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This is Wall Street Week.

I'm David Weston bringing you stories of capitalism.

Unicorns used to be rare, but they're popping up more often and getting bigger by the day.

We look into why larger companies are staying private for longer and whether we should be concerned.

Plus, we're paying a lot of attention to the tariffs President Trump is imposing on China and Europe and Brazil.

But we go to Lusutu to see what the Trump tariffs mean for a country whose exports may seem small by US standards, but are big enough to threaten its local economy.

And the pandemic made the world far more aware of vulnerabilities in supply chains.

What is technology doing to overcome the problems we found?

But we start with a major public university transforming itself and its students for a very different world.

Michael Crowe is the longtime president of Arizona State University.

He's won just about every award there is for innovation in higher education, and his institution is working to make sure it keeps up with the times.

We decided to change everything, change culture, change design, change, intellectual structure, use technology move in new directions, and then we began measuring learning outcomes.

For all that talk about changes in higher ed, including just this week when the University of Virginia became the first public college to agree to Trump administration oversight, the biggest cause for change.

AI doesn't come up all that often in the political debate.

For nearly a quarter century, Michael Crowe has led the university that is by some measures, the largest in the United States.

Few people have thought as much about American higher education while also having the ability to influence it on such a large scale.

But when we first talked with him a little over a year ago, we didn't cover artificial intelligence.

A lot has changed since then.

AI will leave a lot of white colar people behind.

Another uncomfortable truths linked to.

AI AI AI AI AI.

It's not a bubble.

Obviously, the most disruptive technology in the history of man.

Can Egalitarian access to knowledge is at the highest level in the history.

Of our species.

What we have as a walking, talking reference library on any subject, and we never had anything like that in our society before.

We wanted to know how artificial intelligence is changing the American college experience, what it means for the teachers and students who have now made it a regular part of their lives.

But we also asked Crow about the outcomes for recent graduates and how his school is preparing students for an economy that is moving very fast.

What does that do to teaching?

I mean, back in the olden days, we wrote essays.

We wrote blue books back when I was there.

How do you do things like essays and evaluations?

Well, I think what has to happen And we've experienced this at ASU with our six thousand factor members, several thousand of which are already AI trained, is you have to up the game.

Perhaps we were learning too slowly, too incrementally, too much in a regimented or industrial way.

With the AI tools.

That are available now, you can up the game, enhance the question complexity, enhance the answer complexity, expect more of the students.

We had somebody give their test the Business School to an AI system to get everything right instantly, and the test is too easy.

The test is too.

Simple, so you need It's basically a way in our view, to accelerate learning, to broaden learning into speed learning.

So you have to look at it as a new way to basically make the game more intensive.

The model is always changing.

So Plato was against the written word.

He thought everything should be thought through verbally and communicated verbally.

There were unbelievable forces against the development of the printed book, and so the internet in its development, the web and its development all had.

People that were against it.

And so AI changes the model in the sense that it speeds it up and intensifies it.

It personalized the learner's experience, but it doesn't teach those core things.

There's no values being taught, there's no values being experienced, there's no lived experiences being built.

So what we really have here now is we just have this massive hyper speed calculator capable of going to all of the digitized information you asking a question about that information and getting the most probable answer.

It's all about the questions that you're asking.

It's not about the answers.

It's about the questions, and that's what people need to really figure out.

Does it change the notion of cheating.

I'll bet humans have cheated for quite a while.

It does change the nature of what is your work now.

If you're answering a complex question and you're using a reference library and an AI system, to answer that question that seems legitimate.

If you're using it to produce your analytical response that's supposed to be demonstrative.

Of your ability, well then your cheating.

Now you have to then build a system which recognizes the ability to gain access to these tools.

Now, sometimes it's just going to be you in there by yourself taking the test, because they've got to know that you know how to ask the question, you know how to derive the answer, that your brain works in a certain way.

Beyond that, the AI systems are going to enhance learning in every possible way, and that the idea of cheating will.

Change at this point.

Are there some things that you can learn that AI cannot teach you?

Absolutely?

I mean, you know, an AI system can't teach you to be innovative.

It can't teach you to be creative.

It cannot teach you grit, It cannot teach you the discovery process.

It cannot teach you.

I mean, it's a machine.

It's a it's.

An advanced hyper speed calculator.

It can do things that you can't do.

It can think around corners that you can't see.

But of course, soakn a dog and so and so's it's a powerful analytical tool to enhance our mental capabilities, not to replace them.

In order to ensure that AI is a springboard rather than a crutch, Crow says, students and teachers will have to raise the bar.

And one place he's already seen signs of AI's ability to supercharge progress is in the school's research programs.

It's almost unbelievable.

We have probably fifty research groups that are using advanced AI to solve unsolvable problems, to figure out how to process materials or manage the Mississippi River in a different way in terms of the flow of the water and the flow of the dirt and other things that go down the river.

We've got people doing advanced chemistry.

Now, we're using AI systems to think beyond the way that we normally think to create more revolutionary opportunity.

There was a study recently done by some of our faculty at the speed with which you could complete the work equivalent to a dissertation in genetics fourteen days.

What that means then, is that the PhD that normally takes four or five years to set up the experiments, do the experiments, do the work be evaluated?

Maybe the PhD student of the future will do the equivalent of twenty PhDs.

That will speed up the cures for cancer, that will speed up the analytical tools that will help restore site in human beings, that will speed up the techniques that use electromagnetic current to affect people with Alzheimer's disease and other neurodegenerative diseases, all of which are computationally limited.

Certainly, the world has changed in enormous sin since I came out of college a long time ago now, But my sense is the rate of change has really increased, maybe even geometrically how fast it's changing.

How do you prepare graduates today for a world twenty thirty forty years down the road that I can't even imagine.

So there's no way to prepare someone for something you don't know what it will be, except one thing what we call we're attempting to take all the people that are coming to our university one hundred and twenty thousand degree seeking students, seven hundred thousand other learners who are just taking courses with us digitally and otherwise.

Can we help create you to be a master learner?

Can we help you to be a person capable of learning anything, adjusting to anything, adapting to anything.

It's really that because we don't know what all of the adaptations that will be required are.

We do know that you should be grounded in American history and economics and the role of democracy, and certain subjects in math and science and so forth and so on, and then after that we find a learning path.

For you to take where you learn to learn.

We don't care what your major is.

You can.

I met a kid the other day.

It was majoring in opera and physics.

Great, fine, fantastic.

That's how that kid learns and so and so.

That's what we're after.

How do you how do you create universal learners capable of learning anything.

That's the pathway We here at forty thousand feet about a shifting employment situation for recent college graduates because of AI.

Are you seeing any of that in the real world.

We're not seeing that in our graduates.

Now.

The problem with people talking about all college graduates.

There's more than twenty million people in college.

A couple million go to what you think of as sleep away colleges.

You know, they go to places where you're you know, you're living on campus.

The other eighteen million go to college in some other way, community college online, some kind of other course and so forth.

So we're not seeing any change, you know, we're seeing the same level of anxiety.

We're seeing the same level of the process where you know, more than ninety five percent of our students that graduate as undergraduates are employed or in graduate school within the first year, almost all within the second year.

So we're still seeing good rois.

But what we are seeing is students, you know, are quite savvy, you know, adjusting their trends.

So we're seeing a slightly downward trend in computer science, and a slight way slightly upward trend in double majoring and triple majoring, more people moving into analytics and supply chain and all kinds of other things, and so the market for learning is also adjusting.

We measure our success based on who we include.

Crow hopes the size and scope of ASU will help with that adjustment, allowing students to react quickly and build new skills for the changing world.

And in a school made famous for opening its doors rather than being exclusive, he thinks the most important skills of all can come from unlikely places.

We've even got ways now that we're using advanced AI, enhanced robots to help people that aren't qualified to get into a particular college to do what they want to do to get them qualified.

Guess what, when we get them qualified, they have more grit and determination than anyone else who sort of walked into it from high school, and they outperform everyone.

There's a theme going on right now.

Maybe college has been overrated, over sold.

What do you say to parents?

What we have is a way for your child, your student to learn on the path that's going to enhance their ability to be most adaptive throughout their life.

So don't worry about their major.

So we get these parents that say, well, my kid needs to major in accounting so they can get a job, or they need to major in anything other than political science or history or English where they'll never get a job.

That's actually not true.

Some of the hottest things that we have that we're producing right now are English majors that can code, and so they have a broader perspective and they can code, and so we provide free coding classes to everyone in the institution.

We provide other ways in which you can double major, triple major, take other kinds of things, and so what we say to parents is let's find the way where your kid is going to smile while learning, while pairing themselves to be a master learner, and you'll have to worry about them less.

If they take a fixed thing in a fixed way and a fixed pathway, they could find themselves in an alley in no way out.

We're trying to make sure that that doesn't happen.

Coming up, transforming the US economy by taking the bugs and supply chains and turning them into features.

That's next on Wall Street Week.

This is a story about featuring the things we thought we needed to fix.

The pandemic focused all of us on the need to fix our supply chains.

But what if we could use technology not just to fix our supply chains, but to rethink them all together.

Could we use them to transform our markets, our workforce, and our economy itself.

Stopping the spread of the deadly coronavirus has men stopping the spread of.

More than just germs.

Good sparts, and people have been halted in place.

I think that pandemic sort of both logistics to the limelight from this like tucked in the corner industry to be really be in the forefront of all of us, of consumers, and society.

And when supply chain stop, economy stop.

Going back to the COVID days of twenty twenty, we started buying online like we had never seen before.

And so what happened then with all of that cargo rushing in?

It was like taking ten lanes of LA freeway traffic and squeezing them into five.

But what if we could use technology not just to fix supply chains, but to rethink them all together.

Could we use them to transform our markets, our workforce, and our economy itself.

Logistics is the largest cost for the manufacturing and retail economy, and if you drive that cost down, like anything else we have seen in the history of economy, you unleash the next epoch of economic activity.

Lee or Run recently became COO of autonomous trucking company WABI after co founding Uber Freight back in twenty seventeen.

Their cost of good moved is sometimes thirty forty percent of the cost of operation.

It's a prohibitor for them to scale and to be bigger.

If you take that cost down, you essentially democratize access to logistics.

You encourage more economical activity.

If you would use the friction in them.

It's friction in the system.

If you would use the friction in the system on manufacturing, on distribution, on moving those goods around, you just unlock a bunch of new economical opportunity.

You unlock manufacturing strength, you unlock new productability.

Back to COVID, you unlock resiliency, and that set the stage for a rapid economical activity.

The stakes are enormous, but how to get from here to there?

Says The answer lies in part in that artificial intelligence everyone's talking about.

I think I allows you.

The way I think about it really like free levels of optimization and supporting function.

One is logistics is a highly fragmented, highly manual ecosystem.

You have hundreds of thousands of opera ittles acting as glue, overcoming all those information challenges, doing a lot of repeated manual task which is really sort of like taxing the system from a cost perspective and from an efficiency perspective, and more importantly just from a time perspective.

The second level is optimization.

Can we now actually start looking at the supply chain holistically and start driving smoulted decisions?

Can we optimize those empty miles?

Why does it need to be forty percent empty miles.

If we know everything, we could connect everything together and we can actually start smartly designing the network so you can actually minimize those empty miles.

And the last level is using AI to tully drive better decision making.

Let's have a chat shipt for my supply chain.

And the most important one is unleashing AI to the physical world with physical AI and self driving, which I think is really sort of the deepest disruption and the most profound change that would see with AI in supply chain in the next decade.

Part of what Ron and visions for the future is happening right now in the Port of Los Angeles.

There's so much here and I think we're just scratching the surface.

Gene Soroca is the executive director of the Port of Los Angeles, the busiest container port in the United States.

One of the areas that we stepped into right away.

Was digitalization of all the port's information.

How many ships are coming in containers, what trucks and trains need to be planned, how do we get our great skilled labor at the right place anticipating the cargo that was coming in.

So we worked with the wab Tech company to develop the first information sharing system for a port here in the United States.

We call it the Port Optimizer.

We can now see cargo forty days before the ship arrives into Los Angeles, giving us ample time to plan all those things, the skilled labor, the land, the machinery, and just that intuitiveness about how we're going to handle things.

If something doesn't go to schedule.

And normally that's the case, there's always an adjustment that has to be made in the supply chain.

So now we can see things every morning, a dashboard of information about the velocity, the vital statistics of the port, and I could tell you after about ninety seconds of a review how we're doing and what we need to do next.

That digitalization started to introduce prescriptive and predictive analysts.

Then we start to get into really really interesting engineering work.

We're going to have a project here on the Vincent Thomas Bridge to resurface it.

So we're using geospatial mapping and great companies like EZRI and the Jet Propulsion Lab to help us now simulate traffic patterns ahead of time and in real time allow drivers to move around with much more knowledge than they had before.

It's going to help this trucking community out in a tremendous way.

What so Roca is pursuing within the Port of Los Angeles, Roger Penske is doing on roads coast to coast and even around the world.

We'll do five hundred thousand vehicles.

We're in poor contents in nine countries, and we have our truck leasing, rental and logistics and we have forty four thousand people.

So it's a.

Real enterprise from artificial intelligence.

What we're using in the truck leasing business.

We're taking downloading two hundred thousand vehicles a night with operating data, and I look at the amount that we capture on an annual basis, that's a billion units of data.

We run five million, six hundred million miles with our trucks, and when you take that, we need somewhere to aggregate it.

So we're starting to use what we call Catalyst AI.

It's a AI product where we look at the data, we diagnose the data, we go to our customers, and we use this as a connection.

The Penske Company's use of AI is not limited to monitoring its massive fleet.

It also uses it in the maintenance required to keep that fleet on the road.

We then become to build a process where we have predictive maintenance.

So AI is telling us this truck should come into our shop.

You might have the same truck but a different duty cycle.

So when that truck comes in our shop, what happens is mechanic goes to the computer, scans the barcode or the VEN number on the truck.

He puts on a headset with a mic and what we call guided repair, and that guided repair takes him through the whole maintenance process on the trucks.

And then that data, because it's live, goes into our SOS center, which is our call center for breakdown this whole avenue, downloading the data, taking it, making it real.

Then we take it and for the customer, we'll go back to you as a fleet and we'll take and give you your data live and how we compare location to location you have and we can look at that and then determine what are the things that we have to do take action.

We have fifteen thousand customers and many of them don't have the opportunity to have this kind of data.

So it's sticky, it's important, and it's taking all the technology that we can get.

Whenever we begin to talk about automation and AI, people raise questions about jobs.

What's the effect on jobs?

Are you going to eliminate a lot of jobs in supply chains.

It's a how job, and many folks, many young folks, do not want they take on this job, being three hundred days on the road, not being able to raise a family, not being able to have predictable access to sleep and food.

I think for the foresible future, as you start rolling self driving, gradually you augment those jobs, You fulfill the empty spots in the demand for those jobs.

You don't replace those jobs.

There are gonna be plenty of time for the existing population to retire over the next few decades.

As the truck replacement cycleed against like four million trucks in the United States, it's going to take a while until self diving will actually sort of make an economical dent to the driving population.

So I see that as a gradual job transition on self diving.

I think if you look at knowledge workers, I think we'll see a faster transition because the digital AI will is even more prevalent and will scale potentially even faster.

I think there it's about an opportunity to up level so a little bit freight.

We've automated a bunch of those manual, repetitive tasks, but then those folks have been up leveled and they are now most sort of an orchestrators of an orchestra.

They are the brain behind actually orcheslating all those agents because those AI agents can now do this job and that job and that job, and I'm sort of more the integrator.

There is no replacement for the human connectivity, so I can spend my time focusing on customer needs.

I think in the idea that people think that jobs will disappear, that it will be just talkue to AI, I think it's overhyped.

Chris Kaplis is the executive director of MIT's Center for Logistics and Transportation.

I think there's a lot of overhype in that it can truly take over a human's full job, when in fact jobs are tasks, and it'll take over some tasks.

And so then there are certain tasks that each one of us in our jobs that cannot be done by AI, to include the person filming us right now, it's more the mundane things that you get automated and then the things that can help enhance what a human does.

I think there's a continuum on how you automate things.

We've been automating stuff forever, right, but there's a line of what this is mundane and over here I still need a human.

That line keeps moving as AI gets smarter.

I don't think it'll go all the way.

Artificial intelligence may well transform our supply chains, but to get there, it's not enough to have AI alone.

It has to be linked to autonomy.

What is AI without autonomous vehicles?

What are autonomous vehicles without AI?

I fundamentally see the next decade really about building the autonomous infrastructure over the industry, and I view self driving as the most profound help in driving efficiency and safety into supply chain.

The whole digital infrastructure, in the end of the day can drive ten fifteen percent optimization of the network when you start actually moving assets in a self driving way, When you can move an asset from six hours a day of being utilized with a human drive to twenty hours twenty four hours, when you can drive safety into our roads.

With thousands of unnecessary days and half a million related incidents in the US every year on trucks.

You can make a profound change and a profound help to the industry.

This is the time.

I think it's a confluence of many things really coming together to make the next year, not even five years, the next yeal transformative from seldriving in industry like this is game time, This is really now.

It's happening.

Up next to Lesuto.

Why not come to everyone's mind as a textile exporter, but it was on President Trump's list of terror recipients for not playing fair.

We go to the country in southern Africa to see what a small kingdom can do to stand up to the world's largest economy.

This is a story of David and Goliath.

President Trump's biggest tariff moves have been against countries of similar stature to the United States, places like China and Europe, but he's also hit some of the smallest economies in the world.

Our colleague David Goura has the story of Lusutu, a country out of sight for some, but one that's been hit particularly hard.

The African nation of Lesuto, which nobody has ever heard.

The sun is rising over the Tatsani district of Maseru, the capital of Lsutu.

The smoke rising from the textile factory signals the workday has begun, but only for the lucky few, cutting fabric, sewing seams, making clothes for the Western world world.

Many of these workers make as little as eighteen hundred US dollars a year.

Outside the factory, a crowd is building of locals hoping to find work.

Any kind of job in the factory.

There.

I lived up ticket and President Trump should show mercy to Lusutu because the demand for jobs is high in the country.

It's been like this since June, when Lusutu's largest industry began to feel the effects of President Trump's tariffs first fifty percent, among the highest rates in the world at the time.

It give us a shock to us.

Luckily, later on it was revised to fifteen percent.

Sam Matakane is the Prime Minister of Lusutu.

He declared a two year state of disaster for his country's economy after the tariffs were put in place.

We see in negotiations with the US government or a federal reduction maybe to ten percent or to zero where we were before.

We would appreciate the reduction and as well as the renewal of al GOA because our GOA has just come to an end now.

The African Growth and Opportunity.

Act a GOA, the African Growth and Opportunity Act, signed in two thousand, gave some nations in Africa duty free access to the US market.

That deal expired last month, and while the Trump administration has said it would support a one year extension, that hasn't happened.

The Prime Minister says agoa's expiration and the higher tariffs have had a crushing effect on Lesutu.

Well, we are hoping for the best.

Negotiations are still ongoing, but do we are hoping for the best of the best.

Dubbed the denim capital of the World, there are two industries that drive Lsutu's economy, a landlocked country of just over two million people surrounded by South Africa.

Those industries are diamonds and textiles.

Diamond prices have been in free fall since twenty twenty two, and that's led to layoffs in Lesutu's mines.

Now it's textiles that have been hit hard.

As recently as January, Lsutu's Central Bank expected the sector to grow in twenty twenty five, but by June it had downgraded its forecast by more than ten percentage points, saying textile and clothing manufacturing would quote shrink significantly due to the negative impact of newly imposed tariffs.

Afra Expo Textiles is feeling that pressure.

To Bojo Kabelli is the company's founder, but ed of the the day.

One must specialize on something.

If it was a big shock, even know what happened with Kovid, it was something similar to that because it meant shut in daw and when you shot, you mean thirty forty thousand jobs.

The US imported more than two hundred and thirty five million dollars worth of goods from LSUTU last year, about eleven percent of lsutu's total GDP.

That represents just a tiny fraction of Americas.

Forty seven percent of lsutu's exports are clothing that will end up being sold by retailers such as Walmart and Levi's.

Some of President Trump's branded golf shirts are made in Lsutu, but the trade relationship has been unbalanced.

Last year, LISUTU imported less than three million dollars in goods from the US, and although Trump might have been unfamiliar with the country, a few months ago that imbalance was enough to make Lusutu a target for tariffs.

Such horrendous imbalances have devastated our industrial base and put our national security at risk.

They've ripped us off left and right.

But now it's our turn to do the Rippin'.

Kabelli didn't imagine the American President was talking about him.

His factory is one of only a few that's locally owned in Masero.

The biggest parts was onder foreign directing missed us.

Who are the biggest and where are the hero visis?

They're not the listened to.

He's just the awakers here who are producing employment for our people, and therefore our people are out of work and now we suffer.

You see.

But if we could have taken it up to our hands, then would be now knowledgeable of how do we talk to how I might get easily.

But we never take that opportunity.

The government failed to proude their own.

The unemployment rate in LSUTU in twenty twenty four was thirty percent.

That's the most recent official data collected before the tariff induced layoffs began.

Say Pug Macacolay is the General Secretary of the Economic Freedom Trade Union.

Very inverastating.

We are in a bad situation now.

Our economy is so ailing.

The problem because the effectory workers are the ones who are contributing a lot in our economy.

So if the factorists are not engaging a lot of workers, then it means we have a big problem as a country.

What if anything is the government doing to improve the economy here?

Not doing anything.

We don't see anything yet.

But the government says Lsutu is not competing on a level playing field.

The introduction of the tariffs have put us in the disadvantaged positions because now the tariffs are not equaled.

You know, in many countries you'll find that they've got lower tariffs, others have got higher tariffs.

So the ones that we has got the lower tariff have got advantages over the ones that have got higher tariff because the business can be able to move from other countries to other countries because of that.

Kenya's tariff RAID, for example, is lower than Lasuitus at just ten percent, which makes it more attractive to foreign investors looking for a manufacturing hub.

Given that, what can a country like Lasutu do.

Trudy Makayah is a Johannesburg based consultant who works on trade and geopolitics at the Boston Consulting Group.

It is devastating in the short term, and to pivot is not always easy.

So the idea that you know, workers can be retrained do new things is difficult.

So to that extent, you know, the preferences and the access to the market, just the pure access to the market is important.

I think where a different argument can be made is that if you look globally at the level of US trade, we still see, you know, from WTO figures that eighty percent of trade is still happening outside of the US contribution still happening on kind of regular trade rules, on most favored nation principles.

So there is a sense that there is a world out there that continues.

But it would be folly to underestimate the second order and the third order effects that come from this, because once we're seeing all of these production shutdowns, we see investments being pulled out.

So I think it becomes very difficult for a small, landlocked economy with significant development challenges to find other ways to grow itself out of this situation.

And I think that's why you know, trade policy, like I've go and also just general market access has been an important part of the economic growth story of the past thirty years, and now countries no longer have that option.

I mean, even if you look at Asia, for instance, and you look at the development story in Asia, a lot of it was driven by trade and the ability to not only sell product, but trade also brings expertise.

You know, having to meet those senates, having to be export ready does something to the productivity of an economy that needs to develop that now, as you know, their right is being pulled from under their feet.

Makaia says that while the trade story has devastated Lasuda's economy, the ramifications of President Trump's trade policy go beyond exports and imports.

These are small economies, yet you know, to think about the gains that they've been able to make in terms of taking people out of poverty.

It means it rewires the global economy in a different way.

It resets their relationships.

It also has meant barely chains that support American industry.

So in many instances, you know, you'd have investors that come from the United States, not always you would have capabilities that are delivered by American institutions.

So you know, to the extent that you create a market.

Creating a market also means that the people that you want to sell things to should also be able to sell things to you and develop their purchasing power.

So to the extent that you open up your markets, you're developing that purchasing power in other parts of the world.

It also means strengthening relations between countries.

We do see generally that there's greater trade within the South and that that is going to happen, but it doesn't mean that therefore the West should, you know, step back, because by losing economic relationships, it also, you know, weakens the geopolitical ties that have been so important for global stability.

So even from that perspective, if you want to look at it from a security lens, there are benefits to ensure in that countries are able to attain some level of economic self sufficiency and are not beholden to other influences which might also take them in ways that are hostile to interests in countries like America.

Since taking office, President Trump has rewired the global economy for now, countries like Lusutu appear to be losing out.

But Tobojo Cabelli says it's also given his country an opportunity.

I asked him what he'd say to Trump, the American President, who claimed he'd never heard of Lasutu.

If the two ever.

Met, I would say thank you, President Trump, thank you for making Lesuto.

Nor for a president of a powerful country like us to mention in his congress you know is a powerful might get into because then nobody knows well esuit is and everybody else now is that I'm traveling into Lsutu.

Thank you, President Trump, and also the.

World will now.

I tend to asked what is less so to good?

In?

Is good in producing higher quality comments to the US, my kid?

That is why I said thank you President Trump.

If it was possible for me, I would shake your hand and said thank you for making us wake up, because that was a wake.

Up call.

In the biblical story David beat Goliath.

But Tobojo Cabelli says, it's not about winning and losing, but about finding common ground.

President Trump is a business man, and my prime Minister is a businessman.

What they have to do is just to talk business, President Trump.

I've got this and that and that.

I can supploy your good, high quality goods.

What do you want from me.

Let's changed the way we.

Were doing things because the giant has dictated that.

Coming up, Why some of our biggest and most innovative companies won't let us own a piece of them, and whether we should be concerned.

This is a story about privacy, specifically the privacy of keeping a company's ownership and operations out of the public domain.

It seems like every day we hear about another so called unicorn, a private company valued at over a billion dollars.

It's not just the number, it's the size and how long they've maintained their privacy.

I'm in a rush to a public The public is, I guess, a way to.

Inter potential to make more money, but at the expense of a lot of public company overhead and inevitably.

How much lawsuits, which are very annoying.

There seems to be broad agreement that more early stage companies are in no great hurry to go public.

It's roughly that it used to take seven years and now and takes eleven.

That's a big change, and that doesn't count off the companies that failed and didn't get.

To go public.

There's no doubt that many companies now here are staying you know, private, more than ten years, even which used to be the typical maximum time new'd stay private.

This reluctance to rush into the public markets has meant we've seen an explosion in the number of so called unicorns, private companies reaching valuations of one billion dollars or more.

According to Pitchbook, we've gone from virtually no unicorns in twenty ten to over one thousand, four hundred today, worth over five trillion dollars combined.

The reasons are straightforward.

First of all, being a public company can be expensive and just a pain in the neck.

I have several friends who are CEOs of public companies.

You know, the worst part of their life is the week before earnings day or the week after earnings day.

You know, it's incredibly painful, expensive to have a public company.

Jonathan Foster is president and CEO of Angelus Wealth Management, advising high net worth individuals on their investments.

There's not a public company alive that doesn't pay at least five million and up for being public, and that would be from microcap right, So you imagine what the large companies are paying.

And the scrutiny that you have from the public market.

It's not just the cost and hassle that can discourage growth companies from going public.

Gordon Phillips is a professor at Dartmouth's Tuch School of Business who has studied the reasons behind the decision to stay private.

When you go public, you release a lot of information, so there's sometimes proprietary information that you don't want to convey.

Does that drive the impetus to stay private longer, in part because you can't necessarily patent the relationship between what you know and what the capital provides.

Right, I think it does.

I think then you're waiting.

You're waiting, David to go to go public until you've established a brand name that's well recognized.

You can think of Uber and Lyft wanted to wait to go public until there was enough consumers signed up.

And then there's perhaps the biggest reason that large, successful tech companies stay private for longer, simply because they can.

One of the reasons is because of the availability of private capital and the venture capital money and growth equity money that's available.

So there's tons of money, so you can get a lot of money from private capital.

You don't need to go to the public market as quickly.

But Not all private companies are created equal, and most of them are certainly not unicorns.

They're not your typical private company.

I think when most people and regulators and others historically have thought of private companies, they've historically thought of a family company or a small business or something along those lines.

The companies that you're talking about are nothing like that.

Those are real companies that are operating on a global scale.

Sarah Cohan Williamson is the CEO of FCLT Global and author of the new book The CEO's Guide to the Investment Galaxy.

What's interesting about private markets is that the ultimate owner sets the price.

So if you think about in private markets, who actually if a company goes private, for example, whoever pays for that sort of sets the price, and then that's what the price is.

In public markets, the marginal trader sets the price, so the price changes every day, every minute perhaps.

And so I think that one of the really important differences is how good are the valuations on different sides.

And so you mentioned some of the companies that are valued very highly, and those may be very accurate valuations, but a lot of times the difference is between a mark and an actual trade.

Being a public company has its share of costs and disadvantages, but staying private has its own drawbacks.

Professor Phillips has compared some similarly situated companies that have gone public with those that have not.

In a research paper.

We looked at companies which went public, and then we looked at companies which pulled their ipl They filed to go public, and then they decided, hey, the price isn't good enough, I'm gonna walk back.

So we look at those who filed.

They both had the incidents, and we found those that went they still got substantial benefits.

The benefits are the liquidity we talked about, but really the second benefit also is acquisition currency.

When you're public, you can actually buy other companies with stock and you don't need necessarily cash to make that purchase or debt.

One example is, you know, Apple has done lots of acquisitions, including beats by doctor Dre.

They bought that back a lot while back, and they paid two billion dollars, but it was again they had enough cash and shares that they could easily make that purchase even that was two billion dollars.

Having publicly traded stock also allows management to give incentives to employees through stock options and similar compensation arrangements.

A lot of times is the employees want to be able to sell.

Now, there are some private internal markets that have developed to allow employees to cash out before they go public.

However those markets are not as liquid.

Maybe price is art is good.

There are also some benefits in going public that can't be measured.

There is credibility to being a public company, whether that is to suppliers or other business partners, or employees or others.

And then I think you really opens up all of these opportunities like issuing more stock to purchase companies.

It just opens up a whole new world.

So there are very good reasons for companies to go public and that's why many many do still.

But what does it all mean for the rest of us?

For those of us not lucky enough to get in on the ground floor.

First of all, it means that there are just fewer public companies for us to invest in.

Twenty five years ago, there were north of seven thousand public companies, maybe eight thousand public companies.

Now there are only four thousand public companies, So there's been a real shrinkage of opportunities to invest in equities.

In public markets.

And then there's the prospect that by the time those big growth companies go public, they've already reared their explosive growth.

When Apple went public, it only had like one round of venture capital.

People went and bought Apple stock.

You got to participate in.

All the upside is the stock was rising in the public markets.

If you're going public and it's already worth you know, one hundred billion dollars at the time of the IPO or twenty billion, whatever, the number is still a big number already, then you've already baked in a lot of the gains, and so the gains still get distributed is much broadly to the you know, to the population.

Retail investors are not getting that period of heavy growth at the beginning.

Now we're seeing you know, open Ai staying private and they are going to be pretty big.

And then you know, other companies like SpaceX, you know, again staying private.

You can't yet participate until they go public.

As a retail investor.

The pendulum has definitely swung toward companies maintaining their privacy for longer or even indefinitely.

But as so often happens in the markets, what looks like a long term trend may turn out to be more of a cycle, in no small part because coming into the sunlight over time has given investors some pretty favorable returns.

I asked chat GPT a great question a few weeks ago, what is the relative return between putting a million dollars into residential real estate on an unleveraged basis in zip code.

Nine zero zero four nine.

So that's you know, in Los Angeles, which is where I happened to have a home, and that's been one of the great residential markets in the America.

Said doing that versus one million dollars in the stock market from nineteen sixty to today, And it took it like a minute to figure it out, and it said, if you put one million dollars in the residential real estate unlevered in that zip code in nineteen sixty, it's worth seven point seven million today, and in the S and P five hundred with dividends reinvested is worth one point one billion dollars.

The public markets are great over a long term basis, so I think people should not feel they're being left out.

The biggest consideration of all might be the value of public companies to the depth of the capital markets.

Well, if you look at economic history, you will see that the most vibrant economies over time have had a vibrant public market.

So I think there is public value in vibrant public markets.

And of course that's where we come back to this level playing field argument, which is it used to be ten or twenty years ago that a regular retail individual, just you know, a regular citizen would be very unlikely to have much exposure to the private markets.

But today, because there's such a large portion of pension plans, define benefit plans in particular, and other investment vehicles, individuals do have a lot of exposure to private markets if they are are participant in a pension plan.

With all the pluses and minuses of going public or staying private, in the end, it comes down to more than just capital structure and protecting your trade secrets and incentive compensation.

So I think as a business leader, the question is really what kind of company do you want to be as much as what kind of capital do you want to get?

The best company leaders think about their investor strategy just like they think about a customer strategy.

So if you ask a CEO what their customer strategy is you can almost always get a very clear answer about what kind of customer they're targeting, in what location why.

If you ask a lot of leaders what is their investor strategy, you don't get nearly as clear an answer, And it's really important to have that kind of clarity because those investors will end up dictating or at least nudging the company in certain directions, whether it be a shorter term or longer term.

So have an investor strategy that just is robust as a customer.

Strategy that does it for us.

Here at Wall Street Week, I'm David Weston.

See you next week for more stories of capitalism.