Talks at GS With Kroger CEO Rodney McMullen...SPAC Demand...Corporate Financing Enters a New Phase

[Goldman Sachs]( [BRIEFINGS] August 11, 2020 Talks at GS With Kroger CEO Rodney McMullen Above (L to R): John Waldron of Goldman Sachs and Rodney McMullen of Kroger The sudden pivot to online grocery shopping in response to the pandemic will have long-lasting effects on the grocery industry, said Rodney McMullen, chairman and CEO of Kroger, in a recent episode of Talks at GS. “Just in the two weeks in March, where [COVID-19] just took off, our online business over doubled,” McMullen told Goldman Sachs President and COO John Waldron. “It’s one of those things where it feels like we got probably five years’ worth of growth literally in two weeks.” McMullen also sees changes in the future of the food supply chain. “For probably the last 25 years, all the energy and effort has been around [reducing the amount of inventory in the supply chain.] How do you take out 0.1 days? Because when you have $5 [to] $5.5 billion of inventory, it’s real money. And now we’re starting to say, ‘What is that right amount of inventory? What is the right safety stock?’ We haven’t decided yet.” McMullen said, “We are starting to decide if part of the volume from COVID will be permanent, so we need to start building a capacity that can handle things at a higher level.” [Watch video]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Talks%20at%20GS%20With%20Kroger%20CEO%20Rodney%20McMullen&body=https%3A%2F%2Fyoutu.be%2FEwoVMRRL2k4) The Daily Check-In With Goldman Sachs In the US, companies raised a record amount of capital—nearly $190 billion—in the second quarter of 2020. [David Ludwig]( head of Americas Equity Capital Markets for the Investment Banking Division, joined The Daily Check-In to discuss this surge in new-stock issuances and IPOs. “Initially, it was those companies that were hit the hardest by the pandemic,” Ludwig said. “They issued capital in any way they could—common stock, convertible stock, and we saw a number of private capital raises, otherwise known as PIPEs.” From there, more companies raised capital to reinvest in their businesses to drive organic and strategic growth, he said. Finally, as the markets rallied, more regular-way activity resumed, prompting a rebound in the IPO market and renewed interest in alternative listing structures, such as direct listings and SPACs, or special purpose acquisition corporations, which have been getting a fair share of attention lately. “SPACs are attractive to a number of private companies because they bring certainty of price,” Ludwig explained. “They bring certainty of proceeds to a process that, otherwise, they may not have when they go public.” In other episodes of The Daily Check-In, [Elizabeth Martin]( head of EMEA Equities Execution Services and Systematic Market Making, discussed the evolution of capital markets in Europe. From Goldman Sachs Research, [Heath Terry]( weighed in on the sustainability of e-commerce’s surge in activity; [Tim Moe]( explained how the rise of the digital economy has reshaped Asia’s equity markets; [Manish Adukia]( shared insights on how India’s internet market, one of the largest in the world, is at an inflection point both in terms of growth and profitability; and [Amit Hazan]( discussed how robotic surgery is quickly evolving from a few limited procedures to a broader range that could drive a $17 billion market in the US by 2030. For more Daily Check-In videos, [subscribe to our channel]( on YouTube. SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=The%20Daily%20Check-In%20With%20Goldman%20Sachs&body=https%3A%2F%2Fyoutu.be%2FFOh_wcivbng) Podcast: How Companies Are Meeting Their Financing Needs After months of fiscal and monetary support to provide liquidity through the crisis, Susie Scher, co-head of the Global Financing Group in Goldman Sachs Investment Banking, observes that many companies have entered a new phase of their funding strategy. “The economy is still quite fragile, but companies for now have taken all the capital liquidity they needed,” Scher said in the latest episode of the Exchanges at Goldman Sachs podcast. “What's going on in the markets today is that companies are starting to take what I would call ‘play offense’ capital.” This forward-thinking approach is also affecting the equity markets, resulting in a rebound in IPOs. “Companies are saying, ‘Gee, maybe this is the time to create public currency for myself—to set myself up to grow, or grow through M&A,’” Scher explained. “I'm cautiously optimistic that we will continue to see that companies who want to play offense have access to ‘play offense’ capital in the debt and equity markets.” Listen to the podcast on [Apple Podcasts]( or [YouTube](. [Listen to podcast]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Podcast%3A%20How%20Companies%20Are%20Meeting%20Their%20Financing%20Needs&body=https%3A%2F%2Fwww.goldmansachs.com%2Finsights%2Fpodcasts%2Fepisodes%2F08-04-2020-susie-scher.html) Briefly…on Investing in Human Performance How can technology be used to improve human performance? At the recent Goldman Sachs Asset Management (GSAM) Healthcare Investor Forum, Andrew Firlik, managing partner of [JAZZ Venture Partners]( spoke with GSAM’s Hugh Lawson about emerging technologies that are helping to improve health and wellness outcomes. Hugh Lawson: Andrew, given your background both as a neurosurgeon and a venture capitalist in the healthcare sector, can you share your perspective on why you believe technology can help improve brain function? Andrew Firlik: What we understand through neuroscience is that brains have an ability—known as neuroplasticity—to form new neural connections throughout our entire lives. Essentially, we can “rewire” our brains to adapt to new situations and conditions, or to compensate for a deficit. A child with attention deficit disorder, for example, struggles because of deficiencies in specific neurotransmitters. But therapeutic intervention can be used to strengthen that neural deficit in a way that is more beneficial than a pharmacological alternative. Hugh Lawson: Artificial intelligence technology is seen by some as a threat to replacing human jobs. But AI can also be used as a force for good. Can you share your views on the therapeutic applications for AI in healthcare? Andrew Firlik: Today, technology is mostly being used to improve workflow processes and to help make the business and infrastructure of healthcare more efficient. But AI and software technology is increasingly being leveraged to improve patient outcomes. One of our portfolio companies, for example, has developed a natural-language processing system that is designed to foster open-ended conversations. This technology is currently embedded in a robot that is being used to help children with autism spectrum disorder. Through seemingly playful interactions, the robot uses the same techniques that a human therapist would use—such as measuring eye contact, emotions and encouraging back-and-forth conversation—to improve a child’s ability to connect socially. But instead of working one-on-one with a therapist—often an expensive proposition—families can use the robot to do things repeatedly, consistently and patiently, and in a more scalable manner. Hugh Lawson: Can you talk about the venture capital environment that you’re operating in, given that the industries you invest in cut across different disciplines? Andrew Firlik: One of the reasons we decided to build a new venture capital firm in 2015 was to invest in emerging technologies that sit at the intersection of AI and machine learning, and health, life sciences and wellness. In the traditional VC environment, there’s not a lot of cross-pollination between those areas. If you’re an expert in AI and ML, you’re often sitting in the so-called IT side of the house. If you’ve been working in biotechnology, therapeutics or dealing with the FDA, you are typically sitting in life sciences or biotech. In our firm, we have data scientists, technologists, as well as media and entertainment experts who are working alongside people like me with a background in neuroscience and healthcare. In a typical VC model, each partner might be going out to win his or her own deals. We work together on every opportunity so we can see how the different dimensions come together to build breakthrough products. Hugh Lawson: What has the investing environment been like since the lockdown started? Andrew Firlik: We have been making investments throughout this period in part because our fund is benefiting from many of the tailwinds of the pandemic, such as telemedicine and digital therapeutics. Many of our investments are also focused on technologies that can help retrain a workforce and improve workforce productivity, or accelerate learning in a distributed learning environment. As investors, we have to take our cues from the world that we’re living in and continue to back the entrepreneurs that are creating the solutions that we need. The arc of history reflects the constant battle between simply unleashing technology—with all its potency—on the world, and guiding technology in ways that help improve it. Hugh Lawson: These days we’re spending even more time on our devices and with technology. How do you expect that to change? Andrew Firlik: The last 20 to 30 years of technological development were primarily focused on building transactional systems—sharing and moving data, or posting and commenting on social platforms, for example. But what happens to a generation of people who are constantly interacting with these systems? To be successful at software investing, I believe you have to link neuroscience and human psychology, especially as technology becomes more immersive through the use of AI and augmented reality. You need to look into every transactional system that you’re building with an eye toward how it shapes us as people. And when you do that, you can see the incredible potential therapeutic or wellness potential that could come from that. [Read more Briefly Q&As]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Briefly%E2%80%A6on%20Investing%20in%20Human%20Performance&body=https%3A%2F%2Fwww.goldmansachs.com%2Finsights%2Fseries%2Fbriefly%2Findex.html) Goldman Sachs Media Highlights The New York Times - August 11 [Coronavirus Tests the Leadership Style of Goldman Sachs’s C.E.O.]( Bloomberg - August 7 [Goldman Sachs Equity Chief Shares Where She Sees Opportunity]( Business Insider - August 7 [Inside the Goldman Sachs incubator that allows everyone from analysts to MDs to become paid entrepreneurs on the bank's dime — and a look at the startups the firm is betting on]( Bloomberg - August 7 [Sustainable Finance Sees Big-Tech Boom After Record Google Deal]( CNBC - August 7 [July Job Numbers Are Encouraging Relative to Expectations: Goldman’s Hatzius]( (1:53) CNBC - August 5 [Goldman Sachs says it will double hiring of junior bankers from black colleges by 2025]( [Subscribe]( [Unsubscribe]( The data provided in this newsletter is for information purposes only and should not be construed as investment or tax advice nor as a recommendation to buy, sell, or hold any particular security. 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