To celebrate the bloomberg 50. It is our annual list of those 2019st of those whose accomplishments stick out. Jason but first, the biggest ipo, saudi aramco. Shares surge to a market value of 2 trillion. At their peak. Carol a culmination of a fouryear effort from the kingdom. A lot of questions. Now it is publicly traded and it it is an ipo, a publicly held company, but only a small percentage, 1. 5 is out there in the public in terms of the company. Reporter the ipo has not turned out the way they expected it to happen. If you remember back to 2016 when they initially announced plans for the ipo, the plan was to sell shares of the company. What we really have to look at is what is the purpose of the ipo . It is seen as a means of diversifying saudi arabia away from its Oil Dependent economy, to raise money from International Investors and to deploy that on projects outside of the core energy industry. The valuation did not get close to what they wanted but it is attracting International Investors into the kingdom. This is probably a great opportunity to showcase what they have. And also to attract International Investors to a scale that has not been seen before. Having said that, the objective has not hit the mark. Saudi arabia managed to complete the ipo with the help of local investors, rich families in saudi arabia and also neighborhood friends, politically countries that are close to the kingdom in the gulf region. It is still a way far from what they planned initially. Jason thank you so much. Carol let us bring in joel weber. Lets start with the cover story. Reporter a combination of amazing coverage from the Bloomberg Team this year about the listening devices. Americans in particular really love these things. Carol we all have them, right . Joel there have been some privacy concerns that the tech team has done and we bring it together in the cover story. Jason the bloomberg 50 was this week. What a night. Joel you guys looked great. This is a gala meant to celebrate the people on the list and their accomplishments in 2019. Carol i remember having conversations at my table and we did a broadcast from there. People were loving the eclectic group. They were names that they didnt know about that they should. Joel bloomberg 50 is a way of using what we use better than anybody else, data. Looking out across the various world of business, finance, and entertainment to say who has real impact and what is demonstratably that we can point to that is measurable. Jason we will hear from some of those honorees later in the show. I have to ask you about the new red scare. This is a story that caught our attention. And once you get into it, it is a little terrifying. Joel this is another story that businessweek has done multiple times. Peter wallman has really delivered on this line of reporting. We did it as a cover story earlier in the year especially around what is happening in the medical and hospital worlds where we have seen chineseamericans get driven out of the country. That particular research is around cancer. And now, it turns out and this is the latest story in the politics section, the u. S. Government has been targeting people who work in military, and in particular there is one gentleman we found who was wrongfully accused and pushed out of the government and army and had to retire. There was never a case to be made against him. Carol really troubling. Another great issue. Really appreciate it. Editor of the magazine, joel weber. Let us get more on that mistrust in the department of defense and how ties to china could prove fatal for applicants security clearance. This is a continuation of work i have been doing all year long on the whole question of whether or not we are overreacting in this country to the threat of chinese espionage. The threat of the theft of international property. This weeks businessweek story is about an Army Engineer was harassed, essentially, by the fbi and intelligence from the army. This is a civilian engineer. And ultimately his security clearance was taken away after over 20 years of stellar performance, including performance including developing stellar performance, including developing a Software System that the nsa uses for communications and eavesdropping and things like that. This stellar scientist, lost his security clearance forcing him to retire. He was of retirement age. Not the biggest body blow but he was humiliated. He was accused of disloyalty. He had a lot of ties, friends and neighbors who were asked many times if he was a spy for china. He is a chineseamerican individual, and he suffered a great deal as a result of this. The end of the story is that essentially ultimately the pentagon decided he was not a spy and was innocent of their suspicions. It is kind of a sad story. Carol this individual the question is and this goes to how you kicked it off, are we overreacting . Is this an isolated incident . Being targeted in the wrong way, or is a lot of this happening . Peter the distrust level and that is the keyword the level of distrust of Chinese Americans has soared in recent years and a colleague in the bloomberg Data Analytics department, andre tartare, did an enormous job of filtering and analyzing some 26,000 cases in the government database of security clearance decisions, who gets it and who does not. He found that in the past decade, the rate of rejections of chineseamericans essentially for security clearances has gone from Something Like 44 which was the average of all the countries including other nonchinese countries to over 60 for chinese. It is a real growth in the rate of rejection for that which is a kind of barometer of suspicion, distrust, and essentially difficulty for these american citizens. Carol coming up, alexa, what is privacy . Wert devices, that is what are talking about. They are listening. Jason is the new applecart really elite . Why the answer matters to the places where you shop. Carol this is bloomberg. Carol welcome back to Bloomberg Businessweek. Im carol massar. Jason and im jason kelly. Join us every day on the radio starting 2 00 p. M. Wall street time. You can also catch up on our daily show by checking out our podcast. Carol and you can find us online at businessweek. Com and our mobile app. Privacy one of the major themes of 2019. Jason and the cover story for this week focuses on how Silicon Valleys Biggest Companies have fooled millions of people into allowing temporary workers to listen in on their most intimate moments. This is a big story about how these devices like amazon echo and their Virtual Assistant alexa or siri if you have these devices in your home or on your phone, this is a story about how these things work. These Tech Companies in Silicon Valley presented these products as automated. It turns out there is a vast apparatus of human listeners hoping to improve these services. When voice commands are submitted to their service, they are sometimes rerouted to data centers where humans are tonscribing your every word improve speech recognition on these services. Carol there was an assumption that there is a robot listening. Tell me about these humans. What kinds of conversations are they listening to . What are they hearing . You guys talked to a lot of people. We talked to dozens of contractors, people that are placed everywhere from ireland to india. In the case of apple, they rely on an i. T. Firm in cork, ireland , where dozens of contractors will be listening in on peoples recordings. And they told us they feel deeply uncomfortable listening to this material. They recalled children in many cases sharing phone numbers or addresses. They heard couples engaging in sexual activity. Very private conversations in your kitchen and bedroom. The alarming thing is how invasive this is and the people on the front lines are often the most lowpaid workers in the supply chain and they found this very disturbing and emotionally unethical. Jason what do the Companies Say . This has been a story you have been covering through the year. Probablysaid, it is one of the defining stories in many ways of 2019. Probably speaking, the discomfort we are starting to have with the relationship with technology. What do the Companies Say . I am glad you asked about that. One of the most profound things to us was the disparity between the contractors were telling us in how they felt this was morally dubious versus what the tech engineers and executives were telling us. When we started reporting this, it was like they did not think it was a big deal. They did not anticipate this. They argued it was like it was par for the course for the industry. Everyone was doing it. Fixing Quality Assurance issues. They described it as you know when your app crashes on your mac, do you want to report this bug . They described it as a voice bug. On a broader level they say, just fyi, these systems are only recording when you activate them. Vast majority of voice commands and the are handled by computers with a small number of them needing human inputs. Whether or not that makes you feel more comfortable about using the services, there is no doubt that millions and millions of recordings are still being transcribed by humans. Carol the applecart. Jason it is exciting for apple and its users perhaps, maybe not so much for the retailers accepting it. Carol we spoke to jenny on what premium plastic means for consumers as well as retailers. Visa and mastercard have several different tiers. They have their basic credit cards that may be dont have a ton of rewards. Visaext step for visa is signature, for mastercard it is mastercard world, and then the premium tier. Carol we are constantly being ranked in society. This is not different. For mastercard it is world elite. Every time you swipe, it costs the retailer a little more in swipe fees and it has been years of this huge rewards war going on with banks. More and more consumers are pointing up at the point of sale with these cards and retailers are like we have had enough. And they are ready to take the visa and mastercard. Jason and here comes apple joining the party. Carol it is an elite card. It is expensive for retailers. It had a huge launch. 10 billion dollars in line extended to consumers in the first month it was out. A very popular card. Retailers are like this is another thing we have to spend money on. It is holiday season. They are trying their best to compete with the amazons of the world, and this is one more thing in the negative bucket. Carol when we talked about this on our daily radio show during the week, we were both like we did not realize there were these incredible tiers with credit cards. With the elite card, there is an assumption that they make more money and will spend more. Sorry, merchant. You will pay a little more. You will win in the end is the thinking. I think historically that is what visa and mastercard have thought. These people come in and have way more buying power. Their ticket sizes are on average larger. That has been the justification. Retailers are coming back and saying if im a gas station or a grocer, people with these high rewards credit cards are not necessarily spending more on gas or groceries. Those retailers are saying we are reaching our breaking point. Our margins are already thin. We need the break here. Carol turning lemons into lemonade at lululemon again. My exclusive conversation with the lululemon ceo and the private Equity Investor who wins big on the retailer and comes back to fix it. Carol great story. This is bloomberg. Carol welcome back to Bloomberg Businessweek. Jason you can also listen to us on the radio. Including on am 11 in new york. Carol a. M. 960 in the bay area. And always on the Bloomberg Business app. Lululemon earnings are out this week and although the stock dropped shares, it is a remarkable turnaround. It is also a win from bostonbased investment equity. Sweat equity. Didnt you write your book with those titles . Jason i did. Interesting. This is a never before told story of the money behind one of the most Influential Brands of our time talking about lululemon. The pe firm, we are talking about advent. They first invested 74 million, not that much in private equity, and they got eight times as much from that 2005 deal. Fastforward to 2014. Another deal and a lot more money. I sat down exclusively with David Rutherford and calvin mcdonnell, the lululemon ceo, at a store right here in new york city. The business had its challenges but at its core, the issue was alignment. Part of the power that private equity can bring is that alignment. And so, in this case, we had a situation where the founder was not aligned with the board and the Management Team so you had some turnover of the senior management. You also did not have the company in sync with the ability to make investments. They were following wall street and thinking about what they needed to do that quarter. And so, i feel like what we saw was this fundamental opportunity to help regain that alignment and put the platform in place so the company could establish a really strategic proposition, not just the here and now. But part of the real opportunity is to help them get out of the penny a share game and make some of these investments that had been deferred. Jason i want to get to the moment when calvin came into the company but leading up to that you do have a series of ceos. Leadership becomes something you have to deal with in terms of the various issues you have to address. Firstly, we had a situation where the board really loves this company and wanted to see it succeed. And so, in that regard, when we came back in in 2014, we were able to create some of that alignment. Pretty easily. And help create the ability to put some of these ideas in place. The idea of a longer term plan. But, you are right, i think some of those challenges with the founder made it hard. The point that the founder exited the company in 2015, we were able to begin assembling a worldclass Management Team. And so, with a cfo who initially was stuart now coo and a talent along the way leading to people like glenn and calvin and sun and a host of really worldclass business leaders. And the exciting part is that this business had that potential it just needed the opportunity and the framework from this point and beyond. It really feels like the business is just getting started. And seeing what calvin and the team have already done with the manifestation of this next step vision in chicago and the membership and loyalty program, you are already beginning to see the seeds of thinking about what the Broader Vision might look like. Jason what does that look like Going Forward . It seems like we are in an interesting moment in retail growth. We have a huge runway growth. We have doubledigit growth. And new categories. Into our womens category and omni Guest Experience with the digital platform. There is a ton of pop or for more. This is an emotional brand. Our online continues to be more transactional. Finally, expanding into markets. We still have a lot of opportunity in north america not to mention what is happening in International Markets including europe and china. We are in the early innings. We are trying to double our mens business. Proving that this business resonates with men as much as women. For our category it is a dual gender category. There is no reason we shouldnt be able to do that. Carol borrowing money is easy for american reparations. Jason some of the riskiest they are out there and massaging a key measure of earnings to make the borrowers appear more worthy of a loan. Carol let us get to this weeks Bloomberg Businessweek explainer. It is called earnings before interest, taxes, depreciation, and amortization. It is a metric that became popular in the 1980s and it gave corporate raiders like carl icahn and Saul Steinberg a way to evaluate potential targets. It even measures the companys ability to generate cash, but it does not take into consideration the impact of debt on the bottom line. And companies are finding more ways to tweak the numbers. Marketed take excel a 350 million for the 12 months prior. Based on generally accepted accounting principles, the company lost almost 48 billion in the same period. More recently, Office SharingCompany Wework used a Community Adjusted metric. Turning a loss into a positive earnings segment after the adjustments. Critics of th worry about what it is doing to the 2. 5 trillion market for jump wants saying it blurs the picture of Americas Health and creating false perceptions of safety. Carol coming up, the bloomberg 50. Jason from finance and politics, to tech and entertainment, we talk to those that have shaped 2019 in unexpected ways. Carol this is Bloomberg Businessweek