WeWork founder has reentered the chat … how?

Make Me Smart August 15, 2022 transcript

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Kai Ryssdal: I’m all set. I’m all set, a rare moment of host management from one Charlton Thorp. I’m going to tell you a Charlton Thorp story from my days back on MMR. Anyway. Hi everybody, I’m Kai Ryssdal. Welcome back to Make Me Smart, where we make today make sense, amidst, you know, defamatory comments about Charlton Thorp. But anyway.

Kimberly Adams: And welcome back. Hi. Hello, I’m Kimberly Adams, thank you for joining us this Monday, when we have Kai back from his journeys and adventures. We’re gonna do the news and then share a couple of make me smiles. But are you going to tell us where you were, what you were doing?

Kai Ryssdal: So son number two spent the summer in Buenos Aires, doing an internship down there. So we took the fam down. And it was it was amazing. Well, it was great obviously to be in South America, first time down there, be in Argentina, which is super cool. Buenos Aires is a really interesting city. We also went up to Iguazu falls, those of you who follow me on instagram saw my pictures of that. But it was tough to get away from my work reality a little bit, because inflation down there is 90% a year. And it’s been, the thing is… For comparison, ours was like maxed out at nine, right. And what has happened is that it’s a cash economy, for two reasons. One is nobody trusts the bank and the credit card system. But also, there’s a black-market dollar economy down there. So the official peso to dollar rate is 120 pesos to the dollar. So you get that if you pay somewhere with a credit card or officially, right, if you have to do that. The unofficial black-market rate, when we were down there was 284 to 295 ish pesos to the dollar. So more than doubling your money, right? The catch is, you can only trade cash for cash. So we went down there with a not small stack of crisp new Benjamins. And every couple of days, my son who had been down there for a while and had his guy, would take some money from us and go see his guy and bring us back – I kid you not, a two-and-a-half-inch thick stack of 1000 peso bills. And we would use that everywhere. It was crazy. Crazy, crazy, crazy.

Kimberly Adams: It was like that in Egypt after the revolution. And, you know, there was this entire black-market economy of dollars. And so anytime Americans would come into Egypt, you just bring like as much cash as you could, because you could like, you know, not that you’re like money laundering, but just like you were – it was so much easier to work that way. And I remember when I signed the lease on my apartment, I had a full negotiation with my landlord about whether I was going to pay my rent in dollars, or whether I was going to pay it in Egyptian pounds, because depending on where you thought the economy was going, it worked one way in favor versus the other. But what I really want to know is while you were in Argentina, did you have any dulce de leche?

Kai Ryssdal: Oh, yeah, we had dulce de leche all the time. It was all kinds of great stuff. I had more beef than you can shake a stick at. Lots of empanadas. It was really amazing. But wait, back up to the boring economic stuff for a second. The other thing that happens in line with your experience, is that my son’s Argentinian colleagues, every time they get enough pesos to convert it to dollars, they take their money and they buy a crisp new $100 American bill from their guy. And so that’s how people are saving. That’s how people are saving money. Right? Exactly. Exactly. It’s crazy.

Kimberly Adams: To move back into non-boring economic stuff, the reason I know about dulce de leche is because when I was like 10, my sister, the Dr. Adams who sometimes shows up in economics on tap, did her study abroad in Argentina in high school and came back and brought a jar of dulce de leche, and told 10-year-old Kimberly so as not to get me to eat it, that it was poop. And this particular kind of poop was a local delicacy. And then only really fancy people knew that it was like, you know, a cool thing to eat but it successfully stopped 10-year-old Kimberly from eating it.

Kai Ryssdal: That’s great. That’s great.

Kimberly Adams: Yeah, that’s big sisters for you.

Kai Ryssdal: Oh my goodness. All right. So anyway, I think we’ll do news, we’ll do make me smile. And then we’ll move on. You want to go? Go ahead.

Kimberly Adams: Sure. Mine’s a quick, quick easy one, which is just a story in Jalopnik, which is a sort of automotive news site. But the story is kind of everywhere, which is that the gas prices are going down in over half of the country. Gas prices are now below $4 a gallon. And, you know, the oil markets aren’t necessarily doing all that much better, but gas prices are going down like a feather as we’ve said. They are going down much more slowly than they went up, but there is some relief happening there for people. So just wanted to flag it. We talked so much about gas prices going up. Wanted to also mention them going down.

Kai Ryssdal: Yeah, I think I heard David say this morning on MMR that crude was like at 87 bucks or something. So it’s, you know, it’s down a bit from where it was, you know, when I left, last I kept track. So yeah, it’s, you know, energy obviously is a huge component of all that inflation and all that jazz. So, anyway, that’s a big deal. Okay. So I’ve got two, one of which, well, they’re both reasonably quick, as I tend to do on these little lines. So the first one is, Are you freaking kidding me? How does this happen? And I have an answer for that in a minute. Anybody remember Adam Neumann? Adam Neumann, the guy who founded, built and then drove WeWork, not all the way into the ground, but really close to it. WeWork, of course, is the temporary office sharing space that was at one point worth $47 billion. And then through mismanagement and bad timing and a bunch of different things, is now worth 1/10 of that. The reason I’m bringing it up, is because Neumann walked away with hundreds of millions of dollars, when thousands of people who worked at WeWork at its biggest peak, right, the temporary office company that, you know, rented out long term space, and then rented it to people and companies for short term at much higher rates. Thousands of people lost their jobs through his mismanagement of that company, right.

Kimberly Adams: And a lot of investors lost their money.

Kai Ryssdal: Lots of investors lost their money. But WeWork is still around, it’s worth about $4 billion. But on Adam Neumann and investment. He has a new company. It’s a commercial real estate company called Flow. And it has gotten an investment from Marc Andreessen and his venture capital company, a16z, that values that company, Flow, at a billion dollars, okay? And and I bring this up not to – well, I bring it up not to talk about the business model of Flow, which is really unclear, from all the reading I’ve done. But to answer a question that was posed by Francesca Levy, our new director of digital and on demand, in one of our Slack channels this morning, which was she posted this article, and then underneath the headline that said, Adam Neumann is getting a big check, said “How?”. And I was tempted to, but did not answer. And it’s really simple, and it’s really bad. And it has to be said. It’s because he’s white. And it’s because he’s a dude.

Kimberly Adams: I’m so glad you said it, so I didn’t have to.

Kai Ryssdal: Yeah. I mean, clearly, that’s it, right? Some huge percentage of venture capital money goes to white dudes – goes to dudes, and white dudes in particular. And that…

Kimberly Adams: Even with the track record of failure.

Kai Ryssdal: Right, right, right, right. You could take a company like WeWork and implode it, and still get $500 million from Marc Andreessen. And valuation of your new company at $2 billion, when the business model is unclear at best. And you just need to say, what? So that’s item number one.

Kimberly Adams: I mean, not to take it too much into politics. But I mean, like, this is the thing that a lot of people said about Trump as well. He has this long track record of failed businesses and bankruptcies. And like, it took so long for people to stop lending him money. And then you only had like a couple of banks that would and then they ended up getting screwed over. And now they’re tied up in all these legal investigations. And then he turned to politics, and got all this other stuff going on. So yeah, yeah. Must be nice.

Kai Ryssdal: So that’s the substantive item. I do just want to put this on everybody’s radar. You’ve probably seen it already. And if not, here you go. Central banks around the world, as we know, are raising interest rates to fight inflation. Not so the Chinese central bank, the People’s Bank of China this morning, cut two of its key interest rates, because things there are slowing down. And that is not great news. That is just not great news. And I just want everybody to know.

Kimberly Adams: Can you say more about that?

Kai Ryssdal: Well, sure. So what has happened, largely as a result of Xi Jinping’s zero COVID policy, is that large segments of the Chinese economy have shut down for long periods of time at various instances over the past few years. [cough] Excuse me, over the past few years. And now that is catching up to them, and their economy, everything from retail to property to industrial production is slowing down markedly, okay? That is a sign of possibly a recession, certainly challenges in their macro economy. And so the Central Bank of China, the People’s Bank of China, is trying to stimulate the economy. And one way that central banks do that – THE way that central banks do that, is by cutting interest rates to make money easier to get and thus stimulate business. So it’s one-year rate, and its seven-day rate, it’s extremely short rate, are being cut in the hopes that that will generate some economic activity. I would submit that it’s only going to do a little bit of good to cut those rates if we’re still doing zero COVID. Or they are still doing zero. You know.

Kimberly Adams: You know, we talk a lot about how a US recession ripples through the global economy. What is the Chinese recession due to the … of global economy?

Kai Ryssdal: So let’s, let’s think back to the beginning of the pandemic. And the first inkling we had, that it was going to be a huge macro economic story, right? Maybe not the first, but it was the Apple coming out in January, and say, we cannot get the stuff we need out of China, to sell to our American and European and international consumers. Because Foxconn is over there, and all that stuff is manufactured over there. Look at your iPhone, it says, you know, created in Cupertino, manufactured in China or whatever the hell it says. Right? And so that was the first thing. It was a supply shock, which is completely different from a demand shock, right? A demand shock is when demand plummets, because people stopped feeling confident. What we had was the other side…

Kimberly Adams: Which came later.

Kai Ryssdal: Right, right, right. Absolutely. When we all shut down, right, that was March and April. But we had a supply shock. And that was what happened. And that rippled through the whole doggone economy. And the same way you could see the virus go round and round the globe before it finally landed – well, only once around the globe, before it landed here, right. I mean, you remember, we saw it go to Europe, we saw it go – well, first, we saw it sort of in like Turkey and then it worked its way up through Europe. And that it came here and we saw it coming. Same thing happened with that supply shock. And I would just submit that the number two economy in the world, still global manufacturing hub in a lot of ways. is really bad for the global economy when it slows down. And and let’s hope they don’t go into recession. Right. Let’s just hope.

Kimberly Adams: Yes, I’m knocking on my wooden desk.

Kai Ryssdal: Yes, yes. Okay. Charlton. I believe that’s the end of the news. Oh, well, you got three.

Kimberly Adams: I have two.

Kai Ryssdal: Oh, okay.

Kimberly Adams: Two of the links are related to the same thing. So I’ll do that one first, because it’s a make me smile, but it’s a bit on the serious side. So if you recall back to the infamous slap at the Academy Awards earlier this year, one of the stories that went viral online afterwards was a story of Sacheen Littlefeather, who in 1973, accepted slash declined on behalf of Marlon Brando the Oscar that year on, you know, talking about the poor representation of Native Americans and American Indians in film and TV. She was booed. She was heckled. John Wayne had to be physically restrained by apparently like six security guards backstage to stop him from attacking her. And so – I know this does not start off as a smile – the Academy of Motion Pictures of Arts and Sciences is going to apologize to her formally for her treatment at the 1973 Oscars, and they’re going to have her as a guest of honor for an evening, I’m reading from the Hollywood Reporter here. She’s going to return to the academy as an invited guest of honor for an evening of reflection at the Academy Museum, featuring something she never dared to imagine: a formal apology from the Academy of Motion Picture Arts and Sciences. And there’s a lovely podcast from the Academy Museum called “And the Oscar Goes To”. And they have an episode where they interview her about that night and that moment, what it was like, you know, how frightened she was, and how she got to the place where she connected with Marlon Brando and how they – she got to the point where she could, you know, get up there and say those things and kind of how it feels to come full circle. She’s like, the slap was not my fault, which was really funny. But, you know, I’m really glad to see her kind of getting this apology, you know, while she’s still living while she can still appreciate it, because in so many of these circumstances where injustice is done, it takes so much longer. And 50 years is a long time. But you know, the arc of history and all of that. So.

Kai Ryssdal: Sorry, I’m just looking up how old she was – she was 20, what, 27 when that happened?

Kimberly Adams: Yeah, yeah. And she’s now 75. And it’s just. Can you imagine standing up there in front of that room of hostility? And knowing somebody is literally in the wings waiting to attack you? Apparently the director of the show told her that if she went over the one minute allotted for the speech, they would have her arrested.

Kai Ryssdal: Oh, wow.

Kimberly Adams: Yeah. Yeah. So anyway, I saw that article, and it did make me smile. So that’s my first one. You go ahead and do yours.

Kai Ryssdal: Alright. So random Twitter thing that, well, maybe it didn’t make me smile, it made me go, Aha, this is interesting. And so I thought I would share.

Kimberly Adams: It made me like put my head in my…

Kai Ryssdal: I’m sure. I’m sure. It’s an item from Pellicle magazine, P-E-L-L-I-C-L-E mag.com, which is a guide to IPAs. And point of fact, it is the essential guide to IPA, written by Matthew Curtis. It’s chock-a-block full of information. It’s not actually short. It’s super interesting. I think the kicker though, is this line, which I will just say, Yes, I grant you this point. “If beer is truly for everyone,” the pull quote says, “why go to such great effort to make it so effing complicated?” This will clarify IPAs for you. So if you’re curious at all, give it a read. I enjoy it.

Kimberly Adams: So you can feel a little bit fancier than just saying you’re drinking beer.

Kai Ryssdal: Right. Exactly. That. There you go.

Kimberly Adams: Because who doesn’t want to feel like a touch fancier? It’s like how I drink my box wine in a goblet. You know, you just want to level up a little bit sometimes. You don’t just want to drink beer, you want to have an IPA. Sounds fancy. Okay, you know we gotta go out on space. We got to go out on space, which is that NASA might actually be ready to bring out its space launch system a little bit earlier than expected. And so they’re planning to roll the Artemis I mission rocket to the Launch Pad 39B as soon as tomorrow at 9pm 9pm Eastern, two days ahead of the previous announced rollout schedule. That’s not the launch date. That’s just the, you know, getting into the pad and everything like that. But that’s very exciting, because we’re getting closer to the launch date. The three target dates to attempt the launch according to Ars Technica: August 29, September 2, and September 5. So, yay.

Kai Ryssdal: Yeah, to be clear, Artemis I is the uncrewed test flight. Just to be clear.

Kimberly Adams: Yes.

Kai Ryssdal: Okay. Good.

Kimberly Adams: That’s still cool.

Kai Ryssdal: Oh, super cool. Super cool. And I for one will be watching. All right, there we go. That’s Monday for us. We’re back, Me and Kimberly, we’re coming back tomorrow for a deep dive on DACA, the Deferred Action for Childhood Arrivals program. It’s really – yes, it’s about people and it’s about circumstance. It’s also about their economic lives and what has happened to them, where things stand, and what may come to pass with that really critical program.

Kimberly Adams: Yeah, and in the meantime, if you have questions or comments about the program, especially if you have been involved in the program yourself, our email is [email protected]. Or you can call us and leave us a voice message at 508-U-B-SMART.

Kai Ryssdal: Make Me Smart is produced by Marissa Cabrera. Charlton Thorp engineers today.

Kimberly Adams: Our Senior Producer is Bridget Bodnar, and our Director of On Demand is Donna Tam. You know, I ran into a young lady who’s a DACA recipient covering a protest a couple of months back. Yeah, and she’s a budding journalist. I was trying to sell her heart on business rumors.

Kai Ryssdal: There you go. That’s cool.