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Quest Means Business
Apple Launches Budget-Friendly iPhone 16e; Talking ClassPass with the CEO of Mindbody. Trump Calls Zelenskyy a Dictator in New Social Media Post; Europe Scrambles for United Response on Ukraine; Europe Could Be Hit Hard by Trump's Proposed Tariffs. Aired 4-5p ET
Aired February 19, 2025 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:14]
PAULA NEWTON, CNN INTERNATIONAL HOST: So the markets losing some steam there throughout the day, but they are still trying to parse what is going
on with the American economy. Those are the markets. These are the main events.
A public war of words between President Trump and President Zelenskyy as European leaders hold their own summit on the crisis over Ukraine.
The E.U. trade chief says the bloc wants to make deals with the U.S.
The IPO drought could be nearing its end. Well, a popular fitness app be one of the first to wade in. The Mind Body CEO joins us live.
And we are live from New York. It is Wednesday, February 19th. I'm Paula Newton, in for Richard Quest and this is QUEST MEANS BUSINESS.
And a very good evening to everyone. Tonight, Donald Trump and Volodymyr Zelenskyy are openly feuding with the U.S. president echoing lines from the
Kremlin. Trump called Zelenskyy a dictator today on Truth Social. He accused the Ukrainian president of refusing to hold elections, and
suggested that Zelenskyy has lost the support of the people.
Just yesterday, Zelenskyy suggested Trump has fallen for Russian misinformation.
(BEGIN VIDEO CLIP)
VOLODYMYR ZELENSKYY, UKRAINIAN PRESIDENT (through translator): Unfortunately, President Trump, I have great respect for him as a leader of
a nation that we have great respect for, the American people who always support us, unfortunately lives in this disinformation space.
(END VIDEO CLIP)
NEWTON: French President Emmanuel Macron says Europe will step up to ensure peace on the continent.
Now, he hosted a meeting that included 19 European leaders and the Canadian prime minister. Afterwards, Macron said they agreed on three principles.
The first is that Ukraine must always be involved in peace talks and its rights respected.
Melissa Bell is in Paris for us. Kevin Liptak is in Washington, and we do begin with Kevin.
Listen, Kevin, the president's words are startling. He called Zelenskyy a dictator, accused him of not wanting peace, and added a threat that if he
didn't, in his words, move fast, he wouldn't have a country left.
I state the obvious none of these threats or name calling was directed to President Vladimir Putin.
KEVIN LIPTAK, CNN SENIOR WHITE HOUSE REPORTER: Right, and that's what I think is so striking about it, because when you talk about a country that
is refusing to hold legitimate elections, I think the first country you'd probably think about is Russia, not necessarily Ukraine. And I think that's
what's so alarming to a lot of people who are watching all of this unfold.
It has really been sort of a head spinning shift in such long standing American foreign policy that seems to be putting aside American allies in
Europe, but also, particularly in Ukraine, in favor of Russia and in favor of some of the various talking points that Russia has been using throughout
the course of this war, including that Ukraine hasn't been holding elections.
Of course, there is martial law there. Logistically, it is very hard to see how that would happen. But also Trump's claims about the origins of the war
itself, saying yesterday that it was actually Zelenskyy who started this war by refusing to negotiate with Russia. It is not exactly clear what
negotiations he thought were going to happen, but this is all sort of part and parcel of what has been sort of a perplexing theme throughout Trump's
presidency, his first presidency and now this presidency, which is this affinity for Vladimir Putin.
I think the question now, as this rift grows between himself and Zelenskyy, is how exactly all of this moves forward, because, as he is saying this,
his own envoy to try and resolve this conflict, Keith Kellogg is in Kyiv to try and come up with some solution that would end the fighting, but it is
very hard to see how alienating Zelenskyy and alienating the allies in Europe would actually help Donald Trump achieve this goal.
And you know, when you talking to White House officials today, they do say, you know, this post was reflective of frustrations that the president had
about Zelenskyy, about Zelenskyy's claim that Trump is existing in this web of disinformation. And they do say that his overarching goal in all of
this, in talking to Putin and, you know, talking to Zelenskyy, is to try and bring this conflict to an end.
But it is very hard to see how he does that if he doesn't have buy in from Zelenskyy himself and from the Europeans. And to that end, I thought it was
interesting that when Zelenskyy spoke to the British Prime Minister today, Keir Starmer, Downing Street was pretty pointed in their readout of this
call.
They said that the prime minister expressed support for Zelenskyy and Ukraine's democratically elected leader, and said that it was perfectly
reasonable to suspend elections during wartime, as the U.K. did during World War Two.
[16:05:10]
I think it is notable Keir Starmer will be here in Washington next week to meet with Trump, as well the French President Emmanuel Macron.
NEWTON: Absolutely, Kevin, we will get to more reaction there in D.C. And throughout in a moment. But I do want to turn to Melissa now, and I have to
say, Melissa, at this point, Europe needs to stop with the outrage and actually start with some action. To that end, what will Macron's starting
point be, especially as he does have this meeting coming up with President Trump?
MELISSA BELL, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, that was exactly some of the sense of what came out of these two meetings. The first
on Wednesday, the second today, Paula, that Europeans had been and I quote here, the Secretary General of NATO, kind of not really knowing what to
make of these talks, kickstarting without them now about how they can act and what has come out is that they intend to play a big role in a post
peace deal Ukraine.
They intend to have troops on the ground, even if that will involve some kind of American backstop, as they put it. They intend to increase their
spending on defense in line, not just with what Donald Trump and his officials have asked for, but a long standing request of NATO that
Europeans should be aiming to give a bigger proportion of their GDP to their defense spending.
What the Secretary General of NATO had to tell me a couple of nights ago is that that is happening and Europeans have understood it. To your question
about these particular meetings and what comes out, we heard there as just Kevin was just saying about the British Prime Minister, that fight back
against the American narrative. So to in the French President's tweet reminding people that he was entirely in line with President Donald Trump's
desire for peace, but that was a peace that would be won after an invasion that had begun three years ago as a result of what Russia had done to
Ukraine's borders and not anything else.
So it isn't just the narrative that the French are trying to get right here in terms of what happened and how the war in Ukraine unfolded, but also
what happens next and how Europeans can continue to be present at that table.
And I would add, Paula, that what has emerged these last couple of days from the Paris talks, not simply from the Secretary General of NATO, but
from other European allies here, is that their understanding is that this preliminary contact meeting between Americans and Russians is one thing.
Once the actual negotiations over the future of Ukraine begin, everyone appears to be in agreement that both the Europeans and the Ukrainians need
to be around that table and that these next conversations will happen in many different formats, but not without those principally concerned, and
those are, of course, the Europeans.
And I think that is very much the message that the French President, the British Prime Minister, are going to be taking to Washington with them next
week.
There has been the sense that Donald Trump has been keen to get his Russian counterparts across the table, that he is keen to see Vladimir Putin, which
no doubt will happen even if we don't know when. But the fact that the Europeans have been the biggest contributors to this war of military
equipment, more so even than the United States under President Biden, is something that they continue to keep putting forward and within NATO to
keep pushing for what happens next.
Beyond the discourses and the narrative and the tweets and the pronouncements coming from the White House, how Europe can continue to play
a part in its own security future. That's been at the heart of these negotiations. And what we've heard from the French Presidency, Paula, is
that these were two first day of talks. But these talks will continue in many other formats for many more weeks -- Paula.
NEWTON: Yes, it is something, in fact, that President Trump points out himself that there is an ocean between this conflict and the United States,
not so for Mainland Europe, obviously.
Kevin Liptak, I do want to turn, though, to what the reaction is in D.C. and beyond. I want to start first with former Vice President Mike Pence,
Donald Trump's vice president, saying: "Mr. President, Ukraine did not start this war. Russia launched an unprovoked and brutal invasion, claiming
hundreds of thousands of lives," saying that of course, "The road to peace must be built on the truth."
I mean, Kevin, how much will this matter and will Republicans specifically in Congress, have to follow up on that posting from the former vice
president in order for this to have any teeth whatsoever?
LIPTAK: Well, Mike Pence's tweet will have no effect whatsoever in the Donald Trump White House. Those two men have had a long standing falling
out, no love lost there.
But there are a number of Republicans who the president is very close with on Capitol Hill, who have started to come out and question this rush to
meet Vladimir Putin and also the president's, you know, repeated claims that Ukraine could be the cause of this war.
You've heard it from the Republican, Lindsey Graham from South Carolina, who has been a longtime National Security hawk who had to readjust some of
his positions when Donald Trump came into office. But clearly, he is on the side of Ukraine in this fight.
You also heard the Senate Majority Leader, John Thune, the Republican leader in the Senate, when he was asked about this quote that Trump made,
that Zelenskyy is a dictator. He essentially just said, the president speaks for himself.
[16:10:06]
I think this all speaks to sort of the dramatic realignment that Trump is executing on American foreign policy. You know, going back to the end of
the Second World War, every American President that met with their Russian or Soviet counterpart sort of entered those talks with a degree of
skepticism from a position of adversarial-ness, you know, and I think, you know, thinking back to all the summits that I've covered between American
and Russian Presidents, they entered the talks thinking that Putin was trying to manipulate them somehow.
And that has always been absent in Donald Trump's relationship with Putin. And this is still one of the big differences between Trump and Republicans
in Washington, on so many other issues, Republicans have just sort of come along with Trump, you know, go along to get along in a lot of ways.
This is an issue that I think still generates a lot of heated opinions on Capitol Hill, certainly among the GOP. And so it will be fascinating to see
how that particular angle to this plays out.
NEWTON: Yes, and it will be interesting to see if it is met with more than just words.
Melissa Bell in Paris for us; Kevin Liptak in Washington, Grateful to both of you. Appreciate it.
Now, Vladimir Putin says Europe is overreacting to this week's talks between Russia and the United States. Putin described the meeting in Saudi
Arabia as friendly, and he said there was no need for Europe to get involved. Listen.
(BEGIN VIDEO CLIP)
VLADIMIR PUTIN, RUSSIAN PRESIDENT (through translator): Do they want to sit here at the negotiating table and mediate between Russia and the United
States? Well, probably not. So why the hysteria here?
Hysteria is inappropriate.
(END VIDEO CLIP)
NEWTON: Now, President Trump's outreach to Moscow is welcome news, as you can imagine, in Russia.. People there say it is an opportunity to reset
relations with the United States.
Fred Pleitgen has our report.
(BEGIN VIDEOTAPE)
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice over): Breaking news on Kremlin controlled T.V. Even the anchor can hardly believe
her eyes. U.S. President Donald Trump calling Ukraine's President Volodymyr Zelenskyy, "a dictator" in a social media post.
(RUSSIAN T.V. NEWS ANCHOR speaking in foreign language.)
PLEITGEN (voice over): "Attention: This is incredible." The host says. "Trump is obviously angry, having had modest success as a comedian,
Zelenskyy writes the U.S. President couldn't have won in the Ukraine conflict, and the U.S. Was giving him money in vain. Zelenskyy is doing his
job poorly. Donald Trump now calls Zelenskyy a dictator. This is what he wrote."
Many Russians now hoping that Trump induced thaw in U.S.-Russian relations could bring fast sanctions relief. At The Skazka souvenir shop in Moscow,
Boss Alexander is rearranging the matryoshka dolls, according to what many here hope could be the new world order.
BOSS ALEXANDER, THE SKAZKA SOUVENIR SHOP: Our president and American president and also we have Mohammed Bin Salman of Saudi also. So all
friends of Russia.
PLEITGEN (voice over): On the street, much praise for President Trump sometimes maybe a bit too much.
PLEITGEN (on camera): What do you think about Donald Trump?
UNIDENTIFIED MALE: I think maybe small Stalin.
PLEITGEN (voice over): You think small Stalin? Why?
UNIDENTIFIED MALE: Yes, why? But character.
(UNIDENTIFIED MALE speaking in foreign language.)
PLEITGEN: "Of course, I like Donald Trump." This man says, "He is a positive president. He will change America and make it great again."
Moscow's leaders optimistic, saying they believe the Trump administration understands their view of the Ukraine War where Russian troops continue to
make modest gains, this Russian Defense Ministry video purporting to show drone units hitting Ukrainian positions in Russia's Kursk Region.
Russian leader Vladimir Putin visiting a drone factory, also praising Trump, saying a face-to-face meeting is in the works.
(VLADIMIR PUTIN speaking in foreign language.)
PLEITGEN (voice over): "We're not in a position where it is enough to meet each other, have tea or coffee and chat about the future," he says. "We
need to make our teams prepare issues that are crucial for both Russia and the U.S., including the Ukraine conflict, but not only it."
Fred Pleitgen. CNN, Moscow.
(END VIDEOTAPE)
NEWTON: Now, given everything we've just covered, Europe is being forced to rethink whether it can count on the United States for its defense. The
United States has a massive presence on the European continent with bases. You see them there in Germany, Italy, Belgium, Poland and multiple other
countries.
Most European countries spend much less on their militaries than the U.S. in percentage terms, you see it there. Europe is particularly dependent on
the U.S. for support equipment like satellites and transport vehicles, not to mention the all-important nuclear umbrella.
Matthew Savill is the director of the Military Sciences at the Royal United Services Institute, or RUSI, and he joins us now.
Grateful to have you on the program. Head spinning it is indeed. And firstly, I want to know, do you agree that it is time for Europe to work
towards that military autonomy? And if you agree with that, what are the obstacles today that they'll face in trying to do that?
[16:15:11]
MATTHEW SAVILL, DIRECTOR, MILITARY SCIENCES AT THE ROYAL UNITED SERVICES INSTITUTE: Good evening. It is a pleasure to be on.
I mean, it is long past time for Europe to up its game on its defense capabilities, whether or not that is autonomy is a different matter. I
think the biggest impediment is actually turning their undoubted financial strength into actual material gains.
Ukraine has prompted some soul searching and investment and in fact, we are ten years on from the NATO Summit in Wales, which set the two percent
target that most European countries are now meeting. But the reality is, is that investment has been sluggish and they've probably not been taking this
seriously enough.
NEWTON: And when we talk about the investments being sluggish, though, what in material terms does that mean? What do they need to be investing in now?
So even if it is not full autonomy that it gets much closer to that.
SAVILL: Well, what we are facing at the moment is a consequence of essentially very small and incremental growth, you know, there was the
pledge, increases before the first Trump administration, but then that accelerated when he came in.
But we are still talking about a case where Europe's defense spending in total is about $450 billion, and that is basically half what the U.S.
spends, although its considerably more than Russia.
Where we are looking at is a combination of depth, mass, and ammunition stockpiles, and also certain sophisticated areas where the Europeans rely
very heavily on the U.S.
NEWTON: Now, if a future Trump administration significantly reduces or, you know, it is even possible that they might consider ending military
assistance to Ukraine, how would that impact Europe's security? It is a completely different discussion as to whether or not Europe could pick up
the slack for Ukraine, but how would it actually impact Europe's security?
SAVILL: Well, I mean, this is the question that depends very heavily on what the scenario looks like in Ukraine. But let's for the sake of
assumptions, say that there is a relatively, you know -- there is a ceasefire relatively soon. What you'd be looking at is Russian rearmament
and recapitalization largely of their ground forces, which have suffered the bulk of the casualties.
I think, it is worth noting that the Russian threat spreads across -- you know, the Army is heavily committed to Ukraine. Their air force is heavily
committed but can switch. There is obviously a considerable maritime threat, and particularly Russian submarines and Russian undersea vessels,
as well as the sabotage, you know, the intelligence threat.
The big problem that the Europeans have is that they need to increase their artillery shell production. They have a target of two million shells by the
end of this year, and they need to increase their stocks of precision weapons.
The area where they rely very heavily on the U.S. is U.S. air power, and particularly the ability to destroy enemy air defenses and radar sites. And
so Europe needs to effectively build up sophisticated precision strike there and actually its own long range strike.
There is a European program for a sort of long range ground launched cruise missile, but that is in its very early stages.
NEWTON: I don't have a lot of time left, but I have to ask you this, given all of this will cost money, do you believe that European leaders need to
be very straight with their populations at this point in time, and tell European citizens this will cost us?
SAVILL: I mean, yes, and they are already giving out those messages. But the question is how much is enough? I think the percentage question at that
point becomes a bit redundant, because GDP is a moving target. What they really need to do is work out what is necessary to increase war stocks and
buy some of those sophisticated capabilities.
There are some signs of progress. You know, in a couple of years, we will have about 400 F-35s being operated by European air forces, but they are
going to need to spend more on recruitment and training to make sure that particularly ground forces are at higher levels of readiness.
NEWTON: Yes, I know they are American fighter jets, not the European models, which they apparently should have been working on as well.
Matthew Savill, we have to leave it there, but really appreciate the conversation.
Now Apple is launching its latest iPhone and it is hoping it will make waves in the budget smartphone market. How about that a budget smartphone?
More on the new iPhone 16e, coming up.
(COMMERCIAL BREAK)
[16:22:25]
NEWTON: Shares in European and Asian automakers falling after Donald Trump threatened a new 25 percent tariff.
Stellantis, Toyota, Volkswagen, and Renault all closed down more than two percent. Mercedes falling about 1.6 percent.
President Trump unveiled his plan yesterday. Listen.
(BEGIN VIDEO CLIP)
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: I think momentous decisions are being made by companies all around the world, the biggest and
they want to come back into the U.S. Car plants are being canceled in other locations now because they want to build them here.
REPORTER: Specifically what the auto tariff rate should be.
TRUMP: Yes, I probably will tell you that on April 2nd. But it will be in the neighborhood of 25 percent.
(END VIDEO CLIP)
NEWTON: CNN's Anna Stewart now explains how these tariffs fit into the escalating trade tensions between the E.U. and the U.S.
(BEGIN VIDEOTAPE)
ANNA STEWART, CNN REPORTER: It probably wasn't the welcome the E.U. Trade Commissioner would have wanted. The night before his address in Washington,
D.C., President Trump announced a possible new round of tariffs that would hit the E.U. hard, particularly German car manufacturers.
In a speech ahead of trade talks with his U.S. counterpart, Maros Sefcovic made clear that he believes the E.U.-U.S. trading relationship is fair and
balanced, the very opposite of what President Trump has previously said.
And while the commissioner plans to do what he can to avoid new tariffs, he left it in no doubt what would happen if President Trump implements them.
MAROS SEFCOVIC, E.U. TRADE CHIEF: If the U.S. imposes tariffs on E.U. products, it would create unnecessary barriers to European exports, harming
businesses, and workers on both sides.
Therefore, to protect European interests, we will have no choice, but to respond firmly and swiftly, but we do hope to avoid this scenario, meaning
the unnecessary pain of measures and countermeasures, and remain committed to constructive dialogue.
STEWART: In the scenario of tit-for-tat tariffs, the Commissioner didn't say where or what the E.U. would target. In the first Trump administration,
the bloc targeted Levi jeans, bourbon whiskey and Harley-Davidson motorbikes. Companies both symbolic, but also headquartered in states of
influential policymakers.
President Trump says he will likely give more detail on his latest tariff proposal in April, leaving open a window for negotiation.
Anna Stewart, CNN, London.
(END VIDEOTAPE)
NEWTON: Now, an automobile tariff could weigh heavily on some of the best- selling cars in the United States and potentially raise prices for U.S. consumers.
Among the top ten models last year, they were from Toyota, Honda and Nissan, all from Japan.
[16:25:10]
CNN global economic analyst Rana Foroohar joins me now. Good to see you.
There is no debate, at least not between you and I, about tariffs will make prices for all cars more expensive. That means even used cars.
But the president argues the short term pain will be worth it. More cars made in the United States. Is he correct about that?
RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: You know, it is a very complicated calculus. As you know, Paula, I have actually been a fan for
many years of a certain amount of reindustrialization, but in order to do that, you really need to have a 360 plan.
So tariffs are just, you know, kind of one tool in the toolbox if you decide that an industry is important domestically and you want to protect
that, that's a first step perhaps to take to put tariffs in place, but then you need to really have an industrial policy at home and that's the part
for the Trump administration for Trump 2 that I simply don't see in place yet.
You know, like him or not, Joe Biden had a really a strategy of tariffs and industrial policy at home. With Trump, we are just seeing tariffs so far.
And of course, as you know, they've been up and down back and forth, you know, changing one day from the next. That doesn't make business feel the
kind of certainty that you would need to invest and really, you know, reindustrialize at home.
So I am not entirely convinced yet about this strategy.
NEWTON: You know, Rana, it seems that the market isn't entirely convinced either. I feel like the stock market hasn't priced this in at all yet,
despite some of those stock prices we were just looking at. Why not? Because we've been warned from Trump advisers this time that this is not a
negotiating tactic, that these tariffs in some form will be put into place.
FOROOHAR: Right. I think that the market is reeling, honestly, from the amount of information, from the amount of new data points that are being
given on a daily basis.
So, you know, we could have an hour long conversation right now just about us and what Trump is doing around tariffs. That wouldn't even get us into
the various executive orders, the way in which the federal government plumbing is being changed. What is happening at the Fed.
We are getting -- and geopolitics, you know, what's happening with conflict in the Ukraine, changing alliances with Europe.
There is a new data point every day, and that tends to, in the short term, make investors stick to what they know, and I think that there is a certain
way in which the U.S. market, even despite Trump, is being favored because, well, okay, we are not going to make a big shift. We don't know what is
going to happen in Europe. We are not going to diversify there.
China is closing its own borders, and a lot of investors feel that it is riskier than it has been in the past. So that tends to argue for U.S.
markets. That said, I wouldn't be surprised if we see some kind of a black swan event in financial markets even in the next few weeks or months.
I think we are reaching that point where the markets begin to think.
NEWTON: Wow, Rana, I didn't want to say it because I had this conversation in my family this week, but oh gosh, let's all hang on, right, and buckle
up because I am with you.
FOROOHAR: Sure.
NEWTON: I really do not like to see the warning signs in this market. I do want to get to the Fed Minutes. They released today, those Fed Minutes and
they say there is reason to worry about tariffs and its impact on the U.S. economy more broadly.
The fact that they are, you know, basically saying out loud that this could hurt the economy, how much do you think that will really affect U.S. policy
going forward in terms of the Fed policy and interest rates?
FOROOHAR: Well, I think the Fed is going to be focused on data. I mean, Jay Powell has quite wisely said "I am keeping my head down. I am swimming in
my lane." I am, you know, staying out of politics and does not want to be politicized.
I don't think what the Fed does or doesn't do is going to affect what the Trump administration does. I think the Fed is going to continue to be
pressured and politicized by the administration.
They want interest rates to be down, but there is a lot of reason to think inflation may come up and that means that the Fed wouldn't want to make
that move.
I just think that we are in really uncharted waters. The administration is acting the way administrations of the past have when there is a real pivot
point in geopolitics and monetary policy in the political economy pendulum shift.
They are really saying, look, we want to see a change. We want to see a change in U.S. alliances. We want to see a change in the U.S. economy.
Whether or not you can have all of those things and not get a market correction or not get real chaos in the financial plumbing of America and
the currency status, that's what we are about to find out.
NEWTON: Yes, or once again, get $12.00 boxes of cereal. Rana Foroohar always great speaking to you. I appreciate it. Thanks so much.
Now, I want to ask you, how are your New Year's resolutions going? We will talk to the CEO of Mind Body which owns the popular app, Class Pass about
the business of self-care. That's next.
(COMMERCIAL BREAK)
NEWTON: OK. Listen up. If you're looking to get your hands on an iPhone 16, your task, it could have gotten much easier. Apple just unveiled its iPhone
16e billed as a new and cheaper version of its flagship device.
Now, the new model will be the cheapest iPhone to support apples A.I. system Apple Intelligence, and its release marks Apple's renewed push to
gain ground in the budget smartphone market.
Clare Duffy is joining me now, and I asked Claire, on behalf of Apple, what took you so long?
CLARE DUFFY, CNN BUSINESS WRITER: Yes, it is a good question. I mean, the company, it's really an important moment for the company because it has
been dealing with sluggish iPhone sales for the past few years and has been trying to give consumers new reasons to upgrade. Apple Intelligence has
been seen as one of the major reasons, one of the major opportunities to get consumers to trade in for an updated iPhone.
But now this more low-cost device is going to broaden that market even further. Remember when Apple Intelligence launched in the fall, it was
available just for the newest iPhone 16 and the Pro models of the iPhone 15. So it's a big deal that they're now making this A.I. system available
on a lower cost device.
Apple Intelligence promises to do all kinds of things like make it easier to write e-mails, let you create new emojis. It is expected to create a
really major upgrade for Siri in the coming months, so I think there will be lots of reasons why consumers may now be looking to get their hands on
this cheaper version of the device that is now going to offer those Apple Intelligence features.
[16:35:02]
And this really does represent Apple trying to get back into competition with the likes of Google and Samsung, which have really pushed hard into
this budget device space. The last time we saw Apple update its iPhone SE, which was the previous budget version, was in 2022, and so I think this is
a big deal for the company on a number of fronts. Both the competition and just the opportunity to get more people buying iPhones.
NEWTON: All right. We'll wait to see if it does work to get some of that -- some of that market share back.
Clare Duffy for us. Thanks so much. Appreciate it.
Now we are seven weeks, yes, already, seven weeks into the new year. And how are those resolutions holding up? If you decided to put self-care first
in 2025, you might have turned to ClassPass. Now it's a subscription service that allows people to book fitness classes and other wellness
services, and we looked up the selection of fitness classes just around here on CNN offices in New York. Almost 20 options. Yes, within walking
distance. The question is, will Paula get to any of them?
Fritz Lanman is the CEO of Mindbody, which owns ClassPass, and he joins me now.
OK. With someone with over a half century of experience on this planet and who has seen it all, can you lay out your vision for this? What does it
mean for someone with limited resources, I add, to actually get that best value proposition in fitness?
FRITZ LANMAN, CEO, MINDBODY: Yes, well, it sounds self-serving, but, you know, I'd say use ClassPass. There's a lot of great options online. And you
can find workout videos on YouTube and Instagram and TikTok, that have taken the world by storm. But the most successful way to work out and to
stick with a regie is to get into a physical space experience. Have an instructor or personal trainer.
What we specialize in is getting people into those group fitness experiences where you get a sense of community, you have specialized
equipment, you have an instructor telling you what to do, motivating you, keeping you accountable. You know, you're kind of having a competition
dynamic with the community of other participants around you, where you're encouraging each other but pushing each other to go harder.
And then I think, last and most important, you know, is to have variety in your routine. And, you know, we see people on ClassPass who, if in their
first six months they're going to three or four different places, they're going to stay active 50 percent longer and work out almost 85 percent more
in their duration on the platform than those who just try to go to one place.
NEWTON: And in terms of the technology here that makes this possible, it's not just the platform that affords customers, but how does this actually
translate into a good business model? I mean, to quote someone else here, you're not a fitness company, right? You're a tech company. Is that the
right way to think about this?
LANMAN: Yes. So on the Mindbody side, we power these fitness businesses. We do their bookings and payments and staff management. And on the ClassPass
side, we send them, we aggregate members, people who are willing to get last-minute inventory to stuff or want a variety routine. And what we do is
we do dynamic pricing on extra capacity for these businesses. So we say to these businesses, hey, you go find the members who are willing to pay you
full price and are interested in just being a member at one place.
We've got this pool of people who want variety in their workout routines. They want to habituate at three or four or five different places, and
they're willing to tolerate some unpredictable booking access. And what we do is we take their spots that they're not going to sell, and then we
dynamically price that. We surge price and try to get them the best possible price they can for their extra capacity.
And, you know, with no marketing fees or customer support costs, we're basically just giving them pure, you know, high margin revenue for that
unused capacity and to drive new visitors into their businesses.
NEWTON: And given the fact that you may be finding some success in all of this, are you considering an IPO? I mean, the environment for this, I'm
wondering what you think it's like right now. And I will add, your company has had some, and I'd say some bumpy roads in the past with trying to
actually go public.
LANMAN: Well, ClassPass and Mindbody, Mindbody was public and was taken private by Vista Equity, who's one of the two or three most successful
private equity firms in software in the world. ClassPass was backed by a bunch of the top brands venture capital funds. But we're independent and we
did an equity merger, so ClassPass had never tried to IPO on its own. I think our financial profile is very strong. Hundreds of millions of
revenue, very high EBITDA and growing EBITDA very significantly every year.
Some of our numbers have leaked to the press previously, that are directionally accurate. We haven't filed an S-1, and I don't have any news
to share in terms of our plans, but our long term intention is to get our investors and shareholders a return through an IPO. Right now, we're just
focused on getting as many people, as many businesses onto the platform as we can, getting as many people working out as possible, and also now
visiting not just our fitness partners, but we have spas, salon, beauty partners.
[16:40:07]
We are pushing people into meditation. Saunas are way up. Body scans are up 150 percent last year. So ClassPass is really expanding, not just providing
you with access to studio group fitness experiences, but gyms, wellness and kind of a more holistic routine. That's, I think, positioning us for even
more financial success than we're already having. Of course, going through a 1 in 100 year pandemic was a challenge.
NEWTON: Yes, I can imagine there were a lot of challenges there. We will continue to check in just to see what the growth and development of this
business is.
Fritz Lanman, for us, thanks so much. Really appreciate it.
LANMAN: Thanks for having me. Great to see you.
NEWTON: And that is QUEST MEANS BUSINESS. Up next, "MARKETPLACE EUROPE."
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[16:44:29]
(MARKETPLACE EUROPE)
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