#57 - Corona Business Ideas, Stock Buybacks & Recession Proof Businesses

Special edition. So we have this nice studio here. We worked hard to set it up and we are no longer using it. Well we're using uh We're using the best we got, and that's what we gotta do right now. I'm a little out of breath because I just did A bunch of push ups to get myself.

ready for a podcast'cause normally I feed off that that in person energy of yours. And uh I don't know if this remote podcast is gonna do it for me. Mm yeah. Um We just it might. We just had Jordan Harbinger on the show. Uh where basically this guy uh did a he's helped us a ton. He's got this great podcast, Jordan Harbinger show. I'm still like in plug mode, but we just recorded like eight or five different commercials where we're gonna be promoting him on our podcast. He's really talented.

He was so much better than we were. Dude, he flipped the switch. It was like we're just shooting the shit. I was like okay, it's all normal. He's like Okay, so something like this and then he went into Post mode. Yeah, he crushed it, man. Oh, you've been doing this for twelve and a half years. That makes sense. I understand now.

Yeah, he's he's talented. Um So we're gonna be promoting him promoting him on our thing and He's kind enough to promote us on his show. I'm excited. Yeah.

I think that's a good idea. So we uh Corona, corona, corona. How's your quarantine going? I hate it. I'm at the office. Uh so where we are in San Francisco, Mayor Breed, Lennon Breed, uh

It's a A rule or I don't know what it is, a ban, a rule. You can't be out walking around unless you have to be. Um, I thought I had to be here to record, so I kinda got through But it's freaking crazy. Yeah, they did they declared I think it's called shelter in place or something like that, which basically you need to stay home.

Regardless of if you have it or not. Uh except for grocery stores, hospitals and uh One of the pharmacy maybe, something like that. And I said this to our company. And

people c can take this the wrong way. Uh but basically where there's tragedy and where there's down like a downturn There's opportunity. And I plan on pouncing on that. So

Uh you know, obviously first and foremost it's sad that everyone's getting fucked up. And that's horrible. And people are actually getting I mean it's literally life or death for some people, but Um in terms of business, there's a lot of people in our trends group that are screwed right now.

And I feel for them. I also think that this can make some people, hopefully them, much stronger and they can come out on top. Yeah, there's a difference between Exploitation. Which is, oh, there's some problem. I'm gonna go buy all the hand sanitizer and mark it up five X, right? That's exploitation.

Versus Opportunity which is to say Hey n there's a whole set of new problems that exist now. Or existing problems that have been unmasked. And if you're a business person, you're in the business of

you know, finding solutions to problems because now there's a market of people who want them or who need them and so I'm down with you if it's more about Hey, this is gonna build some resiliency. This is gonna wash away Some things that shouldn't have you know, the uh what's the phrase where it's like

You only find out who's swimming naked when the tide pulls in. Yeah. Yeah, there's some things like that that are going on. But there's also just a whole bunch of opportunities that are created because now there's a whole bunch of people experiencing a new set of problems. Yeah, it's craziness. This reminds me of nine eleven. We'll see what happens. Um But

I think that uh What we're gonna do today is talk about a related businesses and different opportunities. You wanna uh kick it off or you want me to Yeah, I I guess um so I send my one two three letter every Sunday night and I wrote it And um I wrote it. Sean, I still don't get that.

I s I sent it to you, I sent this one to you. This is the first one I sent to you, so you'll have it now. Um but I wrote at the top I said This email is either gonna be all about Corona or There'll be zero corona and I'm just gonna distract you from it. I don't know which one it is. Let me just start writing and let's see what happens. And it turned out to be more of an all corona thing because this is like nothing I've ever experienced. Um, I know there are some analogies like you said nine eleven. I saw this great

tweet from this guy, his name is Yi Shan Wong. Do I don't know if you know who he is. He's Uh he was a former CEO of Reddit. He was like an ex Facebook guy. CEO of Reddit for a while. Really smart guy. I I love following him on Twitter. He doesn't have that many followers, but he says a lot of smart shit. Um that I just basically steal and then save myself later. Um And he was saying he was like, you know

The coronavirus thing is so different from like the last thing that felt like this. was nine eleven. And he goes. This is so much harder for Americans. He's like because When it was nine eleven

Um the response was all bravery, patriotism. Action Revenge? Uh it was it was all action things and there was a clear, visible emin an enemy. It was like okay, you know the sort of the terrorists Bin Laden, you got this picture in your brain that you can sort of point it to. He's like with this.

We have an invisible enemy. You can't see the virus. You don't know who has it. You don't know who doesn't. So we all just have to hide. And um the best course of action is inaction. And that's very strange for people. And uh it reminds me of this quote by uh Pascal, which is It's like all of man's problems.

come down to it's uh butchering the quote, but it's like all of man's problems come down to the fact that Um he cannot sit alone in a room. uh for thirty minutes. Yeah, I've heard that. Being able to just sit in your house and chill. And it's so difficult for people. You know, it's funny, there's I was talking to a co worker, I'm like, there's two things that a lot of people want and then they get it and it freaks'em out. And this is a little taste of that, which is

uh people talk about retiring. They want enough money that they can retire. And a lot of people want to work from home and I've gotten a lot of shit from the work from home crowd because I'm because I keep saying I hate this. I hate it. I love coming into the office and feeling energy. And Uh I retired w not retired. I took I've taken eight months off at a time. And

It gets boring fast. And what we're seeing now is that some people are You can kinda taste it. uh a little bit, and I personally hate it. And so Uh

Okay, I got I got the quote'cause I butchered it. Uh All of humanity's problems stem from man's inability to sit quietly in a room alone. Okay, that's the quote. I had to correct it because it's such a bad quote. And that's what we're experiencing now. People just don't It's all they uh uh br the guy from Reddit, uh Alexius Alexis O'Hanian, he started Reddit and he's got like this new billboard company that's really cool. Which

We should talk about sometime. I didn't know that. What is he doing? Yeah, uh I did a big or one of our uh trends guys did a big report on this. I don't have it in front of me, but basically The idea here is that he is trying to recreate or not recreate, but build a bus a billboard business and the the Top two or three. folks are like Lamar advertising

uh clear channel and I think outdoor advertising and they do billions and billions in sales and it's a great business. It's a great business because once you have a billboard, like it's an annuity. Like they just it's almost subscription. They don't go away. Uh and what he was doing was building billboard but it's really hard to buy one. We I bought a billboard as a test and you have to go through all these salespeople and it's a big process. What he was trying to do was automate it. Right. Well there's Ad Quick, I think that they're one of those that lets you do a sort of Automated billboard buy.

Yeah, I think that's his company. I think the I that might be his Um and so anyway he bought billboards in Times Square that said, You are killing people by being here. Or something like that. You are killing people by not being at home right now. And uh

Dude, I want to buy a billboard. That's friend billboard's probably better than buying like multi family real estate just'cause there there's less people trying to do it. You know who uh who started as a billboard company? My hero, Ted Turner. Oh. Ted. Yeah, my who I reference all the time. It was a bill it w at first it was it was a billboard company then

he bought a radio station, then he bought a local T V network and that just parlayed over thirty years to CNN. By the way, when you make it, you need to blur all your businesses together. So it's like they started as a hot dog stand, and then it became this event, and then they became a newsletter, then it became this subscription company. It doesn't happen nowadays that much, but there's this guy named Steve Ross, and Steve Ross started um Warner, Warner Entertainment. And it that business originally started as parking lots.

It was paid. I think it was a A paid parking lot and then they branched out to Morgu's or not morgues, where do you go like where where you have like a funeral service, like a wake. Right. Whatever whatever that's called. Then he parlayed that into

s entertainment holdings and it's was all one company. It all started as a parking lot. And it's I love I love those stories. You don't hear about people doing it as much nowadays, but when businesses have lasted for fifty years, it it definitely happens. Yeah, inevitably so. Like Berkshire Hathaway, same sort of thing. I think Textile Factory was sort of the first one. Um Yeah, it it's really crazy. So b back to Corona for a second. So Um, people like you are out and about, so you're at the office now. Well yes, I drove my car here and I parked on the street and I

Right. I'm with Alan here. We w we he's he's about six feet away and then we um I had handstand or uh what are those Clorox bleach wipes? That's what I used to type in the code. Yeah, we ran right in. Nice. Um okay, so but have you seen you know, what's your take on the reaction where you have You know, you saw the sort of New York bar scene was popping off and a lot of people disreputted. Infuriating

Infuriating. It pisses me off. I got in a big fight on Facebook. I'm a troll on Facebook. I got in a fight on Facebook with this lady who she f oh my God, a fuck it pissed me off so much. Listen to this dude. She said uh If you if you can cancel coming to my wedding shower. you also better be canceling from work because if not, you're an asshole. And I was like I was like You're insane, lady. You're insane. You're like you are nuts. Okay? Like there's a difference between if you have to go to work, that's unfortunate. That sucks because of what's going on. But like Cancel everything. It it pisses me off. Yeah, I think people should everything. How many of my friends and acquaintances um I'm like, Wow, this person's amazing. Like we have friends. Xavier's like

putting together guides and really p promoting the stuff and trying to help people. And uh, you know, our friend Mike Brown put out this great Facebook post about, you know, the s the the risk reward psychology around uh why d why he's over preparing even though he understands it's a low risk event. It's like oh okay, these are some of my friends who I believe are smart. They're taking the actions that make a lot of sense to me. And then I have some other people on my Facebook feed. I won't name names, but

Man, there's some other people that just don't get it and um And they put themselves and they put everybody else in harm's way for the stupidest reasons. You know, we had a a a sort of a thirty minute debate. With my sister in law Who wanted to have her her son's birthday party.

And like she loves her kids as you should. Wanted to have this birthday party? As you should want to have a birthday party. Um, but was like a hundred people going to Chuck E. Cheese, hundred kids going to Chuck E Cheese. Oh my God. And like grandparents coming and like, dude, they're at risk. And I was just like And she's like, I don't want him to be disappointed. Tough. Tough sucks.

It sucks. This is unfortunate. You know, this is what we had to do in World War Two. Like you just can't buy certain stuff, you can't do certain things. Exactly. It was crazy to me that it was even a conversation. But uh you know, there's all kinds of little mini examples of this Um, and especially the hardest one, actually, I don't know about you for your parents, but It seems like people are most at risk. They don't they're like Ah what's the big deal. Well less w y you know, we Oh, I can't go to the grocery store? And it's like yeah, you literally can't.

I was having to tell my parents that I'm like, You guys cannot go out to eat tonight. You just one hundred percent can't and They're like, Well you know, it'll just be quick and I'm like, Well that's not how it works but I go, Look, I love you You're gonna get sick. This is this is one hundred percent your fault. Just so you know, and you are hurting Not only me as someone who loves you, you're hurting yourself, but you're also hurting all your peers. Right.

It's crazy. What's been pissing me off is all of my friends who are very like Oh, we have to help each other. We have to vote for this person so everyone can be equal. And then they're doing this other stuff. I'm like You don't give a fuck about anyone What are you saying? You don't care about people. It's insane. I have a I just now you said pick a fight on Facebook. I never pick fights on Facebook. Uh I lo I know you love to get in the mix and it's great. It's great entertainment. That's why you rank at the top of my newsfeed every day. You're always at the top because I think you you love to mix it up in the comments. I do. But just now, right before we went live, I saw my old high school basketball coach, you know

And your coach is usually somebody you look up to. They're kind of like a mentor. They know everything. Your future, your plan, you know, your dreams are in their hands, type of thing. More than a teacher, I'd say. And he was like he posts on Facebook one of those passive aggressive things where he was like Does anyone know anyone personally that's gotten corona?

Like as if like this is a hoax, basically. And I commented on it. I haven't talked to this guy in whatever fifteen years. Uh, he probably doesn't even know who I am from ninth grade basketball, but I was like Do you actually think this is a hoax? Do you are you literally promoting this right now on Facebook? Because all of his comments were, nope, not me, don't know nobody.

He's like. I know four people. It's crazy that people are like this. I have I have four people, two who have been tested And they it's it's they do in fact have it. Right. And two who are incredibly sick.

Not incredibly sick, but they have a a flu. Uh Or flu like symptoms and they try to get tested and they said The doctor said. It seems like you might have it, but

you know, you you can just kinda you can get through it and we can't waste a test on you. So And then there's all this so there's the people who don't give a fuck. Um that are just they know but they go out to the you know, they're like whatever school got canceled, work got canceled, I'm going to the bar.

Then there's like our parents who are like, uh You kids back in my day we had wars. It's like Yeah, okay, so they they just don't take it as seriously as they should. And then there's people in Italy singing songs on the balcony. Uh so then there's like all these like great sort of human human moments and human ingenuity that's uh that's pretty great as well. So that's been what I've been observing. It's yeah.

It's nuts. This is crazy. I I I'm sleeping way less. I'm going to bed way later looking at the news and I'm waking up first thing and check in the markets. Right. Uh it's freaking nutty. Alright, boys and girls, I want to tell you about our sponsor for the week, and you know I don't just take any sponsors. I only work with sponsors that we believe in here.

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I'm checking uh two things. I'm checking my glucose monitor'cause we both started our weight loss challenge and now have a glucose monitor installed on our Did you go right or left arm? Which uh which arm did you put it on? You might have to be able to do it. Um yeah, me too. And so I wake up all the time to compulsively check this thing, which is Awesome.

And then I check the stock market and I it's just all red. Although today a little bounce back. Thank God. Well let's talk about that this glucose thing,'cause it's an interesting business. So The the background of this you want to talk about this? I do want to talk about this. Uh I have one joke that I wanted to squeeze in there that I missed. Missed the opportunity, but Uh I saw this great joke on Twitter that was like Italian people are all singing songs on their balconies. Everyone in San Francisco's stands on their balcony and pitches their startup.

Uh, um So the the The glucose thing, here's the background folks. J his name's Justin, Justin Mares, I've been friends with him since two thousand twelve. A few years ago he started Kettle and Fire, which is a bone broth company kinda he kinda Jumped on this.

Keto trend. It's uh it's like a sixty, seventy million dollar company, I bet. Uh I don't know firsthand, but it's quite large. She also co founded Perfect Keto, which is a cool company as well. And A few weeks ago he tweeted out that he was gonna do this thing where we would all Venmo him nine hundred dollars. He keeps one hundred dollars for his fee and eight hundred dollars we can earn back over twenty eight days. And the catch is is that he gave us all glucose monitors, which is like something uh a lot of d people who are diabetic, they put in their arm and it monitors your blood sugar. And

If any of us goes above a hundred and ten I don't know what the measure measurement is, milliliter I don't know what What like the unit is. I don't know the unit. Something something per milliliter of blood. Yeah. Some measurement which basically means you have high blood sugar. So if any of us go above this limit, we don't earn our money that day. And there's a group of twenty uh twenty of us uh beta testing it and I do a lot of weight loss things. So I have a like a nutritional coach that I pay two fifty for. I do meal delivery which I pay two hundred a week for maybe. I love all these things. This so far has been the most effective.

By far the most effective dude. So I was like, Okay, you put money and measurement in you're speaking my language. And so I you know, I checked this thing. I think you only have to scan it once every eight hours. Yeah. I do once every eight minutes. Cause I'm like, oh, how does podcasting affect my glucose levels? Let's check.

Boom. So right now I just scanned. And uh I am at one oh four. Um so one of four of the unit is MG per DL. And I've been hovering Mine's really low all the time. I I don't even know if I have mine installed properly'cause it's so low.

Um I've been hovering around seventy. Now one forty is the max. If we break one forty, we lose our money for the day. And that's, you know, sort of you've been too carb heavy or too sugar heavy for the day. And I made bet with I made other side bets with people in the group that says I'm gonna have a one hundred percent Yeah, so that's right. So the other good thing is the social group. So there's a there's a WhatsApp group of all the peop weirdos in this challenge. There's probably like I don't know, thirty of us in there or something like that.

And uh Sam came in hot. I don't we don't know these people, you don't know them, right? No, but they said they listened to us actually. Oh okay, that's cool. So Some of'em know who we are. So I put in there, I said, what are you guys trying to do out of the twenty eight days you're trying to hit ninety percent, eighty percent? What what do you consider a win for you? And Sam just came in and just laid down the goblet, he's like, W what kind of question is this? one hundred percent I am not losing my money. I am winning this challenge. Regardl like no matter what. If I have to like drain all the blood out of my body, then I will drain all the blood out of my body. And then I bet a few other people twenty dollars that I'm gonna have a 100% success rate. I love this. I love high stakes. I think that's what you you have to be in terms of a business. Uh, I think there might be some downsides if he tries to launch it.

Uh but so far as a product it's great. Um He the he makes this open to the public. He says, Hey Uh this is the best way to lose weight or whatever, he's gonna claim something. Uh, I ran this t study

You know, out of my thirty participants All thirty lost twenty pounds and maintained their thing. They stuck to their diets. because money and measurement is a great motivator. So everybody in the world, Venmo me a thousand bucks. And join this challenge, join these little batches. I could see that being very big. Why do you think that there's some challenges?

Okay, so these aren't reasons why it it can't work, but why it would be a challenge. The first thing is that in order to get these freestyle Libres, it's produced by a large pharmaceutical or hardware company called Abbott, you have to get a doctor's diagnosis. Um, I have no idea how we got our hands on it. Yeah, maybe. I don't know how we got it, but but a lot of doctors will give it to you because it can't hurt. I don't think it can hurt.

I think you can also just buy them out of pocket, not covered, and they're way more expensive. I think they're like whatever, four hundred dollars a month. So he said he's losing money. on the monitors. I don't actually believe that. I think he got'em in bulk and got a deal. Or he got l the other company levels to like cover it for him. But um

But I think you can buy them out of pocket without the doctor's note. But yeah, that makes the economics hard for sure. So that makes it hard. The second thing that makes it hard is Could it be dangerous? I don't know. I I I'm an idiot about this stuff. I have no idea. I don't know anything about blood sugar. I I bet he does, but I certainly don't. So there's a liability component for sure. There's a big liability component. Now there are s other services. There's stick, S T I K K I think it's called.

And what that service does is you sign up with a coach and you put money on the line and you have to hit it and if you don't you lose your money but it's like a coach. So for example one time mine was I'm gonna dunk a basketball by this date and if I didn't film If I didn't uh have a video of me doing it, that person uh would donate like five hundred dollars to like a charity that I hated. Right. Can you dunk? Have you ever dunked? Yeah, yeah.

What uh Oh well I mean I mean I could I could I'm not good at basketball, but I could And jump really high, duck it, yeah, I'm pretty sure. You just moved up three notches in my book. That was an excellent stick. That's interesting. So but that's an old school company. Um they've been around for

a d at least a decade. And so it's not quite effective because you can cheat. This is the only service I've done that you can't cheat. Now this is the upside, which is It's super effective now with my n nutritional coach, I take a picture of my my meals and they look at my reports. I lie sometimes. Like when I go like when I go to Costco and I'll like sample something, I'm like, Oh that's like a that's not even worth doing it. But I could easily have those chips. Right. It's like that but I could easily eat five hundred calories of chips and dips. Walking around Whole Foods. Right. Why do you think I'm here? And so this is like the thing where this is I love it. I love this service. It's um it's been it's definitely the most effective. Uh but as a business

So as a business, I think there's demand and it's effective. There might be logistical issues. Yeah, I think there's liability and logistical issues. And um the other thing I would say is I'm not a hundred percent sure this glucose monitoring is actually like legit. So I don't know if this device is effective, for example. I hadn't been able to like I'm not even getting close to one forty. I was eating right. So I was like, let me see what I could do. I ate a plateful of French fries. I ate like five girl scout cookies.

And I stayed under one twenty. And I was like, Oh well Then this is like that ruined it for me. So I don't know if I installed mine not exactly right or something like that. Well here's what happened with you and it's what I experienced. So I actually got three of these devices. I um I got my first order and I told them that one was broken. And because I thought it was broken'cause I did what you did. But after twenty four hours or forty eight hours, it started getting it all incredibly accurate.

Uh it was a it it was very accurate after about twenty four, forty eight hours. So in the first twenty four hours of doing my thing, I started eating horribly and I called Abbott and I was like, Hey you guys this isn't working and they sent me another one and I just kept it on anyway and then it started working. Oh nice, so you get an extra fourteen days now. Yeah. Okay, that's great. Uh yeah, so this is interesting. So we're gonna keep reporting in. So we're only two days into the challenge. Uh we're gonna report in uh if this is a good uh sort of uh method for us, as well as uh the weight loss that ultimately results from this. So we'll we'll check in on that again. Um couple other things I want to talk about. So

Uh back to Corona for a second because Um, you know, when while we're quarantined here, it's really all that's on my mind's all that we're reading. I'm sure that's the same for Many, many people who are listening to this. One really interesting

What does this mean for various businesses? What does this mean for the overall economy? And I'm not gonna pretend to be an expert. Um I don't know what's gonna happen. Probably nobody does. But there's definitely

Better people than me are predicting. So let me just put out put that out there from the beginning. But I will say some of the interesting things that I've been reading and I'll share that with you guys and then if you know more, great, keep going beyond that. So The first is uh the prospect of bailouts. So there's all these different industries cruise lines.

Airlines, hotels, casinos. movie theaters, sports leagues. That are not gonna survive. um this thing or they're gonna have a lot of trouble because We're not like

Two weeks away from this ending. Um the I think the New York governor came out today and predicted that They said that the curve looks like in forty five days this is gonna peak, so a month and a half. The patient curve peaks.

And that's just the peak, it still has to sort of decline all the way back to normal from there. So a month and a half from now Um that's when they're projecting this. So all these businesses are having trouble And a lot of people believe that we're gonna have to do a bailout of the airline industry, hotel industry, casino industry. What do you think about that? Well

I'll I have two points. The first is bailout. Um I'm conflicted. I'm I'm relatively I don't know, I'm not hardcore, but I'm right of center in terms of capitalism where I'm like let the weak go down and let the strong get stronger. It's really hard.

I I don't know. I haven't made my opinion yet. Because I was very much against a lot of socialist stuff, and then when I see Alright. our our our rich co country hurting and there are people that can help us, I'm like, Man, what do we do here? So I I I'm I'm I'm I'm having to reflect on my beliefs and this is uh changing them.

And so there's there's two Interesting things going on. So the first is what I call the blue collar bailout. So I I tweeted this uh two days ago. I said

I think we're gonna need a blue collar bailout. Which is A lot of people who go to jobs, retail jobs Uh, they work in these casinos, they work on these cruise ships, they work in the stadiums, whatever. they're not gonna be able to withstand being out of work for a month or two months or whatever.

And um that's gonna really hurt the economy because it's a huge percentage of, you know, citizens in the country. I said we've seen bailouts when it comes to big car companies Energy companies. But we've never seen a blue collar bail out banks. Um, you know, the government rushes to help the sort of institutions that are

deeply tied in with them. But will they help the constituents? And today, for the first time, they discuss Um you know, a a potential stipend. that they'll give out, I think, a thousand dollars sort of Andrew Yang style Trump Trump and his uh crew

Talk today about doing that. I think that's very interesting. It's eight hundred and fifty billion, I think. That's what it would cost. I think that well, it was he's they're discussing eight hundred and fifty billion dollar uh stimulus package for regular people. Yeah, and so I think they're gonna have to do something like this, otherwise too many people are gonna dip into the poverty s cycle and once you sort of

Once you get on that track, it's just very hard to get out. It's like being on the wrong end of a game, a tetherball, and the other person is just hitting it just out of your reach and it's just getting tighter and tighter. So I think they're gonna need to do that. Um So that's one thing and then the bailout on the other side, I was looking at these companies and I saw a bunch of people saying Hey, why are we gonna bail out the airline companies when they're doing all these stock buybacks?

Yeah, come up boys said that. And so I was yeah, Mo Z Ali was saying that and I said, what's up with these stock buybacks? And so I went pretty deep on understanding, you know, what what are these buybacks'cause I I only knew at a surface level. Pretty interesting to me. So let me talk a little bit about what's going on here. So Um

Stock buyback started basically at the Great Depression, so nineteen twenty eight. Uh the depression happens, stock prices start crashing for a bunch of the companies. And The companies realise hey normally when we want our stock price to go up, we gotta generate more revenue, more customers, more profits.

But with the Great Depression happening, those are going down. So our stock is dropping. And then the way that our stock is measured revenue, profits, et cetera. is gonna get worse and uh it's just gonna cause a a cycle where we're just gonna keep keeping keep crashing. So somebody very smart decided Oh, I know what I can do. If I want the demand for my stock to go up, I should just limit the supply. How do I do that? Well, what if I just use the cash we have

And rather than investing it in our business to, you know, grow or do more marketing or whatever I'm going to um just buy back shares. So they started buying back shares. And they bought back shares and then all of a sudden the there's less shares available on the market and the price started to buffer. A price started to go up. And so uh this became like immediately the the sort of silver bullet solution that companies were using to sort of survive in the Great Depression.

No. This is actually a a technique that Joseph Kennedy did with uh There used to be a cab company called Hertz, which is now the car company. And this is exactly what he did. uh the founder of Hertz said, Joe, I need you to lock your he was young and he goes he was willing to break the rules. He goes, I need you to lock yourself in this hotel room up in New York And I need you to do a lot of these buybacks so it appears as though we are a lot bigger than we are. And then once people start buying'em back, sell'em our stuff and you're gonna save us.

Right, exactly. And uh you they just need to reverse the momentum and the appearance that hey, this company's doing well in spite of everything else. And so when there's a m uh you know, when the economy is crashing, people fly towards safety. So there's a flight to to safe safe uh havens. And so if your stock is going up, people will view that as a safe haven. And so Anyways, this happens for a few years, happens for six years, and then they put a stop to it. So the government comes out and says, Hey, wait, wait, wait, wait. This is sort of an artificial way to pump your stock price. And uh we don't like it. We don't think it's a good thing. You're just

buying uh they're basically buying the management stock itself. So the management would sell the stock using the company's own money. So the man the executive management would get rich and the stock price would go up. And so then executive management keeps their jobs. So it was a double win. So nineteen thirty four this stops and it stops for about I don't know, fifty years. fifty years, there's basically no stock buybacks.

In the stock market. Now nineteen eighty two comes around. You have Reagan as the president. And um There's this guy, John Shad, and I I don't know exactly what his deal was, but Um

But they decided that hey, you know what? Um, we should they change they wro they wrote a new law which allowed uh stock buybacks back. Uh back into play. Um companies should be able to do this. And the theory was Hey, here's what will happen. When a company buys back its uh shares Um they can use

You know, they can use uh some of that A company could use its cash to do three things at any given time. It can give it to the employees and raise their wages. They can Invest in growth, hire new employees or invest in machines and whatnot.

or they can issue a dividend to investors. And um That's the sort of buyback route. And so what ended up happening was Reagan writes his law into pass, so nineteen eighty two Buybacks are back after fifty years.

And the second change that happened was that CEO started getting Um Compensated not on salary, but also based off of bonuses for the share price. So now the CEO is also incentivized. to buffer the the sale the stock price. And so you go from in nineteen eighty two

Half a percent. of profits were spent on buybacks. Before this law. Two thousand eight? Seventy-seven percent of profits are used for stock buybacks.

Even now it's sixty five percent. So 65% of profits not going to employ wages. Not going into investing for growth. Just you announcing uh stock buybacks.

And you can see that the CEO compensation is sort of skyrocketed as well. So it went from The CEO used to make fifteen times more than the average employee at their company. Now it's two hundred twenty times more. Because they're compensated on the stock. price and the stock buyback is the easiest way

to buffer the stock price. And so um this has been getting worse and worse and worse. Two thousand eight was sort of the peak uh worst time because when the Financial crash happen in two thousand eight. uh companies n they pulled their favorite lever to keep their stock price high. Uh or from plummeting further.

And so uh recently Trump cut the corporate tax from thirty seven percent to twenty one percent, and the idea again was like All right, great. If we don't tax the companies They'll use that money to give higher wages, to reinvest in the business. And uh they did a study, they saw that it's been a year and a half since that tax cut.

And uh Wages have gone up one point two percent. Only? But there's been one trillion dollars of stock buybacks announced since then. And so clearly the the reason the companies asked for the tax cut is not why they did this. And So what what what do you think's gonna happen? So I think what's gonna happen is

Um now there's a there's a problem, right? So these companies like the airline industry, right? So I have this graph um that we can show on the screen for people who watch this on Instagram or on the YouTube channel for the hustle. Uh, which by the way, for some reason nobody watches on YouTube, even though it's much better. We cut the clips of just the good parts and you see the video, you see the graphs. So I don't know why nobody's watching, but they should. The podcast gets way more lessons than that.

Um but anyways th there's this graph that shows okay. If you look at like international companies p outside the US where you know, like Volkswagen or whatever They'll have like zero percent stock buybacks. If you look at in the US, some of the corporations like United, eighty percent of profits went to Uh to uh stock buybacks. Southwest 66 delta 50 of profits being used on this. So now these companies they don't have cash anymore.

because they bought back their own worthless shares. So they they ran out of cash because they were buying back their shares to pump their price. And now they can't do it because the whole economy's crashing, so now they can't get their way out of that. And they don't have the cash to withstand it. So they're gonna go to the government and say, Hey, we're all out of cash.

Don't let us fail. But really should we reward that because you used all your cash to buy back stock to make yourself rich for the last five years? Which, by the way, we know how this is gonna end. Yeah, you're gonna get bailed out and they're gonna do the same thing. Sadly.

It's yeah, this is uh I didn't know. I didn't know About a lot of that. Um so there's our clip.

Uh Yeah, it's crazy. And you know, Bernie and Elizabeth Warren, they've been trying to say like, hey, we should stop this, but like I think, you know, it took me five minutes to explain this, and that just means it's like too complicated of an issue to like be mainstream. Therefore it's gonna get swept under the rug. Well let's talk about Let me bring up two things that are interesting. First of all, have you looked at Casper's uh oh my god, have you looked at Casper's market cap? No But that reaction makes me wanna know. It's sad. I mean it sucks. I don't wanna like I said, I don't wanna see people lose

Uh a hundred and seventy five million dollars is their market cap. And so what was it um Yeah, ten times higher. No. Uh the share price right now is f is four fifty. Before it was thirteen fifty. So that's way less money than they raised.

Right. Uh that's crazy. And then let's talk about one more and I'm gonna parlay this into like an opportunity here, which is Um Okay, Groupon. For years I said that I think Groupon can actually be great.

Um Why is that? the market that I think there's still ways to make it I don't know. I just uh a couple of years ago when I was looking into this, I was like, Man, I think Gripon can can be a little bit better if they change X, Y, and Z and I did a few years ago, so Um I'd have to go back and look at my arguments, but

I was wrong because Uh, their valuation up until recently was like two or three billion dollars. As of today three hundred and fifty eight billion uh three hundred and fifty eight million. Wow. Yeah, and so they crashed and I mean they their their share price sixty five cents. So we could just pool our money together and buy it outright, huh? Yeah. But I think it's actually I think that what I would do is I would want to buy hotels right now, which I'll talk about in a second, but I will all I'm very interested in this local deals and here's why. I've had

Maybe five people come to me. and talk about monthly boxes with local goods. And I think that if you executed on this uh uh appropriately, it would actually be incredibly Um incredibly successful because the moment that we're at now, it's not really like People don't have money.

It's just that there's this there's virus that's scaring people. And so people have jobs or hopefully still do. Um and I think that w I've had some people interesting uh reach out to me and a lot of people just people have ideas and that's kinda worthless. I had one guy who mocked it up and he goes, I have this company of about twenty his name's Sam, actually. He goes I had twenty I have twenty employees for this events business. I'm gonna fire them or I gotta make this work. And he reached out to me and I showed me his mock ups and everything and I go

Yeah, I'm into it. And so what he's doing is he's starting in Seattle and I go, Then then you gotta like put like a box there where people can sign up for a San Francisco one, and if you get enough demand, you could do it, and then have a Chicago one, and then an LA one, and then a St. Louis, New York. And you spend a certain amount of money and they'll send you goods from that local service. So for example, uh a restaurant that has good barbecue sauce or Um You know, whatever. uh coffee beans from a local place. And I think it's awesome. If this existed uh like in a reasonable way for San Francisco, I for sure would spend a couple hundred bucks to buy from

my place. I mean I don't wanna I'm kinda h I'm kinda humble bragging here, but the coffee place down the down down underneath me, I love these guys, are the these Afghani immigrants who are great. I went and bought coffee from'em yesterday and I gave them a hundred dollar bill and I was like I'm I I'm not gonna be buying from you guys for the next couple of weeks. Right. But act like I am. But I and I and I think a ton of people are doing shit like that. But I would totally put my money into this something similar. Yeah, I think I think that's um that's happening. There's there's also I think an opportunity right now for sort of

Some kind of uh local gift card or some kind of buffer. So one problem that that's happening is you know, a gym, a local gym. My my brother in law he does jujitsu. And the Jujitsu Jim post on Facebook they were like, look if Everybody freezes or cancels their membership for two months. Like we can't survive, we're gonna try to do video jujitsu classes and other things.

But the and so people started commenting, like, Hey, how can we help you? And he said they said Look, if you could just buy um, you know, a gift card for for ten classes that you can use in the future. Um that will help our cash crunch today. And we'll be able to stay open.

Now let me bring that up. I'm gonna tell you two things. Um first I'm gonna Well first I'm gonna humble Bet brag. Again, I'm bragging a lot. Ben Askren, one of my favorite fighters, the guy who got knocked out in five seconds on UFC He reached out to me. It was awesome. He messaged me on Twitter. I'm meeting up with him online, uh like a video call on Thursday because he has wrestling gyms and he wants to do that where t he goes, you got he goes, we gotta go digital. I go, Yeah, let me help. And so anyway, that's badass. Like my hero, one of my heroes. The second thing is okay, there's this uh I'm gonna come back on Thursday with more insight into this, but entertainment.com.

Entertainment.com what it what it was was like a local coupon. Remember those coupon books where you my parents love those. Yeah, I think that there's a huge opportunity to bring that back. And so the business model for these coupon books was actually pretty sound. So entertainment.com went out of business in two thousand thirteen. When they went out of business they had thirteen million in assets and fifty million in liabilities. So they didn't run it well. It's now been acquired by a private equity firm. Um originally uh before the private equity firm bought'em, uh a A A I A C the uh the folks who own Tinder and Match, those guys owned it. And

when uh when the private equity firm bought it, they bought it for a hundred and thirty five million dollars in cash and the company had like five hundred employees. So Uh at one point the economics were sound. Um, I actually think that someone can retool these coupon books and build something super interesting. The way that I would angle it is I would say I don't I would have to work through this model. I think it's I think it's doable, but I would have to work to the unit unit economics. I think what you could do is do some type of deal where you as the middleman get your fee, but you can kind of f forward your money to the vendors right away.

Right. I would have to I I I have to Think about this, but th I think that something like that is incredibly interesting. So this company now, they still make tens of millions of dollars a year in revenue. Um But in two thousand and twelve, two thousand thirteen, fourteen, they were making about a hundred million in revenue. So these businesses can work.

Well I think I think it's um you know, like Honey or those Chrome extensions, those are the modern day coupon books because Um you know They t they're coupon books for the internet, which is great, and they can operate at internet scale. And um and honey's doing, you know, ludicrous numbers. But um

But I I do think you're on to something with this local this hyper local thing. Um You know what I mean? Right, exactly. The Groupon thing I think is more interesting than the coupon book because Um, you know, at HustleCon this year, that guy Eric Ryan talked about the founder of Method Soap and Ollie and Welly all these great D D C brands or or sort of not D C actually just new consumer brands.

Um that they sell through Target and whatnot. You know, he he said a line that stuck with me. There's the number one most important thing from Haskhan this year, in my opinion. He goes You have to identify The culture shift first. And um, you know, the culture shift happens first and then the products and services that um that meet those cultural values

Come second. So let's say for method soap. He was saying You know, consumers now they turn their everything they buy, they turn to the back and they read the the ingredients. And so They care about what they're putting in their body, they care about what they're putting in their homes, they care about what they're putting in their babies, but et cetera, et cetera.

And so you see honest company take off'cause people care about what they're putting on their baby. you see native deodorant takeoff because people care about putting natural ingredients and not Uh aluminum and parabens. You know, in their armpits. And Method Sop took off because they said

Hey, you shouldn't have to clean your house with toxic chemicals. But he identified the culture shift first. Now I don't know how much of this is just retrospeak because entrepreneurs do do that where they Just make up a story later about how they did it and the real reason was just some Total. numerical thing where they were like Oh yeah I just know that's

We know firsthand this was true with Moyes with native deodorant that he did this. Yeah, and he actually tweeted today some more info, which I thought was good. He said Um he identified that n uh natural deodorant was one of the top selling he's at number one. I don't know if it's actually number one, but it was one of the top selling products on Etsy, period. Yeah but um everybody was buying it out of a jar and you had to like do this weird thing, stick your hand on the jar, then rub it in your armpit. And he's like look, people want

People want natural deodorant, but they want the convenience of the stick. If I could figure out how to put natural deodorant in a stick, I think I can make a business that works. and uh you know eighteen months later sells it for a hundred million dollars. So I think there's something to identifying the culture shift and if the culture shift is Hey, we gotta like

hunker down a little bit or hey we gotta like support our local businesses like small businesses that's where something like a group on or a group on 2.0 is very very interesting to me Very hard to pull off. Extremely hard to pull off because Local is super super hard. It's slow to scale. And you're dealing with a lot of mom and pop style businesses. Group but Groupon was not slow to scale. Groupon got to uh a billion dollars in sales f I I think faster than any other company ever. Now it didn't it didn't it didn't operate well. It was a now there

It didn't stick. I I I don't want to talk out my ass. No, I think it did stick. I mean look up until recent Groupon Hey, look up. How much does Groupon do in revenue? They still Well it it didn't stick from a merchant perspective. What happened was they onboarded all these merchants, the merchants went on and they would get a bunch of empty traffic and then those empty sort of calories eventually they pulled off and they said, Why am I offering these deals? People come They they take the sale, they don't come back. And that part didn't work. So they lost on the merchant side for a while. And then they got

All these clones came out. that we're doing the exact same thing. So customers sort of got inundated with daily deals. Products. So that was a bit of the problem there, but you're right, actually they did scale very fast.

What what's yeah you have the revenue? Two point eight four billion in twenty seventeen. Yeah, so That's we have an echo from the Oh? Or something. All right, we're good. Uh two point four billion dollars in sales. It definitely stuck.

Uh Yeah, but you you can see the share price, right? Like y you could see that it's not um Well,'cause operationally it's it it's not It it didn't work operationally. You know, they have way too many salespeople. There's a lot of reasons why that model didn't work. But whenever I look at a business, I I ask myself, where's demand?

And where where do I get demand and distribution? In this case distribution is kinda built in because The m the demand, I mean the proposition is quite Simple. You're gonna get stuck at a discount.

Now I really think that something's here. I'm talking a little bit on my ass, that's kinda what the podcast is, though. Uh I I something has to be done. And so

I'm gonna look Or not, something has to be done. I don't know if I'm gonna do it, but s somebody there is opportunity here of like uh Uh you could pull on people's heart string. Pretty easily because I found myself given this coffee guy more money. I've paid my clean lady already.

Uh, even though she won't be coming, and I have a feeling a lot of Americans are doing that. You know, uh everyone's buying gift cards. At the moment. Yeah, and I I also think that there's a just a pay it forward component. So if somebody made a really simple viral site that's just about giving, it's like, hey, this is for giving for people in need. um that are gonna be affected by this. I think you could do I think you get a lot of attention from this.

Um Because I think there is I think people understand that people are suffering and nobody likes when the people around them are suffering. And uh there's enough good people in the world that will Even if it's the minority of people. There's enough good people that will do something about it. Next week, Sean, what I wanna talk about is founders card and some membership

some membership deals. And the reason why is I think that You know, my prediction is Well I don't know if it's a prediction or if it's a hope. is that uh because this wasn't like a financial crisis, it was more so a scare or whatever we wanna call what's going on.

I hope a full blown recession isn't gonna come. And I actually think that it It might be okay. Um but If it's gonna be really bad, I'm g I think we'll see a really big rise of discount. memberships like for example

buying clubs, which I have done a lot of research on. And so next week I'm gonna come with a bunch of buy buyers club inf information that I love. I was fascinated. So I I I do want I wanna hear what you have to say about that. For sure. I actually have the opposite view. I think this is gonna be very, very bad. Um I've been hearing for first I'll give three reasons. So

My my general view is that The coronavirus isn't gonna cause Um it's not gonna cause an e uh economic recession. Um, but I believe I I think the corona is the needle that pops the bubble. It didn't create the bubble. The bubble was due to several other factors like corporate debt or

the fact that we've just had a ten year bull run, which is like as long as it goes, and these things always go in cycles. And so at some point The cycle had to uh reverse where you have super low interest rates money's easy to come by. You have a bull market for ten years. That that's gonna go, you know, the other direction. And I view this as the the pin that popped the bubble.

The bubble was Things like w the stock buybacks that we talked about. The corporate debt problem. I'm not as much of an expert in this, but if you want to see like how Fed up this is, just Google corporate debt crisis. And uh that's basically the equivalent of more mortgage backed securities this time.

Um that's my that's my understanding of it at least. And um another video I'd recommend, um, have you seen this? It's uh Ray Dalio has this YouTube video called How the Economic Machine Works. I think about it constantly. One of the best videos I've seen out there. It's just super well made. It's twenty minutes, which is long, I understand. But watch it. It's amazing. Uh and it describes how the economy works. This is what sticks out. Yeah.

on a grand scale up and to the right. So it's it looks if you zoom out, it looks like a linear uh linear diagonal line But when you zoom in, there's loads of blimps. And if you're in the thick of it, which we are, the little blimp down feels like it's the end of the world. Right.

Yeah, it's crazy. Um also I thought some other interesting things are happening. There's other opportunities that are happening here. So some companies are doing really well, like I know at Twitch, for example. uh usage is higher than it's ever been. Um but are the advertisers there. Uh the advertisers are gonna suffer, right? So you're gonna get the usage to go up and then you're gonna get some of the advertisers advertisement to go down, dollars will go down. But i if you're a company like a social media company like a Facebook or YouTube,

you'll take a temporary dip in advertisers'cause they'll always come back. when the economy recovers. But the usage is super important because You have very few times to build a habit amongst consumers. And so we see this all the time. We do analyses of of of the business. And I can't say too much, but I'll say

What's a safe way to say this? Okay. So a safe way to say this is There are times of the year where people have more time availability, maybe they uh get new hardware or new software. And um they build a habit during that period of time and that sticks throughout the whole year. And so we as a business decided, okay, we need to invest in those times because

This is the formative period where people uh build their habit that lasts the rest of the year. All the stuff we do mid midway through the year is nothing in comparison to anything we can do during this special zone or these special time windows. And so um It's like tw tw Twitch is interesting then to you. Yeah, so Twitch Twitch has that. That's where I've sort of learned that. But e commerce obviously has this seasonality, like the Christmas Black Friday time, you know, sales all peak, but that's also where people sort of

are willing to go buy a bunch of stuff, try a bunch of brands and form opinions. And that carries through the rest of the year. And so I think some companies are gonna do really well and so um you know, I'm looking with my personal portfolio at Uh I don't know when and when is a very important question because you don't know.

how long the economy will get rocked, but Companies like Amazon, Facebook um Google. I think they are On sale. Um, I think they're they're a discount. It's like, you know, get these blue chip companies

fifteen percent off, twenty percent off, it might get up to thirty, forty percent off. And uh those are opportunities for Uh'cause I asked a bunch of people, I said Hey, you know, you saw the dot com boom and bust. You saw two thousand eight.

You know, w two thousand eight I was a sophomore in college. I wasn't paying attention to this shit. And um So I asked them, you know, what do you what do you remember from those experiences and what would you guide now? And they basically said Hey During these downtimes, two things happen. A lot of great startups get started because jobs aren't available and people have a lot of downtime.

And the second thing is Um Stocks are fifty percent off, real estate's for thirty percent off, whatever. And and it's sometimes the best time to buy. Now you just you don't know when it's gonna hit that that bottom. Um and so you have to have if you have dry powder, you're in a good position. I uh

Brian Ch my wife works at Facebook. Brian Chesky gave a big talk the other day because uh what did I say? Facebook. Oh, she used to work at Facebook. She works at Airbnb now. Um, Brian Chesky gave a talk because it's not good. Obviously.

Yeah, and they're in the it's not good at all'cause they were gonna go public and our family was expecting a nice little Right. You know, it it would have been whatever. Uh anyway, um Yeah, shareholders. I'm very upset. But it I think it will bounce back and Brian gave a talk the other day. He goes

Just Everyone think about this. We started this company in two thousand and eight. Okay. We have been through this. We have pl we have planned for this. We expect we already know what's gonna happen. He goes, I just spent an hour on the phone with Obama

And we talked and he like was he was like kinda drop it in a cool way. And he goes, uh he was like I we we plan for this. Not this, but we plan for we know what happens to travel industry when bad things happen and he goes We thrived in O eight and oh nine. You know, we were just getting started, but we started on paper the hardest time. He goes, We will get through this. It can work.

And let's just work together and execute and w we'll come out on the other side. Fucking fingers crossed, man. Yeah. That's uh that's great. You know, it it's actually it's good for all businesses if You know, the more businesses that survive and thrive.

uh the better. Um because the the whole economy gets impacted by it. So Um yeah, root rootin' for that to happen. Do you wanna keep going or do you wanna save some for next time? uh call for a investment I gotta make in in two minutes. So I gotta I gotta talk to this guy. He's in Y Combinator. I actually wanna do this. I wanna go through the Y Combinator uh company. So they cancel demo day, which is usually an in person sort of meat market of investors and and founders.

And they went all remote. And so what I want to do with you is to go through the list of companies and uh react to them and talk to them. We might do like a sort of a three part special just going through the Y C batch. I don't know if people are interested in that because it's like Y C is very Silicon Valley, but I should be this guy How'd you make this guy? Uh which one? The founder?

Yeah. Actually I've met I saw him on Twitter doing something interesting. It's the same way I met Furcon actually. I saw that the anytime I see an engineer who's on Twitter talking about either growth tactics that they're trying Or talking to customers, I'm like, Oh, this is special. This guy builds the product.

But he doesn't just sit there. He's like changing this button and and trying to figure out how to get the conversion rate to go up. Or he's talking to customers and being like, Yeah, don't worry, I got you, I'm gonna fix that and then tweeting again, Hey, I fixed it. And those people are one man wrecking crews. And so I saw this guy I started DM him and I said, Hey I gotta talk to you.

And then I fucked up and I didn't he was like, Yeah, great, I'd love to talk. And then he kept being like Um like I I it said something like very mysterious in the first combo that was like Hey I got something to ask you. And um

And so he then I like dropped off the map and he's like, dude What kind of cliffhanger was that? I need to know. Come on, talk to me. And so I I messed up there and I came back again like two months later. I was like, Hey, sorry about that. Um

And so his company's just been growing in value. And so now he's raising at a fifteen million dollar valuation. And I probably could have got it at a two million dollar valuation if I had just responded to the DM I started way back in the in the day. So Well next week or on Thursday you'll have to update us. Next week I'll cover a little bit more about coupon stuff and some buyer club stuff. Okay, and I'm I don't know if I want to do the Y C thing.

Um partially'cause they might hate it because you're not supposed to do this, but I'm willing to do it anyways if people actually really want it. Um if you're lukewarm on it. Just be like I'm lukewarm on it, and then I won't risk my neck putting these companies out there. But if you're like, No, I wanna I wanna hear this, I wanna get access. Then let me know and uh we'll do it. And I did a a rant last time, Sean. I did this on Thursday. I showed up here by myself and recorded

It was scary. It was weird doing that. And I think people liked it and they said they want you to do one too. Okay, yeah, I'll do one. I'll do a Corona rant as well, uh from quarantine. C quarantine rant. Um all right. Thank you, listeners. Uh me and Sean rev read every single review. I I I'm this is I'm not exaggerating. Literally every night I go and look at the new reviews, so go ahead and leave us one and let us know what you think. And we will talk to you soon. So yeah.

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