Interview with Eric Savitz of Barron’s.

In this week’s episode, we speak with Eric Savitz of Barron’s about some of the recent stories he’s written on the effects of the pandemic on the financial markets – as well as on companies that are innovating and creating technology to better enable us to work more effectively from home.


Jeffrey Freedman: Hello and welcome to the RP HealthCast by Rooney Partners. I’m your host Jeffrey Freedman. The RP HealthCast is a weekly podcast series on the stories around the latest news and innovations in medicine and healthcare. To learn about these stories, we hand over the microphone to those who are actually building and writing about the future. Therefore, we either speak with leaders of companies behind the latest breakthroughs in medicine and technology or with journalists to discuss their stories on important issues surrounding the healthcare ecosystem. 

Everyone and every product has a story to tell. The goal of our podcast is to help tell that story and to tell our listeners why that story matters. Our guest this week is Eric Savitz. Eric is associate editor for technology at Barron’s. He’s also worked for Forbes, The Industry Standard, Smart Money, the Brunswick Group, and Roku. Today we’ll be talking to Eric about some recent stories is written on the financial effects of the pandemic in relation to the financial markets, as well as his stories on companies that are innovating and creating technology to better enable us to work effectively from home.

Eric, welcome and thank you for joining us today. 

Eric Savitz: It’s my pleasure. Thanks for having me.

Jeffrey: Eric, as a journalist for Barron’s, you’re located in Silicon Valley, and your coverage is technology. With this pandemic, almost all companies have been getting crushed. But one of the few financial or Wall Street darlings during the pandemic has been Zoom. And for those that don’t know, Zoom is a video chatting software and technology; it’s been around for a long time. A lot of people didn’t know they needed it until they were quarantined and stuck at home. 

You’ve written a lot about the company and some of the issues that they weren’t prepared for during the massive growth opportunity right now for them. You also just wrote that Facebook and how Facebook’s going to try and compete against. Can you talk a little bit about Zoom and Facebook and this technology? 

Jeffrey: So Zoom is a fascinating story. Zoom came public last year. The time they came public they were growing close to 100% per annum and were profitable. They had a lot of appealing characteristics as an investment. But what’s happened in the current crisis is that everyone has shifted meetings to the web and there are some characteristics of Zoom’s platform – the simplicity of it makes it very powerful. And then the other element is that it has some nice features, like the, let’s say, 25 faces at the same time, which is something that some of the other platforms don’t have, is a nice feature. So what’s happened is Zoom was really originally targeted at small business and then enterprise businesses, but it’s been widely adopted by students and people using it for virtual cocktail parties and things like that. So a lot of consumer use. 

It’s a little unclear whether Zoom in the long run is going to be able to monetize a lot of that additional traffic. A lot of the users are using free versions of… I think the entry of Facebook into this market, they’re offering a product that you know will do up to 50 simultaneous users and with some security controls things like that, is interesting. I think it’s mostly a consumer-driven product at this point, even the way they’ve positioned it so far, like, “This is a great way to do your book club,” and things like that. It remains to be seen whether that’s going to have a big impact on Zoom. 

So far, nothing is stopping Zoom. Zoom, maybe a week or so ago, announced they had hit 300 million users. That was up from 200 million at the beginning of April. The growth of this thing is unbelievable. I think the really interesting question here, though, is what happens when we return to what’s next, right? I think they say we go back to normal in the sense that it looks like the world before COVID-19 isn’t realistic, but we are going to go back to something a little less restrictive. I think one of the things that happens is people will rely on those kinds of tools much more than they did before, but we’ll see how it plays out. I do think that a large chunk of that extra traffic that Zoom is seeing is coming from consumers and students and people who eventually will just probably not use it nearly as much as they are. That is a fascinating situation. Their stock is up like a hundred and fifty percent year-to-date. It’s been an amazing, amazing ride for their investors. And I hope the listeners have all bought it a long time ago [chuckle]. 

Jeffrey: To me what’s also incredible is they were able to change vocabulary and what that means to me is… Like the word ‘Band-Aid’ right? Band-Aid is a brand, you know what is, and you know you need a Band-Aid. Six months ago, we all went on WebExs, right? Business. For our business we’re going to do WebEx, and everybody knew what that was. It was going to be a video meeting or a shared meeting or whatever. You don’t hear that anymore. Everybody’s going on a Zoom, right? So not only did they come out with the technology, but they changed our way of thinking. 

Eric: Yes, you know you’re doing something right when your company name becomes a verb, right? It’s like making Xerox copies. It’s funny because a lot of companies get irritated when you do that, right? Like don’t call it Kleenex, call it tissues – that’s an old marketing problem [chuckle]. I think in this case, they’re having a truly remarkable marketing moment. I’ve written about this a little bit. The the idea that you are a relatively small, relatively obscure technology company and suddenly everyone on Earth is using the name of your company as a verb is astonishing. And that’s a gain in perception that won’t wear off, right? That’s a permanent change in the way we think about that. 

You’re right, it is fascinating that it’s not WebEx and it’s not Skype. It’s not Microsoft Teams. There’s a bunch of other perfectly good platforms by which you can do this, it’s not even Google Hangouts, right? There’s a lot of options, but this is the one that has really caught fire. And again, I think a lot of it is about user views. 

Now I think part of the problems that they’ve had on security are kind of related to the views, right? So I think what they’ve had to do is take a platform that was really targeted an enterprise user and that has been adopted in widespread with the consumers, and that adoption has brought with it some unexpected sort of security issues – the Zoom bombing and things like that that they’re having to deal with. But it doesn’t seem to have slowed their growth, so it’s a remarkable story. 

Jeffrey: It really is and it’s a great product. So another topic that you write about that I’m very interested in talking about – it’s been in the news all over, you did a great job and we’ll talk about why you did such a great job – It’s the SoftBank Vision Fund. Alright, for those that don’t understand. From a very high level, let’s start out. Can you explain the SoftBank Group? 

Eric: Sure. SoftBank Group is a Japanese company, it’s really a holding company. They own a bunch of assets, so the things that, they own a lot of assets, but just as a few key pieces, they own about a quarter of the stock of Alibaba, the large Chinese e-commerce company; they own about two-thirds of a Japan-based wireless company, which is also called SoftBank; they own Arm, which is semiconductor design company that they bought a few years ago; and a few other things, they own a Japanese league baseball team, various other things. They also created in 2016, so really about three and a half years ago, they created a venture fund called the SoftBank Vision Fund, and they did it in a sort of spectacular style. They raised about $100 billion – that is an amazing thing on its own because a hundred billion dollars, that’s about what the venture capital industry invests in an average year, so that’s a huge amount of money. They raised most of that money from two Middle Eastern country wealth funds – one from from Saudi Arabia and from Abu Dhabi put in about 60 billion dollars of the total, some of the money came from SoftBank itself, and then there’s a few other, a few billion here and there from a bunch of tech companies.

What you ended up with is what is by far, by an order of magnitude, the largest venture capital fund ever. And their philosophy here has basically been, first of all, they’re huge believers in– Masayoshi Son, it was the founder of SoftBank, and the CEO of the company, is a big believer in artificial intelligence. He’s a big believer in technology. He’s also a big believer that you think big and you plan far into the future. And he’s making some unbelievably outsized bets. Part of their philosophy is flood companies with money to accelerate their growth and then you will reap returns faster and get bigger returns. Now the problem is, and one of the reasons they’ve been in the news a lot, is they’ve made some unfortunate bets, most famously they are the largest investor in WeWork. Not only are they large investor of WeWork, but they they basically rescued WeWork from financial oblivion after the WeWork IPO failed to close. They’ve also made big bets in other things that have been troubled. Some of them in the ride-sharing business – they are the world’s largest investor in ride-sharing, so they own a big stake in Uber and big stakes and three other ride-sharing companies around the world, including DiDi, which is the Chinese ride-sharing company, it’s probably the largest one in the world, but that’s a terrible business right now. You only have to look at Uber’s stock to realize in a world where there’s basically no one traveling, the need for ride-sharing services is a lot lower than it was. 

They are really struggling to make this fund to success and downturn is not helping them. They’re also a big investor in DoorDash, which is trying to go public, but is really finding it difficult in the current environment. They’re a big investor in a company called Oyo Rooms, which is basically a hotel business based in India that is having big problems. And then they’ve made I think even hurting the more, although maybe a little less financially, they’ve invested a few things that just seemed silly. They did an investment in a company called Wag, which is basically a dog-walking service. They lost about $90 million on their investment in Wag, and they’ve had a few things that have just folded. They were invested in a company called Brandless, which was a personal products company, cosmetics kind of thing, and that company just simply folded and they lost their whole bet there.

They’ve struggled and fairly recently, they’ve announced they have very large write-offs related to the holdings in their funds. They’ve now basically lost money for the life of the fund, which is not something you want to do as a venture capital fund. It’s raised real questions about their approach and Masa’s decision making and in the future of SoftBank, so it’s a tough situation. 

Jeffrey: Your article you wrote, I think your words were, “The fund has been the subject of a series of headlines about strategic missteps and failed investments.” Now, what’s interesting to me, it’s most of those missteps and failed investments, you were able to tell that even before the pandemic. Now with the pandemic, everything is just compounded. The whole WeWork thing was before the pandemic. The ride-sharing, the Uber – before the pandemic. Now, everything is like falling off a cliff, it seems, for these guys. The write-off that you talked about was about $17 billion. Now that’s a hell of a lot of money just to vanish. I mean 17 billion gone. So what do you do? You call those investors the next day and you say, “Got some bad news.” What are those conversations like? 

Eric: Those are tough conversations [chuckle]. I think there’s a couple of offsetting elements. One is they had previously returned about $10 billion in capital to investors from some more successful investments that they’ve made in the past, they had a stake in Nvidia that paid off pretty well, they owned a big position in an Indian e-commerce company called Flipkart that was acquired by Walmart. So there have been a few things they’ve done that have really worked out. But you’re right, that’s a tough situation. I think one way that it’s hurting them is they had intended to raise a second fund, the Vision Fund 2, which Masayoshi Son famously said was going to be even bigger than the first fund, and that is now not on the cards. There are a few investments that they’ve made through what they call Vision Fund 2, but all the money is from SoftBank, they have no investors, and clearly their Middle Eastern partners are not eager to provide them with more capital. 

Now, I think one thing that SoftBank will say is this a long-term bet. This is a 10- or 12-year lifetime on this fund and we think there are going to be some huge exits out of the portfolio. And they’ve had some good exits, a few of them in the healthcare space. There’s a company called 10x Genomics that has done very well. There’s a company called Vir Biotechnology that’s been a hot stock lately. But those things are not making up for the problems they’re having in some of their other holdings. And I think there’s a certain risk that they’ve painted their brand in a way where having an investment from SoftBank, whilst it’s nice to have a capital, being associated with them hasn’t been one of the keys. That makes them angry when you say that, and I think there’s some truth in that. They’ve angered a lot of people in the Valley, right? The rest of Santa Road, the rest of the venture capital industry tends to look at them as having warped pricing in the market, that they over inflated prices, and that they’re now reaping what they sowed, so there’s a little bit of schadenfreude. I think people are happy to see them have problems. But to your point, that’s a tough thing.

It’s not so easy to hit the undo button on a venture fund. You can’t just decide, “Yeah, we’re done. This didn’t work out, so we’re just going to shut this thing down.” That’s not an option. So you own stocks, I think they currently have 88 things in the portfolio, some of which will end up doing fine, some of which won’t, but you kind of have to play it out. Their investors in SoftBank are going to live with each other for a while and we’ll see where it goes. Now I would say there is one other odd element which they are venturing, which is that SoftBank Group, the parent company’s shares, traded a fairly steep discount to the value of their assets. The value of SoftBank Group’s stake in Alibaba alone – again, they own about a quarter of Alibaba – that’s a [inaudible], and that’s kind of weird. The company is trying to do something about that, they’ve promised to sell off a bunch of assets and buy back stock and pay down debt and do some things to try and fix that problem. But I think among other things, it’s just a reflection of the fact that the market’s not entirely trusting of Masa right now. That’s going to take some time to fix. He did some damage along the way with some of the things that have happened in the fund.

Jeffrey: As I read, you know in your article, over 40% of the portfolio is in logistics and transportation. So that’s not necessarily coming back so quickly during this pandemic time, so it will take a while and that that could probably be some of the discount as well. Now you mentioned that the the leaders of the fund, they’re visionaries, right? They’re thinkers of the future and what’s going to happen down the road. You would think that would lend itself to more healthcare and health-related companies and stories, but according to your article, about 6% or less is in the healthcare industries. Why do you think that is? Why do you think they’re kind of staying away?

Eric: Clearly, I’m pretty sure they would rather have more money in healthcare right now than car-sharing services given their options, right? But I think part of what’s at play there is when you talk to people in the venture capital industry, what you tend to see is there are a few funds that do both biotech and software and hardware businesses, conventional technology businesses, but they tend to involve different partners in different disciplines. And for whatever reason, this is a fund that reflects Masayoshi Son’s history and he has been an investor in the technology business for decades. He’s owned lots of things, he was an early investor in Yahoo, he at one point owned COMDEX, the old trade show business. During the bubble period of ’99 to 2001, he owned pieces in almost every brandname internet business on Earth, including a lot of them that didn’t do very well. So his expertise is intact. And I think the fund reflects that. They have had some good exits in biotech, but their commitment there is much lower, and I think it reflects Masa’s focus. He’s a big believer in AI, and he thinks AI, artificial intelligence techniques, are going to solve a lot of the world’s problems. Now that includes in healthcare, but he’s made a much more limited investment there as you say, and I think that was probably miscalculation. I would say that that is probably typical of many Silicon Valley venture funds: most of them tend to do just it or consumer kinds of technology businesses and don’t do a lot of biotech. There’s some specialists that do more, but it certainly looks like a misallocation of assets right now.
Jeffrey: Now, forget about on the SoftBank side, and focusing more on technology, let’s say Barron’s and your writing. You’re technology-focused. Do you think in the future, based on our learnings now on the pandemic, do you think you’ll see a lot more stories or cover more stories and health tech or med tech type of thing. 

Eric: We spent a fair amount of time covering, pharma and biotech and medical device companies and other companies in the healthcare business. I think one thing that you’ll start to see is technology businesses are going to look for more ways to go here. So you’ve seen a little bit lately on– there’s some controversy around contact tracing, for example. I think for all of these businesses, so think about Apple, for example, which had really tried to push both the Apple watch and to some degree even the iPhone more and more as a medical device, or at least a health device, tracking your steps or tracking your sleep patterns and things like that. So I think you’ll see more and more of that. I think from a Barron’s point of view, we and and everyone else in the business journalism world are going to spend a lot of time – have spent and will continue to spend a lot of time trying to figure out how this plays out, who the beneficiaries are, both in the healthcare business and on the tech side and beyond, obviously. Grocers and also some other people benefit.

There is a lot of opportunity there. I think that for me, most of my core coverage involves the large technology companies – the Microsofts and Amazons and Alphabet and companies like that. While they are not on the surface purely healthcare businesses, they are going to have to play more and more of a role, and sometimes it’s indirect. Sometimes they might be taking dollars from healthcare. And, again, in the case of Apple, could be app-related. They’re all trying to figure this out and how they should play a role, and I think we’re going to have to write about all of it. One thing is true is we’re we’re not going to run out of topics to write about COVID-19 any time soon.

Jeffrey: No, unfortunately, we’re not. This has been incredible. Thank you so much for your time today. I’m hoping that we can get you back on with us in the very near future and we can explore further. 

Jeffrey: We hope you enjoyed this week’s podcast. If you have any questions, comments, or future story suggestions, please reach out to us on social media or email us at or visit us on our website at Additionally if you like what you hear, please follow us, review us, and share us with your friends and colleagues. Thank you, and we hope you enjoyed the RP HealthCast.

Interview with Dan Colarusso, SVP of CNBC

How do you broadcast live TV during a pandemic?

In this week’s podcast, we speak with Dan Colarusso, SVP of CNBC, who discusses how they transformed their daily newsroom to a new world of remote broadcasts and social distancing.


Hello and welcome to the RP HealthCast by Rooney Partners. I’m your host Jeffrey Freedman. 

The RP HealthCast is a weekly podcast series about the stories around the latest news and innovations in medicine and healthcare. To learn about these stories, we thought it best to hand over the microphone to those who are actually building and writing about the future. So typically, we either speak with leaders of companies behind the latest breakthroughs in medicine and technology or with journalists to discuss their stories on important issues surrounding the healthcare ecosystem, but this week we’re speaking with a special guest who’s leading a television newsroom during the COVID-19 crisis. This pandemic is still wreaking havoc within our society. And today we have over 800,000 Americans with the virus and forty-three thousand fatalities. Here in New York, it’s still a scary time as I’m sure it is all over the country. And our governor, Andrew Cuomo, just told us that will be sheltering at home for at least another month, and a large portion of our country’s been put on hold. There is no escaping the havoc this is wreaking on everyone.

Last week we spoke with Paul Sullivan from The New York Times. Paul’s a journalist, and he’s able to write and work from home, and he can easily send his articles into the news desk. This week, we’re going to take a different look at our news reporting. We’re going to look at it from the eyes of live television. Now keeping a 24-hour, seven-day-a-week television newsroom functioning and operational in the best of times, it’s always an imperative and hard to do, but even more so during a global crisis. The viewing audience needs to stay informed and be reminded of things like social distancing. But at the same time, the news team also has to practice social distancing. So how did TV networks and cable news platforms continue to broadcast 24 hours a day everyday, while managing to protect their staff from this highly contagious virus? This question and many others are the subject of this week’s podcast interview. To address this topic, we’re pleased to have as our guest Dan Colarusso.

Dan is the senior vice president of CNBC Business News. Dan’s responsible for overseeing television news content, its coverage, and its production for the network’s business day programming. Dan welcome and thank you for joining us today. 

Dan: Oh anytime, my pleasure.

Jeffrey: Great, before we get started though, how are you and your CNBC colleagues holding up – both emotionally and physically during this time? I know you had a few correspondents that actually have the virus. 

Dan: Yes, one or two. There were some producers as well. But we did manage to do very early physical dispersion. We managed to keep our sites operating, so that was good. We have three different sites where we broadcast out of, so we’ve moved into one and moved into people’s homes. But right now, thanks for asking, everybody is holding up well physically, and it seems like everybody, emotionally, feels like they’re being taken care of and the company’s working very hard to support them and provide whatever technology or just whatever they need actually along the lines. Nobody’s ever been here before at this point in history, so we’re working hard to make sure that we anticipate and react quickly to to what people need. 

Jeffrey: No, that’s great. That’s great to hear. And that’s kind of what we’re going to get into, right? What what has been history, and what is present, and what are we going to do in the future? So to start, let’s give our listeners a little bit of background. Can you explain how CNBC operated before the coronavirus and what was the traditional workflow? 

Dan: Well it’s live television, so I think we had three live broadcast sets. We have one in Englewood Cliffs, we have one at the New York Stock Exchange, and we had one at the NASDAQ market site, in addition to our bureaus in Washington, Chicago, and San Francisco in LA. So what we had to do quickly was anticipate what could go wrong at these places. There’s a workforce in two of them that isn’t under our control at all – our staff is, but there are a lot of people coming in and out of the New York Stock Exchange, a lot of people coming in and out of NASDAQ, and they managed their situation is very well, we reacted when the New York Stock Exchange had to close the floor, we stayed an extra day, and then we came back to Englewood Cliffs, or we sent anchors to their homes. I think the big win for us is that instant we were able to turn anchors homes through technology, whether it was a Padcaster or a live view camera or some other setup. We were able to quickly turn anchors’ homes into sets, and they could broadcast without ever leaving home. So their families were taken care of, they weren’t being exposed to any people or sites that we couldn’t fully control. So that was really worthwhile. 

That’s been at the biggest change. Everything is remote. There are no more guests in the studio. We had to learn how to broadcast the show with three anchors who were usually on the set together and could read each other’s body language and get each other’s eye rolls or whatever they do on camera – they couldn’t see that anymore. They had to get used to that and that causes some mechanical problems in production. So we had to make sure that was there. The other part was we had to get guests accustomed to not being on a set, and these are people who aren’t TV professionals. So it’s a little nerve-wracking when your remote and you’re a guest. That was another process we’ve had to walk people through. A lot of what happens in person, a lot of the emotion and the resonance that goes into producing live television isn’t there anymore. We had to find ways to to make sure we kept some part of it there, and I think we have.

The other part is location shots. We can’t send correspondents around the country anymore. We’d love to document the profound pain of Main Street, USA and small businesses. Eight weeks ago, we would have done it in one way. We would have sent a camera and a crew and a producer and a talent out to a main street, somewhere. We can’t do that at this point. So we do it remotely, we’ve learned to use user-generated content, meaning people telling their own stories to their smartphones, and then us producing it and packaging it into something a little more elegant into television content that we consider informative, useful, and quasi-historic in a sense. It’s become a test of new technology and old tricks and a meeting of the two of them into somewhere fairly tight. 

Jeffrey: That is an undertaking.

Dan: Yes, and I should just say, the other part is planning as well. We run an editorial meeting every day and they’re 60 or 70 people on it. I’m used to doing that meeting with 20 or 30 people in a room and the rest of them calling in, and now it’s a total dial-in situation. So it requires a lot more energy on behalf of my team to keep the meeting moving and make sure we include the right people at the right time. That’s delicate choreography as well because of who gets the pitch and who gets to give their best foot forward. The producers in the shows have that as one of their main resources to where they get ideas from. That’s become a big that’s become a big thing for us, to working on that meeting and making sure our meetings are a little more active than they are normally.

Jeffrey: You mentioned the use of new technology and old technology, but new technology since nobody was prepared for this, and you mentioned setting everybody up in their homes. Did you have that technology? Do you have the hardware? Was it sitting around?

Dan: [chuckle] We went out and got it. One of our technical executives had been scouting out the use of these Padcasters, which is essentially a device into which you plug an iPad, and it gives you proper lighting and proper sound and proper connectivity that acts almost like a full-on remote camera. So we had been looking at them and hoping to experiment with him, and in a few cases– we step softly into– we didn’t do this all in one shot. We had a few delivered and then that worked with some remote shots with correspondents, and then we had a few more delivered and we tried some anchors, but we’re very careful to– we have a lot of shows that are anchored by more than one person. We try to have one person or a backup in Englewood Cliffs or NASDAQ at a place with full-on hardwire connectivity and cameras so that if we go down, if any of these devices go down or they freeze, we’re able to come back to home base fairly quickly so it doesn’t disrupt the audience. 

This is a lot of learning on the fly. We had a lot of frozen faces when we were rehearsing it, not on the air live. We had a few on the air live. We’ve had sound drop off a few times. But the bigger issue we had was about internet bandwidth in general and how much traffic was going to be coming through the pipes to accommodate it. So we moved everybody to pretty strong connections where we had to go into people’s homes and improve their connectivity, we did. It was like an airlift to the degree that we were out buying these, and as they were coming in in one door, they were going out another door to be distributed around. Now we’re at a level where we even have contributors, not even full on CNBC people, but contributors to the network, some of them have Padcasters because they’re more regular guests than others. So it’s become a thing, but it was on-the-job training, without a doubt and we didn’t know what the vulnerabilities were in full. But we worked through them, we have a great tech ops team here, obviously, and they pulled the wagon on this one and really were able to deliver it, but it was on the fly.

And then we had some people who had full-on camera setups in their homes. That was a slightly different situation. But you don’t want to bring a camera operator into somebody’s home because where have they been? So it’s a delicate dance between keeping people safe and keeping people on the air.

Jeffrey: Right, and it has to be, it’s a whole new world [chuckle]. And I want to explore that in a couple minutes, but you mentioned a few times that headquartered in Englewood, New Jersey. Now most New York area TV studios, they’re located in Manhattan. And you’re located across the Hudson River in Englewood Cliffs, New Jersey. So I imagine you have employees living both in New York and New Jersey. Is there any advantage that you find by being situated across the George Washington Bridge?

Dan: Not that I could think of obviously. The one advantage is that we run shuttle services between Manhattan and Brooklyn and parts of Jersey to Englewood Cliffs, to the office, and people can drive in, so it keeps them off mass transit. It keeps them off the subway. That, to me, has been the big benefit because that’s a vulnerability, right? Exposure. You limit the contact. The vans are cleaned a couple of times a day. They’re exclusively used by CNBC folks. The drivers have had masks and gloves back before anybody really was wearing masks and gloves, in my case at least. 

It’s an interesting experiment to get people out here. You would think it would be a disadvantage, but actually it’s worked really well because it allowed us to control the transport side of it, which if we were in Times Square, if we were down on Wall Street, if we were anywhere else we wouldn’t be able to control it as well.

Jeffrey: Real interesting in that regard because you mentioned before that you still have people in the newsrooms now, I imagine–

Dan: Not many. 

Jeffrey: Well, right. I mean before the coronavirus, I’m sure the newsroom was a beehive of activity daily. Every morning must be crazy there. Now, you have a few people there. I’m sure you’re social distancing. What else are you doing on-site to keep the staff safe?

Dan: On-site, a few different things. It’s something as basic as social distancing and removal of self-service from the cafeteria. That’s a big deal. You don’t think that’s a big deal and that also helps us being out here and that people aren’t going out to lunch and bringing back whatever, right? So that’s that’s one thing. But on a real qualitative level in terms of television production, we’ve eliminated positions in the control rooms for individual shows so that if there used to, let’s say, a dozen people or 10 people in a control room, there are now only three. And there’s another person we’ve actually managed to do some things that used to be done in the control room exclusively from people’s homes. We’ve managed to set up other positions around the newsroom so they don’t have to be locked in a control room. We’re also cleaning the control rooms between every shift. It’s funny, you see producers here walking around with tubes of wipes and gloves, and when they go in when they go in to sit at their desk in a control room, the three or four of them would still do it, they wipe everything down themselves because it’s high human turnover in there. So that situation, we’ve moved leaps and bounds there to where there’s not only social distancing. It used to be a control room is a newsroom squished into a tiny little compartment. That now has been loosened up to where we have just three or four people in there for each show. That’s been a big advantage for us. 

The other issue, we have. Again, not being in the field helps. But we’ve managed to keep a lot of the essential personnel home, like segment producers and bookers. They can do their jobs out of their houses. Even writers can do their job out of their houses. So that’s fine. Even parts of our news desk have moved off a central hub to work remotely, and they’ve all been fairly effective. We haven’t seen anything that made us say, “Oh my God, we have to bring this back into the building right away.” We’re looking at our re-entry program and how we do that in waves and who’s essential and who can stay out a little bit longer, whatever those considerations are. There’s nothing where we say, “Here is a weak link we have in this remote work environment. We have to bring it back inside.” We really haven’t seen any weak links from the remote situation.

You live in a newsroom, you grow up in a newsroom. I’ve been in this room since 1987. I’m used to a boisterous, noisy – I like it – it’s a boisterous noisy experience. The gamut of emotions, there’s all those things when you go into a newsroom and there’s not a lot of that now. But you do make sure, like in my position, I make sure to go down to the newsroom everyday. I stop in in the morning when I come in, and then I go back down at least once or twice a day in addition to being connected to people, telephone, computer, whatever, but I go down and make sure I drop in on people around and just say, “Hey,” and check in on them because that’s crucial.

Jeffrey: A lot of changes, right? [crosstalk] right, so when you looked at CNBC before the coronavirus – BC – and then once we’re back and have a working vaccine – AC – whenever that’ll be, these adaptations that you’re making, what do you think? Will some of them be permanent changes? Are you finding it better, this distance, and people being able to work at home? What do you think life at CNBC will look like in this AC world? 

Dan: You know, that’s interesting. We’re having that same conversation right now. We’ve had a conference call about this everyday. The senior management team here, we’ve had conference calls about this a couple times a week. I think the big thing you’re going to find, and I think this isn’t CNBC-specific, I think along all big newsrooms, is you’re going to see more people working remotely in shifts or rotating in and out – weeks where you’ll be in the newsroom, weeks where you’ll be home because I think social distancing is one of the real lessons here. I also think that hygiene, which has never been a hallmark of any newsroom [chuckle] will take some promise. But I do think that the open space office which was a newsroom before somebody invented the fancy term for that, that is going to have to be modified. Whether the cubicles are going to have to have walls, or there’s going to have to be more space between people. I think the control room situation again is one where we’re likely to see that actually until there’s a vax. I mean, look, there’s going to be a stage between now and a vaccine that we’re going to have to involve more people and bring more people back into the flow, right? And I think that’s going to be a situation where the the control rooms will still be socially distanced, and more will be done out of central or remote areas or sparsely populated areas where we’re able to trigger graphics, to run teleprompter, all the things that go into making a TV show, can be done in other compartments. So I think a lot of that’s going to be done. 

The one thing that I hope doesn’t suffer is, I do hope we can get back to travel sooner. I don’t mean to rush it and I’m not saying to preamp testing, or I’m not talking about opening a massage parlor in Georgia, but I am thinking that there’s a lot of humanity going through wrenching changes in their financial lives and their personal lives. I think that those stories need to be told by a strong arbiter, and I think we’re it. And I would like to get to America, and I think I’ll correspondents would like to look business owners in the eye and tell their stories, tell the stories of executives who have been downsized; tell the story of airplane pilots who were furloughed. Whatever it might be, I think there are great stories out there. Or a market or companies that have CEOs who have figured out a strategy and kind of get the new world. I think we want to tell those stories a little more personally and a little more powerfully, and I hope that comes back in some sense, but I’m not going to rush it certainly. I do think that that storytelling and the resonance of the human experience, at least for us through the economic lens, is something that I hope we get back to because I do think the audience response to it. I think the audience needs to see it. And I think journalists as a people should tell those stories. They shouldn’t be left to random Twitter feeds and people’s personal Facebook pages.

Jeffrey: Right, I could tell you I’m ready for this for those stories. Speaking of viewership. So, me, viewer, I’m stuck at home. So I imagine TV ratings are uniformly up all over the place. When I last looked CNBC ratings, you’re up about 50% over three months ago. Phenomenal. But as a TV executive, you’re still competing for eyeballs versus other news networks, so that’s right now. Do you find these rating wars tougher during periods of extraordinary events like this? Do you not even look at that? Do you feel that rising of tide raises all ships? What are you concentrating on? 

Dan: To take issue as one thing. I’m not competing for their eyeballs; I’m competing for their hearts and minds. But yes, in terms of ratings, we don’t get rated by Nielsen, but from press reports, you’ve seen out, all the news networks are doing well. So I think that’s an important thing. For us, I think the issue is that in this time of economic uncertainty, people who aren’t likely to tune into CNBC might come and visit us. They might come and tune into CNBC because they might have a 401k, or they might have a couple of stocks, or they might just want to know what’s going to happen to Delta Airlines. So they’re more likely to come to CNBC because we deliver that. I think it’s incumbent on us right now to plant the seeds for a relationship with the viewer who is not the traditional CNBC viewer or one part of our audience that might have gravitated maybe to social media, or might have gravitated to websites where they can have a live TV experience and feel bought into the personalities who deliver them the useful information. I think it’s our time to be infinitely useful and infinitely practical, but infinitely helpful to an audience. 

When I look at it, I say, “Well this is great and the audience is big.” But there’s going to be an advertising equation here where a lot of the companies that advertise on TV, not just CNBC, are going to see their budget squeezed. We’re going to see cord-cutting which was a trend that didn’t need any help maybe accelerate if people can’t pay their cable bills. What’s going to happen here? So though there are variables out there that make this burst a double-edged sword because of why it happened, you don’t want captive viewers. You want to captivate them, but you don’t want them to have no choice, right? [chuckle] So the idea that we have them and it’s our chance to be, again, useful on a practical basis and and on an emotional basis is important. I think that’s kind of where we see it. This is not going to, I don’t think, change the current economies of TV news or lay out like, “Hey, when are no longer isolating or no longer distancing, it’s not like they’re going to come back and watch cable news for 12 hours a day anymore.” I don’t think that’s going to happen. But we just hope that when they do come back to a regular viewing pattern, we’ve we’ve infiltrated their patterns and we get our share of that. 

There’s a number that came out a few weeks ago in the Wall Street Journal. I think it was in late March, that we had seen a 244% increase in daily time spent watching CNBC compared with last year. Now to me that’s a bigger number than an audience size in some cases because in that, I’m saying, “Okay, I’m engaging with you people.” They’re staying with us, they’re not coming with us for one block and just checking the ticker and leaving. They’re finding something that they like and they’re sticking around with us. And that came from an outlet called Samba TV, which measures TV engagement and viewership. To me that number is important, and the durability of the experience to me is really important.

Jeffrey: Well, you talked a little bit about coverage and given my focus on healthcare, do you think you know the coronavirus will result in any changes in how CNBC might think about healthcare coverage? Well as we’re talking – the audience can appreciate this – but as we’re talking, Meg Tirrell, who’s our healthcare reporter, is on the air now. I think it really is. I think for financial television, pharma, health care, those things kind of in waves. You’ll have big IPO booms in biotech and people that always captures the attention of the West Coast VC crowd and the individual investor crowd who like to you throw a Hail Mary every once in awhile when a cancer drug or a diabetes drug or anything that comes up, so there’s a wonderment to that coverage that goes in cycles. And then there’s big pharma and you track them because they’re like bellwethers for things. But I do think that it’s going to lead to a smarter, sharper coverage. We’re all now getting associated with the process of getting a drug approved. We are all getting associated with the process of the manufacturer and procurement of medical equipment, cross-border travel, wet markets. There’s a there’s a whole slew of things if you wanted to find health broadly and in an interesting way where there’s more ground for us to cover. 

I think from a business point of view, I find health and science reporting fascinating. I think it’s under appreciated in the business bank because we tend to default to the market so often. But I do think that there’s renewed appetite for it beyond surface-level information and to real detail about how drugs work, how much they cost to develop, how much they’ll cost to manufacture. Vaccines are never a money-making proposition for pharma companies, but you would see companies talking about a vaccine for Corona and the stock will pop. Well, why? Because we’re in that point in time, it’s up to us to take people beyond that and really give them a better understanding of the broad landscape of it. I think we’re positioned to do that and I think it’s become part of the muscle memory. I think that will happen for investors as well as the journalists who cover the markets.

Jeffrey: Yes, you certainly have a more educated audience right now, being that–

Dan: That’s the one of the joys of CNBC is that you can assume some knowledge. You can’t assume the total vocabulary of the markets and contangos and and the VIX – you can’t always assume that, you have to step back and explain some of that. But you can assume that they are smart and really interested. So you don’t need to blow something up on screen for them to keep watching.

Jeffrey: As you mentioned before, you’ve been on a news desk since 1987 and you’ve been described as a visionary. Yes, you have [chuckle]

Dan: I don’t believe that but thanks. I don’t know any of my bosses would say that, but okay.

Jeffrey: [chuckle] So as you think about TV news in the next 20 years or 25 years, what changes might be in store? You’ve touched on a couple but what do you think of the future?

Dan: Look, I think the future is interested. I don’t have a greater sense of the future now as I had a few years ago when I was more on the digital side and kind of trying to bridge the gap between live TV news and the digital experience, which I did at Reuters for five or six years. But I do think that there’s a possible change to the economic model that surrounds
cable news and network news, let’s say. And I think that that it’s going to meet somewhere at a level of a little more authenticity in reporting. I think field reporting and good field reporting is going to be worth the price that we pay for it because it is more expensive than booking a Democrat, a Republican and sitting in a studio and having them scream at each other. Or in our case having a bull and bear debate, you know, Amazon, which I think is valuable, but I think that there’s another level of journalism that we can do around it. 

I think the the the future, when I look at the future of TV, I don’t see TV as a standalone entity anymore. Just as when you look at digital now, digital is one of we have the now, officially, as of last week, the most visited business news website in the world rated by Comscore. Now, that’s a great achievement. There’s an economy around that the way there’s an economy around television. I think those economies may get a little closer together, and I think the idea is that if these things don’t work in tandem, if you’re not promoting on social broadcasting on linear, monetizing in both places on the way out, you’re missing an opportunity and you’re missing the future foundation of the business. So I think that there’s some level of that that is going to be the next turn because, again, as the economies change – whether it’s cord cutting on one side or further programmatic or for the dominance by Google and Facebook on the web advertising side – you’re going to have economies that need to depend on each other a little bit more. So I think on one sense from a financial sense, that’s how it changes. In terms of production, again, I think we become a more numerate society. The last recession created a whole generation of very numerate people. So I think TV is going to be a little more graphics-intensive, a little more explanatory and expository, and I think that’s valuable. 

When I think about the the key things, those are some of them. And then I think the authenticity of the hosts, also, play well– our viewers are absurdly smart, so they call us out on social all the time like, “You’ve got this wrong. I can’t believe you said that.” Beyond– this is not the hate-Tweeting that the partisan guys. This is, like, they love us but they’re scolding us for not getting some earnings equation right or for not remembering when a stock had dropped 50%, which is all valuable. We take it. But we have an active and engaged audience, so I think the authenticity and the knowledge and the depth of the people you put on TV is going to have to go– I think it’s a for us it’s a high quality level, but I think overall it’s going to have to maintain a quality. The relationship that you that the audience has with the people bringing them the news on the screen is going to be even more important. 

Jeffrey: So authenticity and an integrated multi-channel, multi-screen approach. 

Dan: Yes. That’s that’s far better than I said it, see you maybe you’re the visionary [laughter].

Jeffrey: [laughter] I’m just listening to what you say, I’m a good translator. Dan, this has been great. I want to thank you so much for your time. We could actually talk for another half hour, so I hope to have you back at some point in the future. This is really helpful. Wonderful. Thank you.

Jeffrey: We hope you enjoyed this week’s podcast. If you have any questions, comments, or future story suggestions, please reach out to us on social media or email us at, or visit us on our website at Additionally if you like what you hear, please follow us, review us, and share us with your friends and colleagues. Thank you, and we hope you enjoyed the RP HealthCast.

Interview with Paul Sullivan of The New York Times

The Economic Impact of COVID-19 on the U.S. Economy

COVID-19 has created havoc within our society from a healthcare point of view, where today we have over half a million Americans with the virus and over twenty-five thousand fatalities. As we are entrenched now for the long-haul, we thought it would be very interesting to hear from someone that has been monitoring the economic fallout from COVID-19 and how it has been impacting companies of all sizes. Our Guest this week is Paul Sullivan of The New York Times. Paul is the Wealth Matters columnist.


Jeffrey Freedman: Hello and welcome to the RP Healthcast by Rooney Partners. I’m your host, Jeffrey Freedman. The RP Healthcast is a weekly podcast series about the latest news and innovations in medicine and healthcare.

To learn about these stories we hand over the microphone to those who are building and writing about the future. We either speak with leaders of companies behind the latest breakthroughs in medicine and technology, or with journalists to discuss their stories on important issues surrounding the healthcare ecosystem. Everyone and every product has a story to tell. The goal of our podcast is to help tell that story, and to tell our listeners why that story matters at the time of this recording we find ourselves still under attack and held captive by the effects of the coronavirus. This pandemic is created havoc in our society and from a healthcare point of view. Today, we have over half a million Americans with the virus and over 25,000 fatalities, almost half of which are here in New York and it’s certainly a scary time here.

As social distancing is being used to help combat the virus, we’ve been temporarily forced to shut down a large percentage of our economy and there’s no escaping the economic impact this is having on our country. From large scale corporations and retailers to our mom-and-pop neighborhood stores and restaurants. Unemployment is reaching record-breaking levels and employees and business owners are trying to figure out how to pay their bills for the next few months of the shutdown. Society’s fear of the economic impact of this pandemic is rivaling the fear of the disease itself.

As we are now entrenched for the long haul, we thought it would be very interesting to hear from someone that’s been monitoring the economic fallout from COVID-19 and how it’s been impacting companies of all sizes. So, our guest this week is Paul Sullivan of the New York Times. Paul is the wealth matters columnist. He’s also the author of The Thin Green Line, The Money Secrets of the Super Wealthy and Clutch: Why Some People Excel Under Pressure and Others Don’t. Paul also writes for Golf Magazine and previously wrote for the financial times for the Conde Nast Portfolio, Fortune, Money, Barons and Bloomberg. We’re very grateful to have Paul with us here.

Jeffrey: Paul thank you for joining us today.

Paul Sullivan: Thanks for having me.

Jeffrey: Before we start to discuss some of your recent reporting, let’s provide some context for our listeners out there. The importance of small companies to the US economies these times are not really appreciated. And, can you talk about some of the key data points that illustrate the scope of the impact these small businesses have on the US economy?

Paul: Sure. The majority of businesses in the United States are small businesses. 99% of them, as defined by the criteria from the Small Business Association, which is any business with under 500 employees, and that’s something like 30 million businesses and they you know, constitute a 45% share of our country’s GDP. You know another is, 500 to most people is kind of big, about half of all people in US works for small business, but their data out from JP Morgan that says, 88% of companies have less than 20 employees. So 88% of the company in America have less than than 20 employees, and those of course are some of the businesses probably most impacted by what’s been going on economically the past couple of months.

Jeffrey: Yeah. I mean that’s scope is completely under appreciated when we hear about this big box world that we live in. Over the last several weeks, your articles in the New York Times and The Wealth Matter Section. You focused on the impact the economic shutdown has had on business and you’ve written about companies of all sizes and companies that have been in families, for generations in fact. The title from one of the articles that you just wrote is ‘For Small Business Owners, Hard Decisions Become Personal’, and what do you mean by that? What do you mean by personal?

Paul: I mean that, so often, the owner of that business really knows the people that work for him or her, and in some of the businesses that I highlighted there is this furniture company outside of Chicago, it was in the fourth generation of owners, but they had three generations of people working for that. There’s a story that one of the owners told me, the grandma celebrated 50 years of working for the company, her son worked for the company and her grandson work for the company. So, their employees obviously, there’s that employer-employee relationship, but because they’re smaller businesses, everyone’s working together, you really know your employees a lot more intimately and it’s just so different than if you’re a company with 10, 20, 30, 40 thousand employees, sure, on some level people are known but not in the same level that they’re known at a small business.

Jeffrey: Yeah, no, that’s that’s true. Do you find this as a common thread? People are people but are there common threads between these businesses that you interviewed?

Paul: I mean, the threads in terms of how they look at their employees or the threads on how they’re dealing with this current economic moment?

Jeffrey: A little bit of both. I mean, there is tons of empathy I’m sure, but they all have to be in the same boat right now.

Paul: They’re all in the same boat and I agree there is a lot of empathy but what are they trying to do? They don’t talk about layoffs, they talk about furloughs and somebody who gets furloughs that doesn’t come back is of course laid-off, it’s a kind of gentler term, but there is this hope, there is this expectation that whenever we emerge on the other side of this pandemic, a lot of these family owned small businesses want to bring these people back and so they’ve really agonized a lot over the immediate choices that they have to make often, letting people go, of course we’re also cutting back on innovation, cutting back on spending and cutting back on non-essential parts of their business, but the wisest ones are the ones who survives all kinds of ups and downs including one company I talk to for this week’s column that survived the Spanish Flu in 1918. They are trying to think, “Okay, how do I stay a bit in business now? When this is over how am I still a business? How have I still made sure that we know what made this a business still exists in a month, three months, a year, whatever it is.”. And that’s why these decisions are so agonizing because some of these people are highly skilled, if you let them go they’re going to feed their families. They may find a different job either, they have to do that. So you got to be careful as to which people you let go now to keep the business alive because you’re going to need to get a lot of them back hopefully when things get better.

Jeffrey: I assume the name is different between being furloughed and being laid-off right? As an employee, it would kind of feel the same. But what’s the difference, what’s the official definition or meaning there?

Paul: I mean, employees are furloughed. You know, it means they theoretically still have a job spot at that company. This used to happen thirty years ago in the Auto Industry. The workers would be furloughed for X number of weeks and there’s the expectation that orders with pick up for XYZ car and they would be brought back and be back on the assembly line, the issue here is we don’t know. We don’t know how we’re going to emerge in X number of months and we don’t know what the demand is going to be and we don’t know what businesses are still going to be viable concern. So, a furlough give somebody hope, but you’re absolutely right, it feels very much the same as being laid-off right now.

Jeffrey: Yeah, and you talked about companies saying we have to make sure that we’re actually an ongoing sustainable business after this. So, in the same article you wrote about Russo’s, which was a hundred year old fruit and vegetable company. They’re a hundred years old, but now they’re trying to adapt and innovate, right? To avoid laying off and losing what they have. So from a Darwinian point of view, I guess adaptation or survival of the fittest, what types of companies do you think have the best chance of survival or what do companies have to do in order to assure themselves of that next stage, post Corona.

Paul: I mean not to be good, but the companies that have the best chance of survival are going to be the ones that have benevolent landlords and very understanding lenders, because people have to cut back. I mean revenue, in the case of Rousseau’s, that business lost half of its revenue in about three days, and that’s because the state of Massachusetts closed the public schools, all the universities and colleges sent home their students and all the restaurants closed. That was half of their business. The other half is the retail side, but you still have half of your workforce that doesn’t have anything to do. Other examples, I’ve talked to some smaller firms, tech firms. Let’s say they were paying ten thousand dollars a month in rent. They need to make sure they have a cash runway of at least a year, and that’s difficult. So, what are they going to do? Hopefully they’re going to go to their landlord and say, “Look, can we work this out? Can we cut the rent in half? Can you make it five thousand dollars a month and then I’ll make it up to you on the back end, and it’s in the landlord’s best interest to negotiate as well because right now nobody’s going to come in and take their space. You don’t have tenants knocking at the door to say I want to lock myself into a five-year lease at X amount of dollars a square foot. And so it’s really that back and forth and one last point, when I mentioned the lenders, what I found is that and sure we’ll touch on this later, but some of the government programs like the PPP loan, if you don’t know your banker well, if you don’t have that existing relationship with a bank, whether it’s a gigantic bank or a small community bank and have already borrowed from them and they know that you’re good to pay that money back, you do your best to pay that money back, those people who have those relationships are going to pair a lot better than those people who don’t, because this is not a time to suddenly get to know your banker when every other customer he has is also reaching out.

Jeffrey: Yeah absolutely and what you’re talking about before is more for the private sector, meaning negotiate with your landlord, negotiate with different things and that’s going to have a complete trickle-down effect throughout the economy because that landlord also has vendors and people they have to pay for. But if we talk about the public sector, and you started to get into that with the PPP, what other types of federal programs, and we hear a lot about the Paycheck Protection Program, the PPP, but as you’re saying, getting to know your banker, I know a lot of business owners that are having a really tough time applying for these programs and putting in claims. So, what’s going out, why is it so hard and are our banks playing favorites?

Paul: Well, why it’s so hard is because in a traditional year, in any other year, small business loans are about 30 billion dollars, 30 billion dollars for an entire year. What the government was asking is for banks to help them lend out 350 billion dollars in three months. So that’s sort of a 40-fold increase in volume and velocity of lending. What happened was a lot of the big banks and a lot of the community banks weren’t already approved to be small by the SBA, to be Small Business Lenders, not hard to do. It’s time consuming, certain criteria you need to meet but now is not the time to try to meet all those criteria and fill out the applications. And so what happened, it’s only been about a week and a half as we’re talking now since the program came into existence, is people rushed to apply but the bankers were overwhelmed, because even if they had a small business lending division. Let’s say that’s 10 people and another 90 people at the bank who do all kinds of other things, those 10 people cannot handle the volume of requests that they’re getting and even if you bring in 50 of the other 90 people work at the bank, they have no experience in this. They were making home mortgages, they’re dealing with lines of credit for a business. They’re doing all kinds of different things and that’s what’s caused this backlog. Our banks “playing favorites”, that’s kind of a loaded term. What are they doing? They’re working with the clients that they already know. These are the people they know first. These are the people that they have a relationship with. These are the people that have already borrowed from them. And this doesn’t necessarily mean the largest, biggest, most prominent small businesses. I talked to a woman who ran a business in New Hampshire that helps and works with autistic kids and she got approved very quickly. She had 17 employees got approved very quickly by a small community bank in her town. And so, she had that relationship there and obviously, the size of her loan is nothing compared to the size of a 500-person firm, but she had that relationship in place.

And so in that sense, she was able to jump ahead of a lot of other people and get approval for what she needed.

Jeffrey: Yeah from the bank’s point of view. I guess the difference between that 30 billion of lending versus now the mega PPP program, is the banks aren’t guaranteeing this, right? The federal government is guaranteeing this?

Paul: They are but the issue is that you know, the guidelines were created so quickly and they are rushed through so quickly that it’s not entirely clear. I mean an entirely new program was created in the span of a couple of weeks. That doesn’t just how it works. If you’re making a mortgage for somebody. Well, we understand Property Law, we understand the structures around a mortgage and even when you go get a mortgage to buy a house, it still takes 4, 5, 6, 8 weeks to get that mortgage approved, even though a bank lends money to buy homes every single day of the week. And so, just imagine, a whole new blown product if used correctly or as the the guidelines say is correctly, can be forgiven being rolled out because what happens if people don’t use it correctly? What happens if these companies still go bankrupt? Who’s ultimately on the hook for that? Is it the Federal Government’s going to pick it up or is the bank going to be accused of not doing it’s due diligence. Well, the flip side of that, how can you do due diligence when you’re supposed to get all this money going out the door in a matter of hours or days, not a couple months.

Jeffrey: Right, incredibly interesting. Thank you. So, that’s the PPP, right? So, what’s the difference between the PPP and— the SBA also has something called the Economic Injury Disaster Loan Program, what’s the difference between that?

Paul: More commonly known as the ‘Idol Program’ and that’s been around for a long long time and historically, what does that use for? You live in South Florida and you have a business and a hurricane comes in and wipes out your town, that is a disaster. And therefore there’s a Disaster Loan Program. And historically, that program has worked very well. You could apply for an immediate grant of $10,000 you put in your bank information, you tell them who you are, you put in your tax ID so they can look up and see that you’re going concern that’s been making money and paying taxes and historically in 3 days, you get that $10,000 grant. That’s a grant, it doesn’t have to be paid back. And then, that puts you into the queue to get a larger loan up to $200,000, doesn’t have to be secured but the loans go up to 10 million dollars. You want to get a 5 million dollars alone, you got to show why you need to find that 5 million dollar. That’s all established and understood. The problem is, we have a disaster in all 50 states. So it’s no longer localized. It’s just not that Hurricane in South Florida, you’re applying for that loan from every state because every business— or not every business, the majority of businesses are suffering some sort of economic injury, economic disaster and that whole program has ground to a halt and what used to be a no-questions-asked $10,000 grant is now, you get a $1,000 per employee up to $10,000, but that money hasn’t gone out. I haven’t talked to anybody who’s actually received that money and nobody received it in 3 days. So, the whole rush for this was around the end of March and people are still waiting for this emergency grant. They can’t get that. They’re not even quite sure what’s going to happen with the loan portion of it that’s supposed to come after that grant arrives in 3 days.

Jeffrey: Right, so do you think there is a bottleneck issue or a real flaw in the design?

Paul: I think there’s a bottleneck issue. Again, it’s not designed for businesses in all 50 states to apply at once, it’s designed for the regional SBA in South Florida to call up Washington and say, “Okay, this is what happened in a fill-in-the-blank greater Miami area. This is what we think the issue is going to be…”. And then the system works and one of the big problems here is that the $10,000 grant, had it been able to go out in 3 days, was super meaningful to these small businesses with less than 20 employees because there’s other data in one of my columns that talks about most of these micro business—super small businesses, don’t have enough cash on hand to make it 30 days. 25% didn’t have enough cash to make it 30 days and another 25% so to bring us to 50% didn’t have enough cash to make it 90 days. So, a loan or a grant that could arrive in your bank account in 72 hours was a huge beacon of light for these very small businesses. And now, it’s just one more layer of uncertainty as business owners try to make rational choices as to what to do. 

Jeffrey: Yeah. I mean it’s as you were saying this affects companies of all sizes, of all ages. For the last couple minutes that we have together, if we could take a minute and talk about the nonprofit’s, right? These are companies that are probably hurting as bad if not worse than all the other for-profit companies. And you wrote recently that the coronavirus is a test of how philanthropists can use their wealth to fill an enormous gap in revenue for nonprofits. How hard if these nonprofits been impacted and how are these billionaires that you speak to and these philanthropists, how were they helping out?

Paul: It’s a great question. If you think about it, you first have two different sort of ways of giving money. You can give film property dollars philanthropy or you can do charity. Philanthropy is something that is planned out months or years in advance. I care about my Alma Mater, I care about this hospital, I care about this food program. Plant Charity is an immediate response to what is happening in the world. There is a hurricane in Haiti, it’s devastating, I’m going to give money. And so, understanding that, these philanthropist usually have a lot of things planned out and they’re going to give to the organization’s but now the pull is to give immediate to food banks, to give immediately to charities really focused on the impact of the coronavirus. Obviously, that’s incredibly important, but what happens is, any people only have a limited amount of money to give—even billionaires, all the money that was supposed to go to these other nonprofits that were for the arts, for music, school. They are now left wondering, “What’s going to happen? Where’s the money that was here?”. And you know the spring for most of these pretty much every nonprofit, the spring is the time to have benefits and these benefits bring in tremendous amount of money. Sometimes 25, 30, 40 percent of a non-profit budget. Well benefits aren’t happening now. So what we have here is kind of a perfect storm for these non-pandemic related nonprofits to wonder how are we going to survive. So, in this column you reference what some of the philanthropist I spoke to were doing was making sure they still fulfilled all of their pledges to the other nonprofits that they had support in so that those groups wouldn’t have to worry, “Can I keep my 20 employees, my 30 employees? Can I continue to do these after-school programs? Are these enrichment programs for kids?”  because that was a huge question mark and I don’t have the number on top of my head but nonprofits are something around eight or nine percent of GDP and they employ a lot of people as well. So that’s not an insignificant part of the economy and an insignificant part of the economy where you have to worry about people still having jobs. 

Jeffrey: It’s incredible, do you feel that speaking with some of the philanthropists, are they pulling forward some of their multi-year thinking and does that put them into different weird tax situation?

Paul: Well, good two part question because yes, they are pulling forward some of their giving. Many give through foundations, so they’ve already gotten the tax deduction when they’ve contributed to their private foundation. Many foundations have this requirement that you give at least 5% a year private foundation, but it’s not limited to that so they could give 10% 20% 25% whatever they want to do. They’re allowed to do that, but you know one provision in the Car Act [?] said, for brand-new cash donations, there used to be a limit as to how much of that cash donation you could deduct from taxes. It was about more or less about 50% if it was cash. Now a 100% of a cash donation could be deducted. So if you make a million dollars and you donate a million dollars in cash you pay no taxes this year, so that was a government program to help accelerate this giving. Now what are these philanthropist going to look like next year? I don’t know how many of them are even thinking about that because if we don’t get through this portion now, that beloved cultural organization in Seattle, is it going to be here right next year? It’s even, take the money. So, better act now while there’s this huge need than, wait and maintain your 5-year giving plan.

Jeffrey: Incredibly interesting, the impact as I said before the trickle-down, but the full economic impact is this having everywhere on businesses large and small new and old. But Paul, thank you so much for our conversation today and hope to have you back on a future episode and talk further about some of the other articles.

Paul: Thanks for having me. I really enjoyed it.

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The series will explore the stories and value propositions of the companies shaping the future of medicine.  To learn about these stories, we thought it best to hand over the microphone to those who are building and writing about the future.

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