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First Move with Julia Chatterley
U.S. Inflation Rises at the Fastest Pace in 13 Years; Volkswagen Goes all in on Electric and Autonomous Mobility; Elon Musk Tells a Court he rather Hates being Tesla's CEO. Aired 9-10a ET
Aired July 13, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:21]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here is your need-to-know.
Prices pumped. U.S. inflation rises at the fastest pace in 13 years.
Volkswagen volts. The carmaker goes all in on electric and autonomous mobility.
And Musk misery. He tells a court he rather hates being Tesla's CEO.
It's Tuesday. Let's make a move.
Welcome to FIRST MOVE. We have got another jam-packed show for you this Tuesday. Earnings season in the United States has begun and surprise or no
surprise, banks are earning a lot. Consumer prices come in extremely hot, and as I said there, Elon Musk says being CEO of Tesla, well, he'd rather
not. Yes, Musk said that during a court appearance on Monday that he actually hates running the electric vehicle company, perhaps he thinks it's
boring, See, what I did there, boring company. Yes.
Moving on, nothing boring about today start to earnings season. JPMorgan's Q2 earnings saw 150 percent year-over-year. The big bank buzz, the release
of $3 billion set aside for bad loans. Goldman Sachs, its profits powering ahead, too, thanks to fees from deal making and listings. Company's IPO-
ing, not our only focus though.
Today, U.S. consumer price data showing a much greater than expected 5.4 percent year-over-year rise last month. The comparison, of course, with
what was going on this time last year important, but it is the highest levels since 2008.
So, it's a day of rising profits and rising prices, but is it a day of rising stocks? Not after that numbers and real caution feeding into the
markets. The Dow easing back from that 35,000 mark. What about Europe, too? Well, as you can see easing back from records, too. Though Asia had a
strong session.
China saw an expectation beating 32 percent rise in June exports easing some of those broader slowdown fears. China also said -- and this is
crucial -- supply bottlenecks are easing, though I have to say, there are other signals from the region suggesting entirely the opposite.
We're also watching the U.S. administration today, President Biden is set to warn U.S. companies about operating in Hong Kong due to China's growing
influence. That, according to various reports.
The White House also reportedly mulling a multi-nation digital trade deal, though excluding China. If we get this news, it's going to be seen as lines
in the sand being drawn I have to say.
All right, let's get to the drivers. Much to discuss. U.S. consumer prices taking a jarring June jump, sure to test the patience of Fed Chair, Jay
Powell. We also, as I mentioned, have bank earnings in focus.
Paul La Monica joins me now. Paul, let's talk about that U.S. inflation data. I mentioned it and it is important, the comparison with the year
ago's numbers is important given what was going on. We were mid-pandemic, of course, but it is used cars and it is energy and food costs that are
driving certainly the headline number higher.
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, exactly. Julia, the used car price spike is still making up a very significant portion of the overall
rise in consumer prices, and I think for that reason, you're going to likely continue to hear -- drumroll, please -- it is transitory from Fed
Chair, Jay Powell.
I don't think this number, as alarming as it may seem on the surface, it is probably not going to be something that the Fed is going to be too
concerned about because they are going to continue to say that this too shall pass and they are not going to overreact to some of these supply
chain induced pricing pressures that we're seeing, even though if you're a consumer, there's little solace in the fact that you know, when you're
trying to buy a car, or go to the grocery store, they are a lot more expensive. Both cars, used and new, as well as food at many places.
So, I think it's a problem for the economy, but it may not be a problem for the markets and investors.
CHATTERLEY: Yes, I was doing a little quiet drumroll there in the background for you. And of course, drumroll because we are going to be
hearing from Jay Powell this week. He is testifying before Congress. So, I agree with you. We're going to hear him say, look, we expect these pricing
pressures to moderate but he is going to get questions from Congressmen and women saying, look, you know, my constituents are complaining about rising
prices. My small businesses in my states are struggling with what they're seeing. Hiring is also a critical angle here.
All of this feeds into what we're seeing from the banks today. JPMorgan, a resurgent consumer, the recovery is ensuing and as a result, they are
releasing a whole lot of the cash that they set aside for tension troubles in light of the pandemic.
[09:05:15]
LA MONICA: Yes, about three billions worth, Julia. I think that is a sign of confidence from JPMorgan Chase CEO, Jamie Dimon that as you point out,
the consumer is still healthy. They are borrowing, they are spending. There are cracks, certainly in the housing market concerns about how high prices
have gone and whether or not we might finally get a slowdown there. But for the time being, this is a good period for consumer banks like JPMorgan
Chase and Goldman Sachs as well, both of them, obviously, Wall Street rivals, and they are clearly benefiting from this boom in demand for new
stocks, be it IPOs or SPACs, and, you know, companies issuing debt as well and a lot of merger activity, too.
CHATTERLEY: Yes, it's the investment banking part of the business that is showing such strength for both of these. To your point, the number of
companies that are coming to market listing, the deal making going on, signs of toppish markets, though, as we know, given the amount of stimulus
out there, these things can carry on for a while.
What about trading activity? Because again, this time last year and the comparisons are always important, furious trading activity and market
volatility, some of the comparisons will always going to be tough here.
LA MONICA: Yes, market volatility has clearly dropped pretty significantly. But I think that all things being equal, if you're a Goldman
Sachs, JPMorgan Chase, you know, Morgan Stanley, all the others that are going to be reporting this week, even though things may be quieter, I think
you're happy with this slow grind up because it's lifting every other part of the business even if you don't have the frenzied pace of trading that we
saw in the second quarter of 2020.
CHATTERLEY: Yes, financial is first class, at least so far, inflation intense. Will it be transitory? Thank you, Paul, great to have you with us.
All right, let's move on. Europe's biggest car maker outlining plans to electrify sales. Volkswagen says by 2030, half the cars it sells worldwide
will be electric, and that by 2040, those will be the only kind it is selling.
The automaker is also betting big on self-driving and software -- related software.
Anna Stewart joins me now. Anna, I have to say, and this is clearly a big company and an umbrella company because it has many brands beneath it, that
when I read a press release that I'm scratching around on the first page to work out what the headline is, perhaps I'm going to be disappointed
relative to some of the other car makers. What do you make of this announcement?
ANNA STEWART, CNN REPORTER: Yes, Julia. I think you're not alone of being a little bit disappointed particularly by that overall headline figure.
They are planning to be 50 percent all electric; so batteries, not hybrid by 2030. And nearly 100 percent electric by 2040.
This is from the carmaker that actually beat Tesla last year in terms of overall electric vehicle sales, but compare it to the other car makers and
what they've pledged in recent weeks and months for Europe, it does look a bit disappointing.
So, we have Volvo and Ford, both all electric by 2030. Audi, which of course is one of the brands owned by VW, all electric by 2033. And actually
Renault and Stellantis, which owns Fiat and Peugeot also have slightly more ambitious targets than the VW at the stage.
Sales of Volkswagen's battery electric vehicles were quite disappointing actually so far this year. I was reading a report from Bernstein last week,
which said that in order to hit their annual sales target, they would actually have to double their monthly sales.
I'd also say Julia, if we're feeling a little bit cynical, and I know you and I never feel cynical, but if we were, this is really the last
opportunity and Volkswagen could make this sort of pledge, this sort of announcement because tomorrow, according to what we're expecting from the
E.U., their hand could really be forced.
CHATTERLEY: Yes, you and I, the least two cynical people we know, she says. Talk to me about that, because that is really important.
We spoke to the E.U.'s climate envoy last week and actually homed in on some of the challenges for going green for these car makers. But he said
despite pushback in previous years, and oh, boy, they've had a lot, that there's been a real sea change in terms of the car makers' thinking. I
guess the question is, is that choice or are they being pushed?
STEWART: I think it's a little bit of both at this stage and tomorrow, we are expecting this big policy announcement called Fit for 55. There it is.
It is a climate policy package, and essentially, this is to help the E.U. reach 55 percent of emissions compared to 2019. To give you an idea of
where they are, that's by 2030. Currently, they're at 24 percent. They've got a long way to go.
And transport accounts for around a fifth of E.U. emissions overall. So, that is why transport is likely to be mega targeted in this policy
announcement tomorrow. We are expecting that possibly, combustion engines could be effectively banned by 2035. That would be a huge announcement. And
actually, the emissions targets we're expecting could be so strict that it could actually push out hybrid entirely.
So, putting a lot of pressure here on a transition to battery electric vehicles, putting pressure on those supply chains and within the
announcement today from Volkswagen, they did reiterate that they are planning to have six giga factories up and running in Europe by 2030 --
Julia.
[09:10:15]
CHATTERLEY: Yes, thank you very much for that fascinating to watch and then great analysis of a report that only just came out, too. So, great
job. Anna Stewart, thank you very much for that.
And I'll just apologize briefly to our viewers for the noise effects that were going on there. We're working on it. Live television, the joys.
Now, don't worry. If you don't like your job, one of the world's richest men says he hates his -- one of his -- let's be clear. Tesla CEO Elon Musk
made the revelation during a court case as he defended the acquisition of Solar City. Clare Sebastian has been following the story for us.
Never a dull moment in Elon Musk land, Clare, and we'll talk about what he said there, but just explain Solar City. I mean, this was a company that
Tesla acquired several years ago and he was a 22 percent owner. And these - - the people that bought the action suit are saying, hey, it was effectively a bailout to help himself among others.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, that is the crux of this case, Julia. This dates back to 2016. The original complaint was actually
filed before the merger between Tesla and Solar City was approved by shareholders, and it alleges that the Elon Musk and the Board of Directors
basically breached their fiduciary duties to shareholders and went ahead with this acquisition at a too high a price, and in a sense, was a bailout
of a highly indebted company.
And it did of course, raise some eyebrows at the time. You'll remember when it was announced, Solar City's share price went up a lot. Tesla's share
price went down a lot. That shows you that shareholders were a bit worried about it, but it was all part, according to Elon Musk, then and now, he
defended himself that it was part of his master plan to create this sort of sustainable energy company with electric cars and solar panels.
So, this is -- that is the crux of the case. That is the acquisition in question.
The issue is a question of control. That is the legal test to Elon Musk, at the time of this acquisition owned about 22 percent of both companies. That
does not make him the controlling shareholder. But what the court and the lawyer for the plaintiffs has tried to argue is that because of his -- and
I'm quoting the original complaint here, " ... his dynamism and his cult following," he was able to exercise control over the Board and force
through this acquisition.
This is something that Musk defended himself against vigorously, saying, again, this is part of his sustainable energy master plan, and he did not
exercise undue control over other members of the Board.
CHATTERLEY: Yes. And that ties to the point that we made coming into this and this sort of revelations about hating their job, and perhaps the
pressure that comes with it. You know, they have no marketing budget, he does it himself, because he is so powerful. And therefore, when he changes
his title to the Techno King of Tesla, everyone watches. It gives him good PR.
It perhaps doesn't surprise me given the intensity of the focus, and sometimes the hate that he faces, the Bitcoin on the balance sheet example,
is a classic one that at times, he finds being the boss limiting.
SEBASTIAN: Yes, he has been honest about this in the past that he finds it stressful that it's all consuming. Remember that he, at one point, was
sleeping on the factory floor, and he talked about this again, during the court yesterday. He says he doesn't really want to be the boss of anything,
he'd much rather focus on engineering and design.
But without him, Tesla would apparently die, is what he said, and look, shareholders and analysts have said the same that Musk is Tesla, and Tesla
is Musk.
But the court again, is trying to show the lawyer for the plaintiffs that that is an area where he exerts undue control over the company. What he is
saying is that this is essentially free advertising that he thinks he is quite funny, that his sense of humor, his tweets, essentially bring
attention to the company and mean that they never have to spend money on advertising.
So, that was one of the arguments that he made. He continues with this case, Julia, it could take two weeks. And it could be, you know, a landmark
sort of settlement if it goes against him in the sort of history of these kinds of shareholder lawsuits.
CHATTERLEY: Yes, I mean, he made the point. I rather hate being the CEO, but quote, "The company would die" without him. That's a fascinating
statement to make as well.
Very quickly, what might it cost if it goes against him? What's the liability here? Do we have any sense?
SEBASTIAN: We don't know exactly, Julia. The deal was worth about $2 billion at the time. The plaintiffs are seeking unspecified monetary
damages that could include courts and legal fees as well. So, it could be significant. But at the moment, we don't really know the scale of that sum.
CHATTERLEY: Yes, I saw one estimate saying $2.6 billion, and I checked the Bloomberg billionaire index. Musk's net worth estimated at $187 billion.
Context is everything.
Clare Sebastian, thank you so much for that.
All right, let me bring you up to speed now with some of the other stories making headlines around the world.
South African Police say more than 30 people have died in violent protests that erupted this weekend. Demonstrators have been clashing with
authorities, some have looted stores and malls leading to more than 700 arrests. The government has deployed the military to try and quell the
unrest.
CNN's David McKenzie is with us from Johannesburg. David, just explain what we're seeing here because these protests, I believe, began in response to
the decision with regards Jacob Zuma. And of course now, it seems to have expanded into something differently, and I'm just watching you, just
explain where you are.
[09:15:24]
DAVID MCKENZIE, CNN INTERNATIONAL CORRESPONDENT: Well, Julia, I'm here in Alexandra area near Johannesburg, close to one of the richest parts of the
continent. And right there, you can see an APC, a military vehicle, with several soldiers inside it. They were deployed throughout the city, in this
province and in KwaZulu-Natal Province today to try and quell this unrest and this looting.
This morning, Julia, we were out seeing people looting with impunity, completely cleaning out several malls in Soweto, south of the city. It has
been chaotic scenes. I have not seen scenes like this in South Africa in many decades.
As we see, another military vehicle passed by. Earlier, they were running battles in this area and the military does seem to be coming out in force
now. But whether they have the numbers to in fact, keep the peace remains to be seen.
The President has called for calm. Earlier we spoke to -- actually, let me just show this unfold.
You know, it seems like this unthinkable these days in South Africa, in a democratic country for more than 20 years, having to bring the military out
to try and stop the population from looting. This was started, Julia, because of the imprisonment of former President Jacob Zuma that I think it
spiraled beyond that at this point.
More than 30 people killed, at best estimates, hundreds of people have been arrested, and these are the scenes unfolding right now in Johannesburg --
Julia.
CHATTERLEY: It looks very quiet behind you, David, apart from obviously the forces that we can see there. Are people just staying out the way and
staying off the streets in these areas?
MCKENZIE: Well, it might be quiet right at the second, but it certainly hasn't been quiet throughout this country. If you just step with me here.
You know, these are normally vibrant businesses in the heart of Johannesburg. Right now, there is a fire going on inside -- excuse me, let
me put this back in -- inside this building, and there are no firefighters here at the moment. You can smell the acrid smoke.
So yes, it hasn't been calm at all. Right this second, it is calm, because people are afraid of soldiers with live ammunition. We saw at least one
person shot with live ammunition earlier today. The police have been using nonlethal force, which hasn't seemed to have had much effect given how
thinly they are stretched in both our Gauteng and KwaZulu-Natal Province.
I just want you to hear from one shopkeeper explaining the impact on his livelihood.
(BEGIN VIDEO CLIP)
RAHMAN, SOWETO SHOP OWNER: Even right now, we have -- where are we going to stay? What am I going to eat? What am I doing? We don't know nothing
really.
We lose everything.
MCKENZIE: How do you feel about what's happening?
RAHMAN: This is very painful, and I don't know what can I say about that. This is not our fault. I don't know what happened with the government. We
don't know. But this is not our fault.
We didn't do nothing. We just lose like that.
(END VIDEO CLIP)
MCKENZIE: Well, millions and millions of dollars clearly lost and South Africa is already struggling through the COVID-19 pandemic and an intense
third wave. Several vaccine sites, Julia, have been a closed today because of that.
There does seem a little bit of order being restored, at least this afternoon, but it is fluctuating. There's reports of other areas being
looted this afternoon. So, I don't think this is over by any means -- Julia.
CHATTERLEY: No, and to your point, the anger about much more than just Jacob Zuma. It's a challenging time. More than challenging.
David, stay safe. Thank you for your report. David Mackenzie there.
We're back after this.
(COMMERCIAL BREAK)
[09:21:41]
CHATTERLEY: Welcome back to FIRST MOVE. Since 2010, crowdfunding site, GoFundMe has raised $15 billion for millions of donations worldwide.
Last year was its biggest year ever with a donation made every second. As COVID-19 hit, many turned to the site to raise money for things like rent,
food, utilities, and medical bills. In fact, a recent study showed almost 25 percent of the money went to just one percent of campaigns.
Lots to discuss. Joining us now is Tim Cadogan, he is the CEO of GoFundMe.
Tim, so great to have you on the show. And all I can say is, thank goodness for this platform, in particular over the last 12 to 18 months. Just talk
us through what you've seen, in particular, the growth, I think that you've seen in need.
TIM CADOGAN, CEO, GOFUNDME: Yes, hi, Julia. It's great to be here. And thank you very much for those kind words.
Yes, obviously, over the past year and a half, we saw a tremendous amount of activity on the platform, a lot of that related to COVID. Now,
fortunately, certainly in the U.S., we've started to see things shift, and thank goodness for all of us that COVID, you know, we began to beat it here
in the U.S. and as a result, we started to see the number of fundraisers for COVID-related causes beginning to decline and we started to see normal
life come back.
And so you start to see people raise for things like community activities, you start to see people starting to start fundraisers and get support for
their dreams, things like getting ready for the Olympics at the high end, and then at the small end, people funding their little league teams.
So, we're starting to see that shift, particularly really in the second quarter as COVID started to wane with the vaccination rate, and normal life
has started to come back, and thank heavens for that.
CHATTERLEY: Yes, raising funds for some of the joys of life, the fun things in life, as opposed to the basic necessities of survival, quite
frankly, and I know you've been incredibly passionate about that, that this shouldn't be a social safety net. The government, wherever you are in the
world has to step up and provide support in emergencies like this.
I saw a statistic saying at one point, you had 10,000 people starting a GoFundMe every day. Can you give us a sense of even just the kind of
numbers that you're seeing today relative to that?
CADOGAN: Yes, I mean, that's actually normal, right? That's about -- that's about normal. And, I mean, look, if you think about it, there's a
lot going on in life. And at any point in our lives, nearly any of us need support.
And so it's really a great thing to be able to say, you know what, I'm at a point in my life where I need support. I would like my friends, my family,
and my community to mobilize around me and support me for that, whether that be for a need, say urgently or long term need or for some aspiration
or ambition or dream. And so we think very much about needs and dreams, and how do we help people address both of those.
So, that's kind of the balance of what we see going on, but the level of activity is very high, and as you mentioned in the intro, you know more
than a donation every second. You know, that's someone taking time and their resources to help someone else every second, the moments of kindness
every second, and it's an incredible thing to see.
[09:25:12]
CHATTERLEY: And you caught my attention in the past week because you announced a deal with PayPal as well, and before, people couldn't use
PayPal, and I'm sure you were inundated with requests simply to make making a donation easier. I believe people can also pay in crypto if they choose
to, too.
Tim, talk to me about that deal, because I think the potential for doing good is vast.
CADOGAN: Yes, thank you. And we're very, very pleased to have launched that. So, we want to make it as easy as possible for people to do two
things. One, to ask for help. And two, to give help.
So the PayPal deal was part of obviously giving help. And so how do we make it as familiar and easy for anyone to say, hey, that is someone's campaign,
that's a cause that I want to support. What's the way of paying that I'm most familiar with? And what engenders trust, as well?
Because when you get in to a campaign, you want to make sure that you can trust that your money is going to go in the right place and it is handled
in the right way.
Now, for a lot of people, PayPal is a very trusted way of paying, and so being able to put that there in the donation flow was really, really
important.
CHATTERLEY: Explain to me how you make money? Because I think a lot of people will be wondering, you know, when someone makes a donation, let's
say they make a $100.00 donation, what part of that goes to you? Because I know you had a change in the past couple of years where you decided to --
it was voluntary contribution. What are you willing to pay GoFundMe in order to be able to use the services? But break down that $100.00 for me.
What goes where?
CADOGAN: Yes, yes. Actually, very little goes to us. So, we really spend a lot of time trying to think about, how do we get the most amount of money
to the person who is asking for help? That's the whole point. That's our whole company. That's what we do.
And so let's say you raise $100.00. The only part that comes out of that is the 2.9 percent for transaction processing, which is the totally standard
rate that is paid anytime you use a credit or debit card. You can go to the supermarket, pumping gas, it's coming out.
Now as a consumer, you don't always -- you don't see that because you don't realize that that's what's happening. But that's totally standard,
worldwide. So, in effect, the person is receiving $97.00 out of the $100.00, which is incredibly efficient.
When you look at, you know, really any other form of charitable giving. That's super-efficient, way more efficient than anything else.
The way we make money is through voluntary tips. So, we ask the donor, hey, if you liked our service, if you want to support our company and help us to
do more, would you like to give us a tip? Voluntary contribution on top of your donation?
So, let's say the person decides to give us $5.00, they donated $100.00. Their credit card bill says $105.00. A hundred of that is donation, $97.00
goes to the recipient, and the $5.00 comes to us. And we think this is the right model because it aligns everybody.
The recipient gets the most amount of money, we're as motivated as we can to get them as much money as possible, and the donor gets to choose, do
they want to support GoFundMe or not?
CHATTERLEY: You know, I mentioned in the title, I have so many more questions for you, but I'm running out of time that a quarter of the
donations go to one percent of campaigns. What makes the difference for those one percent of campaigns? And I'm frightened that the answer is going
to be income levels in the area that the money is being raised. What makes the one percent?
CADOGAN: Look, it is not predictable, right? So, the one percent are ones that just take off and become viral social phenomena. And what happens is
the breakout of raising money from friends, family, immediate community, and they become, you know, citywide, statewide, national wide, they just
become big social phenomenon.
And it is actually impossible to predict which ones that's going to be. It is just, as you'll see, you know, on Twitter or Instagram or things that
take off, things that capture people's attention. There are certain ingredients, but we never know for sure what's going to happen, and so we
see that happening. And I'll give you an example --
CHATTERLEY: Something that grabs someone's heart. Actually, Tim, I have to let you go because we're running out of time, but I just want to ask you
very quickly because this is important, have you asked Visa or MasterCard, for example, to waive the fee?
CADOGAN: We have, you know, regular discussions with them about how we can get more of that $100.00 to individuals. We would love to get into $98.00
or $98.50.
CHATTERLEY: We'll work on that with you, too.
CADOGAN: Because -- that's long term project, but we would love that.
CHATTERLEY: We are throwing the gauntlet down. I'll work on it, Tim. Come back and talk to us soon. Plenty more to discuss and great to have you on
the show. Thank you.
CADOGAN: It's a pleasure. Thank you. Bye-bye.
CHATTERLEY: Tim Cadogan there, the CEO of GoFundMe. Thank you.
The market opens next. Stay with us.
(COMMERCIAL BREAK)
[09:32:38]
CHATTERLEY: Welcome back to FIRST MOVE. U.S. stocks are open for trading this Tuesday, and mostly lower on news of a much hotter than expected read
on U.S. consumer price inflation last month, the eighth straight monthly rise in prices and the biggest monthly price jump since 2008. And remember
the comparisons, year-over-year are tough given the challenges of this time last year.
Now, a mixed picture for U.S. banking majors, JPMorgan and Goldman Sachs, both are reporting robust Q2 earnings. JPMorgan releasing $3 billion set
aside for bad loans. Goldman Sachs's investment banking really shone, too.
And from weightlessness to wipeout. Virgin Galactic shares continue to fall after Sunday's landmark flight with Branson on board, shares fell 17
percent yesterday, and a down again today, as the company announces plans to sell $500 million in new stock, so raising money off the back of it and
that is putting some pressure on the share price.
Now, one of the big disruptions brought on by the pandemic is how we pay for things. With increasing number of small and medium sized businesses
going cashless, it is been a ripe time for Fintech companies, as we've discussed many times on the show.
This time, Dutch payment service provider, Mollie says it has raised $800 million in their latest financing round valuing the company at a cool $6.5
billion. According to CB Insights, that makes it the third largest Fintech unicorn in Europe.
And joining us now is Shane Happach. He is the CEO of Mollie. Congratulations on the funding round. Let's just take a step back, though
and explain what are you? What does Mollie do? Who do you target and what services do you provide?
SHANE HAPPACH, CEO, MOLLIE: Yes, Mollie is a payment service provider online. So, we target small and medium businesses that sell almost
exclusively over the internet, and we help them take payments. So, they have a website, they run a payment transaction through us to make sure they
get their money on time, flawless, every day and getting them out of the box and running and trading as soon as possible, which is obviously very
valuable in these times.
CHATTERLEY: So, give us an example of some of the companies, the small and medium sized businesses that are your clients.
HAPPACH: Well, I think our clients started out as very small and then over time, just grew and morphed with the company, it continued to grow, more
and more businesses came online. We've got everything from organic food delivery to bird seed, the exercise bikes to coronavirus test bookings, so
really anything where someone can get a digital strategy, we're there to take a payment for.
[09:35:09]
CHATTERLEY: And how many new customers are you signing up each day? And how many active merchants have you got? Because I saw one statistic saying
that you were still signing up 400 to 500 new customers a day. Is that right?
HAPPACH: Yes, Julia, so we're still seeing explosive growth, which is great, and we're continuing to push our geographic footprint and our
product suite as quickly as we can, for which the financing model will definitely help. But we've got about 500 customers joining a day, about
120,000 active merchants now, and that just continues to compound because our customers love us so much, they tend to stick around.
CHATTERLEY: But you also don't lock them in. I think that's one of the unique aspects of what you provide in terms of facilitating their online
payments. They can join you, but they can leave if they find a better option, and you're sort of suggesting there that they won't.
HAPPACH: Yes, well, the DNA of the company is just customer friendliness, customer first and what we saw in the SME business is, not a lot of
businesses love their payment service providers, it is generally viewed as kind of a one-way relationship. So, we just thought, hey, that's a great
angle in which we can be different, and it's just persisted even if the companies become super successful. We want customers to join because they
love it and stay because we treat them right.
CHATTERLEY: Why? Why one way? Simply because they pay too high fees for the services that they are receiving?
HAPPACH: Yes, well, the service is difficult to use, difficult to get up and going, difficult to onboard. In general, not filled with lots of
automation, not super customer friendly, not a lot of customer success management. It's still, you know, by and large, a fairly incumbent industry
in terms of how people are targeted, and we just generally think there's ways in which we can do better. And I think many companies that have taken
this approach, digital first, easy to use, automated have seen huge market share gains in the past.
CHATTERLEY: And I've also heard you talk about the idea of it being localized, and it sort of ties to what you were saying about that sort of
more intimate experience. You want to make it easy. We want to be connected to the customers that we have. You know, even my unbridled enthusiasm for
digital disruption in the Fintech space, my team now go, "What? Another Fintech? We're talking to another Fintech."
What differentiates you from the likes of Stripe, which obviously now has an HQ in in Ireland, so pushing into Europe. Square is obviously another
example. I can mention lots of them. What differentiates Mollie? Is it that localized touch, or other things?
HAPPACH: That's definitely, I think, honest to this point. Obviously, as we think about long term differentiation, we're all studying each other and
saying, who is doing a great job serving customers? So, I mean, at Mollie, we're big admirers of the Stripe business, obviously, hugely successful.
And in general, same thing that we're both trying to pursue, which is make it easy for people to use the product and build more products that they'd
like to use besides just payment.
So, I think where we see ourselves differentiating in the medium to long term is continued localization. So, we really want to be hyperlocal in
Europe and elsewhere, including customer service support, local language, relevant payment types, relevant partners, and plugins, and a physical
presence.
So, we think that differentiates us from most, but from there, we'd like to continue to build products that aren't just payments. So, I think we've
been public about a couple of areas where we see financial services being bought by our SME customers, from others, particularly banks, where we just
think we can make a better product, and that's what we've started working on now with the extra capital.
CHATTERLEY: Yes, I was about to say, $800 million can help you play and enter some of those spaces, in particular. You said, hyperlocal in Europe,
but elsewhere, too. I mean, you know, when we've talked about it on the show already, if I look at a similar structure in terms of accessing those
that are unbanked or a high proportion that are unbanked, a localized structure and demand for small businesses, Latin America, for example,
looks like a pretty great opportunity, too. Where are you looking internationally, potentially? And where do you see opportunity?
HAPPACH: Yes, I think we're formulating that plan, as we speak. We always said we would want to focus on a couple of key areas, you know, a large
total addressable market, a right for us to compete and win, I think there's still some very large markets where foreign payment service
providers have difficulty getting licensed or whether the product must be clunky, because you're forced into a particular cooperation.
But we also said that, you know, we wanted the ability to control our own product destiny, and we wanted a certain competitive landscape where we
feel that we could win and there are still a number of areas and Latin America would be a key focus, as well as parts of Asia for us where we
think the market remains underserved and nobody has managed to crack it from outside and that's a great challenge for us to work on.
CHATTERLEY: Yes, Asia, too. Very quickly, happy to stay public -- private, sorry, in light of your ability to raise money.
HAPPACH: We don't think about that. We've got an operating plan. We've got a lot of stuff we know we need to do. Our customers really want some things
from us and what we're telling them is, hey, let's just use this capital to serve you better and we'll let the rest of it work itself out.
CHATTERLEY: Yes, focus on the growth and we'll see what happens. Shane, great to chat with you. Thank you so much and good luck. Exciting times.
The CEO of Mollie there.
HAPPACH: Thank you very much.
CHATTERLEY: Thank you. All right, coming up, the CEO of Subway will be joining us. He wants a bigger bite out of Main Street with a fresh take on
the humble sandwich. That's next.
(COMMERCIAL BREAK)
[09:42:53]
CHATTERLEY: Welcome back to FIRST MOVE. Making sandwiches scrumptious, my words, not theirs. Subway, the world's largest restaurant chain with more
than 40,000 stores around the world, including in the United States and China is making the biggest menu change in its history.
The revamp called Eat Fresh Refresh, kicking off today in an effort to win back customers.
Joining us now is Subway CEO, John Chidsey. John, fantastic to have you with us. Explain what differences consumers are going to see.
JOHN CHIDSEY, CEO, SUBWAY: Sure, so when our new team came as a group, in the last year and a half or so, we obviously did a lot of consumer
research. We went out and talked to lots of our franchisees and the one thing both groups really were looking for was food innovation, which the
brand hadn't had a lot of food innovation in the last five or six years, also looking for food that was a little more craveable.
So, we went to work over the last 15 to 16 months, really working on our core ingredients, upgrading our turkey, upgrading our ham, our new bread
products, smashed avocado, lots of different core ingredients, and there are about between new sandwiches and upgrades to core products, there's
about 20 new things that we're going to expose to our guests or consumers. So, it's really the biggest refresh in the 56-year brand history.
And so I think in QSR, in particular, it's a very innovative industry, as you know, and so you constantly need to refresh, to stay fresh, so to
speak, and what we really want to do is demonstrate to our guests and consumers that Subway is back on top of its innovation game.
CHATTERLEY: So, it's better quality ingredients we're talking about. Is that going to translate to higher prices?
CHIDSEY: That's a great question, obviously, again, given our footprint and how big our scale is, we've been working on this for, as I said 15 to
16 months and we worked very hard to offset all these costs by changes in packaging, other things we did and so we were able to do this on a cost
neutral basis, so we thought.
As you demonstrate or as you point out, you know, with inflation rising, obviously the entire quick service restaurant industry is facing price
pressure. And while we don't yet know how transitory it is or how permanent it will be, obviously if it continues at a sustained level and it's
consistent we will see some of that inevitably being passed through to the consumer.
CHATTERLEY: Can you give us a sense of how much?
CHIDSEY: No, not at this point it's way too early to stockpile if we bought -- it is challenging. But also we're a little insulated, at least in
the short run because of this big brand refresh. As an example, we're giving away one million free six-inch Subs today in the U.S., our turkey
Cali fresh Sub. And knowing how big this relaunch was, we pre-ordered lots of as much food and protein as possible. So, we're somewhat insulated, but
obviously, we will run through that. And then again, over time, we'll figure out how permanent a lot of these cost increases are.
[09:45:34]
CHATTERLEY: Now, John, I can't have you on the show without talking about tuna. It was a report that went around like wildfire, and I'm sure it was
very irritating for you guys. The suggestion that your tuna products don't contain tuna, and it was a class action lawsuit that began in California,
which I believe has now been amended to say that it's not made a hundred percent with tuna because it doesn't always use skipjack or yellowfin tuna.
John, where do you stand? What's the deal with Subway tuna, please? Can you just clarify for us?
CHIDSEY: Sure. I'm really -- I'm really glad you asked that question. First of all, the amended complaint needs to be corrected. Now, it does say
it is a hundred percent tuna. They question what kind of food it is, but they acknowledge it is one percent tuna. But that's not the real issue as
you said.
I say follow the science. And if you follow the science, you know, once tuna is cooked, its DNA becomes denatured, which means when you go to test
it, which The New York Times admitted, you can't tell one way or the other.
I think the other important thing is we have a website out there called subwaytunafacts.com. It will take you through all the science. You can see
every bit of the story there, and I think that will obviously put the facts out there and clarify all these misconceptions.
The last thing I would point out is, again, we've been working on this Refresh for 15 to 16 months, and if you notice the one thing that we did
not touch was our tuna. We worked on turkey, we worked on ham, we worked on chicken, and we worked on steak. People love our tuna. We're very proud of
our tuna. So, I think that's really the end of the story.
CHATTERLEY: Yes, over and out. No red herrings as far as tuna is concerned. We'll see how that ends, John, and forgive me for the pun.
Talk to me about what you're hearing from franchisees because you clearly have a lot of competition out there on the High Street. The pandemic was
challenging. We've seen a shift to sort of digital to takeaway menus. There's lots of things, I think -- rising wage costs as well for your
franchisees. What are you hearing from them and some of the challenges that they're facing?
CHIDSEY: Sure, well, first of all, lots of things that have been going on even before the Refresh. So you know, you mentioned digital as an example,
and while -- which was probably more important to us contactless curbside pickup, digital third party delivery because we don't have drive-thrus like
a McDonald's or Burger King. We have very limited, shall we say.
And despite that, we've had a 217 percent increase in digital sales since 2019. Our third-party delivery sales are up 260 percent, so we've been
busily improving our digital experience, really trying to drive consumers that way anyway. So, I would argue COVID was actually an accelerant in
pushing the business where it was already headed.
So franchisees are very happy, I think, of the investments we are making in that space, and what they're starting to see.
The other thing I would say, not just true in the U.S., but in Europe and Asia, in large parts of the world, the first six months of the year, the
brand -- 75 percent of the brand, which would be a system, you know, larger than McDonald's has been positive. If you look at -- and positive, not just
against 2020, but against 2019. If you look at the second quarter of this year, the entire brand, on average is positive.
So, things are definitely moving in the right direction. I look at this Refresh as a way to just throw gas on the fire. The brand has already
really started to move nicely over the last six months. So, I'm very encouraged by what we've seen over the last three to six months, both in
the U.S., but more importantly, globally.
CHATTERLEY: I mean, this growth looks incredible. What proportion of the business though, remains people going in store versus ordering online? Can
you break that down for us in terms of percentages?
CHIDSEY: Sure. Sure. I mean, the majority is still in restaurant. The digital pieces growing, like I said very nicely. It is, you know, strongly
in the double digits approaching 20 percent as it continues to climb.
So, you know, we're very excited about all of that, and that obviously doesn't count takeout. You're purely looking at digital, if you will, and
if you count takeout, it's obviously a larger percentage, but in restaurant still today is a big piece of our business, albeit, you know starting to
trend downwards due to all these other channels that are out there.
CHATTERLEY: And any challenges in hiring for your franchisees? I saw McDonald's this week announcing all sorts of additional benefits that
they'll help with tuition fees, that kind of thing. Are you having to make promises or are your franchisees having to make promises like that to get
people in the door to work for them?
CHIDSEY: Yes, I mean, it's a struggle in the U.S. for sure. It's a struggle globally, as you know, as well. The one advantage we have on our
restaurant footprint though is you know, we're a much smaller footprint than a traditional quick service restaurant, hamburger chain, et cetera.
So, we need less labor than other people.
Having said that, you know, we still need labor. One of the things we did again knowing Refresh was coming, we got out in front in May on our digital
app and pushed heavy for hiring and we were able to hire about 40,000 people in that timeframe. So that helped. It's just as you noted, it's a
huge system. Labor has always been a bit of an issue in the quick service restaurant industry, and this is just one of those times that we all have
to just fight our way through.
[09:50:18]
CHATTERLEY: Brilliant. John, fantastic to have you on the show. Quick question, final question, a very quick. Do you eat your tuna?
CHIDSEY: I absolutely do. It's one of my two favorite sandwiches.
CHATTERLEY: What's the other one?
CHIDSEY: This turkey Cali fresh, the million subs that we are giving away in the U.S. I love that product and I know it sounds like a shameless plug,
but it is one of my favorites.
CHATTERLEY: It definitely sounds like a shameless plug. But we did it.
John, thank you for joining us. Good to chat with you, and we'll speak soon. John Chidsey there, the CEO of Subway. Thank you.
All right, coming up, from subway to London's world renowned restaurants. They are finally back in business again, and we've got the latest. That's
next.
(COMMERCIAL BREAK)
[09:53:01]
CHATTERLEY: London's restaurant industry, a sector that suffered severely under months' long COVID restrictions is now roaring back. As Salma
Abdelaziz heard from one top chef, reopenings bring both joys and challenges.
(BEGIN VIDEOTAPE)
SALMA ABDELAZIZ, CNN REPORTER (voice over): Food, not made at home or delivered in a box, but chef developed, expertly prepared and beautifully
plated is back.
After more than a year of closures and restrictions, London's restaurants are buzzing again. From his acclaimed restaurant, NOPI, Chef Yotam
Ottolenghi told us it's about bringing people together.
YOTAM OTTOLENGHI, CHEF AND RESTAURANTEUR: As someone who serves food for a living and not doing it feels so terrible and unnatural.
ABDELAZIZ (voice over): The author of 11 cookbooks told us lockdown forced him to change and innovate.
OTTOLENGHI: This is where all the magic happens, behind the scenes. There's an immense flexibility in the hospitality industry. It is people
who think on their feet act on their feet so as an industry we move really quickly from serving people on site to deliveries and takeout.
ABDELAZIZ (voice over): Head chef, David Bravo said he used his time at home to get creative.
DAVID BRAVO, HEAD CHEF, NOPI: Having all this time, I was just kind of thinking of new dishes, new recipes, or what we can do with leeks, or what
we're going to with carrots used in different forms.
ABDELAZIZ (voice over): But while people are eager to finally dine out, the industry cannot find the human resources needed to serve them.
OTTOLENGHI: We're struggling to hire on all fronts. So, you put an ad out for kitchen porter and we've got very few candidates applying.
ABDELAZIZ (voice over): A third of venues reopened without adequate staffing according to one survey. Post Brexit immigration rules and a sense
of instability makes recruitment and retention more difficult.
General Manager Pierre Maloof told us many of his friends and colleagues have quit their jobs.
PIERRE MALOOF, GENERAL MANAGER, NOPI: It feels very sad, a couple of times on the bus to work, I did have a little cry because I think we didn't get a
chance to say goodbye. It was such a mass exodus that we never got the closure, and now we have to rebuild again.
[09:55:05]
ABDELAZIZ (voice over): Pre-COVID, an estimated half of hospitality workers were E.U. citizens, but over the last year, many have returned to
Europe government data shows, but while the industry struggles to find solutions, consumer demand is soaring.
OTTOLENGHI: The one thing I'm really confident is that people will want to eat out, because it's one of the few joys -- communal joys that we still
have and restaurants are the perfect places for that.
ABDELAZIZ (voice over): Hope that the revival of London's food scene will lead to renaissance and reunion.
Salma Abdelaziz, CNN, London.
(END VIDEOTAPE)
CHATTERLEY: And finally on FIRST MOVE, a heartwarming story for Manchester, the hometown of England forward Marcus Rashford after he missed
his penalty in the Euro final on Sunday, a mural in his honor was now defaced. The police are now investigating.
Well now, Mancunians are rallying in support of the player, covering he mural with hearts and messages of solidary saying, "Hero."
Rashford said on social media that he is never going to apologize for who he is or where he came from, and rightly so.
He was the youngest person ever to top the giving list of "The Sunday Times." Marcus, heart.
That's it for the show. Stay safe.
"Connect the World" with Becky Anderson is next. We will see you tomorrow.
(COMMERCIAL BREAK)
[10:00:00]
END
