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Welcome to a new episode of the Opening bid podcast. I’m Yahoo Finance executive editor Brian Sai. Like I always say, this is the podcast that will make you a smarter investor, period. And of course, opening bid sponsored by our friends at Vanguard. I would love to, uh, bring in our featured guest here. No strangers to opening bid in Yahoo Finance more broadly. That is former Medtronic CO Bill George. Uh, of course, Bill, uh, successfully led, uh, Medtronic for 10 years as CEO, was on the Starbucks board, Exxon Mobil board, Goldman Sachs board. Bill, did I leave anything out?
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Uh, uh, uh, well, yeah, it’s actually not Starbucks, it was Target, Target and, and, uh, Goldman Sachs. OK,
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there, thanks for correcting me, because during the break we were talking about Starbucks, so I think it was still, uh, stuck in my head, but nonetheless, uh, good to see you as always and look, um.I call you the CEO whisper. I mean, this is what you do. You know how these CEOs think with good reason. Now we have a trade agreement between the US and China. It’s 90 days. At the
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time of
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this taping, it’s in 89 days. What should CEOs be doing in this moment?
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CEOs are relieved, I can tell you that, that what I would call a truce, I wouldn’t call it a trade agreement. I would call it a truce, uh, that we’re not gonna continue this ridiculous tariffs, 145% on China and they retaliate 125%. That can’t work.Uh, but I think it’s still a wait and see. Are things go stable down. You can’t have new news every day and, uh, that much uncertainty if people really want to invest. I think CEOs are eager to invest. I think the market is eager to see them invest too. I think the response to the market, uh, since then would be clear indication of, let’s stop this, uh, t foolishness and let’s get back to building the country.
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If you’re a CEO in this environment, Bill, and youLet’s say 2 months ago, you start to move your supply chain out of China. Now it’s 25% in India, and now it’s in Vietnam, and you’ve moved a little bit to Malaysia. What what do you do? Do you move it back to China?
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No, I’m a believer in balance supply chains. I think you shouldn’t have everything in China. I, I worry about Tim Cook, Apple having everything there on the iPhones. And I think it’s good to have some in Vietnam or Malaysia or wherever you want to go. And also having a supply chain in the US. I I’ve always felt that, that uh where you don’t have all the logistical issues that you would have on shipping from Asia. But no doubt there are big differences uh in cost. But you can get those differences picked up in Mexico too, so.Uh, I think a balance supply chain is important, including, by the way,
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is the bestadvice then.To the CEO community. Don’t do anything, just learn and listen and study, and just stay.I mean, it’s, it’s a hard gig, and it just seems to be getting harder by the day.
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It gets very hard. I would say right now, get ready. Get ready to blast off, so to speak, like there’s a big game coming up, get ready to to launch, but you may want to hold on to your cash and investment dollars for a while before you make those big moves, but be ready.Uh, because I, I think the potential is clearly there all around the world, and I’m a great believer in global markets, so why are we fighting each other? Let’s, let’s trade all around the world. One of the good things that came out of the China deal was that, uh, we’re able to get them to talk about opening up uh uh more opportunities in China for US companies. I think we haven’t done nearly enough of that. And that’s the kind of balance I look for, not trying to cut back on what the Chinese are doing here.Uh, so I think that’s really important that we open up those opportunities in Europe and throughout all of Asia.
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What are some, I guess, you know, there’s, there was a big theme, or there has been a big theme of decoupling. What do you think the relationship is now between the US and China? Has it already decoupled in light of this trade war?
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Uh, I think it’s tense, and I think the Chinese, I think she is pretty astute. Uh, she really believes that this president and the previous president are trying to hold back China, and he’s not going to be held back. And so he’s, he’s in a pole position. Look, uh, we backed down to him, not the reverse. He didn’t back down to us. He was the one, head of government that challenged uh Arterros and wasn’t willing to back down. And so, uh, we had to back down to him.I’m glad we did. Uh, the tariffs are still very high though, at 30%. So, and that’s the so-called fentanyl deal. Uh, I’m not sure tariffing for fentanyl is the right way to go. I’d rather negotiate that if you’re really concerned about it. But, uh, so I, I think you have a uh a trade challenge, uh, competitor with China, and I think you will for a long time.And they have redone their economy so that they don’t need as much trade with the US. If you saw the numbers last month, trade with the US way down up overall because they’re going to trade with everyone else. And they have very clever ways to do that throughout Asia and throughout Europe, Latin America. The concern I have, Brian, is when we go out of a country, we get into a dispute with them, they come in, and I think that’s not good for the US uh companies.Yeah, cause we can export and we can do business all around the world much more. The key we have though, and the real challenge is gonna be in AI and tech.And can we maintain uh superiority of the Chinese. Now, the one thing the US has no other country has, I want to stress, new company formation, true innovation, new business models. If you think about what’s driven our successful companies, it’s not just efficiency. No, it’s new business models. And that’s what an Amazon has done. That’s what, uh, that’s what the iPhone has done. You can look across all of our companies. Google is done with search.And so I believe in building up our really strong global companies. I don’t believe in taking them apart for antitrust. I know there are antitrust issues, fine them for that, but don’t take them apart.
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Whatare your thoughts then on these AI chip exportcontrols?
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Well, I think we should have some control of our technology, and I think the Chinese have not observed intellectual property. This is true in my former industry, I tell you, in healthcare, uh, pharmaceuticals, medtech, there is not the kind of support we need from the Chinese government. And I think that’s clearly a negotiation we need to have with them, uh, to get them to respect their intellectual property. So yeah, I think we should control our technology, the most advanced technology.Uh, you take an Intel. Intel was doing $5 billion a year in China, but they were selling them second, you know, one generation old chips. So, and I think with the Nvidia being so much in the lead, we need to keep control in that leadership. We need to support these companies because they’re uh they’re they’re national treasures for the US.
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I loved what you are, you know, I follow you on LinkedIn, and I loved that you put in a recent post. What we’ve seen, I, I, and I hope I have this right, on the trade front, we’ve seen quote relentless chaos. Is this chaos over now that we have this, you’re not an agreement or a thought, a standstill, whatever you wanna call it.
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Well, we’re right in the middle of it. Yeah, the tornado’s still swirling around us, don’t kid yourself. And every CEO knows that. And everyone’s waiting to see what’s gonna change tomorrow. Today we’re gonna do a deal with the, the Saudis, and tomorrow we’ll do a deal uh deal. We just did a deal with Qataris, and tomorrow we’ll do a deal with the Emirates. I mean, you know, let’s see what happens. Uh, and I think that level of uncertainty is still causing people to hold back on investments.Uh, but I, I think they’ve got to move forward. You can’t hold off forever. So everyone’s looking for an opportunity to invest. But I want to see our companies invest globally, so the US companies can dominate the world and we can take advantage of our innovation and technology, uh, to be the world leader. It’s not gonna be through low costs. The idea that we’re bringing manufacturing back is the wrong way to think about it. Let’s work on AI. Let’s work on the technologies.For every job in manufacturing in the US today, there’s 8 or 9 service jobs. Let’s make, let’s upgrade those frontline people and make them more effective in healthcare and retail, and everywhere else they work. Uh, that to me in hospitality, let’s upgrade those jobs, and I think that is critical.
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Is then is the, is the president Bill running an outdated playbook and wanting to bring back manufacturing here to the US?
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Well, it’s a political playbook. You know, it’s uh, you could call it a Maga playbook. Yeah, absolutely. We’re manufacturing accounts for 8.4% of the jobs. We’re not going back to the 50s and 60s. I can tell you that companies are not going to do those kinds of best. And when they do, it’s gonna be uh the intels of the world creating a chip plant. It’s gonna be, you know, Eli Lilly creatingFactories that are fully automated, these are all gonna be robotized and very few workers. And the workers there are gonna be very highly skilled workers. It’s not gonna be people unskilled workers. That’s yeah, but I’m advocating that we also upgrade the skills on the service front. You know, we don’t count services in the trade balance that the that the White House looks at, certainly we do in all of our statistics. Hey, we have tremendous trade benefits in finance. You know, we dominate the world finance market. Let’s build that up.We dominate the world’s uh healthcare, uh, technology and, you know, and pharmaceuticals. I’m very concerned about cutbacks in R&D and pharma. I think this is a huge, huge issue, and, uh, what’s going on with the universities on the advanced uh technology. So that’s where we should be focusing. That’s where the US is gonna win, and no one can match us in that area. I because people on the other countries, they may be just as creative, just as smart, maybe smarter, well educated.But they don’t know how to form new companies. And so how do we take a company and Amazon comes out of nowhere? How do we take a Google that didn’t exist, or a Microsoft? That’s what we need to focus. Well,
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I justhad a good conversation on by the way, no, no, that’s a good point. I just had a good conversation on the, on the podcast, um, with former commerce secretary, Mr. Wilbur Ross, and I asked him point blank, do you believeUh, we can make iPhones in America. If you were in Tim Cook’s seat, would you sign off on bringing an iPhone production back to the US to to appease the president, even if you will not make as much money as you normally would.
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I would never do that. But what I’m upset about it is we blew up NAFTA. The whole purpose of NAFTA, USMCA correction, uh, why, so that we can produce in Canada and Mexico. Look what’s happening to Mary Barra at General Motors, which you know it’s a $5 billion hit from Tros. And we haven’t fixed that yet. And so they, these supply chains are set up for 30, 40, 50 years. You can’t change them overnight.And to blow that up, it was a huge mistake. I think we need that competitiveness right here in North America, and it was working well for us. That’s how we attracted all the Germans, the Japanese, the Korean, Chinese car companies coming here. Why would we blow that up? I think that was an enormous mistake.
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All right, hang with us, Bill. We’re gonna go off for a quick break. Lots more to talk about on the other side of this break on opening date.All right, welcome back to our opening bid here at the Nasdaq in Times Square. Having a fun chat here with Medtronic, our former Medtronic Tronic CEO Bill George. Uh, and I, I have to mention again, uh, on the board, formerly on the target board, uh, ExxonMobil and Goldman Sachs, and of course this podcast sponsored by our friends at Vanguard, Bill, you mentioned Mary Barra, and now we’re almost, you know, I’ve talked to Mary a bunch of times. I mean, best in class leader has run General Motors what for over a decade.Um, responsible for electric vehicle push, and I look at what she has done. I look at what Ford’s or Jim Farley has done so far year to date, really been dealt a challenging, challenging hand, uh, in running these public companies against a trade war. Now that we are we’re almost mid-year, what CEOs that you know, or you’re watching from afar doing a good job, like, you know what, I’m gonna give that CEO an A plus because, you know what, they’re doing OK during this trade war.
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Well, someone and someone talking about is, is good or probably the best CEO in the world, Satya Nadella and Microsoft. And you didn’t see him get trapped in all these gameplay. He’s doing the job, and he could continue to be Markov. Actually, Tim Cook is uh right up there with him at uh at Apple. So I think he’s doing a fantastic job navigating through all this. Those two people. You mentioned Mary, I think, look, Mary’s got a very tough hand.But I think she’s doing terrific, and Farley’s doing a great job at Ford. Uh, so I’m very pleased with that. And uh another one that I would mention that’s really done a fantastic job is Dougie Millan. We country me being on the Target board. I’m not very happy with Target right now. They’ve abandoned their uniqueness, and Walmart is coming upscale to move into their markets, and it’s done a great job of that. Target’s had negative customer sales, and they all accept one quarter.For the last year or two. This is very negative, but Doug MacMiller is doing a great job and, and Costco, you know, they went through a CEO change. I knew Craig Jeenk better, but they’ve done a fantastic both those organizations. So we can see where creativity and great leadership makes a difference. And by the way, you look at the financial markets, you look at Jamie Dimon, and early on in his tenure, David Zalman got a lot of critic boy, he’s done a fantastic job. He’s tripled the stock price at theIn his tenure at Goldman Sachs, so, and Jamie just continues to be the leader, not just in American finance, but of the world. And when he speaks, people do listen.
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Yes, uh, they most certainly do. And of course, I get a shout out to Ya Finance, our company of the year last year was in fact Walmart had a great chat with Doc Millan down in Arkansas, sitting in the grocery section. You can go to yahoo Finds.com and check that out. But to your point, I just wanna, as the kids would say, Bill, double click on a topic because you mentioned the Walmart target battle, and Walmart.Wow, they’ve done a heck of a job, uh, under Doug, expanded more to groceries. The AI is now there, the website works, they deliver things to you same day. What does Target need to do? Because there is this disparity, even before this trade war, the sales between these two companies were very, very different, and now you have to think that we are having probably inflation based upon from overseas where Target gets a lot of its goods, like they may see a couple challenging quarters. What has to happen there?
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Well, I think Target, Brian Cornell is gonna retire in uh September, and I think they need a very creative merchant that makes them unique, different from our. It’s not true anymore. It used to be back when I was on the board, Bob Aerosillo. He was, he did amazing things like bringing in Michael Graves, the architect in the design line of of teapots. But he did that to be unique in his advertising.Unique. A new CEO Target needs to make them unique and different from Walmart to attract people. They had this Target and casual chic, and that’s what they need to do, uh, or cheap chic, whatever you want to.
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Isaac Mizrahi. Now you, I used to be an analyst, Bill, so like I remember covering Tar with all these, I never heard, I didn’t even know what cheap chic was. I’m like, What the hell is that? What are these people talking about in these analystreports.
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Yeah, and the other one said that, by the way, Spanish company Zara, that they can copy anything in about 2 weeks and bring it to market. But Target needs to do those things and shorten their supply chains and be much more aggressive. And they never really made it in food. I think that was something I pushed for when I was on the board, uh, that was a number of years ago,
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but I don’t get me started, Bill. Please, I don’t get me going on the Target food section. I, I, that’s gonna take up a whole hour podcast. I don’t have time for that. Um, they need that bottom up, they needed some more food.I mean, I cannot do a necessarily a full fresh food grocery shopping session at a Target. I mean, Walmart has a older inside ofa store.
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If you’re a retailer, how many times a week do your customers come into the store to buy merchandise?Once, once every other week, once every 3 weeks. How many times a month do they come in to buy food? You know, 3 times a week, 12 times a month. That’s the difference. That’s where MacMillan has really made it and he’s perfected that. And, uh, by the way, he’s done a great job competing with Amazon too. So he’s still second Amazon’s a very tough competitor, and he has weathered that well.
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Let’s say, let’s stay on the CEO beat because if there’s a theme that has happened during first quarter earnings season, as these companies reported, there’s no guidance. You know, I just talked to Mattel’s CEO Anan Kris. Uh, he had to pull his guidance bill, you know, just 3 months ago, he was looking for almost $1.72 a share earnings this year. Now that’s off the table. I just talked to Mercedes CEO, uh, two days ago.Despite the trade agreement, thought, whatever it is, he’s not bringing back the guidance that he pulled in late April. What do CEOs do with guidance here in this environment?
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If they didn’t get away from it, they should. And I think they’re smart to pull it. I think Mary was smart to pull hers, uh, because the market loves it. Hey, you know, as an analyst, you can make a lot of money, but you should do the analysis. If I shouldn’t give you the numbers and say, OK, here’s how much we’re gonna spend in this area, here’s our revenue projections and all that.I realized that’s the game and I’m fighting the game. Uh, but so I think right now, there’s too much uncertainty. So I’m just shooting in the wind to give you a number when I don’t know what the ground rules are. If you tell me what the ground rules are, I’ll tell you what we’ll do. That I’ll tell you.But I need to have some ground rules. I’ll tell you, when new products are coming to market, I can give you some idea of how we’re gonna do revenue-wise and help you figure it out. But I think the whole idea right now is, no one knows. How do you know what’s gonna, it’s not just tariffs, it’s what’s gonna happen with in the global markets, where it’s just such a big part of people’s business, including a Walmart. This is not just a domestic company.And uh that’s so important, and that’s why I can’t understand why we don’t emphasize the importance of global markets. And uh yes, let’s export more, OK? That’s fine. I’m all for that, but let’s export technology without giving away the crown jewels. That’s the results of technology, the products we put together.And let’s be the dominant global player in AI. Let’s use AI not just to be more efficient. That’s what I’m concerned about. Let’s use it to upgrade our workers so that we don’t have need ranges of analysts telling them what to do. They’re so skilled, they can do all the work because they got an AI right in their hand that they can look at and get all the answers very quickly.
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How doyou know then, as a CEO or even a CFO, how do you know when to bring back guidance in this environment, even if we have someRules of the road in another month. One post on social media could change it all over again. Yeah.
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I’ll, I’ll bring back guidance when you cause me to do so, and I’ll give you a wide range. It’s wide range as you’ll let me get away with it. You can do the point estimates if you want.
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I’ll get $1 all the way for $10. Take that analyst.
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And the other thing too is, of course, I’m a long term thinker about business and also a long-term investor. So stock companies don’t go like this. They don’t go straight up. They go up and down like this, even a Medtronic where we had aYou know, 60 times increase our market cap. It didn’t go straight up, you know, there’s some peak periods. And of course, the analysts loved that, that’s fine. And uhSo as long as we’re talking about it, and I’ll give my other shot is don’t give away all your cash. Cash, cash is king or queen if you want. A good, uh, it’s a good way for life that buybacks. Invest in your company, invest in your business, invest in acquisitions. That’s what they want to do. And I just want to get some period of predictability so that people will invest it. The M&A market was ready to go in December. I can tell you. You could talk to to David Goldman or or or any of them.And they’ll tell you it was ready to go, and all of a sudden, everything went on pause. But those, those deals are there to be done, and they’ll strengthen American and global companies.
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Lastly, Bill, I’d love to get your hot take on this as we wrap up this episode. What is your biggest concern on US trade policy moving forward?
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Uncertainty and instability.I, I don’t, we don’t need a trade balance. We need to open up markets for American global companies and lead the markets. And, you know, I’m a believer in the, the laws of the economic laws and comparative advantage. If we can take advantage of the better, better rates in Asia or in Mexico, we should do it. We should be very global in our thinking as companies and have a balanced supply chain, uh so that we aren’t locked into one country.
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Always appreciate your time. For Medtronic Seal Bill George, uh, always great to hear your insights on all things CEOs, uh, business, and, well, you know, a little bit of life too. Bill, we’ll talk to you soon.
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Thank you very much, Brian, forhaving me on.
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That’s it for the latest episode of Opening id sponsored by our friends over at Vanguard, and like I always say, continue to hit us with all of those likes and thumbs up on all the social media platforms and podcast platforms. I very much enjoy all of your feedback. I learned a lot. We’ll talk to you soon.
