tv Press Here NBC October 13, 2019 9:00am-9:30am PDT
this week a san francisco startup buys an iconic department store for a song. two founders pay $75 million to purchase lord & taylor. the big question now what will they do with it. plus, a high-tech company sees truck loads of opportunity with freight and amazon doesn't want washington to know too much about who's making its deliveries. our reporters michael lietke from "the associated press" and buzz feed's caroline odonovan this week on "press: here." good morning, everyone, i'm scott mcgrew. it is hard to remember in this day of amazon and target, but
not that long ago, department stores were where you went to get new shoes for a job interview or something nice for a birthday gift. marshall fields in chicago, beltz in atlanta, barney's in new york. the oldest and most storied though is lord & taylor, 1826 which means it survived the civil war and the great depression, but it could not survive the modern day. lord & taylor faced the same problem all other stores have faced. e-commerce, a changing clientele, declining foot traffic at malls. lord & taylor started closing stores until rescue came from the strangest of places, an upstart san francisco company called la tote run by a couple of young men who have probably spent very little time inside an old-fashioned department store. they paid a paltry $75 million for the iconic store chain. rakesh, ceo of la tote andceo
of lord & taylor joins me this morning. >> thanks for having me, scott. >> it surprises me that the hutzpah buying a major, major chain. how did that come about? >> we were talking about a true partnership where we would benefit from being partners with them and they would benefit being partners with us. what that meant was we would have le tote stores within their sto stores which would give the customers the ability to rent items from the stores, being the stores -- try on these items and then buy complimently items from lord & taylor. >> that's possible. but then you end up buying the whole chain. how did that develop? >> so as conversations were progressing, their parent company decided that they wanted
to look at strategic alternatives for the company which meant they would likely go out and either restructure the company or go find an acquirer. that's how we started to think about how we could leap frog into the next generation of retail and give our customers what they really were looking for. the ability to come into stores, pick up items for rent or get items to buy. it would give our customers the ability to have a lot more variety. >> sure. but wasn't their hesitation on the part of the seller in the sense that, i mean, a couple of weeks ago you were just talking to them about maybe, you know, having a location in their stores. now you're saying, you know what, we'd like to buy you. >> of course. i think when they did their due diligence on us, realized what we were bringing to the table, made them feel really comfortable. what we really brought to the table was the technology piece that lord & taylor was really
lacking. lord & taylor has really loyal customer base that's blood pressure -- been shopping with them for a long time, dwight them not investing much into the technology and e-commerce. what le tote brought with them was the technology that they were lacking. >> i want to get to the future of retailing in just a second. but i want to ask you about the price. it was $75 million. did i get that right? >> it was $75 million in year one and $25 million in year two. and then they have -- so it's $100 million, and they get a piece of equity of the combined company. >> it just seems like an incredibly low price. they must have more than that in stock on hand, wouldn't they? you got a really good price on that. >> so we definitely think we got a good deal and so did they because they are getting a big piece of our company which is valued quite highly. so getting a pretty significant piece of our company makes them
feel really comfortable about the price that was paid for it. and what this could mean for them in the long run which could be what multiples of what were working. >> isn't that such an interesting illustration? you have this long storied enormous department store that wants a piece of a small thogy company pany because it's that's going to be worth something in the future. that says a lot about where we are in the world of retail. >> yeah. again, what the markets are valuing is really looking at growth, looking at profitability. and companies that are appealing to the generation that's coming next versus the generations of the past. i think what they are really looking at is how do we engage people that haven't been shopping at lord & taylor, that have been shopping at other brands that can be loyal shoppers of the lord and taylor le tote combined.
>> and what is the future of that combination? will there still be lord & taylor stores at au mall where you open a big glass door and there's a perfume counter? >> lord & taylor is the oldest department chain store? the u.s. it's 193 years old. it's an iconic brand that's been part of the american retail economy for the longest period. and we want to retain this brand. we want lord & taylor stores to remain branded as lord & taylor stores. what we need to do as a company that's combining with lord & taylor is really tell that story to these customers in a more interesting way, try to engage customers of the next generation, gen y and gen z to
come into the stores and shopping. >> we've seen forever 21 and others that are really struggling with -- they are selling to gen z, but gen z doesn't want to go to the mall. so how would you encourage these people to come back to brick and mortar retail? >> ecom is only about 30% of the market in most categories. in apparel, it's about 25, 57% of the overall spent. so call it is still taking place which is still in stores and then potentially making those purchases online or looking at these items online thinking about going to stores potentially touch, feel, try them on, and then making that purchase decision. so people are living in this omni channel world that they are looking online, buying in store or vice versa. and so we want to give our
customers the ability to do that as well. we also want to give customers the ability to come and rent in the stores which was not possible until very recently. so we are going to be launching a lot more unique products and services in stores which will create incentives for people to come into stores, give customers the real reason to come into stores and have a curated experience just like they have online. today customers are looking for more personalized curated offerings to them. so imagine we've got feedback and customer data on yo based on your past behavior, your purchase history, your return patterns and the brands that you gravitate towards. we can have you come into the stores and give you that same curated experience by you walking up to a screen, the screen recognizing who you are,
what you like, what you buy, and the brands that you gravitate towards and the price banrands which you like to shop. >> rakesh, for someone who doesn't like to go to stores anymore, i wish you the best of luck. he is the ceo of le tote and recently bought lord & taylor. up next, reporters from "the associated press" and buzzfeed join me to talk about the future of trucking, amazon and activist ceos when "press: here" continues.
welcome back to "press: here." you know technology disrupts everything. music, taxicabs. earlier we were talking about retail. sometimes i think though we don't realize to what degree some industries can be disrupted. take, for instance, trucking. yeah, sure you've heard of automated trucks. that's an obvious disruption. more than 17 mon american truck drivers could be replaced by computers. but the freight industry is much more undercomputerized tn you might imagine started using bar codes on the sides of shipping containers. the longshoreman paid to write down shipping container numbers, fought that one pretty hard. these are the offices of
southern california-based next trucking. and the first thi you'll notice is there are no trucks. they do trucking but more importantly it's computerizing all the things in trucking industry that have never before been computerized. bobby nepel is chief revenue officer at next trucking joined by caroline o'donovan of "the associated press." i heard that it is not uncommon for a trucking industry for a fellow to show up with a clipboard, an actual paper clipboard and he says i need, you know, unit 17532. they don't know where it is, and the two walk around till they find it and finally tlod into a truck in 2019. is that pretty accurate? >> i wish they had the dewey decimal system because you would at least know where to look for it. but unfortunately yes, it's true. the industry as a whole is probably anywhere from 20 to 30 years behind where most other industries are, and there's only three left in american in
america and transportation which is probably in most need of an overall. >> i'm sorry, three what? >> three macro industries. >> why is it so far behind? because the ecommerce is so huge, it has been for 20 years. this is central to delivering goods. why is it so far behind do you think? >> that's a great question. if you look at any technology adoption at all starts with consumers first. who does e-commerce? consumers. right and so it's really the pointy piece of the sphere that drives us. that's usually led by multiple players. in this case it's the tail. and the tail is how the goods get there. and most people don't actually understand. everything around us in this space in the room in your house was delivered in a can that most likely came on a ship from some place not called america. so the consumerization typically is three to five, some cases ten years ahead. and then the industry catches up. you hear many people talking
about the fourth phase of the industrial revolution and that's exactly where we are with trucking. >> i feel like trucking is a heavily regulated industry. it sort of has that reputation. and the tech industry has a reputation of fighting against regulation wherever it meets it in order to create greater efficiency and such. i'm curious to see how that's played out with next. have you met that kind of conflict? >> so i think if you look at every industry where technology is an intersection there's a rub whether it's the smart grid, data privacy. it's because most industries never had a crystal ball to say in 10, 10, 30, 100 years this will be here. they're always playing catchup especially ones in a mature economy like america. you take other countries where legislation's not so much the issue. the adoption across the masses or most importantly people are digital natives or mobile natives. that's not here. >> how much resistance do you get from the trucking industry
itself and perhaps truckers and, you know, people who want to keep their jobs? i mentioned automated trucking. that's not necessarily what i'm talking about. i'm talking more about sort of the dispatchers and the freight manifest people where they could easily see if you walk in the door with your ipad, say, ah, no, no, no, i don't want this guy in my facility. >> that's rare. that's interesting. we had one large bco. those are the people that own the cargo in our office this week, and within the first ten minutes he said in my wildest dreams i would have never imagined that a trucking company would have looked like your office. and later that night he said i would have never imagined the technology you showed me that i can actually see my trucks on the road across america, what's in them, how can that be. and i said well, i know that my daughter was in school and took a test an hour ago. >> how do you not know what's in your trucks and where they are? >> so part of our goal and as the son of a truck driver myself i have to tell you that's one of
the drivers that got me to next along with working with a great team is that our goal as a driver centric marketplace is that every trucker in america can make a thousand dollars a day. if you think of it that way, your goods will arrive on time. i look it as it is our kids. if we treat them the same and allow them to pick your load, your truck, just imagine what a great place we would have across america. >> so you mentioned how consumer technology kind of leads the way and others catch up. are you using some of the tricks of the trade from consumer companies? like i think of you as almost like an online match maker. are you using some of the formulas like eharmony? is that how you judge yourself? >> there's definitely a lot of ai that will go into that. it's interesting you should say that. i had an epiphany a couple of weeks ago and it's almost like happy wheels like happy meals. i go into mcdonald's and i know
for $6.99 what i'm going to do. the trucker actually registers. we have a very rigorous process, they get qualified we make sure they are vetted and that they have insurance so that we do make sure that the state or federal regatory requirements are met. and then based on where we live and understanding the lives of a trucker will actually allow us. so we have a relationship that while distanced because they don't work for us, it's a way that we actually serve them. and i will tell you that all of the shippers i speak to, even the largest companies in america when i share our vision and our goal, they want to do business just because of the corporate social responsibility aspect of what they know this means to them. so that's quite exciting. >> you mentioned that you're the son of a trucker. and i think it's worth noting that truck driving is actually like the most dangerous job in the country that a person can have. is there a safety angle for next? feel like if i was head of trucking company that would be one of the things i wanted to try to tackle first. and i think automation obviously moves us in that direction. but is that something that you guys think about, the safety and
health risks? >> most certainly. we are a safety first organization both inside and outside of our company and across our yards. and we do have a small fleet of trucks that we really run tests with or use almost, you know, coming from silicon valley for the last 32 years we like to look at it as the center of excellence much like a microsoft or a sysco. we know the things that can be done in a very safe and regimented manner so those things don't occur. >> bobby, what is the thing that you've been able to solve that has been the most important? the friction point in which this was not working properly and people were using index cards or what have you that you were able to say, no, no, we can do this with computers and make this happen much faster. >> so that's a muart question. so we will start with the adoption of a hand-held app. most of us already have them, smartphone penetration across america is probably 99%. even though this type of worker may not have all of the smart
apps you or myself may have, they realize that the one we produce and offer is very simple. it's your load your way. i get to sit and pick where do i want to go? my daughter has a dance recital on decembwednesday. and that allows me to understand -- >> not unlike an uber driver. not at all like an uber driver. [ laughter ] >> terrible example. they have no clue they're picking you up and you've probably been dropped when you say you're going ten blocks away. that happens to me all the time at lax. that's rare because there's a difference between that type of driver and a trucker, big time. >> let's move beyond the app. i only have a limited amount of time. you said it was a multi-part thing. what are the other parts that come together? >> data sharing. if you think about every industry, the only way you unlock value and this is when i was there for cloud computing.
i was in sales force when we were small and now we're really big. a lot of that was via the data sharing, the same with the smart grid. most of your phones have been hit with a text. that ability to share information across terminals, steam ship lines who are all still running as 400s. and what we are going to do is enable it and then open it up so everybody can have democratized data. >> it's remarkable how much this sounds like so many other high-tech companies. and to think trucking was the place where this would go would be amazing. bobby, that's all the time i've got this morning. bobby is with next trucking chief revenue officer. appreciate you being with us. >> thank you very much. a reminder when we're not working on this television show, we are working on a podcast, a look at venture capital. you can find that wherever you find your phone podcasts. we'll be back in just a moment.
"the associated press" wrote about him, crusading tech mogul aims to prove ceos can be activists too. welcome back to "press: here." michael joins us along with "buzzfeed's" caroline o'donovan as well. so it's not just bennyoff. they are all kind of moving into this or many moving into this i have an opinion on homelessness, et cetera. >> just as mark 20 years oohing was on the leading edge of cloud computing, he's kind of been on the cutting edge of this concept that we have reached a point in society where ceos need to be more than just custodians of profit. they need to use their business platforms to take stands on these polarizing issues that our government can't seem to solve. >> there was another headline, move over shareholders, top ceos say companies have obligations to society was in the "wall street journal." >> some people are calling
this -- of course companies into toad make profit, but maybe they should be start being called not just for profit companies. and there's a reason for this is good business, especially as the workforce gets younger and younger, millennials aren't forming their own families so there's this theory that they look to their companies as their families and they want them to embrace values that they can support. >> is this significantly different from what a b-corp classification would be? a b-corp is when you have social goals. it's not a nonprofit, and people go back and forth on how effective that, really can you have two masters essentially. >> i don't know about that, but salesforce started their own foundation where they took 1% of the profits and put it in there and then a lot of other companies followed that, google. >> the danger though is take something like gun control. i think you can take a stand that i think cancer's bad. you're going to be fine. you take an issue on gun control, and i don't even know if salesforce has an opinion on gun control. >> yes, they do. they've already -- not selling
their software to killers that sell military style rifles. they are costing themselves money in theory. >> but i think if you're big enough you may say i don't care. we'll make our money elsewhere. and other walmarts, you know, phasing out the sale of ammunition in their stores. so we are seeing the spread. so there's the theory that that's good business because i am going to go take my dollars to this company. so there's an argument that salesforce is just really doing stuff that maybe is good for their business. >> though i mean if i'm angry at walmart for not selling ammunition i c take my money somewhere else. salesforce is deeper down in the system. it runs the cash registers and things that are going to make this possible like a microsoft, give them a lot more power. we are not selling to anybody who takes a position we don't like. caroline, i saw you had a headline that said senator blumenthal calls amazon's response invasive.
>> that's right. >> this is about amazon's vans that drive around, deliver things to my house all the time. apparently not owned by amazon. >> not owned by amazon, although increasingly they do have some amazon branding on the newer vans. previously they were sort of those unmarked white vans. so we did a big investigation into previously we were talking about the first stretch of trucking, the first stretch of delivery. this is the final mile getting it into your house and we wanted to look at how it was getting to your house. so amazon has third-party delivery contractors which it sort of controls. it tells them what hours they are supposed to show up. it tells drivers through a gps system how to get from point a to point b and when they need to be back. >> that doesn't sound very third-party. in the courts amazon has argued that they are not responsible for these drivers and the accidents they inevitably get into. some employees say they haven't been paid on time.
in the courts amazon has successfully mostly been able to say but that doesn't have anything to do with us because they use the contractors as sort of a liability insulator, if you will. >> i am sorry, michael, but one of the things i was surprised by amazon named those companies. if you ask amazon who are these third parties. >> as a person who spent a lot of time trying to figure out the names of all of these companies, these senators including blumenthal and elizabeth warren had asked amazon to name with the companies it works with, and amazon says that's proprietary business information and we can't tell you. but hopefully there's going to be an ongoing back and forth between the company and they have sort of offered to do a walkthrough. >> how much has this gone beyond the law? do you feel like they are skirting their social responsibility? >> well, i think we'll see how it plays out with the regulators
for sure. >> oh, that was a good safe answer and so quick as well. caroline o'donovan very proud that you are able to get congress's attention with that. excellent reporting on "buzzfeed." we'll be back in just a minute. loma prieta earthquake 30 years later. we are going to take a lookback at the devastating quake as we mark the anniversary.
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