Debt & Consequences, Defying Fiscal Gravity, Hollywood Gets Democratized

29:13This is the Bloomberg Tech Minute brought to you by ChatGPT. Now with ChatGPT work. I'm Carol Masser. Bill Gates Breakthrough Energy Ventures is betting on a cheaper way to produce clean jet fuel and made its first investment from a fund that is backed by Alaska Air, American, and several other carriers. The investment is aimed at accelerating the commercialization of clean aviation fuel, The recipient is Boston-based Lydian, which is developing lower-carbon jet fuel made from hydrogen and carbon dioxide, and is one of a growing number of companies developing next-generation clean jet fuel technology.

29:50Lydian says it can reduce capital expenses by more than 50 percent compared with competing technologies. Lowering those costs is seen as crucial to making Sustainable Aviation Fuel, or SAF, commercially viable, as it remains far more expensive than conventional jet fuel. Today, clean fuels represent a tiny fraction of the overall market. That's the Bloomberg Tech Minute brought to you by ChatGPT. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com today by selecting Work Mode. Available on Plus and Pro plans. This is Matt Rogers from Lost Culture East. That's with Matt Rogers and Bowen Yang.

30:32This is Bowen Yang from Lost Culture Research with Matt Rogers and Bowen Yang. You know when people try a new food and suddenly it's like, wait. That's the reaction a lot of people are having when they first try Kewpie mayo. It's the one with the red cap and the little baby on the bottle. You've probably seen it in the grocery store before. And if you've ever just walked past it, some people would say that's a huge mistake. Because this mayo is different. Most mayonnaise uses whole eggs. Kewpie only uses egg yolks, which gives it this rich umami flavor. It's smoother, deeper, and almost buttery.

31:04Once people try it, they start putting it on everything. Egg sandwiches, fries, burgers. Some fans even swear by dipping pizza crust in it. And once you notice it, you start seeing it everywhere. Chefs use it. Restaurants use it. People who really care about flavor use it. Never tried it? Grab the bottle with the red cap next time you're at the store. Put it on just about anything. Then you'll understand. Kupi, the original Japanese mayonnaise. AI is entering its most consequential phase where scale, safety and sovereignty will determine who leads and who lags. Join Bloomberg Tech in London on November 2nd and 3rd as global leaders across business, finance and policy examine the defining tradeoffs shaping the future of AI.

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31:58You're listening to Bloomberg Wall Street Week with David Weston from Bloomberg Radio. This is a story about America the beautiful and how the beauty of one particular part of America is way more than skin deep. Every year about this time, central bankers gather in Jackson Hole, Wyoming, transforming it for one week into the most important place in the world for monetary policy discussion. But this relatively small resort town in Teton County is also a symbol of the way wealth transforms a place. Michael McKee takes us back to Jackson. The wealthiest place in America today is a long way from New York or San Francisco.

32:42It's much more famous for its mountains, its bison, and its cowboys than it is for its billionaires. The residents would prefer to keep it that way, but they would also tell you that things are changing here fast. Me personally, my home has doubled in value in the last three years, so my balance sheet is looking good, but my income certainly hasn't doubled in the last three years. Jonathan Schechter runs a think tank and sits on the town council in Jackson, Wyoming. Not far from the hotel that hosts Fed Chair Jay Powell and central bankers from around the world every summer. If you go back and look at Jackson Hole historically, we are a high, isolated mountain valley in the northwest corner of Wyoming.

33:28It's been very hard to get here and very hard to get out of once you're here. The result? An economic transformation over two centuries, from trapping to ranching to tourism, as the community's isolation and rugged landscape eventually became a selling point for visitors. All right, that's what I like to hear. People would come to visit the national parks. All of Grand Teton National Park and the southern half of Yellowstone are within our county. And then in the early 1960s, the Jackson Hole Ski Area got started. And that got started actually with a federal government loan that was intended for the most impoverished areas in America because we didn't have anything but a summer economy.

34:09The geographic isolation still really affects who we are, our ecosystem, our community, our sense of who we are. but it has much less effect on our economy. So now we have people from around the world who come and live here part-time, full-time. They work from anywhere. So we've really become a hub of remote work. For decades, it was New York County, which is primarily the island of Manhattan, that led the country in wealth accumulation. But in the early 2000s, Teton County jumped into the lead. That trend has rapidly accelerated in recent years, and New York has tumbled into fourth place since the pandemic.

34:48Today, the average per capita income in Teton County is about a half million dollars a year. We're the wealthiest county and the wealthiest country in the history of the world. We also sit at the heart of the greatest intact ecosystem in the lower 48. And if you think about things through the eyes of sustainability, where you have ecological capital, financial capital, and human capital, I don't think there's any place in the world that can compare to here. Jonathan and others say it is no coincidence that a singular ecosystem and a singular economy go hand in hand. About 97 % of the land in Teton County is publicly owned, dedicated to parks and forests.

35:30And among those who can afford to live anywhere on the planet, there seems to be a belief that something is special about this territory. But then again, there are plenty of other spectacular places in America, so natural beauty is just one piece of the puzzle here. Another is the tax system. Phrase is we are an onshore, offshore tax haven, and so we are hands down the most wealth-friendly and income-friendly and wealth-preservation-friendly state in the Union. No other state comes close. Low property tax, low sales tax, and zero income tax in Wyoming are strong incentives. But then again, every other county in the state benefits from the same friendly tax regime, and their annual incomes are much closer to the national average.

36:21Teton County leaves the others in the dust. So what's the secret ingredient? If it's not just the land or the taxes, maybe it's something else altogether. When in doubt, ask the locals. It was a small town. Everybody knew everybody here in this town. at one time. It was extremely western. Philip Wilson is the great-grandson of Sylvester Wilson, who was the first settler to bring his family to the valley in the late 1800s. The town five miles west of Jackson still bears his surname. Today, Philip and his family run the Jackson Hole Rodeo, and he says a lot has changed here, even within his lifetime.

37:04When I was younger, basically everybody had cattle ranches. There's a few dude ranches around, but not a lot of them. And then the hotels started coming in and tourists started coming in. Everybody that comes to Jackson Hole immediately falls in love with it, wants a piece of it. We want to have them feel part of Jackson Hole when they're here. We want them to feel the atmosphere. That's why here at the rodeo, I even go out in the parking and welcome people that come in. I turn around and shake their hand when they leave. For Phillip Wilson, his family and so many of the other residents, the cowboy culture is not just for show.

37:44They were born into it. But he also says it's no wonder that culture appeals to outsiders and newcomers. That's what draws people to Jackson Hole. The people that are here are friendly type people. They're outgoing, they're friendly. That's the only way they know how to be because that's the way they run their lives. It's very, very popular. I think it's made it into a lot of the must-visit when you come to Jackson Hole type of places. Among those drawn here by the land and the culture is Kate Moore. Low taxes aren't a motivation for her. She still files in New York, where her work is based. As chief investment officer for Citi Private Bank, she's joined a growing group of people making the move from Wall Street to the West.

38:28I bought my house a little over seven years ago, so pre-COVID, which was excellent timing given the real estate prices. But I've been coming out here for 30 years. My first trip was when I was in high school, actually. Now, your job is essentially on Park Avenue, but you're splitting your time here. Yeah, I split my time and I split my time in my previous role as well. But I think, you know, I'm someone who manages a global team. We're not all in the same location at all times anyway. and, you know, if I'm working the appropriate hours, in this case, East Coast market hours, I'm up at four, which can be a little bit tough.

38:59I think a lot of the finance people in town do the same thing. Moore says there's also a deep appreciation for the region's history here. She herself lives in a renovated cabin that was built in 1929. But whether the homes are new or old, one look at real estate prices will give you an idea of just how high the peaks of wealth in Teton County can go. Our supply is limited here, but demand seems to go up every year. Brandon Spackman is a local real estate agent, and he currently has the listing for the most expensive property in the area. That's where we met up with him for a tour. It seems like you have almost an unlimited supply of buyers.

39:42We do. It's a big investment, and a lot of it's just timing in their lives and what they want to do. When he says big investment, he means it. The River House sits on a 36-acre property in Wilson, Wyoming, the town founded by Philip Wilson's great-grandfather. It's about 10 miles from downtown Jackson and is currently listed at$60 million. Obviously, you have a room like this, you walk into the room and it helps sell the house. You want to live in a place like this. Now, how many houses are in this price range? Over$20 million. A lot of properties are in the$20 to$30 range. Properties like Riverhouse form the higher end of the range in a place where private land is hard to come by.

40:28But as the ultra-premium market goes up, so does the rest of it. Some people here say the billionaires are pushing out the millionaires, not to mention those in lower-income brackets who sometimes commute from across the border in Idaho. And Jonathan Schechter thinks the wealth divide could become a bigger problem under the latest federal legislation. You're number one in per capita income, but also number one in income disparity. Yes, yes. We have roughly 90 % of our income a little north of that is earned by the highest earners. So maybe 15 % of our community earns roughly 90 % of our income, leaving about 10 % of our income for the other 85%.

41:12The big, beautiful bill disproportionately benefits the wealthy. A lot of these cuts that are going to occur, a lot of cuts in social services programs and other programs, are going to disproportionately harm those of lower income. and when you have the greatest income inequality, the greatest income disparity of any county in America, then I'm concerned about my constituents, my friends, my colleagues, my neighbors. Philip Wilson's rodeo employs locals, and the lack of affordable housing means he has to run a leaner business. We'd like to have 80 employees here. We're not up to where we need to be, but we make do.

41:53There's not enough people here in the valley that live here to work here, because most of them live outside of here. So when you come to the rodeo, we're in the evening. They're either 100 miles away or 60 miles away down in Star Valley. Despite the challenges facing Jackson Hole, its workers and its residents say the sense of community remains strong here. And that's what Philip Wilson hopes to preserve, bringing the ultra-wealthy along for the ride. If you're going to come to the rodeo, we want you to have a good time because we're going to have a good time. So when you come here, we try to show them the friendly type of atmosphere.

42:30That's why we do so much handshaking here at this rodeo. And there's a cowboy Western culture in Jackson. Oh, there is. There is here, you know. The cowboy culture is, I'll tell you one thing that a cowboy does, is every time he sees you, he shakes your hand. If he sees you tomorrow, he shakes your hand. If he sees you tomorrow afternoon, he shakes your hand. I mean, it is the most amazing community ever. I can tell you I have incredibly close friends that are fishing guides and that are self-made billionaires. And frankly, some of those people I didn't even know they were really wealthy because everyone drives the same like F-150 and wears the same kind of jeans around town.

43:09It is a place where there is an enormous amount of wealth, but showing that wealth is not part of normal behavior. Jonathan Schechter says he hopes the community spirit and a respect for the land will be constant even in the face of economic change. But he also says they need to be protected and are no longer as certain as they once were. You just needed to have that hot luck kind of church social mentality because there were too few of us and we had to rely on each other in a very harsh and extreme place. And so we can't take a lot of these things for granted. We can't take for granted transmitting our cultural values from one generation to another.

43:47We can't take for granted transmitting a healthy ecosystem from one generation to another. If we lose that, then we've lost something really special. These worries seem far away on a Friday night at the rodeo. A view from the stands shows that, although much has changed here, much abides. The story of Jackson Hole is one of American ideals. The wealthy and the ultra-wealthy of today may see what the Wilsons saw when they arrived in Teton County over 100 years ago, an American frontier that can share the bounty of the land with its people. But more than ever before, those who live here will have to reconcile the values of capitalism with a culture born of cowboys and unforgiving landscapes, a culture which may be their greatest asset of all.

44:37Up next, there's a new game in town for movie moguls, and it's way easier to get into that game. Just post a video on YouTube, get a following, and you too could be the next Cecil B. DeMille.

44:54This is the Bloomberg Tech Minute brought to you by ChatGPT. Now with ChatGPT work. I'm Carol Masser. Bill Gates Breakthrough Energy Ventures is betting on a cheaper way to produce clean jet fuel and made its first investment from a fund that is backed by Alaska Air, American, and several other carriers. The investment is aimed at accelerating the commercialization of clean aviation fuel. The recipient is Boston-based Lydian, which is developing lower-carbon jet fuel made from hydrogen and carbon dioxide and is one of a growing number of companies developing next-generation clean jet fuel technology.

45:32Lydian says it can reduce capital expenses by more than 50 % compared with competing technologies. Lowering those costs is seen as crucial to making sustainable aviation fuel, or SAF, commercially viable, as it remains far more expensive than conventional jet fuel. Today, clean fuels represent a tiny fraction of the overall market. That's the Bloomberg Tech Minute brought to you by ChachiPT. Put ChachiPT to work on your most ambitious ideas and projects. Get started at ChachiPT.com today by selecting work mode. Available on Plus and Pro plans.

46:31And if you've ever just walked past it, some people would say that's a huge mistake. Because this mayo is different. Most mayonnaise uses whole eggs. Kewpie only uses egg yolks, which gives it this rich umami flavor. It's smoother, deeper, and almost buttery. Once people try it, they start putting it on everything. Egg sandwiches, fries, burgers. Some fans even swear by dipping pizza crust in it. And once you notice it, you start seeing it everywhere. Chefs use it. Restaurants use it. People who really care about flavor use it. Never tried it? Grab the bottle with the red cap next time you're at the store.

47:04Put it on just about anything. Then you'll understand. Cupid, the original Japanese mayonnaise. As markets move and headlines break, what matters most is context. A Bloomberg subscription gives you unmatched reporting, sharp analysis, and powerful tools that help you connect the dots. Subscribers get unlimited access to Bloomberg.com and the Bloomberg app, including exclusive stories, premium markets tools, Bloomberg television, and podcasts. all in one place. Make smarter moves with the global benchmark for business news. Learn more at bloomberg.com slash podcast offer.

47:42This is a story about democratization. From its humble beginnings in the late 19th century, the American film industry has evolved into a$10 billion business largely dominated by a handful of studios, the Warner Brothers and Universals and Disneys of this world. But now new technologies are changing that world, making it possible for just about anyone to create movies of their own. This video revolution is giving rise to a new generation of filmmakers, one growing up far outside of the traditional studio system. Five years ago, Alex Kister posted a video on YouTube that changed his life. If you see another person that looks identical to you, run away and hide.

48:26Here's kind of my wall of achievements that I've had over the past couple years on YouTube. The first big one being the 100 ,000 subscribers that I got, which is, you know, the silver plaque. Kind of the more recent one is the million subscriber plaque that I got about a year and a half ago or so, which is just so insane. And I never even imagined in a million years that I would get that number of followers on a project that I've been doing. It was in this small Wisconsin neighborhood, about 45 minutes northwest of Milwaukee, that Kister developed, filmed, and released a supernatural horror series called The Mandela Catalog.

49:03We thank you. Attracting millions of viewers and the attention of Hollywood bigwigs, Kister recently signed a deal to develop a feature film with Amazon Studios and Steven Spielberg's Amblin Entertainment. The thing that surprised me the most was you uploaded your first video in June five years ago. And it was just for fun. You know, you didn't have any expectations or anything. And then it just exploded almost overnight. Kister is part of a growing craze of YouTubers taking the film and TV industry by storm. They start with immediate access to an audience of over 2.5 billion users around the world, accounting for nearly 14 % of all U.S.

49:44television viewing, according to Nielsen, more than any other single platform or service. It is completely taking over the world. And the funny thing is, the industry just realizes it, that it happened over the last year. It happened five years ago. They just weren't paying attention. Alan Descreniol is the CEO of FilmHub, an online movie and television distribution platform. We're in this amazing era where it's up to the creative and the filmmaker to make that decision and choice to really own their own destiny. And we're seeing that throughout every area of business right now. And it's just happening in film.

50:20YouTube itself has become such a massive platform, right? It's, I don't even know, it's the dominant place that people watch video in the world. And as a result, it's also, you know, the place where people post video and post their films. But the YouTube creators are not limited to the free streaming service. Increasingly, they're breaking into the theatrical box office. So far this year, there have been no less than three theatrical hits directed by filmmakers who came directly out of YouTube. Have you ever actually flirted with Nicki? Among them, Obsession, which cost$750 ,000 to make and earned 650 times its budget at the box office.

51:01What did you find? While Backrooms became the highest grossing film in A24's history. Both films were produced by Abhijay Prakash's Blumhouse Atomic Monster. Not only is the box office doing so great and really now in comparison or in contention with comparisons to pre-pandemic times, but horror as a share of that box office has grown higher than it's ever been. Horror was the third largest film genre last year, accounting for more than 15 % of domestic ticket sales. So far this year, horror has grossed over$800 million at the box office. Horror in particular lends itself to original theatrical events because horror also has more room for doing things in different ways.

51:46For filmmakers seeking to do original storytelling, in theaters, horror is kind of the singular genre, the most resilient genre to be active in. It's gotta be a scary horror event. That's what drives people to the box office. There's so many choices that people have to watch things on their phones, at home. Compelling them to leave their house requires having an experience, or delivering on an experience, or promising experience in the movie theater. Scary is one way to bring people to the movie theater. Another is repeat franchises that continue to perform well, even as that performance tends to fade with each new installment.

52:24And then, of course, there's the blockbuster. Things like this year's Spider-Man and Odyssey. I think it's very hard to kind of paint with a broad brush and say, originals are winning and sequels are losing. IP and sequels and franchises are relevant and an important part of our business, but we have to make room for originals, and the market is responding to that right now. That some new ideas coming from YouTube creators are finding great success in theaters does not make that the norm. With the introduction of a large new group of creators has come an explosion in how much they're creating, the vast majority of which never find the audience that obsession or back rooms have enjoyed.

53:05There's 400 ,000 new pieces of content created every year on IMDb alone. That's on IMDb. That's not counting every YouTube video. That's not counting everything on TikTok. when you think about how much is actually being created, you realize that there's a massive inequality in the supply and the demand and how that equals. So there's a lot of talk about democratization of cinema, a world in which everybody gets to decide what they want to watch. At the same time, aren't there some benefits to having a studio, an executive, presumably somebody who has some experience, commit to something, say we will actually put a lot of money into this?

53:40100 % something that needs to continue to exist, right? Not every film is meant to be done on a low budget. There are some films that require a big, massive creative swing, and you need to be willing to bet it. Same as in the venture ecosystem. There are certain companies that need billions of dollars to fund. But at the same time, the world is getting easier and easier now to have outsized hits without that funding and investment. The online explosion of video content isn't supplying new material only to cinema. It's also flowing into what we used to call television, free video platforms that make their money from advertising rather than subscriptions.

54:22Free advertising-supported TV, fast as they call it, is something relatively new to me at least. I may not have been paying attention, but where did it come from and how fast has it grown? It's been growing like gangbusters. And you say it's new to you, it probably isn't because if you've been watching broadcast television, that's another version of free ad-supported television that's been around for almost 100 years. So free ad-supported television or fast is a very snappy name that's been put on the digital delivery of a linear programming feed, much like broadcast or cable have been for years, but this is digitally delivered, so on streaming devices like Roku.

55:01And it allows consumers to watch the way they've always watched, which is to turn on the TV and see what's on. Lisa Holm is Roku's chief creative officer. The streaming platform is heavily investing in FAST. As we think about programming the service, again, we're thinking about how do we have the right content for the consumer and make sure they can find something they want to watch. And so instead of just going shopping from traditional Hollywood, we can kind of go to a much bigger sort of selection of content to say, great, if people are watching Mr. Beast, we should probably have some of Mr.

55:36Beast on Roku as well. Why do you think that free advertising-supported television is growing so fast? One is that there are so many subscription services, and those subscription services keep raising their prices. I think one of the other is I think the average consumer only has so much attention span. And so I think one of the sort of need states that fast is filling is, OK, five hours a day, I might spend one of those watching some really great scripted drama. But sometimes I need to feel like, you know, if my mind wanders for five minutes, it's OK. And so I think fast is really filling a lot of that hole for consumers.

56:17But whether it's for cinema or fast, the question remains of how both the creators and the platforms can make money off of this new stream of video content. Most platforms pay you based upon a revenue share. If it's a transactional platform, they pay a percentage of the buy rent. If it's an advertising platform, they pay a percentage of the ad sales. Subscriptions, generally, they're sometimes paying a fixed fee up front or they're paying you a percentage of subscription revenue. And we take whatever those revenues are we receive, and we generally take somewhere between 20 % and 30%. One of the other hallmarks of the FAST ecosystem is the commercial terms are governed by revenue share.

56:57So the more engagement that happens on it, the more the content owner makes and the more that Roku makes. So again, it's sort of an all boats rise, a real partnership where the more engagement happens, the sort of better the economics are. It's a more perfect economics for everyone in the business. What succeeds makes money. What doesn't succeed doesn't make money. Like in many creative industries, Blumhouse's Prakash says success often boils down to one thing, luck. We're talking about these movies because they worked and they hit. There are, I don't know, hundreds of others that don't, that are also made for comparable prices or for relatively low cost that don't hit in the same way.

57:39And so it's easy to say, oh my gosh, let's just do that. look at that return, what if we got half of that return, that'd be an amazing business. It's not that simple to execute. I think there are two main elements to why people find some barriers in trying to make their films more known and viewed on the YouTube space. I think one of them being a lot of people are just so nervous and so afraid of negative backlash. And also I think a lot of, there is a luck element involved in some way. And for Alex Kister, that perfect timing will hopefully lead to success. You've worked so incredibly hard, and I just remember how excited you are about everything.

58:18And I can't believe, you know, how far, you know, you've come in these past five years. I'm just so proud of you. That does it for us here at Wall Street Week. I'm David Weston. See you next week for more stories of capitalism.

58:43Here at Bloomberg, we spend all week talking about markets and the economy. And on Fridays, we help you make sense of what it all means for your money. Bloomberg Money is our weekly look at the forces shaping your financial life. We explore personal finance, investing and retirement with leading economists, strategists and wealth managers. Join me, Scarlett Fu. And me, Tom Keen, for smart conversations that help you make better financial decisions. Subscribe to Bloomberg Money on Apple, Spotify, or wherever you listen.