Happy Scribe Logo

Transcript

Proofread by 0 readers
[00:00:01]

This is Nick, this is Jack, and this is Snax Daily, it is Tuesday, September 1st. Goodness gracious. It's already September 1st to September 1st, summer without tan lines for us. A brutal situation, but we're going to open this up with the best one yet, TBR.

[00:00:16]

Why, Jack, what have we got for the first story going on over here? Corporate generosity. Toms gives a pair of shoes for each sale. Warby Parker donates a pair of frames for each.

[00:00:25]

Yeah, lemonade is donating to at a rate of 17 times more than the average publicly traded corporation. Very generous investors, though, are annoyed since lemonade is unprofitable. Second story, Jack, what do we got? Do you get the Netflix password from a friend, from a parent or from a simple trick question? These days, Netflix just offered up its content for free, breaking the freemium model, but it didn't even have one. I think it's called Netflix Dotcom Watch Free.

[00:00:51]

Sounds too good to be your third and final story, Jack, where we got United Airlines just eliminated the most hated fee of all time for ever, the two hundred dollars change fee, a.k.a. a purebred.

[00:01:02]

One hundred percent beautiful. You want to hug it? Profit Buy American Kennel Club approved. But before we jump into all that good stuff, snackers. Happy boy.

[00:01:13]

Tuesday to you and a special happy boy Tuesday to Warren Buffett, whose 90th birthday I think was yesterday. Now, we don't know if he's a snacker, but we also don't know he's not a snacker either. We did notice that Bill Gates made Warren Buffett an Oreo cake for his birthday. Very nice, Bill. And Bill Gates, who's a millennial at heart, made him an awkwardly well produced video on how he baked the Oreo. If he got the money, you spend it on the production.

[00:01:39]

Now, the real story here is Warren Buffett's investing strategy, which gets all the attention.

[00:01:44]

There's like 20 books written about how Warren Buffett invests. Everyone else talks about fundamental analysis. But, Jack, I notice a different strategy going on with Warren Buffett. He doesn't talk about he literally invests with his gut snackers. We're talking about a 90 year old man who drinks six Cokes a day and owns 10 percent of Coca Cola. The guy bought the entire company.

[00:02:04]

That makes See's Candy because he loves See's. Candy splurged half a billion dollars on Dairy Queen back in 1997 because he's got a soft spot for the soft serve.

[00:02:13]

I think his nickname in college was the Dairy Queen, actually the right dessert for the right Burger King meal, which he also happened to. And there's a reason Bill Gates made him a cake out of Oreos because he's a major shareholder in Mondelez, the company that owns Oreo snackers, alternative investing strategy behind Berkshire Hathaway.

[00:02:33]

We've identified it.

[00:02:34]

Don't go with your gut, literally. Follow your gut.

[00:02:37]

Let's hit our three stories you tuned in this next day. Beast spoke to the lawyers and we got to get some legal out of the way about the way food is candy. They don't reflect the views of her family. It's all informational. Just so you know, we're not recommending any securities. Nope. It's not a research report or investment advice, not an offer. A sale of a security buy nexus. Digestible Business News for use by Nancy Pelosi, member Fagbug ABC.

[00:03:06]

For our first story, the most purebred profit puppy of all time just got eliminated. That's right. United Airlines just ended their two hundred dollars change fee permanently, permanently. Now, the lawyers, they bust out, they're favored here. They wanted to go with in perpetuity, in perpetuity is how lawyers like to say forever. But they got overruled by the CEO who dropped the F bomb and said they're gone forever, forever until we change policy against the terms and conditions.

[00:03:33]

Often I thought in Puerto Rico must be eighteen over overall terms comply.

[00:03:36]

I would not be shocked. Naggers, if they bring this feedback in like five years. But in the meantime, happy September. Summer travel ends with Labor Day, right? And usually the summer is blockbuster season for airlines. So Jack and I are looking back on this. How are the last three months? Well, air travel was down 70 percent and the airlines faced a revenue triple whammy.

[00:03:57]

Jack, you don't want one with me. You definitely don't want to. Three is unheard of. Well, first of all, anyone who's been on an airplane recently knows that flights are like 30 percent full at most. They're not going people. So then the airlines have to drop the price in those tickets to even get on the airplane. And they cut the number of flights already by forty five percent and still can't fill the airplanes. Now, we know the airlines are have that feeling that we have all felt before you show up two hours early because they tell you to the it you're in TSA for an hour, not bad.

[00:04:25]

Then the flight gets delayed three hours kind of bad, then you find us to borrow the pizza's terrible. No sauce, then three more hours a delay and then at one thirty and the flights can't. OK. Oh, good luck finding a hotel room. You end up sleeping in a mattress in Newburgh. Now, the usual historic response by airlines during an economic downturn like we're facing right now. You create mandatory revenues because you're not getting regular revenues, mandatory revenues.

[00:04:49]

In other words, fees that travelers have to pay, checked bag fees, change fees. Those are the biggest culprits we've seen up. And these fees are purebred profit puppies because there's no. Costs related to those revenues, they become pure profit for the company. We're talking Westminster blue metal situation now.

[00:05:07]

It's different from like a ticket sale for a flight from JFK to San Francisco. There are costs associated with those revenues like fuel, plane maintenance, pilot salaries, etc. So you got all that good stuff.

[00:05:18]

But fees have risen by five times in the last decade, and now they're 15 percent of all airline sales and they are pure profit Puppis. That goes straight to the bottom line.

[00:05:27]

But what Jack and I find fascinating is that during this downturn united those that fees aren't actually creating revenue, they're destroying it. Say you're considering a Labor Day weekend trip to Miami. You found in Airbnb that looks super covid safe, very sanitized place. It's cute. It's by the water. They have their own towelettes. But you think of yourself with covid so volatile, there could be some new shelter in place that makes me cancel my weekend. Boom.

[00:05:51]

You get down there and they're saying, like New Yorkers have to stay underground in a hut for six weeks before they can emerge. So if you're reluctant to book this trip to Miami, you're going to be even more reluctant when you see the two hundred dollar change fee you'll have to pay if the trip does get cancer, plus these change fees at an entirely new health risk. Because if you booked the Miami trip and feel sick, are you going to worry about the change fee?

[00:06:12]

You'll end up going anyway because you hate the change fee so much you just don't want to pay. So United just ended their two hundred dollars change fee forever to encourage you to book travel anywhere, anytime.

[00:06:24]

There is fine print as always with airlines, they will still have change fees on international flights. And like this super basic fare that like doesn't even give you a bathroom break. So, Jack, what's the takeaway for our buddies over at United? Here's the thing about oligopolies. Once one airline drops fees, they all have to drop fees, snackers, a monopoly. You got one company that dominates an oligopoly. You got a few companies that dominate, kind of like a monopoly in the United States.

[00:06:51]

We have four airlines controlling 80 percent of the flight market. We got ourselves an oligopoly. We got an oligopoly.

[00:06:57]

Now, notice, though, that most airlines kind of feel similar, similar miles program, similar seat reclining, similar peanut snacks.

[00:07:04]

Now, besides Southwest, which is a little different, Nick, they all feel similar because they all act exactly the same. They even charge the exact same two hundred dollars change fee.

[00:07:14]

And in an oligopoly, they can't afford to let one rival snag the advantage over another airline.

[00:07:20]

But they can also maintain an advantage over flyers if they act together in coordination. Now, technically, that's collusion, which is technically illegal and anti-competitive practices. But the airlines have had a don't ask, don't tell and none of us will ever lower fees. So we'll all win policy. It's actually kind of charming. So Jack and I were expecting Delta and American Airlines to begrudgingly, like, make the same move as United just did. We were going to predict it.

[00:07:45]

But then minutes before a recording like three minutes ago, Delta did drop their fee, just like we expected them to.

[00:07:52]

And then American did, too, because oligopolies, they fly together and they dropped their change fees together. For our second story, Netflix is making an unprecedented move. It's giving away its top movies and shows for free in order to find its next one hundred million users.

[00:08:09]

In a world where you don't have to ask a buddy for a password, it's actually brutal when your buddy whose password you have you haven't talked to in like three months, we've been there and then you need the password real bad. How long do you go into the conversation before mentioning you're about to get a password reset email? Yeah, I could explain.

[00:08:27]

Which brings us to free Netflix. Netflix is offering ten movies and TV shows, no subscription, no strings attached at Netflix, dotcom watch Dash for a Costco free sample and all three except instead of a cracker. It is a prime rib steak. Yeah, they're not showing you some five hours Serbian documentary about Serbian documentaries. They're giving you their top shelf content. We're talking stranger things, Grace and Frankie, our planet, the two popes, our planet, which is the planet Earth knockoff with the same British guy Adebayo Sue these guys.

[00:09:02]

Now there's a catch here. You can only check out these shows for free if you're watching on a web browser or through an Android smartphone. When we said there were no strings attached, there was a single string. This was it.

[00:09:14]

You're also not allowed to do this through your iPhone or through a smart TV or through a fire stick or on incognito mode.

[00:09:22]

Now, more on those in a bit. But at first, this kind of feels like the classic freemium model that the tech industry loves. We've all experienced this. You download Spotify and you can listen for free if you listen to ads to or you can upgrade and get the premium subscription ones free and you hear ads, one you pay a subscription for.

[00:09:41]

But really, this Netflix thing with the free movies, it's actually a marketing website for customers who are concerned about price. The only ad you're experiencing is the content itself and a call to action to actually subscribe to Netflix in the future, if you like the stuff.

[00:09:55]

Right. So this isn't some revenue generated through the ads from Netflix, which is. Why we think they're targeting emerging markets like Brazil or India, where people's incomes are lower now, typically with the sign up for one free month of Netflix, he got to, like, put in the credit card info and expect you're going to get charged in a few.

[00:10:13]

But with this easy website, there's no marking your calendar and being stressed out about whether you actually canceled it. And you might see a surprise 14 dollar Netflix fee on your credit and then you get to get in touch with customer service. Instead, you just watch in the 30 second Netflix at the beginning of this awesome show and then you get to actually enjoy the show.

[00:10:31]

Now, some of you might be like, why can't I try this out on my iOS device? Because Netflix figures if you got an iPhone, you probably can afford the Netflix subscription. Yeah, they're not just given the freebie to anybody. So, Jack, what's the takeaway for our buddies over at Netflix? Netflix needs new tools to find its next one hundred million users snackers. Last quarter, Netflix added 10 million new subscribers crushed expectations. Next quarter, they're projecting just two point five million, a fraction of before.

[00:10:59]

Now they rely like another global keep everyone at home pandemic event to keep making you a subscriber. Yeah, by the way, Disney plus the Peacock Apple TV plus Majelis all competition that didn't exist for Netflix one year ago.

[00:11:14]

So going from like one hundred and ninety three million subscribers, which is the present count of Netflix Nation to three hundred million Netflix subscribers, which is where Netflix wants to be, requires an unprecedented move and some fresh new tactics like letting people watch for free with no credit card attached, something Netflix has never done.

[00:11:33]

For our third and final story, Lemonade is a broke company that still donates to charity. And that's exactly why it thinks millennials and GenZE will love it. We're talking the pink branded online only rent home insurance company. Looks like a bunch of grapefruit all in the app. You can pay 15 bucks a month and you're covered if your home gets burglarized or like explodes or something.

[00:11:54]

They got eight hundred and fourteen thousand customers as of June 30th, which is like nearly double from the previous year. And they IPO it on July 1st, becoming just the third ever B Corporation to go public. B like banana. Let's about the dicks are being a B Corp is why Lemonade donated two percent of its revenue to charities. That's Knackers C Corp C are about ninety nine percent of the companies that we discuss on snacks as in Charlie.

[00:12:19]

But B co-ops are like they're like younger sibling who has a hand-me-down Subaru because they still have a fish concert poster on their bedroom wall from Madison Square Garden and they're 40 years old. Someone should maybe to remove that famous snackers because Caird just as much about purpose as they do profess to be korps are literally and legally obligated to do the right thing. Lockette for them to see.

[00:12:42]

And the news comes from the Wall Street Journal yesterday, which calculated that lemonade donates 17 times higher a percentage of their revenues than the average big corporation does. That is wild 17 times more than your average corporation. Now, that's not surprising because this is a big corporation which tries to do good for the world. I notice it is awkward because they have never made a profit. I don't want to tell you how to live your life lemonade that maybe cut back on the charitable donations since you're making horrible losses each year.

[00:13:12]

Yeah, I could I can give investment advice. You will look at the giving all this money away situation. Now, this story brings us back to marketing to one. It's one step above marketing one on one. This is like a slight tweak in the syllabus. What product attribute is most important to consumers? That is the question now for the product of renters, insurance is the most important attribute price. Is it generosity of coverage? Should you actually have to make a claim?

[00:13:38]

Is it convenience? It's not a particularly sexy industry, but those three are the only three attributes that all the insurance companies happen to be thinking about. Now, lemonade's like time out.

[00:13:48]

What about sustainability and social impact of the company? Those are just as important. Their calculation here is that charitable giving loses the money, but only in the short term. In the long term, it's going to win love from young people who become customers of lemonade and make them less likely to lie about their insurance claims. Very true. So, Jack, what's the takeaway for our buddies over lemonade? This is charity as marketing snackers. You got one million dollars and your lemonade chief marketing officer, you could spend that on like a twenty seconds of a Super Bowl ad.

[00:14:20]

That's what all the other insurance companies are doing every Sunday during the NFL.

[00:14:24]

Or you could donate a million dollars to charity instead and get people to praise you for being so.

[00:14:30]

Wolke, 70 percent of Lemonade's customers so far are under thirty five years old. They're young and they're first time home buyers or renters. We're talking about a generation of customers that cares about purpose and lemonade targets this generation of customers with these charitable donations.

[00:14:46]

We appreciate it. Investors don't seem to appreciate it right now. Investors don't love the strategy. They're annoyed. And the stock is down twenty nine percent since the July first IPO. Wall Street's watching to see if social promise can win. Customer box weather charity can successfully become marketing, Jack, can you whip up the takeaways for us over there?

[00:15:06]

The airline stocks all fell by three to four percent yesterday because they had to finally put down their finest profit change. Fees are gone across the industry because like ducks, airlines fly together.

[00:15:19]

Second takeaway, Jack, Netflix has a free sample option, which we think is targeting lower income consumers. In the next 100 million, Netflix is going to require some new strategies and some new offerings for our third and final story.

[00:15:30]

Lemonade is donating to charity, even though it really can't afford to do so. They're betting that consumers will buy insurance from a company that has values.

[00:15:39]

And a few posters now time for a back. This one tweeted in by Jeremy Waterbury in lovely New Palestine, Indiana.

[00:15:46]

NICOLAAS Last week we covered the company Ball Corporation, which manufactures the aluminum cans. That has a global supply shortage right now. Yeah, they kind of missed out in this case because everyone's consuming stuff in cans and they were not ready.

[00:15:58]

Turns out that company was created by the five ball brothers who are also the same people behind Ball State University in Indiana, Lucas, William, Edmond, Frank, George sounds like a lame law firm.

[00:16:11]

Universities and aluminum can companies. That's what the Ball Brothers do.

[00:16:16]

But before we go snackers, Nico and Marijana engaged in Monterrey, Mexico. Congratulations. Happy anniversary to Lee-Anne and Nick in Boston, Mass. Michael and Monica covid style myCar wedding they had in Newport Beach, California.

[00:16:29]

Happy anniversary to Robert and Sandra in Stockton, California. Enrolled in Shauntay, a baby girl. Benton, Arkansas, newest young snacker. Happy back to school to Aria Greenberg in Teaneck, New Jersey. And same to Hannah Adam in Kansas, the state Charlotte Aurilia Sollar, happy coming into this world. And congratulations to Joe Bree in Sarasota, Florida. Happy birthday to Fareeda in Lagos, Nigeria, and Rachel Zane in Brooklyn, New York. And A and Muscat, Oman.

[00:16:57]

And Sean Payne and Oklahoma and Kendrick Courtney turning thirty one in Jackson, Mississippi. Michelle Hearn's in Stamford, Connecticut. Penny Chen in Naperville, Illinois. And so so in Belleci, George and Kevin, two in lovely Brevard, North Carolina. Snackers, you all look fantastic. The text. Now, if you got buddies warrants that, can you please do us a favor and ask them YHWH we got to grow snacks nation. Have you had your snacks daily.

[00:17:24]

Nick. I'll see you again tomorrow. Can't wait if you know. Yeah. No. This is Jack Ioane, stock of Spotify, the Robinhood Snacks podcast you just heard reflects the opinions of only the hosts who are associated persons of Robin Hood Financial LLC and does not reflect the views of Robin Hood Markets Inc or any of its subsidiaries or affiliates. The podcast is for informational purposes only and is not intended to serve as a recommendation to buy or sell any security and is not an offer or sale of a security.

[00:17:55]

The podcast is also not a research report and is not intended to serve as the basis of any investment decision. Robin Hood Financial LLC member, FINRA, SIPC.