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tv   The David Rubenstein Show Peer to Peer Conversations  Bloomberg  October 28, 2017 9:00am-10:00am EDT

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♪ david: you have had to follow bill gates and steve ballmer, two legendary figures. satya: look, clear message was don't try to be like us. david: did steve say if you do this well, we will be happy? has having empathy made you a better ceo? satya: my pursuit is the growing sense of empathy for people around me. david: do you get a standing ovation for what you have done? satya: i have a lot of people saying, hey, come and fix my computer. [laughter] >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but ok. just leave it this way. alright. ♪
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david: i don't consider myself a journalist. and nobody else would consider myself a journalist. i began to take on the life of being an interviewer even though i have a day job of running a private equity firm. how do you define leadership? what is it that makes somebody tick? you have now had to follow bill gates and steve ballmer, to two legendary figures. did you feel you were ready for the job following those legends? or were you saying i could do a better job than they did? satya: the best advice i got from both bill and to steve i think helped me a lot. the clear message was don't try , to be like us. don't even bother to sort of say, i am succeeding these people. just be your own. in fact i remember very
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, distinctly, even during the interview process the board was conducting, they asked me if i wanted to be ceo. i said only if you want me to be the ceo. the feedback i got was that people who want to be ceos are like i want to be ceo. ,that is not me. i talked to steve and he said , just be your. it is too late to change. david: since you have been the ceo 3.5 years, the stock is up about -- i guess it is about 120%. when you go to your shareholder meetings, do you get a standing ovation for what you have done? satya: no, i get a lot of people asking me come home and fix my computer. [laughter] david: you are an native of india. what part of india? satya: i was born in the central part of india. david: growing up, your parents doted on you, i assume. satya: yeah. they did. david: and they told you you would be prime minister or
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something important in the country. what did you want to be? david: they wanted me to stop playing cricket take my studies -- and take my studies more seriously. david: you were an avid cricket player? satya: yes. david: when did you realize you wouldn't be a professional player? satya: pretty soon. i realized at best i would play , what is considered perhaps first-class in india, but i was not going to go much further than that. that is when my dad in fact -- i remember one of the big decisions that changed my life was -- my entire outlook was so provincial when i look back at it. i want to stay in hyderabad, maybe study economics and political science. that was about the extent of my ambition. he looks at me and said, what are you doing? you have to get out of this place. he pushed me out to an get to an engineering school, and that pretty much defined the trajectory afterwards. david: your father was a member
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of the senior civil service, which is an important position in india, right? satya: my dad was a different guy than me. prowessemic -- , which is amusing when you look at my report card. he was always humorous. he would look at my report cards and say i don't understand how anybody can have these kinds of marks. but he would say it in such endearing ways that it never made me feel bad. [laughter] david: the marks weren't high enough? satya: not high enough. the guy never met an exam he did not ace, as he would say. it was astounding to me he would have a son who could not face an -- could not ace an exam. david: your father is still alive? satya: yes. david: he must be proud of what you have achieved? satya: not enough. [laughter] david: so you went to college in india and then graduate school in the united states. satya: yeah. david: where did you go? satya: i went to the university of wisconsin in milwaukee, and that is when i switched from
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engineering to computer science. david: how did you happen to wind up there? it could not have been well known in india. satya: i showed up in milwaukee. david: did you have a winter coat? satya: that was my first valued possession in life, a winter coat, which is very important. unfortunately, i picked up this bad habit of smoking in india in , college. the one nice thing about going to school in milwaukee is you are a smoker, you have to go out in the winter and smoke. that one winter in milwaukee cured me of my smoking habit. [laughter] david: you have a job after you graduated at sun microsystems. and what was your job there? satya: i was a software developer. david: and then you got recruited to go to another company called microsoft. that was in 1992? satya: that's right. david: but you had also applied to go to the university of chicago school of business, so how did you decide to do one or the other? satya: frankly, i was very
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committed to saying oh, i want to go to the business school, maybe even to wall street. david: the highest calling of mankind, right? [laughter] satya: says david rubenstein. [laughter] satya: i thought wow, maybe that is what i should do. somewhere along the line i started talking to people. they said why would you do that? you are in tech. you should really come back. it was an amazing time because windows nt was just starting out. i subsequently went and did some combination of part-time and other courses and actually finished my mba, which i find astonishing. david: you were commuting, working, and on weekends commuting to the university of chicago. that must've taken a lot of energy to do both. satya: it was crazy. david: you are beginning your
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ascent, but your first child was born with cerebral palsy. he is 21 years old. how did you realize that would change your life and how have you dealt with that issue? satya: yeah, even, i was 29 years old. if you had asked me an hour before he was born what was going to my head, it was all about oh, is the nursery going to be ready? what will happen to our weekends now that we have a son? when will my wife get back to a job, and so on. but obviously everything changed that night. he was born because of an undetected in utero distress act -as 60 asian -- asphyxiation. the first, maybe even two years or more even, i was more about, why did this happen to me? what happened to us and all of
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these plans i had are now have all been thrown up in the air and changed? whereas my wife, what came naturally to her as a mother was she said, ok i'm not going back , to my job. i'm going to take care of my son, drive him around for therapy after therapy. and i watch that. without schooling me, i was schooled. nothing happened to me. what happened was to my son, and that it was time for me to understand that, realize that, see life through his eyes and do my duty as a father. that to me perhaps didn't come in one moment. it is something i think took time, but as i figured it out, it changed me as a parent, but also who i am today and how i approach everything. david: your wife is trained as an architect. she has given up doing that for a while? satya: that's right. david: and you have two
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daughters. one daughter has a severe learning disability as well. how did that affect you and your wife? satya: one of the things that happened because of our son is we built up a tremendous community of people, whether it is a therapist or other parents of children with disabilities, and so we were involved in that community by the time our youngest daughter came into our lives. i must say we had the richness of this community to support us, and when we recognized very early on, my wife and i, my wife in particular was quick to realize she would need additional help. so we found the school in vancouver, bc, which is all around numeral plasticity -- oplasticity.
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the idea is you can train your brain to learn, sort of compensating. we decided we will move the family to vancouver. my daughters and my wife were going to live in vancouver and we were going to commute again over the weekends, but the thing that -- that, quite honestly is , where it all came quite naturally to us. our son had taught us what it takes to give people with disabilities the best shot, so it is something we took on. david: your son lives with you now? satya: yes. david: one of the qualities you say you got from all this was empathy. but the result of having empathy made you a better ceo and a better person is that fair? , satya: yeah, in fact, most people think empathy is something you reserve for your life and for your family and for your friends or what have you, but the reality is i think it is an existential priority for a business. because you look at it like what
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is our business? our business is to meet unmet, unarticulated needs of customers. there is no way our innovation to meet unmet, unarticulated needs is going to come about if we do not listen. not just listen to the words, but go deep to understand what the needs are behind it. so i think empathy is core to innovation, and life experience, if you listen and learn from, teaches you. i would not claim to have talked about it but i would not claim any innate capability of empathy that i was born with. it is life that taught me. if anything, i pursued is every year is a growing sense of empathy for people around me. david: did steve say if you do this well, we will be happy. if you don't to this well, you might get another job? satya: one of the amazing things about bill and steve is there canne -- their candor.
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they are very honest about most things in life for everything in life. if you do a good job, maybe you are have another job. if not, you won't. [laughter] ♪
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♪ david: you are rising up in microsoft and running the business solutions division, but then they said we would like you to run the search business, and did you say you can't compete against google, i do not want to do that? or did you say i am happy to do that? satya: i had just been promoted to lead our business solutions team. i mean i was loving that job. ,it is something that i aspired to do.
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steve comes around and says hey, you know what? i have an idea for you. i think you should go run this group that has high attrition and we have a very tough task ahead. i don't know whether it is a good career move, but i need help and, you know, think wisely and choose. [laughter] satya: and i was like, wow, this is an interesting choice in front of me. i remember very distinctly going that night to the building in which the being a team -- bing team and our search team was housed. it was 9:00 or so and the parking lot was full and people were in. i said, wow, what is the deal here? these people are working hard, inspired, so i said well, i have got to join this team. the fight that they showed, they d me not to take the
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easy path and get in. david: did steve say if you do this well, we will be happy. if you don't do this well, you might not get another job? satya: that is correct. steve was -- one of the amazing things about bill and steve is their candor. they are very honest about most things in life, or everything in life. they do not sugarcoat anything. and you are lucky. if you do a good job, maybe you will have another job. if you're not, you won't. david: then they ask you to run another business, that was your cloud computing business. how did it happen that amazon, which was not a computer company more or less, became a giant in cloud and microsoft wasn't a giant there? satya: the interesting thing is what happens when they company become successful is this beautiful, virtuous cycle that gets created between your concept of product, your capability, and your culture. you really have all of these three things fall into gear and
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they are working super well, but then what happens is the concept that made you successful runs out of gas. it is not growing anymore. you now need new capabilities, and in order to have that new capability, you need a culture that allows you to grow that new capability. our solo business was growing strong double digits, a higher-margin business, and you look around on the other side of the lake -- here is a very low margin business call the cloud -- called the cloud and people look at that and say why would we do that? why would we do that when we have such an amazing, fast-growing, high-margin business? so that, i think, is the challenge. to be able to see the secular trends before they become conventional wisdom -- change your business model, change or technology, and change your product, is the business.
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tech is unforgiving, but quite frankly, now that tech is part of every business, it is something we all have to deal with. david: you get to be ceo of this company and are following legendary figures. two how did you say i am going to change things? satya: i was the consummate insider. i spent 25 years, 22 years or so when i became ceo. growing up in the company that bill and steve built, i understood like the back of my palm all the things we got right and all the things we got wrong, and i had a point of view on what i wanted to do if i was going to become ceo. we need now to make microsoft thrive in a mobile first and cloud first world. about trying to criticize or replace the past, but what we were going to do in the future. david: one of the things you try to do to change the culture was to change what was known as a very proprietary culture at microsoft. microsoft said this is the way we do things and we don't want to cooperate with other firms.
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how did you change the culture? satya: i said look let me not , these things as zero-sum. let me approach even our traditional competitors and say customers are heterogeneous, they use some of what we do, some of what you do. let's figure out a way to combine forces where it is market expansive and satisfies customers. that is how i approached it. it is the lesson i learned early on at microsoft. historically, windows and microsoft office are your two cash cows. they are the biggest source of profit? satya: absolutely. david: after those two, you have other things. you spent $26 billion, the biggest acquisition for microsoft ever, to buy linkedin. what does linkedin have to do with microsoft? satya: if you look at it, we have a one billion users -- one
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billion users of windows and microsoft office 365, so what is the common thread? they are all professionals, people who are trying to get things done. so we have the professional cloud and the professional devices in the world, and the vision was to combine that with the professional network of linkedin. in fact, if you look at some of the integrations we have since launched, you can be in outlook , you can get an email from david rubenstein. your linkedinup profile, which i hope you have. david: i will get one today. [laughter] satya: and look at all the mutual connections we may have, so the idea of the professional network and professional content can be brought together. i think ultimately it can be a big driver productivity. so that is why. one of the other big pieces that has been a real game changer for us is linkedin is the way people do business to business sales. if you want to be able to reach
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customers and sell, this integration will be a game changer, same way with talent management. so i think we have a lot of synergies between the products that are now coming to. david: you gave a statement about women's pay. satya: i gave such an absolute nonsensical answer. , when i talk to women who are very close to become a very senior very successful women, , that are key to microsoft and heard even their own personal experiences, that is when it struck me. david: did you hear from your wife about that? satya: absolutely, my mom and my wife. ♪
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♪ almost everything you have done since you have been ceo, the last three and a half years has worked perfectly. , the stock is up, the market value is up, everybody likes you. the only thing anybody criticizes you for is you gave a statement about women's pay at one point and you correctly i think changed your position to next day, but can you explain what happened? satya: absolutely. i was asked about pay equity and in fact -- i gave such a nonsensical answer, and i was interviewer the while on stage. i was answering a question
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literally using some past -- my own personal expense without understanding the broader context, the depth of the question, which is what is a person like me, who is the ceo of a company, doing to make sure that one, women can fully participate in our companies and economies, there is equal pay for it will work, and more importantly, there is equal opportunity -- equal work, and more importantly, there is equal opportunity for equal work. that was the real question. it was not about what about you what career advice you have for , me? it was a great learning moment for me. when i talk to women who are me, very senior very , successful women key to microsoft and heard their own personal experiences, that is when it struck me how the job of a ceo in particular is to make sure that everyone, whether it
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is gender diversity or ethnic diversity can first come into the company, do their best work, so we can serve our customers. that is a realization which i thought i had, quite frankly, but i was -- i'm glad i messed up so publicly because i think i internalize the lessons from it. david: did you hear from your wife about that? satya: absolutely. at that time, my mom was alive as well, so my mom and my wife. my wife had to give up her career because of her son but , even in my mom's case, she struggled. now i realize it a lot more than i even did growing up. the trade-off she had to make , where the system that she was working in did not support her re-entry into the workforce after she had both myself and my sister. david: so you have about 125,000 employees, something like that, so what percentage are male,
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what percentage are female, and how many senior women do you have? technology is not a place where a lot of women have risen to the top yet. satya: in fact, one of the things we have made good progress on is the women's representation, which we have a long way to go. you have to ever in tech, we have a particularly tougher issue because of technology disparity in terms of gender diversity, but let's start with the progress, which is that in in the last year, we have gone -- improved to 27.7% of women coming into the organization, which is two points more than historical. on the technology side, where we have improved by four points. that, i would say, is movement in the right direction, but not enough obviously. one of the other things are -- our board also did was to change the compensation system for me as well as my directors
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to say, look, progress despite , all the work that they do, programs we may have, let me tie compensation of the senior most people, including the ceo, too real numerical progress. , so we are doing everything, but quite frankly it is going to take continuous vigilance, a continuous push, and it is a top of mind issue for all of us. david: you have only been doing 3.5 years, which is a relatively short tenure for microsoft ceos. how many more years would you like to do this? satya: you know, i have been at microsoft now for 25 years and i think the thing that i feel that gives me that source of energy is really that sense of purpose of the company, because quite honestly it is not just i don't -- inestly, it is not just do not know how mine of it is up to me or how many years i will be there.
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i think it will be fun for me to do it each day and it is a real privilege to do it each day. ♪
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♪ >> the thrill of living well is in pursuit. the pursuit of the rarest experiences. a pursuit of the finest products. the pursuit of quality in everything you do. and in all of these pursuits, you need the best intelligence to make the best decisions. >> we know she sells for a lot, but what makes her important? >> it isn't easy. it is difficult work. >> welcome to "bloomberg pursuits," where you find information to help you follow your inspiration. in this edition, what you drive is important, and so is who you ride with. hannah elliott talks cars with jay leno.
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>> they're sort of like dinosaurs from another era. this is the demographic car that the average tv viewer would remember. >> learn the rules of cocktail bars. >> give the bartender something to work with. say i like whiskey, what is good with whiskey? or something we can build on? >> and see how the world's most spectacular watches are put together, one tiny magnificent piece at a time. >> with a mechanical watch you buy today, it is not the leading technology anymore. it is really craft and art. you are not racing for the technological breakthrough, you are racing to make the more spectacular watch. >> but first, trouble with us to -- travel with us to an of the world's legendary destinations. ♪ >> whether you know it is the city of light or love, paris is -- paris's charm is irresistible and unmissable.
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its galleries, cafes, and wine bars are revered the world over. welcome to "bloomberg pursuits." we will show you how to make the most of paris when you are here on business. ♪ >> the historic center of paris has been missing two of its most famous institutions for the past four years. the ritz, probably the world's most famous hotel, and even more exclusive rather, -- brother, n, were closed for renovation. well now they are back, and they are better than before. before the ritz was under threat , from modern hotels. a $450 million renovation has brought this grand building into the 20th century. -- 21st century. the ritz'side premium suite. there is no shortage of marble,
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goldleaf, or antique furniture. decadence is still the order of the day. this could all be yours, for a cool $33,000 a night. staying in the ritz has its perks. down in the basement is the hotel's own cooking school, in case you need to brush up on the culinary craft. the ritz's head pastry chef can show you how to make the perfect macaron. >> last one. >> yes, great job. ♪ >> if the ritz is famous, then its bar is legendary. the hemingway is named after the american author who liberated it during the second world war. the man behind the bar is colin fields, ranked as best bartender in the world by "forbes" and "travel and leisure" magazines. colin has a drink for any occasion. >> perfection in a glass. ♪ >> paris is trying to go green. banning diesel cars by 2025.
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the churn of the city is hard to escape, but it is possible. there are beautiful parks. it has also transformed one of its busiest stretches of road into a new two-mile pedestrian route along the seine. ♪ paris has been making perfume since the 14th century. how exactly scents are created remains a closely guarded secret, but here at ex nihilo store, you getd a chance to design your own perfume. paris' hotel scene is welcoming back its other grand palace hotel, the crillion. if the ritz is playing it safe, then the crillion is taking risks, and it has worked. modern art adorns the lobbies and bars, while staff are useful and dressed to the nines. if you thought the ritz was
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expensive, take a deep breath. suites start at $1350 and go up to an eye-watering $38,000 a night, but every room has its own butler with modern styling mixing seamlessly with tradition. before the renovation, the crillion was seen as aging and stuffy. well, the cobwebs have been blown off, revealing a new hotel of style and substance. a barber is on-site to make sure your beard is as sharp as your suit, while in-house cobblers are at the ready to keep you looking like you belong. ♪ >> food and the art of taking the time to enjoy it are traditions the french hold dear. i've got some tips for the uninitiated. first, don't do lunch el desco. the french hold to traditional mealtimes. if going out for a work lunch, always plan to sit at around
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1:30. second, if you are headed to a nice restaurant, book ahead. you need to make a reservation or you will end up locked out. don't be afraid, even if your french is not great. chances are the maitre d' will speak some english. ♪ >> if you have a morning to spare and want to get out of the city, here is a surprising option. the champagne region is just 35 minutes away by helicopter. it's not cheap. prices start at $1000, but in no time at all, you will be sipping away. if you get the chance, check out the ballinger cellar. this 188-year-old winemaker has one of the world's largest.
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so, now you have had your aperitif, it is time to head back to paris. ♪ >> this city knows how to do luxury. it has had some practice. other cities might be biting at their heels, but paris still leads the way. there is no revolution needed. great food, dangerously good wine, killer style -- they make it look easy. >> from the city of lights, let's head to hollywood. hannah elliott rides shotgun with a king of comedy who is also a connoisseur of cars. jay: the first car i bought when i came to california was my 1955 buick roadmaster, which i still have. it's how i met my wife in it, i got married in that car. >> plus, learn the rules for being a star at a cocktail bar. >> when it comes to house cocktails, try the way it is made, the way it is written on the menu. chances are, the bar staff put a lot of effort into making that drink taste as good as possible.
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>> and later, peek inside a factory that makes timeless timepieces. >> we have more than 30 different job descriptions. purely different educations, and you find this education, this training, only in this region. because nowhere else in the world do you need this kind of know-how. >> this is "bloomberg pursuits." ♪
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♪ >> getting a drink at a good bar is one of life's great pleasures, but there are right ways and wrong ways to go about it. let's go over the rules. >> i'm jeff bell the general , manager of pdt here in new york city. today, we will go over a few do's and don'ts of drinking at cocktail bars.
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there's a few things i see on a nightly basis that i want to address and share with you and things that can make your life easier. don't come into a bar and ask what's good because the bartender does not know what you like. give him something to work with. say, i like whiskey. what's good with whiskey? you know, something that we can build off of. if you have dietary restrictions, no problem. we have plenty of options that can fit your needs. just don't start deconstructing our drinks, adding substitutions here and there. it is going to slow everything down, drinks are going to take a while, and everyone will be mad at you after that. when it comes to house cocktails, try the way it is made, the way it is written on the menu. chances are, the bar staff put a lot of work into making that drink taste as good as possible the way it is. speaking of being dissatisfied with the drink, if you are, it happens. let us know. just let us know as soon as possible. don't drink half the cocktail and then tell us. to a dollar per drink -- -- tipping a dollar per drink -- it
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works at your local bar when they are pouring a draft or opening a bottle of beer, but a little more elbow grease goes into a making a craft cocktail for you. most guests tip 20% per craft cocktails. just because you step foot in a cocktail bar does not mean you have to order a cocktail. if it's a good bar, they should have good beer, good wine, good nonalcoholic offerings. at the end of the day, drink what you want. here at pdt, on friday nights it can be a three-hour wait. if you come into the bar, sit and have a glass of water, you are taking away the opportunity for someone else to have a good time. bars in places like new york and london, the rent is extremely high, so the seat you are sitting in is quite coveted. if you are wondering whether or not you had too much to drink, you probably have. many states hold bars and bartenders are legally responsible for the state of your guests -- our guests even , after you leave the bar. if you sense you are about to be cut off, avoid the fight. you are not going to win. remember, you came to the bar to have a good time. so did everyone else. be considerate to the rest of guests in the bar and the staff , because we are all in this together. >> hannah elliott can tell you everything you need to know about cars, but there's more to the automotive experience than
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just the machine, as hannah explains. hannah: you don't write about cars for a living without meeting some pretty interesting characters. so i'm circling back and getting cozy with some of my favorite automotive aficionados. we will talk shop, luxury, and passion in a new series i call "crossing lanes." ♪ jay: good to see you again. what has it been, a couple years, right? h: a couple of years, yeah. thanks for having me back. there are a few new things. -- jay: there are a few new things. i bought something i think could not be more americana. this is a 1958 imperial. the epitome of american optimism. we'd won world war ii, we started a space program, all cars had fins and "the jetsons" was coming on tv. hannah: how many feet is this car? jay: i do not know, people lose count. they are sort of like dinosaurs from another era. this should be the demographic car that i think the average tv
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viewer would remember. look how much room there is in this car. just hilarious. i love how huge the gauges are. there like -- they are like giant pie plates. this was considered safety. hannah: padded with leather. jay: the way you start this, you turn the key, and push the neutral button. everything is pushbutton. hannah: people think that is a new car thing, but actually, old cars. jay: if you can type, you can drive. push the button, and you pull away. how many cars can you cross your legs in the front seat? hannah: i mean, none. except for this. jay: comfortable car, isn't it? you don't get all windblown. hannah: we can have a conversation even though we are so far apart. jay: you wonder how many 16-year-olds took their drivers tests in these big, stupid things? parking section? -- hannah: what about the parallel parking section? that would be an issue. what cars did you grow up idolizing when you were a young kid?
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jay: when you grow up in a little town in new england, anything with less than four doors might have well as been a ferrari. nobody had cool cars. i was 9, 10 years old. driving my bicycle up the hill, i saw an old man polishing a 1951 jaguar xj-120, and i was fixated. he said, come over here, you want to sit in it? it was unbelievable. i've never seen anything like that. back in 1959, 1960, most car magazines were black and white. you did not get the excitement or speed or anything from it. hannah: who taught you how to drive? jay: so many houses had abandoned cars in their field, and there there was a 2cv in a field near my friends house. -- fred's house. -- friend's house. when we were kids, we would go over there and work on it. we got it running and we just would drive around the fields all day. our moms would sit at the kitchen window and watch us. ok, i did all right. hannah: once you finally started making some real money, did you finally buy a special car to purchase?
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jay: the first car i bought when i came to california was my 1955 buick roadmaster, which i still have. i got off the plane. i had no place to live. and in california, you need a car before you have a place to live. hannah: of course. jay: i bought the 1955 buick for $350. i lived in that, i slept in it, i met my wife in it, i got married in that car. drove that car to my first "tonight show." and i still have it. that was a special car. hannah: how would you define a luxury car? jay: nobody does luxury like the french. the french put a premium on comfort while driving. the cars don't appear to be ostentatious or flashy, but they are exceptionally nice to drive and very comfortable. we americans tend to confuse luxury with garish. look at trump's apartment. is sitting on a gold chair really comfortable? no, it is not luxury at all. it is like oscar wilde. you know the price of , everything, the value of nothing.
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hannah: have you ever paid more than you thought you should? or something that you bought? jay: no, all i have done is buy too early. i see a lot of people, they buy something because they immediately think they will make a lot of money on it. then when they find out it is not worth as much as they thought, now they hate the car. the important thing is buy what you like and then worry about the price later. i don't mean that from a rich standpoint. better off if you pay a little bit more and buy something you truly enjoy. hannah: if you were 21, 22, 23 now, would you still get into the business? jay: i always liked telling stories and doing comedy. i always liked talking to people. i think that i would. my dad sold insurance, and he became -- he became manager, and once a month, to motivate the men, he would put on some kind of goofy show. he would play the sinatra song "high hopes" and he would juggle.
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i thought i would sell insurance because you get to do a show once a month. hannah: that is very interesting. i love that. well jay, it has been so great talking with you. jay: it's always fun when you come by. we have fun. we have a good time. let's continue motoring. hannah: motoring. that's a trucker term. [horn honks] >> up next, here is a luxury product still made by hand. there is a painstaking process behind each of these beautiful watches. >> with the mechanical watch, it is really the object, the physical object of the handwork which makes it special and unique. >> this is "bloomberg pursuits." ♪
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♪ >> to close out "bloomberg pursuits," a regular series we call "made," because to truly appreciate an object of luxury, you need to go back to the beginning and see how it came to be. the swiss watch brand arnold & son makes luxury timepieces from scratch. the former head of product development took us inside the process earlier this year. ♪ >> every new watch is like a new piece of art. it has a different story to tell. it is a very interesting thing about watches. on one hand you have a high precision device. and the other thing is they have to be hand finished, which is very related to art and craft. you have these two worlds in one watch. both aesthetic aspect and the mechanical aspect of it. here we are on our premises
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where we manufacture all of our watches. arnold & son refers to john arnold, one of the biggest and most important watchmakers who ever lived. he invented a lot of technical solutions still in use today. the aim of the modern company is to innovate and continue his will legacy, but in a contemporary, new manner. the idea is to continue the story more than repeating it. first, with the design team, we design how the watch should look like -- the size it should have, the thickness. you have to have the mechanical harmony. is it good looking or not? and when we are happy with the new complications and think the watch has something new then we , create the inner works which will make the aesthetic happen. the first thing you have to do is to order the right material because we use a lot of different materials in the mechanical movement, going from
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brass to steel and titanium or gold and you need a specific material for every different part of it. once you have the raw material, you start remaking the components. you have different kind of raw materials going to different workshops, so depending on the part you want to make. if you want to do watch making on a superhigh level, you need extremely skilled and specifically trained people. we have more than 30 different job descriptions, purely different education, and you find this education, this training, only in the region. because nowhere else in the world do you need this kind of know-how. working with tiny parts is a challenge because tiny parts make very small tolerances. we are working in microns. you cannot do anything without good tooling. we have an in-house toolmaking department, which makes from the little screwdrivers a watchmaker needs, up to a stamping tool, which takes months of development.
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the reason why we do our tooling in-house, if you are not mastering your tools, you are not mastering the part you want to produce. ♪ >> once all the parts are cut with machinery, it goes to be cleaned. it is submitted to quality control, who decides if the part is good enough to do the decoration workshop. different kinds of traditional decorations are applied. from the geneva stripes, satin finish, depending on the components. the mechanical watch you buy today is not the leading technology anymore. it is really craft and art. you are not racing for technological breakthrough, but you are racing for more spectacular watches. you build a very different relation to a mechanical watch than you do to any electronic device because the day you buy it, you know the next one will come and you will swap it to getting the better one.
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with a mechanical watch, it is really the object, the physical object of the handwork which makes it special and unique. that makes a big difference to something more on the electronic side. once these parts have been decorated, they are quality checked again to see if the decoration has not affected the functional aspect of it. that is a bit of a trick. you have to decorate but not obliterate the part. they go to be reassembled in a specific workshop before going to the watchmaker. you set stones into mainplates, put axis onto wheels, and once all these parts have been preassembled, the watchmaker does the finalizing. the watchmaker gets all the little parts in little boxes, they take the mainplates, which is the base that everything that is built on, and the wheels, put different ridges to hold the
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wheels in place. you have to add the winding mechanism because you want to be able to wind your watch. put of dial on it, then you put hands, and one last thing we add always at the end is the escapement. which is basically the heart of any mechanical watch. that is also what you hear when you listen to a watch, when you hear the tick-tock. the very first time you will see and hear your watch moving. [watch ticking] starting from the simple beating, it is a long process going to a highly accurate mechanical watch. you cannot just put the parts together and expect the watch to tell perfect time. we are checking the watches on different vibration and other machines to be sure everything is ok. there is tiny bit of dust you do not see when you put it together, but when you move the
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watch, it can affect the movement. this process is really long, but this is what the complexity of such a mechanical device requires. ♪ >> once you see the accuracy of the movement is good, you put it in a watch case where we protect the movement. you add the bracelet and the buckle and you have a watch. watches are most of the time perceived as a time capsule. it's really something still built today as it used to be for the last century. it is nice for people to buy something which has always existed and probably will always exist as a form of art. >> you can find more films from our "made" series as well as many more "pursuits" stories and videos at bloomberg.com/pursuits. thanks for watching "pursuits." this is bloomberg. ♪
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♪ jonathan: from new york city, i am jonathan ferro with 30 minutes dedicated to fixed income. this is "bloomberg: real yield." ♪ jonathan: coming up, the president is said to lean toward jay powell to be the next chairman of the federal reserve. the best back-to-back quarterly growth since 2014. and draghi's stimulus plan helps insulate europe from political chaos in spain. we begin with the big issue. it could be the moment of truth for the bull market. >> it has been the graveyard of investment strategists for the

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