version of capitalism is maybe a better, different version of hours. carol: the other debate, at some point, is that the next big financial crisis? joel: if it were to be, what would it look like? is it as global as the financial crisis we had 10 years ago, or is it a different version of that? there's a lot of other people who have commented on that, but it doesn't look like it is an impending situation at the
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moment. carol: another feature in the magazine this week is about the cost of free speech. joel: this is just a fabulous idea, a photo essay that started about a year ago with the march in washington. we had a photographer who basically started to photograph all of the various marches. in addition to the marches, things like charlottesville. we were there throughout this tumultuous year photographing it all, and then susan berfield did this amazing piece to accompany that, which is what is the cost of free speech? when there are rallies, what happens to businesses? , it isppens to overtime such a fascinating undercurrent to this. lot are allowed free speech,
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but what are the economics? carol: we have more on this from susan berfield. reporter: this is a photo essay. a photographer went around for the past year shooting some of the rallies and events that we know about, charlottesville, berkeley, and then a lot of rallies and protests in smaller towns, mostly centered around white nationalists or extremely conservative people coming into town, and the counterprotesters that also amass and what happens in those situations. carol: specifically you talk about one individual who came to florida, the university of florida, richard spencer. tell us about him. reporter: he i think takes credit, probably rightly, for coining the term, "alt-right." he is a white nationalist that runs something called the national policy institute.
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in the past year he has tried to go on public university campuses to speak, and that has caused universities a lot of grief in -- grief and trouble, and sometimes expensive. he actually rented the space where he was going to speak at the corner of the campus. the campus did not invite him, correct? reporter: correct. the university of florida gainesville did not invite him, did not want him to come, tried to stop him, but he has first amendment rights at a public university to rent the space. he paid roughly $10,000 for the auditorium itself and for security within the auditorium. carol: what do you mean he has the right to rent space at a public university? reporter: the first amendment guarantees the right of free speech in public spaces. unlike private universities, public universities cannot turn
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people away because they are controversial, because their speech is hateful, not even necessarily because their speech could potentially incite violence. if the speakers themselves incite violence, that is something different. carol: tell us what was involved. the university of florida at gainesville knew that this was going to be potentially -- there could be writes, -- there could be riots, people that were going to be coming to protest his speech, so they had to prepare. reporter: imagine, you know, charlottesville was middle of august. richard spencer was there. it was the unite the right rally. violence, death, injuries. a few weeks after that, the university of florida here's -- the university of florida here's that richard spencer, the same guy, was to come to their campus. they begin preparing. initially they do try to turn him away. he threatens a lawsuit. they realize they are not going to have grounds to turn him away so they begin planning, and they
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really draw on law-enforcement from throughout the state. they also deal with richard spencer and his group and try to understand how many people they are bringing. they are trying to understand the counterprotesters that are going to come. in all, the university president estimates they spent $600,000. the event was two hours on a thursday afternoon, but it practically shut down the campus. in the end, he came, got on stage, and was shouted down, and left the stage early. carol: up next, nigeria battles bitcoin scams and the challenge of getting millennials to love slot machines. this is "bloomberg businessweek." ♪
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carol: welcome back to "bloomberg businessweek." i'm carol massar. you can find online at in the technology section, bitcoin scams have become commonplace in nigeria, so a group of traders are taking matters into their own hands. here's editor jeff muska. >> in late 2015 through the end of 2016, nigerians became interested in bitcoin for mixed reasons. about 3 million nigerians became the victims of a global ponzi scheme with origins in russia, in the course of a year and a half or so stole about $50 million worth of money in bitcoin. this is a country where the per capita income is less than $3000. the push into bitcoin came as the local government started to
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crack down on the scheme and bar local banks from dealing with the originators. they say, no problem, if you want to buy in, just buy in in bitcoin. a lot of people got burned. nonetheless to hear this huge industry of bitcoin and cryptocurrency traders that have sprung up in nigeria tell it, this is really the origin of nigerians taking alternative currencies seriously as a way to make money and score value. carol: let's see some numbers behind it. you include that in the story. you edited this story. nigerians are trading about $4.7 million worth of bitcoin every week from 300,000 per week about a year ago. that is a pretty tremendous ramp-up. reporter: absolutely. currency exchanges and crypto traders who say it took them years and years to get up to 10,000 customers now say they've added 90,000 in the past year.
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carol: this story takes a look at informal exchanges that have been created by people in terms of monitoring and managing bitcoin. tell us about that. reporter: in nigeria, where the local exchanges are becoming flooded with people who are new to cryptocurrencies, and scammers have flooded into the marketplace. the most common way to try to rob people in nigeria of their cash are either by what's known as cloning profiles of existing reputable traders, photos from the internet, maybe some identifying information and just passing it off for long enough to pass a cursory background check, or by the same token trying to arrange for payment in the local currency and then disappearing once they have got
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the money. carol: a rather sophisticated way of scamming people. reporter: some old and at some new. the way that cryptocurrency aficionados have responded are, nigeria has old-school fraud protections. there are informal networks. in most cases, people with generally a handful of people in charge of acting almost as just a bankers, and verifying passports or id information and in some cases holding the money in escrow in certain transactions. carol: in the small business section the company gambling on people in their 20's to play slot machines. here's chris palmeri. reporter: it's been a slow recovery from the great recession when people realized they could cut back on gambling.
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the big challenge for the industry is younger people just aren't playing as much as their parents or grandparents, particularly slot machines. it has been sort of a 1%, 2% growth nationally, driven a lot by new properties opening up all around the country. carol: i am not a gambler but there are great shows to see, places to eat and the other -- the younger generation embracing that part of it. reporter: exactly. people tell you in vegas it is about 65% non-gambling revenue, at the big casinos which is a total reversal from a decade ago. they are building to new hotels. they make more money on hotels. carol: let's talk about slot machines because casinos make a lot of money on slot machines. how are companies, casinos adapting slot machines that are out there to attract millennials? reporter: the idea is that the millenial crowd is already on its screens so much so when they
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go out on the town they don't want to be on a screen. they are looking for devices that are more interactive, that create an opportunity for people to play with their friends or spouses, so these games are looking a lot more like arcade games than slot machines. carol: tell us about the cofounder of gamblit gaming and what he is doing. reporter: he was previously an electrical engineer that ran a company that made these ticket receipt printers for the slot machines, how you got your winnings. he decided he would start a new company to address this issue and get young people more active on the casino gaming floor, so he's come up with these ideas, and sort of learned a lot in the process. some of his original presumptions haven't panned out. he thought these devices, one game is a video poker game that looks like a table, you have four people standing around it and get a couple of cards, and
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then cards pop up in the middle of the table and everyone competes to grab the card they want and get the ace or whatever -- again the interactive fun communal thing. the assumption was that you would put these in bars where young people hang out and it would be a big hit. not the case because the people at bars are watching sports, flirting with somebody. they are not interested in gambling. so really, the machine on a traditional casino floor did a lot better revenue wise. these are some of the things he is experimenting with and working with caesar's and mgm and some of the biggest casino operators. carol: up next, the engineer creating technology that helps american olympians go for the gold. and the best place to network in london may be coming to new york. this is "bloomberg businessweek." ♪ ♪
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carol: welcome back to "bloomberg businessweek." i'm carol massar. you can also listen to us on radio on sirius xm channel 119. on a.m. 11 in new york, 106.6 boston. 90 91 fm in washington, d.c. and a.m. 960 in the bay area and in london on dab emulex and three in asia on the bloomberg radio app. in pursuits this week, the game changer is a bioengineer and the training gear he created for olympic athletes. >> in the past decade or so, increasingly every year, there is investment that countries like america spend on getting their athletes a little bit faster. we're talking hundreds of a second faster, and that could be different between finishing in first for the gold medal and finishing in fourth with no metal at all. carol: talk about the individual who is very much involved in making sure the u.s. athletes are really high tech.
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it is not like it is one of the well-known big tech companies. it is an individual working out of his house. >> we wrote about him. he heads the usoc's technology and innovation. he goes around to the olympic committees and says, hey, what can i do? what do you need from a tech perspective that might make that 1% difference? for example, the ski team told him recently our athletes are having a hard time visualizing the slopes. what can you do for that? he and his team built a vr platform that has all the slopes they would be competing on in one headset, and a skier sitting on his couch between workouts or after dinner can pop on a headset and visualize that slope in pyeongchang where he or she will be racing in the olympics. carol: so they do kind of test runs. reporter: exactly. you can mentally see the exact run you are looking for, etc. that can be the difference
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between winning first or getting fourth. there's a lot that he and his team are working on. some are things like that, others are totally cutting edge, not available to the public yet kind of stuff. it is fascinating. carol: also in the story you talk about what he did for the u.s. women's cycling team. reporter: that is what he actually said he was most proud of. they worked with an eyeglass company to create connected sunglasses. projected on a screen inside the sunglasses was how fast they were going, what their power output was, their heart rate was. they are seeing all of it, and that lets them -- obviously it is more efficient because you don't have to look down or across. if you are a serious cyclist, you know exactly the power range you want to be in, that most efficient and best performance
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zone, and he has built those for the ski team this year. in the goggles when they are training, it is a similar kind of technology, and that is the kind of stuff that can make that tiny difference. carol: who is he? he is a game changer in the pursuit section this week. reporter: he's a biomedical engineer who started a few different sports wearable companies in europe. he was working with the italian ski team and a few other of italy's politics team. -- italy's olympic teams. the usoc based in america were looking for a guy to head their technology division that has the expertise to do stuff on his own. not just partner with people, but maybe in the time he has developed things by himself. they enticed him to come over. he's now out in silicon valley, obviously the cradle of tech and innovation. those are his people out there. carol: originally he went to their offices in colorado. reporter: i think it was pretty
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clear that he's probably best suited to be out closer to all the companies that the usoc is working with. carol: what was most striking with you in talking to him? reporter: the most amazing thing to me, i think a lot of these things he is working on are things being developed by massive companies, moonshot laboratories. we've heard under armour and nike and adidas talk about tech for years, a future where the shirt you are wearing tells you how much you are sweating, what you are eating, if you're hydrated, your heart rate. he has already built that. there are olympians that will be competing in south korea doing so using a smart textile skin suit that measured all that already. carol: also what it is like to be a member of a private club in london and the plans to expand to new york. here's editor chris rovzar. reporter: i was just there two weeks ago. it is the most fun club, a
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private club that has restaurants, meeting areas, lounge areas, and a very cool nightclub downstairs. it has been hot since it opened in 2012. carol: it is a private club. reporter: a private, members only club. only certain people can get through those doors, and that makes it even more cool. recently they announced they are going to move to new york and take that format, which costs them $50 million to build it in london, to here in new york. union square. carol: tell us about the experience. members only clubs have been around forever. reporter: totally true. london, new york, a lot of places have these private clubs that are members of only. -- membership only. you go in, oftentimes you have to wear a blazer. they have health clubs, fancy dining rooms, but have become kind of old-fashioned and they aren't super fun. the thing with lulu's and soho house is that they really went for a younger audience. the entrance fees are in the $2000, $3000 range as opposed to much higher for some other
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clubs. because of that they are attracting a really cool crowd and have this prolonged energy. carol: and a prolonged waiting list. reporter: yeah, and it discriminated against bankers in some cases. they really want creative types, whatever that means. they really sort of try to curate the membership to create something that seems really cool. carol: it is interesting, the club in london has george clooney as a member. reporter: they got some big deal people and backers. these are all backed by vc's and big international investors because this is actually a great value proposition. carol: talk about the value proposition. it sounds like if you got an annual membership, you have cash flow right away from day one. reporter: you got the real estate play, or you own real estate in cool neighborhoods, which is a long-term table. -- gamble. and because you book memberships, you have cash flow. these people aren't going every day.
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you have these fees from a few thousand people who don't really even use the space, so your day-to-day stuff actually turns profitable. carol: the other thing we see along this line is you also have high-end co-working spaces. reporter: these places are admittedly a little snobby, and can be expensive and there primary competition is co-working type places that have gotten kind of fancy. fancy amenities, restaurants, things like that. that is kind of a competition, and those also have total international financial backing. those are big investments. carol: anybody think they are tied to the economy? they are in london and moving to new york like ok, things are going really well. i just wonder what happens maybe in a downturn. reporter: we've noticed this with restaurants too. the move back to fancy exclusive experiences as opposed to shared plates and communal things, people really want fancy now. carol: "bloomberg businessweek" is available on newsstands now, and on and our
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