Influencers Transcript: Penny Pritzker, January 30, 2020

ANDY SERWER: As an heir to the Hyatt Hotels empire, Penny Pritzker could have taken the easy route. But it was her ambition and interest in business that drove her to set her own course. Pritzker would build her own business, as founder and chairman of PSP Partners and its affiliates.

In 2009, Forbes named Pritzker one of the 100 most powerful women in the world. Pritzker would serve on President Obama's Council on Jobs and Competitiveness and his Economic Recovery Advisory Board before being tapped to serve as the 38th US Secretary of Commerce.

Today, she sits on the Microsoft board, sharing her influence with CEO Satya Nadella. Pritzker hasn't forgotten about her Chicago roots. She and her husband started the Pritzker Traubert Family Foundation, which focuses on physical activity for young people.

Pritzker joined me in Davos, Switzerland, the site of the World Economic Forum, where she and other influential women came together to address pressing issues facing the world and society.

Hello, I'm Andy Serwer, and welcome to Influencers. And welcome to our guest Penny Pritzker, former Commerce Secretary and head of PSP Capital Partners. Penny, nice to see you.

PENNY PRITZKER: Thanks for having me.

ANDY SERWER: So we're here in Davos, Switzerland, and President Trump spoke-- I want to ask you what you thought about his remarks, and then maybe we can talk about his trade policies as well.

PENNY PRITZKER: Sure. Well, he gave a kind of rundown of what he think-- you know, his list of accomplishments and the status of the economy. I think that he painted a very rosy picture, but I think there's still a lot of challenges that aren't being dealt with.

We have, you know, a real problem with inequality in our country, and unequal opportunity, things that need to be dealt with. We've got a manufacturing recession going on, and we don't really have the capital investment that we need. And so while he, you know, it's an election year and he's painting a picture that's positive, which is good. You know, unemployment is low and wages are rising, but not for everybody.

And that's a challenge and something I'm very passionate about. How do we deal with inclusive prosperity and how do we create opportunity for everyone?

ANDY SERWER: Let me ask you about the trade policies now, Penny, because you were involved in that during the Obama administration, TPP. And we'll get to that a little bit as well. But let me ask you specifically about the China trade deal the president has put forth.

PENNY PRITZKER: Well, I think it's not really a deal yet. It's sort of a phase one cooling off period. It didn't really deal with the structural problems and challenges that we have. You know, the investment by the government in corporations, the status of state-owned enterprises, cyber theft, and things like that.

So it's good that tensions are lowered, because that's not good for the global economy and that hurts everyone. I think what's problematic to me is, we've gone through this couple of years of really challenging times, particularly think of our farmers.

Wisconsin lost 10% of its dairy farmers. So there's been real pain. And so now there's an agreement for China to buy our products, to buy our agricultural goods. It's unclear whether that's more than what they used to buy. Having dealt with agricultural negotiations when I was at commerce, you know, those are hard and hard to actually see the results.

So the proof is going to be in the pudding as to whether they actually live up to what they said they're going to do. I think, to me, the challenge is, we haven't really actually solved the problems with China. We've just put them off.

ANDY SERWER: I mean, will we ever be able to solve them, Penny? And would TPP have been the way to do that?

PENNY PRITZKER: Well, I think that the relationship with China is always a work in progress, and I think it's something you always have to work on. But I think there are fundamental structural issues that, if you're going to have the pain of tariffs, if you're going to have the disruption to both economies, which is affecting individuals and the populations in both countries, then you want to see bigger progress.

TPP was really meant to create a counterbalance and to create a trading group of 40% of the world's economy or 60% of the world's economy that was working with high standards as it related to the environment, labor, digital policy.

And it's just a shame that we've walked away from it. I think it's universally believed that that was a mistake and that history will prove that that was a mistake, both from an opportunity standpoint, an economic opportunity, but also from the standpoint of creating a balance towards the presence of China in the Asia-Pacific region.

ANDY SERWER: Let's talk about the North American trade situation, USMCA. A lot of Democrats seem to be on board with that now and seem to think that it actually is an improvement on NAFTA. What's your position?

PENNY PRITZKER: Well, I think Nancy Pelosi did a heck of a job of really coming in and saying, OK, the deal that you've got is not good enough, and that we've really got to see reform in Mexico in terms of the way that labor and labor unions function, because it's very different than the United States.

And to also make sure that the environmental standards are not only in the law, but are also enforceable. And so working on-- and I was close to those conversations-- really improved the deal and brought it over the finish line so that you could have the Democratic support that you're seeing today.

The other thing that's important about this deal, which is a significant part of what was in TPP, are the digital provisions. Remember, NAFTA was before we had the ubiquitous internet, let alone 5G. And it's really important that there are digital standards brought into the relationship.

But I think it's extremely important. Remember, Mexico and Canada, they're our allies. You wouldn't know that from the language that's been going on for the last couple of years. It's important that we have, you know, these countries are our largest trading partners, and it's important that that functions well. And so I'm excited that USMCA looks like it's going to move forward.

ANDY SERWER: So lately you've been working with a company that I mentioned, PSP Capital Partners. Tell us about what you're doing there.

PENNY PRITZKER: Well, we have a portfolio of businesses, mostly in business and technology services, also in housing, and then in industrials. And, you know, what we're doing is we tend to try and have a significant position in the companies that we're involved in and help them grow. Everything from advertising technology and performance marketing to contracts lifecycle management, to we're active with a company called House Canary, terms of valuing homes in the United States and facilitating mortgage origination, particularly with our banking partners.

Or contract lifecycle management with a company called Icertis, that is really working with our largest businesses around the world to manage their contracts. And then we're in the performance marketing business with a company called 3Q where we work to help companies really improve their engagement with their customer base and grow their customer base.

ANDY SERWER: So is PSP an investment company or is a private equity? Do you own-- is it a portfolio of companies?

PENNY PRITZKER: We're investors in businesses for the long haul. We're not a fund or a private equity firm. We're investing for our own account. We work in both control and in partnerships with others. And we think of ourselves-- we like to think of ourselves as business builders. We like to work with management teams and help them really grow the businesses that they've created.

ANDY SERWER: And is economic equality and inclusion sort of a part of that MO of all of your businesses, or is that something else you're interested in? Is it combined?

PENNY PRITZKER: Well, Andy, you know it's a passion for me.

ANDY SERWER: I do.

PENNY PRITZKER: And something that I've been involved in for, you know, decades plus. And for me, it's not only what we try to do in our businesses, but it's also, in Chicago, for example, and throughout the United States, something I've been really promoting. What are the policies that we can put in place, both locally and across the country that can promote greater investment in our people.

Because really, what do we know? We know that with the digitization of our economy and of our world, that we all have to keep reskilling ourselves. We're no longer-- it's no longer like, you go to school, you fill up your gas tank as Richard Haass would say, and then you use the gas throughout your lifetime. You have to keep topping off your tank, adding to what you know. All of us have to keep growing.

But that needs to be more and more so, particularly for younger generations as the technology is changing so quickly.

ANDY SERWER: And you talked about economic inequality with regard to the situation in the United States. Some people have said, actually, maybe things are turning back a little bit in terms of wage growth. But still, the gap is as wide as it's ever been for many, many decades. How do we get out of this mess, Penny?

PENNY PRITZKER: Well, there's a number of things that we need to do. First of all, I think we need an economic competitiveness strategy for the United States, and that needs to begin with investing in our people. We need to create incentives for lifelong learning.

I've called for a greater investment in our community colleges, which are really an affordable way for people to get training. We need to make certification and getting additional certifications easier. We ought to incent companies to invest. There ought to be tax benefits for investing in your people. We get all kinds of tax benefits for investing in capital, but we don't really get that for investing in our people.

First of all, if we did that, it would not only be an incentive, but also, it would force all of us to report what we're doing, and we'd have a greater understanding of what is everyone doing to help people get ahead. So I think there's a number of things. I've worked with governors across the country to try and offer up different opportunities and policies.

I worked with the Council on Foreign Relations to put out a task force report last year of policies that governors and local governments could adopt, a menu of ideas that could be adopted to help promote inclusive growth in communities.

In Chicago we're doing something in the technology area. We're really trying to-- our companies really have a challenge to get enough skilled labor, and there's a lot of vacant jobs. And what we're trying to do is get our universities, our community colleges, and our high schools to all work together so that we're creating a pipeline, an easy path for our young people to follow to be qualified for those open jobs.

ANDY SERWER: I mean, you talk about all these job openings that are unfilled. And I sometimes wonder, Penny, are employers simply not paying people enough money? I mean, don't we need to raise wages? After all, the minimum wage, the federal minimum wage, hasn't been raised in years and years. And yet, business people say that would kill jobs. What's your take on all that?

PENNY PRITZKER: Well I think that, you know, the minimum wage in many cities and localities has been raised. And we do see wages rising. Nowhere near the way wealth is rising in our country, and that's a challenge. But we also need to make-- you know, I sit on the board of Microsoft. I know we're challenged to find enough tech talent to fill the opportunities that we've got, and it's not about pay. We're willing to pay. It's really about talent availability.

The same is true for-- I see it in Chicago. Whether you're Allstate, or you're McDonald's, or you're a startup technology company, we just have a ton of open technology jobs. And so we need to make it easier for a young person to get themselves prepared for those opportunities.

Frankly, we also need to deal with our immigration policy. We're allowing Canada to build up a real technology advantage because of their immigration policy. Our immigration policy needs to address the 11 million undocumented folks in our country, needs to address the DACA kids, but also needs to address the skills gap that we're seeing, and the need for additional talent.

You know, Vice President Biden has called for, as part of economic development, that you're able to petition for additional visas for folks that can fill a gap that's not being filled in your community. That's a really interesting idea. All of which creates economic momentum for everyone.

ANDY SERWER: There's a number of things to pick up on there. I want to start with Microsoft, you being on the board. What is it like to be in that boardroom with Satya Nadella, you know, one of these giant tech companies that's firing on all cylinders, driving our economy forward right now?

PENNY PRITZKER: Well, what I love about Microsoft is its culture, and that starts with Satya. He really has set a tone, he and Brad. And there's both a very ambitious agenda for Microsoft, but there's also humility about the fact we're in a very competitive business-- businesses, not just one, but multiple businesses.

And it's a privilege to sit there and to try and be of assistance to that management team. And it's a phenomenal team, and I think Satya would start by saying his success is a product not only of vision, but also of having a really extraordinary team around him.

ANDY SERWER: And you mentioned Chicago. You are a Chicagoan. The City's had troubles for years, Penny. And, you know, Rahm Emanuel's tried to deal with it. There's still problems. President Trump points to them. What's going on with Chicago and how can those problems be addressed and fixed?

PENNY PRITZKER: Well, I'm optimistic about Chicago. I thought Rahm was a terrific mayor, and we have a new-- Lori Lightfoot is a wonderful new mayor. She has all of us focused on the communities and the neighborhoods, and making sure that we not only have a strong downtown, but that all neighborhoods are benefiting from the strength of the assets that we have in Chicago.

One of the interesting projects that I'm working on right now is something called P33 in Chicago. This is where our private sector has come together and really said, what do we need to do as a city to be punching at our weight as a tech town.

We have the universities. We have the deep technology innovation, whether it's in life sciences, or in quantum, or in other areas. We have two Department of Energy labs. We've got-- we produce number two number of computer science graduates in the United States in Illinois.

And so what can we do to really take advantage of all of these assets? And we're working on a number of initiatives, commercializing our deep tech in quantum and life sciences. We have initiatives where our businesses have come together to make our pipeline of training much easier for everyone in our city. All of our communities.

We've got efforts-- we have gaps in funding. We need more growth capital. We also need more deep tech capital. We've assessed where those gaps are, and so we're focused on that. And we have to tell our story. We not only have to commercialize these things, but we have to go out and tell the story of our successes.

And finally, we have a real authentic right to win in data analytics, and we need to capitalize on that. So there's a lot going on in Chicago. As you can tell, I'm a booster and a believer. And while we, like every city, have our challenges, what's wonderful about Chicago is our communities come together with our government to try and address those challenges.

ANDY SERWER: And you talked about the state, Illinois.

PENNY PRITZKER: The state, well, I'm partial to the state and our governor, so.

ANDY SERWER: Yeah, governor is your brother, JB. And how's he doing? I mean, it's a tough job as well, right?

PENNY PRITZKER: Well, it's a tough job. But you know what? He's doing a terrific job. He's really working to turn the finances of the state around and change the narrative, and I'm really proud of his work.

ANDY SERWER: So I want to ask you about your family, the Pritzker family, Hyatt Hotels, and then diversified into all manner of businesses. You obviously grew up in the business. But as a girl, it was maybe harder for you to become a part of the business. Can you talk about that a little bit?

PENNY PRITZKER: Well, when I started, which is so many decades ago. I'm not willing to admit how long ago. There weren't women in leadership roles in our family or in our organizations. A lot has changed, and I like to think I've had some impact on that.

And I think that one of the things that I believe in is trying to not only pave a way, but really help those behind you to do better and to go further. And I think that diversity is something that I've come to really believe in. I was fortunate enough to work in the Obama administration, and that was really the first time in my life that I experienced true diversity in the workplace. And I really got to see firsthand and experience firsthand how the conversation is better, how the discussion is broader, how the ideas are more fully formed because of the diversity in the room.

And that's something that I continue to try to bring every day to the work I do, not only civically, but especially also in our businesses. And I think that that's something, until you've experienced that, it's hard to really appreciate what you're missing.

ANDY SERWER: So should companies be mandated, say, the way in Europe boards have to have representation of a certain amount of women? Do you think we should do that in the United States?

PENNY PRITZKER: Well, it's hard to mandate the makeup of a team. But what we do know is the data tells you, and look, any good CEO, or leader, or board member knows you have to follow the data. Data tells you that diverse organizations do better. So we ought to do it by our own volition, because we know we'll be better and we know the outcomes will be better.

So I don't know if you have to mandate it or not, but I think it's extremely important, and it requires a massive cultural change. It requires, also, leaders to insist that you work harder in an organization to make sure your team is diverse, to not accept the, oh, I couldn't find the diverse candidate.

And diversity means all kinds of diversity. Diversity of thought as well as diversity of gender, and background, and experience, or religion, or ethnicity.

ANDY SERWER: You mentioned Vice President Biden, and my understanding is you've endorsed him.

PENNY PRITZKER: Yes.

ANDY SERWER: So that's maybe early, some people would say. But if you've got your guy, I guess you're going to go with him. There is a lot of months ahead. How do you see this playing out, Penny?

PENNY PRITZKER: Well, I really think that the vice president is the person with the integrity and the experience to deal with the situation that our country faces today. I do a lot of travel around the world. I stayed close to my peers when I was in government, both in the United States and outside the United States.

And right now, you know, many would say to me, you know, the United States is off the playing field, or we don't think about what the United States is going to react if we take action whereas we used to. And I think the vice president has the experience both in domestic policy and politics as well as globally, the respect, in order to put the United States rightfully in the place it ought to be, which is as a leader. Whether it's a leader in our economic policy, a leader in terms of our attitude towards multilateralism, or a leader in terms of the stature of the United States around the world, which I think all of which are extraordinarily important.

ANDY SERWER: The Democratic Party is split to a degree. How do you see that being reconciled? In other words, say Biden gets the nomination. How do you bring in the Warren and Sanders supporters?

PENNY PRITZKER: Well, I think that you're seeing an agreement on something, which is what we started to talk about, which is we don't have enough inclusive prosperity, right? We don't-- opportunity is not equivalent for everyone in our country. And then what you're seeing is a variety of ways to address it, whether it's Andrew Yang with universal basic income, or it's Elizabeth Warren with a wealth tax, or it's the vice president who's saying, let's not blow up our economic system, but instead let's make it work for everyone.

And I happen to agree that his policies, I think, are more executable and more likely to be successful, and are enforceable. I think some of the proposals are not constitutional and not enforceable. And so I think that that's-- I think the conversation is good. But at the end of the day, unity is going to become really important.

ANDY SERWER: I mean, have Sanders and Warren gone too far criticizing billionaires, and were you suggesting, maybe, some of their proposals in terms of that wealth tax is something that might not be not only not palatable, but not something that's legal?

PENNY PRITZKER: Well, I think that-- I'm not in favor of the wealth tax, but I do believe that folks like me should pay more in taxes. But I think the structure should be different. I think that, as I said, I think that what folks are trying to address is the fact that we have so much inequality in our country.

And how do we make, how do we create the situation where there's opportunity for everyone? And one of the opportunities is we have such-- if we can lay down a digital infrastructure that is equally accessible by everyone, then credentialing ought to be equally accessible, which means opportunity ought to become greater for more people in our country.

So there's many ways to address this challenge. I think the dialogue is constructive, as long as it stays not personal, but rather, it's about policy. We benefit from those kind of conversations. That's what a democracy is about.

ANDY SERWER: And you obviously feel good about the vice president's chances, not only to get the nomination, but to win the presidency?

PENNY PRITZKER: I think he is the man to win the presidency.

ANDY SERWER: And speaking of Democrats, you're friendly with the Obamas. How are they doing?

PENNY PRITZKER: They're doing great. They're doing very, very well. Family's doing well. The president's finishing his book. They're about to start construction on the Presidential Center in Chicago. We're very excited to have that in Chicago. So they're doing very well.

ANDY SERWER: From your position, with your portfolio of companies at PSP and your former purview as Commerce Secretary, how do you think the economy is doing, and how long can this expansion last?

PENNY PRITZKER: Well, there's the US economy and there's the global economy. And I always say, you can't talk about-- you have to be specific, if you will. I think the US is doing OK. I mean, we'll probably be around 2% growth. But we have real pockets of challenge, as we talked about a little bit earlier.

Manufacturing is really still in a recession. Capital investment is not where it needs to be. The good news is, inflation seems to be in check. Wages seem to be rising some, but we need to do more.

ANDY SERWER: And do the tech companies-- are you concerned about not only their market valuations, but the power that Microsoft and Facebook, Amazon, Google, et cetera have on our society?

PENNY PRITZKER: Well, I think that, you know, it's what do you do with the opportunity is what's important. And fundamentally, I think the biggest challenge that any tech company faces, large and small, is one of trust. How do you develop a relationship not only with government, not only with communities, but with individuals of trust?

And that's about, what are your policies around privacy, what is your attitude towards ethics. Let's say ethics and AI or ethics and facial recognition. How are you trying to address the big challenges that we have around cybersecurity? I think the government in the United States is-- we're too federated in terms of our policy. We've been unsuccessful at creating a national standard, let's say, for privacy. And I think privacy is a human right. I think it's something extremely important that we need to protect in our country and around the world.

And what's happening, what I see globally is, you're seeing policy, technology policy and digital policy, really becoming separated. Different in Europe than it is in China than it is in India than it is in the United States. And that's a challenge. That's a challenge, because the promise of the internet is that we're all connected. But what's at the core of all that? Trust.

How do we have trust? Who has control of your information? How do we deal with privacy? What happens so that you can have cyber security? How do we ensure that our key systems are not vulnerable to disruption by other governments?

This is a real challenge that faces all of us, and I think that the United States is-- that we are all struggling, because we have states produce policy, but we don't have a national policy.

ANDY SERWER: Right. And ironically, California has sort of taken the lead with a GDPR-like set of regulations kind of mirroring what's going on in Europe. And I say ironically, because that's where these companies, many of them, are, and yet they're going forward. Maybe it's not ironic. Maybe they understand the challenges better than other states. But to your point, it should be national rather than state by state, right?

PENNY PRITZKER: Right. It's very difficult, then, to comply state by state. And I think that inures not to the benefit of the small company, because the large company will have the resources to deal with it. But if I'm this small innovative upstart, Make it easier for me. You see in Europe, they're trying to have a more uniform digital policy across Europe. That's in order to spur innovation. We shouldn't tamper innovation.

ANDY SERWER: And finally, Penny, I want to ask you about what you see your legacy being as you look backwards and forwards in your career.

PENNY PRITZKER: Oh my goodness. That's a big question. You know, my husband and I try and get up every day and try and support the creation of greater opportunity for people in our country, and particularly in our community. And that's where we focus our energies. And, you know, we're trying to do our part.

ANDY SERWER: All right. Penny Pritzker, thank you so much for your time.

PENNY PRITZKER: Thank you.

ANDY SERWER: You've been watching Influencers. I'm Andy Serwer. We'll see you next time.