tv Bloomberg Technology Bloomberg November 5, 2021 5:00pm-6:00pm EDT
>> from the heart of where innovation, money, and power collide, in silicon valley and beyond, this is "bloomberg technology" with emily chang. emily: coming up in the next hour, locked down darling no more, peloton its biggest ever stock wipeout after cutting its forecast. the ceo is no longer a billionaire.
can peloton ride out the stock slump? plus, the world may be on board for a travel rebound. airbnb bouncing back from its pandemic decline, reporting record profit and expedia getting the most in a year. conversations with both ceos this hour. uber's road to recovery, his first ever adjusted profit of $8 million in the third quarter, our conversation with the ceo. all that any moment but first, let's get a look at the markets and a rally on that solid jobs data. what have we seen? >> after two months of disappointing payables reports, we get a big payrolls beach, 531,002 jobs added to the u.s. economy and this is why it is important. we have that labor market momentum through july and this big slump so to see the 531,000 gain is substantial but it is not just about got hired, it is about what they are getting paid as well.
you have to point out the fact that a lot a people are concerned about wage inflation at the moment. this has to do with this idea that more people want better benefits, they want higher pay into right now, they are not getting that. if you look at real wage inflation, it is negative compared to regular inflation which tells you that wages cap -- wages are rising but not as fast as broader prices. that is going to be a relationship we are going to want to watch. let's talk about how it transits into the market. the s&p 500 in the green but here is what did not do well, technically would the nasdaq ending flat on the day, big take -- big tech taking it on the chin. the treasury market, a seven basis point move. let's get to the micro. >> breaking news after the bell, rivian upping the range for its ipo pricing, $72 to $74. they had priced at $57 to $62.
that is massive. it gives them a diluted valuation of more than $70 billion. this is a company that has delivered a handful of cars yet when it lists it, it will be one of the biggest ipo's the u.s. of all time. let's get back to the equity movers on the day. you talked about this, the re-opening trade is back to look at airbnb, how they have had a record called her earnings, strong resilience in the face of the delta variant, and it has been a good week for similar companies, beating estimates and feeling the love over the course of several sessions but a big gains in that space on friday. i want to look at qualcomm. really strong performance for a second day on friday. this is when they posted their numbers. this gain of 22.5% is the best weekly gain since april of 2019. investors like what they are
seeing with the strategy. long-term depended on smartphones. clearly, investors are on board with that direction. let's finish on peloton, 35% drop on friday, biggest ever one-day drop, stock at a slower was level since june of 2020. iraq topic -- it jumped off a cliff. a 1-2 punch of supply chain hitting the bottom line and downgraded that forecast revenue because demand has evaporated. where has it gone? emily: to the sidewalk? let's talk about that. we are going to dig and more. thank you. take in more -- dig in more what happened to peloton. what you think is most concerning about what peloton has reported? >> i will point to a few things.
first is it missed forecast, the magnitude of re-opening economies and the resulting reduction in consumer demand. supply chain constrains and logistic challenges. they had guided through fiscal year 22 revenue answer descriptions and they got it down meaningfully for the next year. the biggest challenge here peloton is facing is lower consumer demand. they did not expect consumer demand to fall off as much as it did as the economy reopened. they saw a decline or moderation in website traffic, which implied that the demand for their products was moderating more meaningfully than they thought and that is why they had to the weather guidance. the other thing i will add is not only the were demand for their products compared to what they saw last year, but also the
shift to the lower-priced original bike, which is lower market. the profitability puts pressure on their profits, it also puts pressure on the top line growth. the lower prices, higher cost, and the way demand. emily: how can we think about peloton's opportunity from here? we know they are breaking ground on a new factory, charging forward with expansion plans. shweta: the challenge with peloton -- i will point to both the opportunity and challenges -- the challenge with the stock is the visibility is fairly limited. there are a lot of macro concerns around logistics that they have to figure out. there's also the moderation in consumer demand. i think the stock will likely be range bound in the near term. but that does not mean there are loud term -- that the long-term
outlook -- it is unchanged. they pointed to 180 million plus people globally in the market in the u.s., canada, germany that they can address. that is 75 million households they can penetrate. the goal for peloton is to have a product that is price friendly and they want to maximize household penetration. they have 6 million plus members, that single digit percentage of their market opportunity. near term, there is tardiness. emily: how does engagement change and the quality of the peloton experience? shweta: it is a function of re-opening economies. we saw lockdowns and people working from home. as a data point, this quarter says 60.5 workouts per month. that is compared to over 20 workouts per month last year this time, sink order. a lot of it is because people
are out, going out and ready to go out versus last year when not only were we working from home, but we had nowhere to go. that said, compared to two years ago soon time, engagement is about 40% above the pre-covid levels. those who do have a trade or a bike, they are working out more now than they did pre-covid, which is a good sign. emily: we will continue to follow shweta, thank you for breaking that down. coming up, we will hear from the airbnb seared though -- airbnb co -- ceo. will's travelers start -- bill travelers start crossing borders again? that is next. this is bloomberg. ♪
emily: welcome back. airbnb reporting record sales and earnings for the third quarter despite the delta variant triggering travel restrictions. i caught up with brian chesky to dig into the travel rebound and in particular, the growing opportunity in long-term stays with her shift to remote work. brian: what we saw with the pandemic was a massive acceleration. it is 20% of our business. 50% of our business are four nights longer than a week and
the lesson is the longer you are away from home, the longer you want to be in a home. i think it is going to be larger than 20%. i don't know how long it's going to take but it is clear where the world is going. emily: you've got australia, close to international tourist until about now. hong kong has these lengthy quarantines. thailand still grappling with outbreaks, singapore stopping and starting. what is going to be the impact of these delayed the opening? brian: north america and europe and latin america are outpacing a but what we have seen, before the pandemic, half of our business was cross-border, the majority was people crossing borders were staying in cities. what we have seen is the biggest growth is people not crossing borders, traveling domestically, and going to vacation destinations or rural
communities. as boris get reopened, growth cross-border surges. when president biden announced october 15 that boris re-open on november 8, the week after, within one week, cross-border bookings into the united states were up 44% in one week. the borders are still closed, but that also means that we think there's going to be a lot of pent-up demand. i think travel is one of the things that people miss the most that they felt like has been taken away. i think you are going to see a lot more. emily: how do you see the mix of domestic and cross-border travel shifting as we move forward? brian: it will come back a bit. i don't think you are ever going to see the world looking like 2019. business travel will come back but business travel will never
come back to 2019 levels, at least in the way it was, people getting on airplanes for a meeting. now you can do it on zoom, it is cheaper. there will be new types of business travel which are people working remotely going back to headquarters for weeks at a time. there is a shift in business alicia, a shift from people going from the top destinations traveling everywhere and no matter how travel will recover, i think the genie is out of the bottle. i think more people are going to travel nearby, stay longer, and travel in off-peak hours, but when we see boris re-open and when we see urban combat, it is going to be a rebound. i don't think it goes back to 2019 but it will be somewhere in between. emily: let's talk about holiday travel. what are you expecting? are you prepared if there is another wave of key covid -- wave of covid or a new variant? brian: i think it is going to be
a big holiday season. most people in travel are saying that -- because i think not everything from the pandemic that we lost we probably want to get back. i don't know if everyone wants to go back to the office five days a week if they don't have to but most people want to travel because travel is one of the most meaningful ways to spend time with people you care about. that is important. i would also say this about what if there is another variant. i think anyone who was in the business of producing the future last year was humbled. if i cannot predict the future, i can adapt to it. our business model is highly adaptable. emily: brian chesky there. i want to keep the conversation going on the travel landscape with peter kern joining us after a strong third-quarter result. great to have you back with us. you see that reflected in the numbers, the rebound is
happening. do you see the words of the pandemic is over? peter: i don't think we have seen the last of the bumps in the road. i think we will have to adapt. you are asking brian, there will be changes, there may be new variants, but science is on our side with the new pills, with vaccinating young people now, and i'm sure soon other places. probably the worst is behind us. as a general trend, we will see the business continue to evolve and grow out of the pandemic, whether we learn to live with it or finally do away with it, travel will continue to expand, people will move around as they can. as international borders open, we will see people climb into them and start moving around. there has been huge demand and be expect that to continue. emily: i know you have disagreed with brian in the past about how
much of travel changes in how much goes back to normal. based on what you see when it comes to business versus leisure versus domestic versus cross-border travel, do you still think it is going to go back to the way it was eventually? peter: i largely do and i think the trend is supported. while we are starting at a lower base, we are seeing cities coming back, we are see international coming back, obviously corporate will depend on companies going back to work, companies going back to work in the new year, whether they are five days a week or some days a week, there will be a significant increase in business travel. does it get exactly back to where it was in 2019? i agree with him. it may be that it has a different shape, but i think it likely comes back. as far as international goes, as far as people going to cities, there is evidence that people will cope back to cities.
it is lacking because -- lagging. all the attractions that make cities great have to come back but there is only one paris, one shanghai, new york. there is no question that most things will be back. emily: the u.s. is about to welcome back vaccinated international travelers on monday. how big an impact can think you will see from that in the business and you think expedia has a unique advantage in cross-border travel compared to airbnb which are seeing more of a certain domestic travel? peter: historically, we have been strong and international travel, particularly in some of the vectors that are opening, europe to u.s., other countries to u.s., that has been a place very expedia has been a strong brand. we saw over this past year, we are not as strong in some places to mystically and we are stronger international in those places. these openings we think play to
some of our strengths. many of us will be beneficiaries of city, i believe that the international opening will bring european travelers into u.s. cities. we will be a beneficiary of that but airbnb should also and others. i think we are disproportionately benefited by international long-haul air opening and by cities coming back. but we will not be the only beneficiary. emily: airbnb has talked about this opportunity of long-term stays. the numbers are looking strong. bookings for next summer are looking strong. where do you expect to see the most growth in vrbo and you think you will be taking share potentially from airbnb? peter: i think in the places where we are strong and the markets we are focused in, we believe we have taken share. things will evolve, we are not
as strong as other places where airbnb has reached that we don't and are not focused on, so we will not benefit from those recoveries. as i mentioned in our earnings call, whether than half our customers for vrbo this year where new customers to the platform and we believe they had great experiences, we believe they will become long-term customers. we believe that continues to add growth to the business going forward. we think the growth will come from those new customers who have gotten to know us during covid and will continue to want to use
they have the right kind of vacation, or luxury home somewhere and go to the beach, the mountains, etc. places where we are strong in vacation and leisure, where the market is robust, we think we are in a great position. emily: a loyalty program you launched, how is that playing out? peter: we have not watched it yet, we are excited about it. we think it will be one-of-a-kind. we have 145 million loyalty members that have been on our platform across our brands and that does not include all our brands because they have not all had loyalty. we think there is an exciting future for us where our customers uniquely can use -- can earn points, can earn rewards and use them across virtually every product in the chapel universe, which we are uniquely positioned to provide. we think that is a sticky, high-value experience for customers and we think it is going to be great. emily: you said if not for the delta variant, this would have been their most profitable quarter ever. is that may be can expect your most profitable quarter ever soon and if so, how soon? peter: seasonally, the third quarter is always a strong one for us. would not expect it as far as the most profitable, it is probably going to take us until next summer.
but we are definitely on a good trajectory, we are feeling good about it. there could be pumps in the road. it is not all roses and sunsets. we may see other variants, other issues to deal with and we have seen airlines having issues with labor, hotels having issues with labor. we are far from out of the woods , but next year i think will be a robust year for travel. i think next summer will begin busters and assuming we get our share of that, we should have our was profitable summer next summer. emily: what about the holidays? does this season look like it did in 2019 not yet? peter: you say that but involves many stories around the globe and if you just talk about u.s. thanksgiving, u.s. christmas will be a strong season and i think most of us in the business will see numbers in excess of what we saw in 2019 if you're
talking domestic holiday travel. again, how international plays into that, whether tourist can come in, it all plays a part and it will be different stories. emily: if we don't talk between now and then, you have a wonderful thanksgiving. expedia ceo peter kern, always good to have you. much more coming up on "bloomberg technology." this is bloomberg. ♪
nearly 150 ships are waiting to enter the los angeles and long beach port complexes. some mega container ships carrying half a million tons of goods. the race to develop a pill to treat covid-19 is heating up your pfizer says it's pill is reducing hospitalizations and deaths in high-risk patients by 89% in recent trial. the drugmaker saying it will submit its findings to authorities for emergency authorization as soon as possible. let's muffed, merck and ridgebacks omitted their experimental pill to regulators. coming up, we will hear from uber's ceo, the company reported its first adjusted profit since going public. the problem now is too much demand. this is bloomberg. ♪
emily: welcome back. uber shares jumping after reporting is first adjusted profit since going public. we talked with the uber ceo earlier about driver supply, writer demand, and staying profitable. >> your confident and the indications is we gave, we got her to tony $5 million to $75 million for profitability and for the foreseeable future, you
can expect to see a company that is growing our top line at healthy weight, over 20% as we expand into this $5 trillion mobility total addressable market, as we expand into the delivery $5 trillion addressable market, and freight as well while improving the profitability of the business. we are hitting that scale point globally where we can deliver both growth and profits for the foreseeable future. emily: i know you have been working on driver supply but wait times are longer than usual and fears are higher than usual. how much longer will be times and fairs be elevated? dara: we have added in the u.s. alone 640,000 drivers and carriers to the platform, number of drivers is up 65% since january, number of carriers on the platform is up 80% since
january and the good news is that the search pricing are about half of where they were at their peak, average returns around 4.5 minutes, so we are below that magic five minute mark. not everywhere, but on average. the quality of the service continues to get better. the problem we have is too much demand as everything is opening up. we are seeing travelers go to airports as well, airport trips are up 20% in the past two months and for business travel up 60%. there is a ton of demand out there and we are catching up to demand happily but the demand keeps growing ahead of us. emily: there is a huge labor shortage, inflation, we are heading into the holidays when companies like amazon are sweetening the deal for holiday workers. a cofounder told me he is not interested in getting into a price war, he is focused on differentiating the product.
how big a challenge is it going to be to continue to keep drivers involved to the holidays and what is your strategy? dara: the great news on drivers is that driver earnings, first of all, are at historical highs. if you are a driver who is striving more than 20 hours on the platform so you are engaged driver and a top 20 market, you are making including tips $40 per active hour. the earnings are very high and within this world, the zoom world where we talk about flexibility and being able to work when everyone, wherever you want, that is what uber offers for blue-collar work, call it, and he can choose to move people or you can choose to move food around. we have the broadest platform than anyone else. we think the combination of earnings opportunities, which are dynamite, and flexibility whether you want to drive people or things puts us in a good
position and you can see it in the trends in terms of drivers on the platform and carriers on the platform being up and we only see those trends improving as we get into q4 and next year. >> that we talk about what is happening on my side of the pond which is lended. london traditionally has been a hot market for uber but competition has increased over the last couple years. the profitability and milestone you guys have achieved, is london profitable as well? i'm curious to see with the profitability numbers look like here. dara: we don't disclose profitability by city. i will say that in london, we have passed a great milestone of declaring drivers as workers. that means they have flex ability to be on the platform as well but they get a minimum wage, pension benefits, etc., which we think are terrific.
we are working to make sure that the driver/worker experience is top-notch. many of our competition have not moved forward and have not done the right thing. so they enjoy pricing advantage, taking advantage of drivers out there -- this is the u.k. supreme court declared that drivers should be workers -- so we have followed suit, we think some of our competition has a pricing advantage but it is space on what we think not following the law and rethink the will of the supreme court should be recognized by anyone in the transportation industry, we think it will happen. when it happens, the u.k. market will be a great market for us and a great market where drivers are using the platform in the right way, which is as workers they would emily: you've got another business, he said the core restaurant and food delivery business is profitable. lyft say they are seeing drivers
go from delivery and to, wonder if they are worried about delivery driver shortages and with doordash doubling up more market share, how do you get a bigger piece of that pie? dara: the great news for us was in q3 in the u.s., we not only increase profitability, but we gained a share in the marketplace. we are the market share gainer in the overall marketplace in q3 and the u.s. and we are neutral. we offer a driver who signs up to drive on uber, you can deliver food, you can drive people, and you don't need to choose upfront, we will give you both opportunities and based on how much you can make, where you want to go, when you want to work, you can choose to do either. we think that is a superior solution. no one else has that. we think, ultimately, if you really help the customer, in this case the customer and drivers decide how they want to
earn, you will win over the long-term because he will become the preferred platform. i think you are seeing that now in the growth of drivers, safety 5% since january, and growth and carriers, 80% since january, or choosing our platforms because it is the most flexible one out there. emily: uber ceo there, you can catch the full interview at bloomberg.com. i want to dive into a bear's results -- uber's results. can they get the driver supply to where they need to be to meet that rider demand? >> i think that was the major improvement we saw in the quarter. 65% in january, 20% since the summer. it seems like -- what has been a back against the wall situation, uber has come through. you're starting to see demand surges rebound that we hope to see starting to come through. i think the street goes from
half empty to half-full. this is the start of av rating for the stock. emily: we are going into the holidays, there is competition for workers, and also workers coming out of the pandemic seemed to have greater expectations for what they deserve in terms of wages and benefits and every time i interview dara or don zimmer or cjc mo, i get feedback from drivers you are angry, they feel like they are not paid enough. do you think that at these wages, that they can get drivers back the way they were before? dan: i think they can get them back to a certain point but they are going to need more promotions. they are going to have to increase what they are paying drivers. i think that is something that we are starting to see happen, i think we will see it through how. right now, is a game of thrones between uber and lyft in terms of getting drivers. this is a pivotable time --
pivotal time. they also have to do it profitably. that is going to be the balancing act going forward as they continue to drive growth but they need to do it profitably. see the stock ultimately move into the 50's and 60's. emily: as we move into next year, there's the question of food delivery andrew birge, doordash has been doubling up share. how big a problem is that for uber? dan: it is a problem, probably the biggest overhang of the stock. because of what you are seeing, competition, also cap rates up -- across the board. you will see moderating growth going to the next year or two and you start to see more of an arms race and for delivery and
even the 1520 for delivery in some cities. i still expect more consolidation, but this is going to be a pivotal three quarters ahead for uber and even though that was the key growth driver during the pandemic, now it does become a little bit of an overhang. emily: how do you see over and l -- uber and lyft weathering a shift to electric cars, given they are buying on drivers -- relying on drivers and the fleets they have at the moment? dan: i think you saw the start of the bobo taxi network -- robo taxi network. you're going to see more partnerships across the board. i think tesla plays a pivotal role there. lyft, you're going to see them play catch up.
this is important because you are going to see more and more of a ramp-up on ev's, especially when it comes to mobility and by chair -- and ride share. when you look at the framework of robot taxis over the coming years, i think it has been a big part of tesla. emily: it is a tale of covid stocks, winners and losers. uber,airbnb, lyft with strong results, then easy peloton tanking. how bad is this? is this part of the long-term story that peloton is going to have to face? dan: i think it is a cautionary tale is something to work from home names, you have seen it play out, but peloton, that was a black eye. i think it is something that for them, it is back to the drawing board and i think it also speaks to some of the yellow flags as this rotation happens from to
work from home back to the office, back to the jambs, back to everything else. you will continue to see a rotation with a lot of the tech stocks and continue to weather the storm. they are not seen that pullback which is why we are seeing more growth money go to attack as we go into year-end 2022. that apple forward in tech never happened which is why we are seeing 16,000 nasdaq. emily: we will see what happens on monday. always good to have you here with us. coming up, it is the holy grail of crypto. this is bloomberg. ♪
>> the destiny of bitcoin, first it is eating gold as fast at the canberra it is going to -- as fast as it can. it's going to replace all gold etf's in the next two or three years. >> is moving away from early speculation. >> we are trying to work together toward that goal of one day having a bitcoin etf approved. >> by withholding from investors , exposure to spots products, we are not helping them. >> that is the goal, a holy grail of sorts. we are likely not going to see one this year. i think it is going to be next year. >> once these etf's of all, you are going to see hundreds of billions, then trillions of
dollars flow into them. emily: it sounds like a contradiction. how can something digital also be physical? but that is what it physically backed bitcoin etfs and it was all the rage at limerick financial innovation summit, wall street warming up to the idea of a bitcoin etf we shall be exposed directly to pick rather than futures or other contracts. regulators yet to give it a green light. for more, i'm joined by phone connects's head of institutional coverage. is a spot etf the holy grail for bitcoin? >> it definitely is. i agree with the comments made earlier in the biggest thing is the comment around protection of consumers. when you have a futures etf, futures inherently trade at a premium to spot, normally around 5%, and that can equate to a year-end cost of anywhere between 50% to 12% of a premium
on that price so when you think about protection of consumers, you are not getting the best product out there, so not just that, there is the future start etf's. even if you compare it to that grayscale index fund with a two cent -- with a 2% fee, that feature based etf. emily: if this holy grail is approved, how does that change the crypto market? aya: a lot of it is supply and demand. we continue to head into a supply crunch, so we have 21 million bitcoins, they are being mined every second. being able to lower that supply is going to have an impact on that price as opposed to the futures price. emily: it was a relatively quiet week for bitcoin.
ethereum really rallying. what you make of that giv expensive transactions are getting? aya: i think the largest thing coming out of the conference this week is that crypto is much larger than finance and you have a ton of applications being built on top of a theory him and one siding with the theory him, specifically this week you have blockchain, gaming, media, it ton of investments being poured into metaverse, so all of that coincides with real use cases outside of this finance pocket that initially crypto is associated with and it is almost -- in the early 1920's, we assumed that tech was this massive bubble and had fintech, e-commerce, and media breakout into that. i expect crypto to do the same outside of just the initial financial bucket. emily: it has also been a busy
couple weeks for the metaverse. i'm curious what you think the role of crypto in the metaverse could be. aya: it is going to be movement of assets. the way i think about it is how do you value your time, especially if you think about creators, how do you value things that maybe computers cannot necessarily generate? i think microsoft's ceo mentioned, how do you value presence and human connection in a different way? i think being able to use blockchain and crypto to create interoperability and intrinsic right, as measured previously, is going to be important to digitize all of that in a way that is more accessible and democratized. emily: that interview happened here on bloomberg technology. thank you for stopping by this friday. always appreciate you joining us. coming up, clean alternatives to
shared, affordable, and carbon free. we are in over 200 cities, 30 plus countries. lime is the clover -- global leader in shared e-bikes and scooters. we are two times bigger than our nearest competitor in terms of active users. we are also significantly larger in terms of cities we are in. last quarter, we announced our second quarter profitability and we are on a path to continue transforming this business into a profitable, subsistent business. >> i normally live in berlin, if i'm running late or need to get across town i don't want to take a taxi, i will always jump on a scooter. it has been a game changer. but i walk out the door in new york, i walk out the door and bonded looking for one that i don't see them. what is going on? because these are important cities. wayne: you're seeing more cities open themselves up and commit to micro-mobility. new york announced a small pilot this year, london building a
pilot as we speak. the reason why cities are committed to this, you mentioned is often the fastest way to move, we see that in many cities, especially congestions. it is one of the most affordable ways. the most important reason is we are dramatically more green. the average trip online produces less than 7% of an equivalent card for. there is no greater crisis and challenge we face as a world than the climate crisis, the biggest was for carbon pollution is from transportation, the bulk from personal cars. >> i want to bring up the actual pollution issue because they are also -- they clutter the sidewalks and they go from gorgeous, green and white machines do something you don't necessarily want to look at very quickly. how do you deal without littering problem? wayne: we spent a lot of time focusing on parking solutions, we also fine our users to make
sure they are part in the right place. when people say they're everywhere, i asked, compared to what? if you go to any major city, walk down any street, i sometimes get a picture of an e-bike part and someone is complaining, behind that e-bike is 10,000 cars down every sidewalk. when we reduce the number of cars and bring more e-bikes and e-scooters, we will reduce clutter. we will increase the efficiency of parking. >> as you look to an ipo, given the sense of your path to profitability, where are you today? where do you hope to be? wayne: we announced our second quarter of 23 of this year, we achieved the same thing a year ago. one of the key things that has allowed us to reach this is the generation four e-bikes at e-scooters which are more efficient, greater rider preference, and more green.
we are going to take this capital and scale that generation four and that will help us continue to improve our profitability through next year. >> ipo or spac or is it too soon to say what route you will take to the market? wayne: we want to make sure we have the capital to achieve our mission, whether it is a stack or ipo, we will look at the market and see what is the most optimal path but we will keep an open mind. emily: wayne ting there. that does it for this edition of "bloomberg technology." david westin coming up next with wall street week. great lineup you see there. this is bloomberg. ♪
david: politics from u.s. elections. pros from cap 26. and a poetry haiku from the federal reserve. this is bloomberg "wall street week." i'm david westin. this week, former bank of england governor mark carney on enlisting the banks to fight climate change. >> they see a lot of offensive opportunities. david: former treasury secretary larry summers on the fed's calm attitudes towards inflation. larry: i think we're taking a real risk that we're setting up problem -- setting up for a very