Cottage industry

0:00Wake Up To Money from BBC 5 Live. Hello, welcome. It is Wake Up To Money stock markets around the world taking a little bit of a hit. Certainly some individual companies have been whacked after the launch of a new AI automation tool from the AI company Anthropic doing things like legal work, sales, marketing. This tool can help a lot of businesses, but some share prices have taken a hit. We'll get into why that is. Disney now has a new chief executive.

0:34That Josh DiMaro, not singing there, but he is Disney's current chair of experiences. And he's going to take the helm when Bob Iger, the legend of Disney, Bob Iger, stands down in March. Over in Riyadh, the Live Golf League Tour tees off today. And we'll have a look at whether golf's disruptor competition has stayed the course. And we didn't know they could. I'm honestly ashamed to share this recipe, but it's cottage cheese, edible cookie dough. Gen Z, apparently we've got into a cottage cheese in a big way. We're going to find out why. Wake Up To Money with Sean Farrington. Good morning to you.

1:13Wake Up To Money on this Wednesday morning, the 4th of February. We're just coming up to five past five. Lots to get your thoughts on today. So 85058, please do get in touch. Intrigued as Disney puts its chair of experiences in charge of the whole business. are in charge of making all the films, in charge of Disney +, the sports channels, the resorts and the theme parks, everything. That person is now in charge of all of that. But I'd like to know your Disney experiences, where it is you in your lifetime, and it may be right now, you may have plans for the future, you may have spent money with Disney.

1:51It's pretty hard to get through a life without doing it in one way or another, isn't it? It could be off to the cinema with your kids. It could be the trip of a lifetime that people think they might be having by heading off to one of those Disney worlds or Disneyland's. It could be the sport consumption that you have around the world. Do let me know the pile of toys that you had in your attic when you were little. Let me know where all that spending can come from. Disney spend, your experiences. You might have something booked for later this year as well. is it what needs to change, if anything, as a new chief executive comes in.

2:3185058, there's that and plenty more AI chat to be had. Cottage cheese as well. Maybe as the programme goes on, we'll find out a little bit more why that all of a sudden is all the rage and we'll be getting into the launch of the new Live Golf season and the ripple effect that that has had right across the sporting industry, golf industry as well. I've got Nigel Vaz with me this morning, chief executive of the global digital consultancy publicist sapient they've got around 20 000 staff worldwide 1500 here in the uk nigel very good morning to you good morning sean thanks for joining us nigel got laura lambie with us as well senior investment director at rathbones hi laura hi sean are you well i am i am indeed thank you you good i'm good i'm good golf or disney for you, Laura?

3:19I think I know the answer. Golf. Golf for me. So, Nigel, for you, which one has dominated your life more? Disney. Disney, great. Right, well, look, that's what we do. We plan these things intricately on Wake Up To Money, so we get expert views on all of this. I would also like thoughts from both of you on what we're waking up to this morning. Some of the headlines in the business pages of the papers, some of it making the front page, I think a little bit on the front page at the time, AI tool hits stock as Anthropic, this huge tech company in the United States. It's an AI company and it has the likes of Claude, a chatbot Claude under its watch, which is a big rival to ChatGPT.

4:03Might not be as big and off the tip of the tongue as ChatGPT is, but many will be aware of it, particularly if you're in the world of looking to use chatbots in your life one way or another. It might be one of those apps you've ended up downloading, and you might use it in your workplace as well. But Anthropic, as many of these AI companies are trying to do at the minute, they're launching tools, they're advancing this tech as fast as they can. And it's launched a tool that it says could automate things like legal work, reviewing contracts, briefings, wider stuff in the sales and marketing industry as well that it has launched.

4:39And that has meant it seems that investors around the world have thought, What does this mean for many, many other companies that either might have previously provided these services, might be using this tech in the future? I've got Ruth Foxblader who joins us on the line from New York, the founder of the investment company Fox Capital, a fintech specialist as well. Ruth, good morning to you. Good morning. What has been the consequence then? What is the mood amongst tech investors, those in the tech world on the back of this product and those that may well come like it? So for venture capital investors like me, it's extremely exciting.

5:21You know, we have been debating probably for about a year, year and a half, whether some of the kind of game changing efficiency gains from artificial intelligence were going to actually occur. And, you know, we've been talking about, you know, is AI a game changing technology or is AI an overblown bubble? It seems that today's sentiment is that some of these efficiency gains could come quicker than we thought and could curtail profits for incumbent businesses. And so why would it be, Ruth, that we see even the share price of some of the world's biggest tech companies and software companies? Why would the share price fall on the back of something like this?

6:07A lot of the gains in share price of tech at this point is quite circular. It's really about investment in infrastructure, meaning investment in compute power. So there's an assumption that generative AI is going to be used more and more by all sorts of companies. All sorts of companies are going to need to invest in models. They're going to need to invest in running models. They're going to need compute power. They're going to need data centers. And there's been an enormous amount of CapEx spending promised in those areas. If we see things like Anthropic, which is, you know, mainly an enterprise tool, being able to do quite a lot more than, you know, maybe we initially thought, then maybe there isn't so much of a need for all of that infrastructure investment that we've been anticipating coming along with this AI boom.

6:57Maybe the boom is going to be so efficient that actually it doesn't kind of create as much wealth as we thought it was going to for the tech sector. Interesting. So the talk up until now has been the excitement around all the investment that will be needed and the services that will be needed from these big tech companies. But almost this morning, the conversation has turned a little bit to actually what are the consequences of some of these tools? How will it impact all of those legal services companies around the world, for example? Is that what this is about? You know, when we talk about what is AI actually going to do, which jobs it might take would be the sensationalist headline.

7:42Is that a little bit more where we're looking at and investors might be looking at this morning? Absolutely. And I think that what we have seen, you know, for a couple of years now is sentiment really shifting back and forth very wildly. And any hint that these efficiency gains are actually coming has a really, you know, profound impact on markets for a day or two. The sense that, you know, perhaps all companies are overvalued or, you know, the tech sector is overbought. you know, this sort of bubble talk has been in the ether. It's been in the atmosphere really since October of last year. It hasn't had a ton of staying power.

8:23And my assumption is that, you know, we are going to continue to bottom out whether or not, you know, how much we believe in AI, where we think the gains are going to come from. But this is, we're really seeing that sentiment around an unknown that we believe is going to be profoundly impactful on the economy in on jobs. So how would you sum up, Ruth, the consequence of an AI company launching a tool that can automate some legal and sales work, just as this specific thing this morning? What are the ripple effects of that? I think that these tools are very powerful, extremely efficient, and they show that incumbent technology companies, despite enormous amounts of proprietary data and years and years of know-how are probably at risk of disruption more than they have been in you know decades I would say.

9:21Now Nigel, Nigel Vass who's the chief executive of the global digital consultancy Publicis Sapient. Nigel you are part of the the wider Publicis group and we saw yesterday the share price fall in Publicis and you know it seems many analysts Investors are thinking that there's a little bit of a link here. You're not the only sort of advertising and PR company around the world to have seen its share price fall yesterday. Does something like this from Anthropic have a direct consequence on your business? We think exactly the opposite in this case, right? Anthropic to us as a partner on the sapient side, we leverage a lot of their tools, including cloud code in our enterprise AI platforms to accelerate the development of software and technology.

10:16And then on the public side, I think a lot of the models, whether it's an AI, Anthropic, Gemini, essentially are underpinning a lot of the efforts we use to build and deliver content that is targeted and personalized. So from our perspective, actually, revenues were up, margins are up, and the opportunity for AI to act as an accelerant is more what we've actually observed. We shared yesterday that our revenues are up almost 20%, more than a few billion dollars since the advent of Gen AI. And I think building on the question that you were asking earlier, when you actually look at the anthropic conversation, right, we already had tools like Harvey and Lagora, Harvey being the U.S.

11:14startup and Lagora effectively being the European equivalent, specifically focused on legal expertise, if you will, like essentially bringing to bear a lot of the focus on how the industry, from a legal perspective, researches and provides legal opinion. I mean, that was the focus of those startups. I think here the idea was a lot of those startups were wrappers, if you will, built on top of the models. In this case, Claude, which is the anthropic model, and Claude Work. but others. And one of the big things that I think people were really looking at here is, what is the distinction between some of these businesses, which are effectively providing models that are enabling a lot of functional expertise, have in terms of the ability to disrupt those functional expertises and subsume them into the core business?

12:15So it's part of the pitch here, Nigel, a business is going to have to try and almost convince investors that this new technology will actually be a boost to them, rather than what appears to be an initial reaction in the last 12, 24 hours, that it might be taking business away from them? I think partly investors being convinced about that is one thing. But I think the secondary thing is actually articulation of what exactly is the moat relative to a lot of these companies, right? I do think that, you know, as we've seen over the course of the last, you know, I don't know, three years now, we've seen moments like this where investors have generally gone towards, oh my God, you know, a company like an OpenAI is going to subsume everything into its platform and disintermediate lots of businesses, and then go to the other side where you've seen crazy valuations for companies like Accursor and others who are leveraging models to build tools to say, no, no, there's a lot of real opportunity there to drive functional expertise in specific areas, including, like I mentioned, like Harvey and Lagora specifically in the context of the legal space.

13:31So I think you've seen the pendulum switch between these two ideas. And I think yesterday when there was a new launch again of this specific tool, we saw yet again the idea that this is actually a concern from the perspective of a lot of data companies, a lot of indexes, and in fact, a general market sell-off, particularly with a focus in Europe, I would say beyond the United States. Because the other debate here that's happening is the sovereignty of this information, which we haven't really talked about on the show this morning, but there is a big focus. And we've seen over the course of the last few months, lots of companies talking about what they need to do to enable sovereign AI to enable their specific countries, legal and other data to be at the forefront of how these models operate.

14:27Ruth, just finally on this for now, where does this go next, do you think, given that we've got a little hint of how people might view these new tools and what they might do. It's one day, one day reaction. And really interesting to hear from Nigel there about what it's like running a business that actually is using these tools and going to be using these tools in the future, rather than just what investors think. Where next? I think we've made a mistake thinking that any single news story is a referendum on, you know, the debates, which are quite nuanced, and which I think Nigel really laid out in a really interesting and kind of tactical way.

15:12I think what's very clear is that these are revolutionary technologies, and that there will be winners and losers, and we're in very, very early innings of this game. So understanding who those winners and losers are is something that is kind of happening in real time. And so there will continue to be these market shifts as we anticipate market structure changing for specific companies on the basis that, you know, some of the models can integrate some of the more proprietary use cases, you know, within themselves rather than the kind of wrappers or being integrated into legacy industry. But, you know, we're in a period of profound change, and I think we have to anticipate that.

16:01Ruth, thank you for being with us this morning. Good to talk to you. Ruth Foxblader there, joining us from New York, founder of Fox Capital, Laura. And the ripple effect of all this, very much seen on stock markets here in the UK yesterday, Relix in particular, which is a big data company. It's got LexisNexis under its watch amongst plenty of other things. Seen its share price fall nearly 15%. It's one of the biggest companies on the FTSE 100. Yes, it was part of a cabal of companies, including Experian and Sage and Pearson, who fell back on fears that this would affect their business. I mean, Ruth and Nigel are kind of real experts in this.

16:44But I think what the ordinary investor is trying to get to grips with is understanding how this actually impacts life. And if you think back to when CHAT GPT was launched, it was all of a sudden, oh, this is what it's all about. Oh, this is what you can do. And then we had the market turmoil in January of last year when China said their deep-seat model could do it for, you know, five million pounds or whatever. So there's been a roller coaster ride as ordinary investors try and get their head around exactly what this will do. And if the experts are still thinking, you know, we're not quite sure how this is all going to pan out and then ordinary investors are struggling too, there's no doubt there will be winners and losers.

17:30But it's, I think, just trying to see how it impacts your own work. It certainly is affecting my working life and I'm sure it is yours too. More to come from Laura, from Nigel and from yourselves as well. 85058. I would like your thoughts on this. If you may be getting up this morning, you're just getting your pot of coffee ready, getting your cup of tea ready for the commute into work. You might be working from home given the amount we're able to do that now in the legal area, the sales area, advertising businesses, whatever it might be. These AI productivity tools, no doubt we'll have seen plenty of them come into those areas already.

18:09What's the mood? What's the feeling about what these tools will do? Do you feel like it's going to support your job and your career? Or is the talk that actually it's just, it's going to create efficiencies and you're going to have to reskill in other areas within your business. It might not necessarily mean at all losing the job, but what does it mean? The consequences of this 85058 if these AI tools have got into your workplace one way or another. Right, 22 minutes past five. Let's get the weather forecast for the day. Here's Ben Rich at the BBC Weather Centre. good morning a slightly milder day in prospect for many parts of the uk but still with some areas of clouds some outbreaks of rain pushing northwards and still a little bit of snow mixing in over high ground in the north of the uk let's start in scotland snow continuing to fall up over high ground in the north and the east of scotland at low levels i think it'll mainly be rain and those snow levels tending to rise as the day goes on shetland could continue to see some wintry weather even to quite low levels and it will stay windy here northern ireland looking mostly cloudy quite damp and drizzly, some patchy rain at times.

19:10And for England and Wales, well, North Wales, northern England, starting the day with some hill snow and some ice, rain at low levels. It will gradually turn drier and brighter through the day with some sunny spells developing across England and Wales, highs of 5 to 10 degrees. Ben Rich, 5 Live weather. Good morning to you. It is Wake Up To Money on BBC 5 Live, 23 minutes past 5. You may well have seen Lord Mandelson said he's stepping down from the House of Lords. the Metropolitan Police has launched a criminal investigation into Lord Mandelson following claims he passed market-sensitive information to the sex offender Jeffrey Epstein.

19:45According to an email exchange in 2010, Lord Mandelson appeared to lobby then-President Obama's Chief Economic Advisor Larry Summers to water down proposed restrictions on US bank trading activities. Of course, the question is why, and that is what many want an answer. Two, our business editor Simon Jack explains. In the aftermath of the financial crisis, there was a lot of thought being given to how to make banks less risky. And one idea was to stop them making bets with their own money, so-called proprietary trading. And there was a proposed rule called the Volcker Rule, which was going to put a stop to that.

20:22And the bankers didn't like the look of it. So Lord Mandelson appeared to lobby President Obama's chief economic advisor, Larry Summers, at the behest of Mr. Epstein and senior bankers to water down proposed restrictions on that kind of activity. Now, Jess Staley, JP Morgan executive, writes to Mandelson on the 30th of March 2010, suggesting a few arguments to use with Larry Summers, saying things like, proprietary trading supports management of interest rate risk, creating greater lending flexibility. And later, if the Volcker rule had been in place during the financial crisis, it would not have prevented the bank failures that occurred.

20:55Now, ultimately, the Volcker rule was imposed, US banks' proprietary trading was cut back. But the memos appear to show that Lord Mandelson was directly asked by Epstein on behalf of top US banking executives to use a meeting with the US president's top economic advisor to lobby for lighter regulation. And that appears to seem that the theme running through this, as some have said, is that it seems Lord Mandelson's primary loyalty appeared to lie with Mr Epstein and his powerful banking friends. The BBC understands Lord Mandelson maintains he's not acted criminally, did not act for personal gain, argues he sought Epstein's expertise in the national interest.

21:29Stay with us on Five Live, of course, throughout the day for more coverage on that. Thank you for your messages about, well, Disney, for starters, golf, whatever it might be. Steve's been in touch. Golf is the game of the oblivious and arrogant. Dear me, Laura. That's a bit harsh for this time of the morning, isn't it? Steve says, I tried Disney TV for one week. Was so disappointed, despite being aimed at adults. No grit, just smolts. Well, Steve, I think you're in a bit of a minority relatively for that, given the strength that Disney has shown in recent years. And Disney has appointed a new chief executive, Josh DeMauro, currently its chairman of experiences, to take over from veteran Bob Iger as chief executive in March.

22:13It might be an indication the company looking to focus on parks, hotels, cruises, those elements of the business. Pete Blank is a former resort operations manager at Disney's Port Orleans Resort. Pete, thank you so much for taking the time to join us. What would it be like being chairman of experiences at Disney? Well, first of all, you wouldn't get much sleep, as you wouldn't probably if you're CEO either as well. But being over the experiences, Josh had a firsthand look at what it meant to work in the parks and in the cruise line and in the adventures by Disney. And so he's got a pretty good handle over what it takes to keep that segment of the business running.

22:54Right. And give us a sense, Pete, when you're working at Disney in that resort section, how much do you feel you're part of this giant of media, of entertainment with streaming services, huge sports contracts and broadcasting and all of that? It's interesting. When I was with the company, everybody has their passion around their location. So if you happen to work at ESPN, you thought that was the best. And if you happen to work for streaming, you thought that was the best. And the same thing holds true when you worked in the parks experiences. Now, don't forget, the parks are the highest revenue driver.

23:31I think they brought in about$36 billion or something this last fiscal year. But every cast member who works in the theme parks or the resorts, they feel a connection. They feel a passion, especially at Disneyland. you know they'll they'll always talk about you know this is the theme park that walt created on his own this is the theme park where he walked and i'm walking where he walked so people at disneyland the cast members there feel a true connection to the mission of what disney's trying to accomplish and i think that kind of holds true in in all the parks as well that's remarkable isn't it sometimes we when we talk about the media landscape we've been chatting a lot lately about what might happen with Warner Brothers Discovery?

24:12Will it be Netflix buying it? Will it be Paramount? But Disney, even though we think they're in the same world, those other businesses don't have that theme park business, do they? It's almost a cash cow. And, you know, it is one thing to watch Toy Story or Frozen in your home. It's another thing to get to a Disney park and take your kids into the world of Toy Story land and meet the characters or go to Frozen. And then when they get older, they bring their kids And when I worked there, the amount of repeat guests who would come back, who I would see, these are my kids, and now they're bringing their kids.

24:47And it's a generational experience, and Disney knows how to tap into that. And Josh, I think, is going to be the perfect man for this role because he does come from a park background. He comes from an operations background. Nothing against finance people, but they've got a different mindset, and you have to have that. But Josh understands the cast experience and the guest experience. So I think he's going to be a really good fit. What can you tell us about working? I assume that you've had overlaps with Bob Igo and he's been chief executive, you know, 2005 to 2020. Again, the last few years that will much.

25:23First up, what was his running of Disney like? He was very focused on taking the company to the next level. He, you know, he welcomed the Star Wars and the Pixar acquisition. He welcomed new and creative ideas, buying out 21st Century. So all of those have ripple effects through the entire organization, whether it's streaming or parks. Josh's challenge is going to be to continue the legacy. You know, Bob is very well-liked among the cast members, both on the Hollywood side and also on the theme park side. Josh is very well-known in the theme park side, but not so much on the Hollywood creative side, which is where Dana Walden, I believe, is going to take over and do some of that work as well.

26:08So he's going to have to chart his own path, but he's very much an innovator. He's a risk taker, and I think he's a calculated risk taker. But I think he understands the power of the Disney guest and how much that the company means to people. I mean, very few CEOs can talk about their company and make people cry because of the emotional attachment they have to it. So as long as he can continue to latch onto that and make good strategic business decisions, it's going to be okay. Is that what Josh does? Absolutely. He is. And here's the funny thing over in America right now. When this announcement was made, the amount of people on social media, I've seen hundreds over here on Facebook and LinkedIn, who post pictures of themselves who saw Josh walking around a theme park in Walt Disney World or Disneyland.

26:59Hey, the chairman of Experiences was walking by. He stopped and took a picture with me. He said hello to me, cast members. So he's not going to walk through a theme park with an entourage and people pushing him to the next location. He has always been a cast-first, guest-first type of leader. And so that attracts people to want to work harder for him because he at least gives the impression, I think he'll follow through, that he has everyone's best interest at heart. Are you saying this, Pete, have you met him directly? Did you work pretty closely with him or under him? I have met him a couple times through my career when I worked there, but I have a large contingent of friends who still work in the Disney parks.

27:41And their stories that they tell me are just that he is – genuine is the best word I can use, Sean. The most genuine person you could experience. Now, when you go to CEO, that's a huge jump because now you're not just over the experiences division. You're over the entire company. So it'll be interesting to see how much time he has to stop and chat with people when he gets to the theme park because he has other – but from what I understand, I don't think he will lose the connection he has with the frontline cast and knowing what they know and how much they mean to the organization. And what's the environment like at the minute, Pete, for tourists in the United States, you know, more generally?

28:22There's not so much, I mean, it'll be a challenge for Josh tomorrow, but we've heard about concerns around tourist numbers in America. Do you get that sense from your friends who still work there? Yes, there's always a hint of caution around international travel. We saw it after 9-11. We saw it after COVID. We're seeing it a little bit now, depending on the political environment. But you're not just seeing it at Disney. You're seeing it at the Universal theme parks. We've got a lot of Six Flags theme parks here. And, you know, numbers are down a little bit there. But nothing that – the thing about the Walt Disney Company is it's always a marathon, not a sprint.

29:00You can't look at anything in a vacuum. You've got to look over the long haul. And so that's going to come back. But as far as the American tourism goes, there's always concern about the price point and how things are going up. But Disney does such a great job with training its cast members to provide the theme park experiences that make the children happy and the adult happy. In fact, a friend of mine who I work with here, he took his family to his first trip, told me this this morning, on his first trip to Walt Disney World. And he goes, boy, that cost me a lot, and I'm already saving for the next one.