Episode 38, The Atomic Number of strontium, also the brand name of the testosterone in my why am on testosterone?

Because I am egotistical. Go, go, go.

Welcome to the 30th episode of the show and today's episode, we speak with Nick Molner, the co-founder and CEO of After Pay The Australian FinTech Company. You've probably seen my online shopping. Nick is a serial entrepreneur with extensive experience in online retail and after is arguably one of the fastest growing fintech companies in the world. We discuss the business model competition and Nick's experience as an entrepreneur. By the way, this company twenty seven billion dollar market cap hit a low of nine bucks and is now up towards a 100 two words for his second ching.

OK, what's happening? Let's get back to the world of e-commerce. All the numbers are coming in regarding Black Friday and Cyber Monday, which took place this past week. According to Adobe Analytics, consumers spent nine billion on US retail sites on Black Friday. That's up 22 percent from the record set in twenty nineteen of seven point four billion. Adobe Analytics also reported that consumers spent around 11 billion on Cyber Monday. That's up 15 percent year on year over in the land of Shopify or the land of nice IP Canada, the company hit a record two and a half billion in Black Friday sales globally.

That's an increase of 75 percent from sales in twenty nineteen. What does all this mean? You already know what I'm about to say. covid-19 is an accelerant. Online sales grew as much in eight weeks as they had in the decade before the pandemic. And of all the companies, which company seems to have been built for a pandemic, you guessed it. The Seattle behemoth Amazon. Karen Weiser of the New York Times wrote a piece detailing how the company's hiring spree is equal to wartime.

Like hiring, the e-commerce firm employs one point two million people. I think that's the second biggest employer in the world, just behind Wal-Mart or substantially behind Wal-Mart, I should say. And by the way, it took them 25 years to get to half a million employees and then just a year to get to a million, hiring about 4500 people a day. What else is causing the acceleration of e-commerce, your mobile device? Another key finding from Adobe is that shopping via smartphones has skyrocketed.

Twenty eight billion more than last year will be spent using smartphones and 42 percent of online shopping this holiday season will be done from a mobile that's up fifty five percent and going back to Shopify, back to Shopify, back to Canada, back to the Denyse people. The company reported that mobile sales on Black Friday were 67 percent, compared to thirty three percent of sales made on a desktop. Think about that. Two thirds on mobile, one third on desktop.

Mind blown. We've seen a few developments in the smartphone, online shopping space. Instagram announced shops back in May where users can browse a company's products and make purchases. More recently, just in the past few weeks, Instagram redesigned its homepage and replaced the activity tab with shops.

Now, who owns Instagram? You guessed it, Facebook. Let's see what's happening over there. The Wall Street Journal reported that Facebook is acquiring customer with a K a customer relationship management startup for a billion dollars. This is an effort to improve customer support done through Facebook's messaging services like WhatsApp and Messenger. By the way, what did they also carve? A one billion Instagram, which by most measures is probably worth about one hundred billion, if not more.

The company said. More than seventy five million people contact businesses using WhatsApp every day. That's right. That's right. One hundred seventy five million people contacting businesses via WhatsApp. Facebook made this announcement despite the fact that the FTC, the Federal Trade Commission, is likely to sue the company for anti-competitive behaviour with its acquisition of Instagram or because of its acquisition of Instagram and WhatsApp. Facebook's market cap is around 820 billion and has a history of dominating the space it occupies through acquisition.

So what's going on here?

How do we wrap this? How do we put a how do we put a bow on this? How do we put a collar around this? Because we're calling e-commerce. What is going on here? The way to think about the way to break it down, the way to get the fallen, when the way to distill it down to, I don't know, strontium is to think about it through the lens of one word. We've been talking about acceleration.

OK, you can wrap your heads around the concept that we're pulling the future forward. Take every trend in your professional and your personal life. Take the slope of that curve about ten years and ask yourself, are you there now? And how would that impact your behavior in investments? The other key word that helps encapsulate our thinking helps us figure out how to allocate our most precious capital as our human capital, our time. Dispersion, simply put, everything about mobile phones.

What we've done is we have dispersed data, we've dispersed media, we have dispersed movies and content to our mobile phone and to a lesser extent, to our TV screen. This would be Netflix. We have dispersed retail to first our desktops and now our mobile to the fact that we dispersed two thirds of online retail to our mobile phones. For us, it was dispersed from the store to maybe home delivery or click and collect, and it was dispersed to the desktop.

And now to mobile. What's next? Probably a form of A.I. where you don't even it kind of skips all of that and just disperses right to the fulfillment center. What else what else is happening under the great dispersion? We are going to disperse, if you will, three trillion dollars in health care. We're going to disperse 750 billion dollars in education. Think about the biggest sectors in the world. And what we see through the pandemic is a level of centrifugal force that is taking the way we register and create value and shareholder value.

And it's being spun out closer to the consumer. Or specifically, specifically, we're taking value add in businesses and we're dispersing them to the home. Whether it's someone showing up at my house every Thursday morning and putting a cotton swab in my nose in my kitchen, or the fact that I'm about to see Wonderwoman 1984 on December 21st as it's been dispersed from the movie theater to HBO. Max, think about your business. Think about the traditional channels of distribution.

Think about the traditional channels and venues where that value is recognized, and then spin this center such that the centrifugal force takes the value add of your core business, of your core product, and spends it closer to the ultimate end user dispersion. Stay with us. We'll be right back for our conversation with Nick Molner from after Pat. I want to tell you about this great online community. My team is a part of it's the ultimate knowledge hub from the hustle called Trends.

Trends will give you the network and information you need to succeed. Trends gives you access to a community of industry leaders in virtually every field where you can learn how to capitalize on emerging opportunities and workshop ideas and network with other entrepreneurs and investors. Trends has exclusive research with intriguing topics to help inspire. Like the 30 companies defining the future of media and pop culture or data on thousands of successful Kickstarter projects, our team found that by topic section helpful for browsing through new trends in e-commerce and using trends insights to anticipate the next big things and the digital ecosystem.

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Welcome back. Here's our conversation with Nick Molenaar, the co-founder and CEO of After.

Nick, where does this podcast find you?

I'm in Sydney, Australia, right near Bondi Beach at the moment.

Oh, gosh. Sucks to be you. Congratulations on your good judgment and being the CEO and founder of a company that has a twenty seven billion dollar market capitalisation, if I'm reading this correctly, has gone from eight dollars a share to about 95 in the last 12 months. So it was very good to be.

Nick, can you let's kick it out. What is after pay? What is the service it provides? Yeah.

So, you know, after pay allows primarily the next generation of consumers, you know, preference being the millennial and GenZE cohort that has found a very deep love for our service to Perowne round numbers.

If you're buying a product for 100 hundred dollars, the customer pays for payments of twenty five dollars every two weeks. We pay the retailer the next day and then we assume all of the risk, you know, really stemmed as a result of the 2008 financial crisis, which was the start of the millennial cohort, preferring to spend their own money, preferring to spend money on a debit card over a credit card. And a pandemic is very much accelerated that debit preference.

But, you know, in a in broad strokes, that that's that's what it's about.

OK, so someone goes up to a cash register and the retailer says you have the opportunity to pay with after pay or they already signed up a bit of both.

So, you know, the lion's share of all of our transactions now that take place with new retailers will be existing off to pay customers.

So, you know, we in the last couple of weeks have gone live with copying Lululemon, OG, Adidas, et cetera, and they'd be very much north of 50 percent new to file customers that we can draw to these retail partners. So, you know, we're we're providing the retailer a tool to serve this next generation that's spending money differently.

But we're also becoming a key source of marketing and new customer acquisition for these partners. If you look at, you know, many of the the public similar website or otherwise, we would be the biggest furfur of traffic to the the vast majority of our retail partners now.

So there's always an argument over who has the power and who gets custody of the consumer data. So when people make purchases at a Lululemon, if their first time user and there they go on to the after party platform, do both parties share the data? Does one party have restrictions over accessing the data? Explain to me the dynamics between between the two entities after paying the retailer.

Yeah, so both parties share share the data from the perspective of, you know, using the example of Lululemon, Lululemon, get the exact same information that they would normally get when they make a transaction. And most importantly, even when a customer goes to our Apple website to start their shopping journey, the transaction is still taking place on Lululemon dotcom. So we're driving traffic out to those retail partners and you know, the relationships. It's then between the retailer and that consumer.

You tapped into something in terms of behavioural change. You don't just build a 27 billion dollar fintech company by doing something a little bit better. What what has changed about would what did you recognise in terms of consumer behaviour that was changing among this core target that other other fintech companies or credit card companies had figured out?

Yeah, I mean, look, it was it was a really interesting journey. And I think my my upbringing also kind of led me to this position in a way. So, you know, I sold the most jewellery online out of my bedroom at university. My family was in jewellery.

I then was I was fortunate to grow up during the 2008 financial crisis and saw this this trend where millennials just said, you know what, like, I want to spend my own money. I want to spend money on a debit card, not a credit card.

And, you know, when you think about why that's the case, if 100 per cent of people pay back a credit card on time, the industry simply doesn't work. It doesn't exist. Incentives are completely misaligned. So I saw this trend unfolding, but it was never very prominent in the overall market because disposable income earned by millennials was still relatively small. Now that starting to obviously get bigger in, you know, five years time, millennials earn half of all disposable income in the economy.

And as such, we're moving from a credit economy to a debit economy. You know, 90 per cent of to customers use a debit card, not a credit card. If you look at Visa's latest numbers in May. Credit card spin was down negative twenty one percent year on year growth, but debit card spend was up positive, 12 percent year on year growth. This is a systemic change now beyond the millennial and GenZE cohort moving from a credit economy to a debit economy.

And, you know, to be able to build a brand that can, as a result of the product you offer, say to that consumer, that next generation consumer like I get you. I understand your preferences and I'm always there to be a Win-Win for you and to be in your favor. You know, that's been quite a while. We've built the brand. I think this, you know, viral customer unlock that's taken had taken place.

So it's it is the mechanism is a debit card. It comes right. The money comes from another account. But to a certain extent, it's not credit. It's a payment plan. Right. So while the payment comes out of there directly out of their bank account, they're saying, but give me four weeks and four payments to pay this back. Is that accurate?

Yeah, exactly. So our customers will use a debit card because they want, you know, the transaction to be linked into their existing bank balance, that by buying to smooth out their cash flow, they're aligning it to their pay cycle. But to be able to do that in a way where, you know, the moment someone goes light on one installment payment, we disable their account. We say you can't keep shopping. You know, on the reverse.

The moment someone goes out on a credit card, they're incentivized to keep you outstanding for as long as possible. Yeah.

So our incentives have been the opposite, you know, which led us you know, we built a loyalty program called Pulse that rewards responsible spending. You know, the more consecutive payments you make on time, the more loyalty you unlock. So when you have a set of principles that are truly built on a win win, that aren't the credit driven economy principles, they're the debit driven economy principles that's built on frequency repeat purchase rights. You know, that high velocity transaction that builds that relationship.

You know, we're just lucky that we have different motivations and drivers of our business that allow us to make those types of decisions.

Well, to a certain extent, you've you've said that the customer is the retailer, not not the late payer. Right. The retailer gets to construct whether it increases their basket size, which they're willing to give you a portion of that increased basket size. It sounds like they like having a new customer. And I can see the network effect. It's know becoming clear now. And I wish this had become clear about, I don't know, twenty five dollars billion in market capitalization increase ago.

But you you're you now have forty million people on the platform. How many people on the platform got?

Eleven million people. Congratulations today. You heard it here first. I'm projecting forty. That's going to be a pretty phat house. And Bondie anyways the and then you can go to bigger and bigger retailers and say I can push some portion of that 11 million people to you on this plan. Is that kind of the new business proposal is I'm going to send an email saying Home Depot is now on after pay. Is that kind of the the new business process?

You know, if you look at our home market in Australia where, you know, we started four or five years ago, we now processed fifteen percent of all online retail in Australia.

And that is largely the blueprint that gives the market and also a lot of our retail partners the context of kind of where we are today and where we're going. But, you know, in Australia, where the second largest traffic driver for the vast majority of our retail partners behind Google customers are coming to our app or soft-pedal.

Com to to start to start shopping. So then to be able to translate that to the North American market, to Canada, UK, soon to be Europe, and build a real global platform that stands for the next generation, you know, can be a source of traffic to unlock that consumer.

It's top of mind for every retailer, you know, not not just because they want to increase conversion rates and average order value, but, you know, they kind of looking down the barrel of saying in ten years time, millennial and GenZE will be forty eight per cent of all retail spend in the economy.

But it's a fraction of my current customer base. So I don't unlock that customer today. And so I you know, I deeply understand you. You have all these influencer brands that are building, you know, big, big businesses in these categories. But now, you know, taking mass away from a lot of the retail market and, you know, the traditional retail is leaning into this hard right now.

So. All right. So what is it about? You think this generation doesn't want credit? They're more comfortable in instalment payments. Yeah, but they don't. Is that they don't like. He gets to a certain extent, it is a form I know you don't like the word credit, but it is a form of credit. You're saying, OK, pay over time. You know, you pay us back at some other point, but we're imposing the charges on the retailer, not on you.

So I guess it's a transfer, if you will, of expense, which is. But you think there's a different mindset. Say more about that.

If I if I just look back nine months, you know, the pandemic started to unfold, I wish I could say it was my foresight, Scott, that brought me to Australia. But my my life was four months pregnant. And we said, you know what, let's let's be near family.

And the stock price went from forty dollars to eight dollars.

But there are a whole lot of structural shifts that are being spoken about.

You know, there's this offline to online shift that's being spoken about as home learning.

There's a range that have been widely articulated.

But what I'm the most surprised about is that this fundamental shift from credit to debit is, you know, shift from the credit economy to the debit economy is the most Onda talked about element. You know that this is a structural shift that might take 10 years to play out because it's directly correlated with disposable income growth. And as people earn more money and their careers develop, they become a greater source of income and spend in the economy. But the shifts now are no longer just a millennial or GenZE thing.

This is the world saying, you know, I want to be more responsible. Traditional credit products are not in my favor. Their incentive is for me to be outstanding for as long as possible rather than to pay back on time as quickly as possible. And, you know, it's that dynamic that has put us in a you know what what is a really privileged position, you know, and it's up to us to now build that relationship and go from here.

But there's a there's a fundamental change right now unfolding across the whole world.

So let's talk about that privileged position which always attracts competitors. You've got a twenty seven billion dollar market cap. You're growing. You've established this relationship with 11 million consumers who are not only valuable but increasingly valuable to corporations and retailers, et cetera. What are the moats around your business? Is it technology? Is it the relationship with the consumer? Is that your sort of this peloton kind of Midsouth meets Netflix, Netflix, kind of hip younger brand? What when you think about the Motch you're building around your business, what are they?

Yeah, I mean, look, there's, you know, a couple of different components that are unique to our business.

So firstly, we have a really strong relationship with the retailer, and that is about providing them a payment product. But that is also about how can we be core to their marketing strategy? How can we be a customer acquisition channel? I mean, arguably, if we charge an affiliate fee for the leads that we drive our retail partners, we'd actually make more money than our payment processing cost. So it's about how you build, you know, an all encompassing value proposition to that retailer.

But on the other side, the most logical competitors and you know, we saw this in the early days in Australia. We're now seeing this start to unfold in North America just at a bigger scale. You know, these are credit driven products, businesses that started life as a finance company, where their incentives are fundamentally different and they're making a lot of income from revolving credit books.

Who has that? Is that squares a people? Who is that? Who I mean, if you look at both of those examples, you know that their products in our world have always been credit led. Solutions have always been apart, interest bearing led products. And it's very difficult, particularly for the next generation, that wants something that's truly in their favour to be credit on one side and not credit on another side.

So you've kind of got this hybrid world where you have competitors trying to produce enough to pay like product as a customer acquisition channel to cross-sell them credit card. That's a high margin solution. And you know, that that, I think, is where people that did start life doing credit checks, hitting like getting people's credit file. They just create a very different relationship with with the customer and their existing business models make it difficult to, in a pure way, come into a market.

So let's talk a little bit about Nick. So you are an entrepreneur, you're sort of you started I Starcom, I remember that I was diamonds and jewelry online, right? Yeah. And then you did this. So how old were you when you started ice? I mean, that's been around a while, hasn't it?

Yes, I, I sold the most jewelry. I started by selling the most jaw on eBay out of my bedroom in Australia. I then reached out to the guys that I Starcom in North America and I launched them into Australia.

So that kind of taught me online retail and then took out a really long story short. My neighbor at my parent's place approached me one day and he said, I don't mean to pry, but I see a lot on every night. And the next day I saw you take parcels to the post office with your mother. What do you do?

And I think the the mother being involved in the parcel delivery made him feel like I wasn't doing anything notorious.

But, you know, that that that led us to to talk about this this shift, but start starting life as a retailer, you know, building DNA within the business that, you know, came from a retail background that wasn't out to build a finance business, I just think has been, you know, core to, you know, the path that we've taken and the track that we're on, we're on right now.

And have you lived outside of Australia, were you with ICE, were you in the U.S.? Yeah, I mean, I was back and forward from the U.S. I'm normally in San Francisco. So if I wasn't really our second child on a boat in North America for a couple of years, and as soon as my son is ready to fly, I will be will be back over.

Oh, Nick, you got to learn the first lesson of being a successful entrepreneur. You sacrifice all relationships. If you have healthy relationships, that means your stocks going down. So compare. How would you compare and contrast the business culture, the society, San Francisco, sort of the helm of the bobsled, the innovation in the U.S. and they would argue in the world and then Sydney. My sense is that kind of Sydney and Melbourne are kind of where the rubber meets the road in innovation or tech, at least in Australia.

Compare and contrast the two Australians as a the culture, the culture and society of Australia is definitely about giving things that go so supporting the underdog, trusting in kind of new.

And I just think that the embracing by retailers in Australia was a lot easier to unlock then than what we did in the US.

And, you know, if I look then into moving to San Francisco and building a team in San Francisco, you know, you've got to understand, like, we we've never been in TechCrunch. You know, like we don't we don't. That's not what our business is about. You know, we work with Women's Wear Daily and business of fashion and, you know, we are where our retailers sit. And so, you know, we got to the tech epicenter of the world and we had to find the people that were the right blend of science and art.

And retail is art. You know, why does someone buy a beauty kit or a pair of jeans? There's a lot of psychology that goes into into that decision. So, you know, we hide slowly in San Francisco and now a team of about 200 on the ground in S.F. within two and a half years of being there. But I'd like to to think that we've built as much of a culture that is similar to what we have in Australia, in North America.

But, you know, we're not we've tried to steer away from, you know, standing for TechCrunch, standing for, you know, we don't talk it ourselves, really is like fintech. We we're sitting in different parts of the retail ecosystem that unlock this this opportunity.

And if you are going to start if you were telling someone if someone, you know, had affinity and lifestyle being equal and someone was starting a company, would you think that the U.S. or Australia is a better place to start a company?

Well, I think there's a lot less competition and I'm more willing to embrace culture in Australia. But the economy is still small. I mean, Australia is 25 million people.

So, you know, when I'm speaking to Australian entrepreneurs, it has to be about Australians going global to really create that opportunity.

But, you know, the top 10 companies listed on Australia, on the Australian Stock Exchange are the exact same top 10 companies that were there 30 years ago.

It's banks, mining companies, property companies. And so that speaks to actually a lack of entrepreneurship, but it also speaks to the size of the market and how, you know, you have Atlassian, you have Kambah, you have some amazing Australian entrepreneurs now starting to go offshore. And, you know, when we first announced that we were going to go from Australia into the US, our stock went down. You know, people here's another Australian organisation trying to go global.

And then when we landed in the US, it was kind of like, well, you know, you weren't you were founded here. Can you succeed? And, you know, both those things were really interesting to go through and to unlock.

And I was asking the last question, advice to your younger self. But I'm going to ask it differently because your advice to your younger self would be do everything exactly the same advice to what advice would you give to a 25 year old, say, just out of college, maybe first job they don't love say they're not a venture capital firm and they think this is an it for me. What advice would you give that young man or woman?

Look, there's a lot of young entrepreneurs that are in a job and have a side hustle.

You know, you read all these reports that say GenZE has a side hustle. They're all about side hustle.

I think it's very difficult to have a side hustle and it's very difficult to rip the Band-Aid off and to do something full time.

But you have to draw the line where you say this is real and I have achieved, you know, product market fit and I have the confidence to give it a go. And that sometimes feels far away. And you always push, you always delay it. You've always got an excuse that now's not the right time. Well, action. I need I need to say this more of this to unfold before I have the confidence.

And, you know, if there are more millennial and GenZE entrepreneurs in the world, I think I think that's a very good thing.

Nick Molenaar is the co-founder and CEO of After PEI, one of Australia's fastest growing fintech companies and arguably its most successful export. I mean, what you've accomplished here at the age of 30 is sort of it's not remarkable is the wrong word. It's really, really inspiring. Nick is a serial entrepreneur. He's got extensive experience in online retail. He's got two children under the age of two. He calls in from or joins us, I should say, today from Sydney, Australia.

Nick, congratulations on all your success and stay safe.

Thanks, Scott. We'll be right back. Our eyes were made to look at screens all day, Felix has created a solution for this. Most blue light glasses don't filter in a blue light in the light spectrum wavelength that matters. Felix read glasses filter 15 times more blue light from screens and other clear blue light lenses. Your favorite devices are a major source of blue light phones, tablets, computers, TV, Kindles and even LED light bulbs are shown to emit more blue light than their incandescent counterparts.

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Welcome back, let's bust into office hours, a part of the show where we answer your questions about the business world, big tech, higher education, whatever else is on your mind. If you'd like to submit a question, please email a voice recording to office hours at Section four.

Dotcom question numero uno.

Hey, Scott, this is Jonah from New York City. I know how much you love Airbnb, but I wanted to know what you thought about the last many big cities are passing restricting the use of Airbnb. How do you think this will affect the business, if at all? My other question is, do you think taxes will be significantly increased for Airbnb? Similarly, to have hotels have high taxes from local governments trying to capitalize on tourism in their city?

And if so, what will be taxed? The hosts the guests are the company itself. Thanks, Jonah.

That's a that's a great question. So in some, Airbnb is guilty of the same blitz, scaling and ignoring traditional norms around being a good corporate citizen. And that is they don't file for business licenses, as Uber did in Argentina, although I do think Airbnb actually does that. But the hotel industry, which is obviously very threatened by Airbnb as they have to actually go out and borrow tens of millions of dollars to build a hotel versus the asset light model of Airbnb is going after Airbnb and sees them as an existential threat, as they should.

And one of the areas they're attempting to attack them and say, look, this is bad for the world, is that they don't pay their fair share of taxes. While actually some markets I don't know if it's all, but Airbnb has, in fact, started paying similar taxes or taxes. Now, whether whether it ultimately gets passed on to the end consumer, the renter or the host, I don't know. But at the end of the day, Airbnb, I believe, should pay the same taxes a hotel pays unless there is some excuse around infrastructure.

Or perhaps you could make an excuse that they are already have already paid for that infrastructure vis a vis the taxes that the owner pays. That that is the argument I would make if I were if I were Airbnb. But I think ultimately they should be subject to the same good behavior as any other organization and the same taxes that any other organization is paying. This reminds me of the evolution of Amazon and state sales tax. And Amazon would say, we're located in DC, we're headquartered there.

And if we don't have a distribution center or a headquarters in New Mexico, we don't have to pay state taxes because we're not actually operating in New Mexico. We're just delivering things there. So if you're a New Mexico resident, you could order on Amazon and not pay state sales tax, which obviously gave Amazon an edge over local retailers that had operations in New Mexico. But over time, Amazon threw in the towel and said, OK, we're just going to start paying state sales taxes.

And I think that's what's going to happen here. If you think about Airbnb and where they have come under fire, the argument is it goes from individual hosts who are leasing out their apartment to make some extra Kabbage. And by the way, about 70 percent of Airbnb hosts, or 70 percent of the seven million properties listed on the platform are single properties. In other words, the whole institutional notion of Airbnb is a bit overstated. About 30 percent is institutional, meaning that it's it's controlled or owned by someone or at least by someone who has more than one property.

And the average age is somewhere in the 30s and it's a woman. So and she's typically making a decent amount of money here. It's not like Uber where they're literally creating a permanent underclass and using software to create a payday loan against your car anyway in exchange for flexibility, which some drivers like. But anyway, what you effectively have here with Airbnb is that people are saying, OK, taking housing stock off the market ultimately increases rents in that neighborhood.

There's some truth to that. I think it's hard to argue that if people are coming in and turning, buying or leasing properties for the sole purpose of turning them into Airbnb is that would decrease the supply rents go up. But what it's also doing is making it less expensive to travel. You get a one bedroom or a two bedroom apartment in a nice area for a lot less. And what it costs to rent a hotel. And perhaps you can take your kids with you if you have a family, if you have if you're married and you have two kids, two or three rooms, you start talking about serious, almost prohibitive costs to travel.

So Airbnb has kind of unlocked travel for a lot of families, I would argue. So what's going on here? I would argue that it's really just a transfer of value, if you will, from renters who will likely in some regions have to pay more in rent because the housing stock is decreasing to two travelers who don't have to pay as much or will have more options as the supply.

And the choice will go up creating greater competition. But net net, I think we're winners here. I think this is innovation. Thank you very much for the question, John. Next question.

I just got away from an homage. Love the podcast. Keep up the great work you mentioned in the past. Like going forward, we will see big tech partnering with universities to help validate the higher price tag at the undergraduate level. How do you see the NBA landscape changing going forward? Moreover, given the cost of an MBA, you had started Hobbs's MBA program today. Do you think it will be worth it?

Thanks, Eliot. Thanks for this. I get asked this a lot, so it's situational. OK, so first thing you got to ask yourself is what are your opportunity costs? In other words, what are you doing right now? When I applied to business school, I just left Morgan Stanley and I was living at home with my mom and not doing.

What was I doing? Not a lot. Not a lot. I wasn't doing a lot.

So my opportunity costs were pretty low. If you're making one hundred and fifty thousand dollars a year at a good company, you're at AT&T and they like you and you have senior level sponsorship. And you're getting options and you can see a path to the next position. OK, that's high opportunity cost. If you're killing it somewhere, you may not want to leave the primary value of an MBA.

The primary value of an MBA is the certification or the additional bump you get in your currency in the marketplace and the subsequent earnings you will register over the course of your lifetime. So there's a big difference between going to Wharton and going to José Bagga Donitz MBA program. So one, did you get into a top 20 program to two? What is your opportunity costs? Three, Do you really want to go back to business school? Do you love learning?

Do you like education?

And then and then finally, finally, what is your financial situation?

If your parents are putting you through business school, if you have a full ride scholarship somewhere, then yeah, it's not a bad place to hang out. Two years goes fast. A lot of people. One of the things I wouldn't think about too much as well, do I really want to spend two years doing it? 24 months is a blink of an eye, my brother a blink of an eye. So it's situational, the quality, the program, your opportunity costs, your financial situation and what's happening at your current company.

Thanks so much for the question. Next question. Hi, Scott.

This is Matt in Madison, Wisconsin.

If you ever find yourself in Madison after the coronaviruses over and want to enjoy one of the truly great college town experiences of all time, I would gladly buy you a pint on the union, the Moral Union terrace.

Anyway, on to my question, which is to ask, do you think that the stores like Macy's and Nordstrom's, other high end brick and mortar retailers, after the coronaviruses over, have an opportunity to market themselves and position themselves as a fun place to shop shopping and Amazon is is expedient. It is convenient, but it is not fun. And so I'm just curious if you think that is the coronavirus ends and people are aching to get out and do things that that might be a great opportunity for them to expand their brand after a decade of getting beat up by Amazon and other online commerce companies.

Thanks very much, Matt, from Wisconsin. By the way, by the way, I almost was very interested in the University of Wisconsin at Madison, but made the mistake of driving through there in February. I thought, there's no fucking way I'm going here. It was freezing, that it was freezing. See if you can get on that. Or maybe we're getting on that with our carbon emissions and global warming anyway.

Anyway, by the way, I'm probably going there next summer.

Was planning to go there in August for the Crossfade games. I'm an old man who does Crossfade and I just invested, believe it or not, in Crosthwaite. And so I'm excited to go to the Games in large part because I want to check out Madison. So by all means, I will likely not call you. But the the thought is there, Matt. The thought is there, the gesture, the intention, the good intention. You should receive gestures with the intention that they are given in my intention to call you, even though I won't.

That intention is there anyway. Anyway, I'm fairly bearish on Macy's and Nordstrom. I don't think your concept is the right one, but you picked the wrong venue's experiential. There's basically two reasons people are going to still go to brick and mortar. They're not going to go for products, they're going to go for people. They're going to go for service.

But here's the thing. The Macy's beauty counter used to be an experience, but now Sephora is a better experience, a place you got sunglasses and eyeglasses at a Nordstrom used to be a great experience. But you know what's better? What's better? Warby Parker. And it's easier. It's so much easier to do a surgical strike and go twenty feet into a special retail store in Soho than to navigate your way into Herald Square and spend ten minutes to get to your destination.

I believe. I believe the Millennials and GenZE will not shop in any store long term that has an escalator or you're incurring a fifteen or twenty minute tax on your time to kind of get in and get out. Does anyone else has anyone else been scarred by your mother losing you and bullocks in Westwood or J.C. Penney's and Culver City? I was. And trying to figure out what doors you came through to get to the parking lot. So I just don't think that format works for very much longer.

I think they'll milk those companies. Macy's has a really interesting tourism business. Nordstrom are some of the best operators in retail. But I think saying it's going to be an opportunity in terms of experiential shopping, unless they come up with something really interesting, maybe they could have kind of instead of store and store like Pop-Up and store kind of applications like the frozen mansion or the the Museum of Ice Cream. But they're going to have to do something because that format is really challenged.

And I don't know if it's fair to say or realistic to say that they're experiential attributes are going to save them. But I will see you in Madison, my brother. Thanks again for your questions. Again, if you'd like to submit one, please email a voice recording to office at Section four Dotcom.

Algebra of happiness, I don't believe capitalism is going to survive in the current format. I think our current approach to the novel coronavirus illuminates the vulnerability of capitalism. The greatest economic construct in history that has created more prosperity than any other construct in history is not offering progress. What do I mean by that? We've had incredible productivity at the employee level. We've had incredible shareholder gains and we have wages that are flat and we have wealth amongst two thirds of Americans.

That is not increased because we figured out a way to crowd all of the wealth and all of the prosperity into not only the top third, but the top 10 and sometimes the top one percent. And what have we done? What have we figured out a way to do with this pandemic? We have figured out a way fiscally to play this pandemic like a goddamn Stradivarius violin and figure out a way to get wealthy people wealthier. The two biggest asset classes are residential real estate and stocks.

And guess what? They're both at record highs. And who owns 80 to 90 percent of that? Essentially college educated white people in the top 10 percent.

So even when we have a pandemic, we find that we have figured out a way to reward the already powerful, the already rich. Do you think that's an accident? It's not an accident. What's happening here? Patriotism used to be sacrifice, not stimulus crises used to be seen as a time when we pulled together all under the flag, grabbed each other's hands and helped the neediest World War Two. Right.

We were looking for a technological solution. So we went about trying to find how to split the atom and end the war. But we didn't stop converting companies. We converted a Chrysler factory in Michigan from producing cars to producing tanks, and that factory produced more tanks than the entire Third Reich produced during World War Two. We planted victory gardens. We put 5000 people in jail for avoiding the draft. That couldn't have been easy. It wasn't like everybody just said, sure, we we demanded more people.

Now we're afraid to ask people to put on fucking maps what has happened to us. Capitalism doesn't work if it doesn't sit on a pillar, if it doesn't sit on a foundation of empathy, what does that mean?

That means wealthy people don't take stimulus. It means wealthy people don't apply for a PPP loan. It means all of us put on a mask. People in World War Two slowed down, they self limited their driving speed because they heard the rubber was in short supply. My mother, my mother slept in a makeshift bomb shelter that was the London tube, and they passed out gas masks in the shape of Disney characters such that they wouldn't be afraid to put them on.

They couldn't even imagine somebody saying that they wouldn't put on a mask because it threatened their liberty or tyranny.

If we don't grab each other's hand, if we don't show greater empathy, if we don't start protecting people, not companies, capitalism implodes. It collapses on itself. Capitalism is not an organic state. It's not an organic state. It has to sit on a pull of empathy. We have to have progressive policies, meaning that the top one percent shouldn't pay a lower tax rate than the rest of us if you're lucky enough to be in the point one percent.

What kind of humanity does that show when you tolerate a system? And let's be honest, the point one percent is probably 50 percent of the 100 senators. Money is just a transfer of wealth and time. And we've decided that we want to transfer time and work from our kids and grandkids such that we can ensure that wealthy people do not pay their fair share of taxes. And we still issue reckless spending in the form of stimulus to a lot of people who, quite frankly, don't need it, see above greatest savings rates in history.

When do we start caring more about each other? When are we willing to say, yeah, I don't need stimulus? Yeah, I am going to wear a mask? Yeah, I am going to reach out to people I don't know and try and help. And they are out there. But we have an institutionalized that we've elected leaders that have decided that our soul goal as a nation is to turn the one percent into billionaires instead of giving the other ninety nine percent a chance to be in the one percent.

What is empathy? First and foremost, it's taking care of yourself. You can't you have to put on your oxygen mask first. You can't help other people. You then make sure your family and your friends are OK. You show generosity, you show grace, you show forgiveness. And then the gangster movie, the gangster movie is you commit to helping, whether it's through time, treasure, talent, people who you will never meet and who will never thank you.

We will be judged by our creator, our friends and society by the actions we took or didn't take during a crisis. We are in that crisis.

How empathetic are we? How loving are we? Capitalism can't survive unless it sits on a base of empathy regard and a committee of men. And we have demonstrated very little. Our producers are Caroline Chagrinned, Andrew Burrows, if you like what you heard, please follow, download and subscribe. Thanks for listening.

We'll catch you next week with another episode of the Prop G Show from Section four and the Westwood One podcast network.

You're thirty three, is that right? I'm 30. Yeah. Oh, fuck you seriously man. Seriously, that's awful. That is is that's unforgivable. Oh my God. If I had your hair, your wealth and your accent, I would be general consulate of the world. I would literally be running most of Southeast Asia by now anyway. OK, so a lot of gray hair here. So yeah, cry me a river.

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