Chit Chat Stocks - Nick Sciple | Online Dating & Gaming

Episode Date: January 12, 2021

This week your hosts, Ryan and Brett, welcome Nick Sciple onto the show. The three discuss online dating, gaming, and many other topics. Before we get to the interview Ryan and Brett share their favorite stories from the week. Stay tuned after the interview with Nick to hear who's in hot water, buy-sell-hold, and anecdotal evidence. As always enjoy the show! Subscribe to 7 Investing with the code "CCM": https://7investing.com/subscribe/ Subscribe on YouTube: https://www.youtube.com/c/ChitChatMoney Follow Chit Chat Money on Twitter: https://twitter.com/chitchatmoney Visit our website to see more from your hosts Ryan and Brett: https://www.chitchatmoney.com Learn more about your ad choices. Visit megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to Chit Chat Money. Today is Tuesday, January 12th. Today we have an interview with Nick Seipel. A lot of fun. He's like sort of our boss, right? Yeah, he is an editor at The Motley Fool, which is another job we both have. So yeah, he's not like our, I don't know, he kind of described it as if he's one of the person in the value chain. Yeah, it was fun to talk to him. But yeah, we talk about online dating, we talk about gaming, GameStop, Roblox. It is pretty informative, and he's got some good takes on it. But before we get to that, what is your story for the week?

Yeah, it's going to be the Poshmark S1 and IPO coming up later this week. Interesting business model going after social commerce, and I think it's going to be fun to talk about. Yeah, definitely. And then I'll be talking about, well, my story is titled The Art of Position Sizing. Yeah, beautiful title. Good. Once again, you have not added a great title, which you'll work on that. And then as always, we have current state of FinTwit, hot water, buy, sell, hold, anecdotal evidence.

But before we move on to the show, this is our chance for our sales pitch, which is going incredibly well. Yeah, so thank you everyone for signing up. Seven Investing loves it. You're going to love it because the service is great and we like it too. So it works out for everyone. Plus a big announcement. Did you see the big announcement yet? No, I did not.

I did not watch it, but they have something new going on. So check out their Twitter feed. I think they talked about it in their video. Um, but yeah, they're all, they're doing new things. I mean. And if you use the code CCM, you get $10 off your first month and it's only 17 bucks. So. No, yeah.

With the discount, it's $7 for your first month. So it's basically, you know, it's under 10 bucks to try it out. It's normally 17 bucks. Use the code CCM to get $10 off your first month. We say this every time, but it's great value. I mean, you're getting all those picks for seven bucks. Yeah, they really are. I don't want to say mispricing themselves, but the value you're getting out of it is

fantastic. Okay. Without further ado, here you go. Welcome to Chit Chat Money. On this show, hosts Ryan Henderson and Brett Schaefer interview industry experts and riff on the world of investment. As a quick reminder, Chit Chat Money is a CCM Media Group podcast. Ryan and Brett are not financial advisors.

Anything discussed on Chit Chat Money by Ryan or Brett or any other podcast guest is not formal advice or a recommendation. Now, please enjoy this episode. welcome in i'm going to kick things off with the art of position sizing so ensemble released their paper this week as i mentioned earlier and it sort of detailed how they choose to size their positions uh and basically they try to combine their approach with qualitative and quantitative thinking it's obviously not all that unique but they use sort of five pillars to assess their thinking and the first thing they talk about is just concentration in general and so they limit

the portfolio to 20 to 25 companies that they know thoroughly. And so when I think of concentration, I usually think a little smaller than 20 or 25. So it kind of had me wondering, do you think a fund's concept of concentration varies depending on how big the analyst team is? Because there's only – it feels like there's only so many names that you can manage at once, so many companies you can have in a portfolio and know deeply. Yeah, I believe they have three lead analysts, Arif, Sean and Todd. correct so if they're all doing about eight that seems reasonable especially you know you could

probably be an expert on eight companies and obviously they overlap yeah that definitely comes into it i think again uh the position sizing also comes into it because if you have 20 to 25 companies but you know five of them are 50 of the portfolio it's it's similar to maybe just having you know 12 to 15 yeah yeah and they they don't equal weight and they talked a little bit about the Kelly criterion. So if you don't know what that is, it's basically this gambling principle that I think was introduced a while back. But if you know the odds and you know the payoff in gambling, you're able to calculate the right bet size. Obviously, you can't do this exactly in investing because there's no way to know the exact payoff. And there's also no way

to know the exact risk either. But do you think everyone is using some sort of variation of the Kelly criterion when they're managing a portfolio? It applies to everyone because the odds are real, whether you know them or not, or paying attention to them or not. And the payoff of what price you're paying for something, again, that is in there whether you know it or not. So if you use it correctly, or I guess there's no way to really define using it correctly, you can, I mean, say you're using it to your advantage, but I think a lot of people may not think about it too much, but it definitely affects them and it's something they probably should consider. And if you're someone that does qualitative research and you're not doing a pure quantitative

portfolio, like, you know, like a value quant type style or something like that, it is something you probably should be paying attention to. Yeah. And I think a lot of people subconsciously are doing it without necessarily defining it. So they're kind of just like mentally thinking, all right, this is obviously riskier, but the payoff is much higher if I'm right. But they're not sitting there like, oh, it fits the Kelly criterion. But the second part about this was slow and fast thinking, I think is what they

titled it. And so the slow thinking part is where they try to turn their qualitative judgments into a quantitative assessment. So they're analyzing the business and kind of breaking it down into three parts. So the first is the return potential. So the upside. The second is conviction. And the third is the research stage. So where they're at and then the analysis. And they're sort of quantifying each one of those, trying to put a number on it. And then the fast thinking part is basically they're making actions, they're changing portfolio sizing at speed. So once they have their foundation, once they've done the slow thinking and they have their judgments, they're not leaving any room for cognitive biases. And I think it's a computer that does it,

but it's instant when certain price actions happen. Oh, okay. So, yeah. So, something, let's say they're looking for, they'll buy under blank shares or in this range or something like that. If the shares fall to that, they're not forced to make another qualitative judgment. They've already done the research and then that occurs. Is that what you're saying? Yeah. Okay. I mean, the process here feels very similar to what we are trying to kind of build for our investment style. Cause I mean, we re like, I don't know if the order is the same, um, because you know, the research stage is kind of always going on and I'm not sure this is just a three-step process where you're one to two to three, but I mean, we try to judge the return potential versus our conviction. Like, I mean, it's a huge difference if you think that something has a 90% chance, like if you're 90% sure, or maybe 80% sure that something is going to go out

favorably in your favor and the stock is, you're expecting at that price that you're looking at for it to only return 10 to 12% versus something that only has a 10% chance of working out and it could possibly return like 20 to 25%. I mean, yeah, I mean, you might get better returns with the one that has a 10% chance of working out if things work out, but you really want to put your money in that, the one where you have higher conviction. Yeah. And do you think it's a good idea to put a number,

like assign a number or try to quantify sort of those characteristics or the qualitative assessments of a business? I don't like to put a number on it. That's just kind of my style. But I mean, if you'd like to put like a number to try to rank some things, I mean, I think you can have the risk of anchoring to the number,

But I don't think there's too many risks. But I don't know. It's not something I like to do. Yeah. OK. I'll get into the step – I think it's step four – step three. So they take the three inputs from step two. So the upside conviction and the research stage and they combine them to arrive at a target weight for each company.

And Sean said – I have a quote from him here. I think this is from the paper. He said, we never target an allocation to cash. Cash in the portfolio is a residual of the best or of the target weights of the companies we own. Is this a good way to look at it as sort of when you don't find value, cash is sort of that fallback? Yeah, I think that's a good framework. I think a lot of people technically do this as well. Just without knowing it?

Yeah, just without knowing it. Yeah, I mean, I think it's a good way to go about it. You don't want to have a, yeah, you don't want to start with your cash allocation. The cash allocation should be, all right, do I have, you know, we have a minimum, you know, level of expected returns for our investments, right? And if we can find 100% allocation to those expected returns with not, you know, risking putting all our eggs in one basket or putting all our eggs in two risky of baskets, then, you know, the cash balance will go wherever it, you know, should be. it's not something that you should target. You shouldn't target like a 25% cash balance or a 5% cash balance or to be fully invested at all times. I think it should just go whether you have the ideas you're actually comfortable with. You might have a time period, say in March,

I mean, this is a shorter time period where you were like, wow, I found a lot of ideas. Like I am just, I can go fully invested or you could have been, you know, still a little bit in cash. And then now there could be a time like now where it's tough, at least in my personal experience, to find good ideas and it's not like i'm one to have cash uh but it just kind of ends up that way my only concern with that is that you might end up fully invested because you're like oh there's returns here there's returns here each company and you get to 100 of your portfolio and stocks can still go down and like you can't buy at a better price i feel like for me i always i mean you obviously try to lean up in bad times but i like having a cash buffer at least a little

bit yeah i mean i guess when i say fully invested uh i would probably that means to me about uh two to four percent cash balance i mean when i have a five percent cash balance in my personal account i i figured that's darn close to being fully invested just because i mean you you don't want you want to have some you know good liquidity just in case things you know things happen i don't know yeah i'm sure they think in a similar way and i'm sure they do have cash or access to liquidity but that is sort of the it's it's the right way to think yeah is that i agree i agree put money where you can find returns um the fourth step is the adjustments so their analysis of securities is on an individual basis so it's not sometimes that target weight that they assume can get over

100 so they have to peel it back on like a pro rata basis okay so they separate everything out and then they come back together and it's like oh we got to 120 let's yeah lower okay And that's a pretty straightforward step that makes sense. I don't really have anything for that. But the fifth step is monitoring. So they keep all weights within 1% of their target weights with automatic buys or sells. This is one that I feel like our listeners, I imagine, might have a little bit of different opinions on. Just that, you know, some of the best investors have said they sold winners too early. And so, 1% within your target weight means you're probably trimming on your winners pretty quick. Yeah. I don't know. Do you like that approach or do you think there's a bit of a balance to where maybe it's okay to keep your winners in there?

Yeah, I wouldn't have that strict of a target weight, but it works for them. Um, maybe they go in with more of a, you know, a weighted percentage at like something that's already like 10 or 12% or something like that, where it could, you know, get to a 20% position rather quickly. And they still have, if they're trimming at 1% of the target weight, um, they still have 10% exposure. But I mean, I do know that, you know, the seven investing guys, the Molly fool style. Um, I know we have a lot of listeners that follow that type of, you know, investing investment

process. um and they've had a lot of success letting your winners right i mean it's that simple i mean you know a lot of people with this strategy likely would have taken a lot of chips off the table with amazon and netflix and those are always the classic examples and they own netflix so yeah so oh yeah ensemble does yeah so i mean there's given takes with that but i think it really um it can definitely help with your risk you know right yeah and you can always reassess sort of your target weight as well. But yeah, I learned a lot from this paper. I think it's well worth the read. And you can probably just find it on like Ensemble,

whatever, look up Ensemble Capital and you'll find it on their website, correct? Yeah, it's on their, I think the blog is intrinsicinvesting.com, but it's also on their Twitter and I'm sure there's a million places you can find it. But what is your story for the week? Yeah. So Poshmark or Poshmark, to be honest, if you're laughing at whatever name sounds right. I'm going to call it Poshmark. They dropped their S1 a little bit ago. Posh? You think it's Posh? I think it's Posh. Okay, Poshmark.

So it is a marketplace that is supposed to price later this week and then start trading by the end of this week so you can see shares out on the public markets pretty soon. I'm expecting it to, you know, with the current market environment, it's likely going to double and we'll get way

past any sort of analysis if I end up thinking that it's a quality company, but the company itself is a marketplace that allows users to buy and sell new and used items it feels very similar to ebay or etsy but with a focus on shoes clothing jewelry and it also has a focus on a social aspect so you can follow people rather easily and interact with them it also has a focus on used items more um than something like uh you know an amazon or a wish.com or something like that but it's also the focus on sustainability yeah go ahead it sounds like i don't know if our listeners are familiar with this but free and for sale i don't know is that just in college

towns or is that yeah it sounds something like that but more um i mean that's a little more of garage sale you know what i mean um and this is more of a say you're an individual and you got a lot of stuff or you want to start like say managing your closet right you wear something one time you want to get rid of it you sell it to someone else and then you can also buy things from other people. And then, you know, Postmark takes a take rate. It was founded in 2011 by Manish Chandra. Chandra, I think it is. And she is still the CEO today. A few stats on them. Active users spend 27 minutes a day on the platform in 2019. That's great usage. And people laugh, you know, some people are like, oh, eyeballs, blah, blah, blah, blah, blah. But that's the first step to

really getting a marketplace going is getting the demand over there. They had 4.5 million active sellers as of end of September 2020. I believe 6.3 million active buyers, $1.3 billion in GMV the last trailing 12 months, and they had a 20% take rate on items over $15. So that's how their marketplace works. Under $15, it's a flat 295 fee. And then over $15, they have a 20% take rate. So quite large. And their gross margins show it that they are getting a lot of, you know, they have no inventory they have a you know low working capital numbers and i think they had tiny amounts of liabilities outside some preferred stock that will likely get converted into a you know common stock during the ipo um yeah what do you think so far it's less like an etsy than uh and more i guess

balanced between buyers and sellers so maybe a lot of the sellers are also buyers no yeah they had some stats where i a good amount like a really good percentage of the buyers actually transitioned to sellers over time so it's less of a one-sided and it's like both people interacting with each other um they had 247 and a half million dollars in revenue over the past 12 months that's ending on september 30th 2020 the tagline for the business is postmark makes buying and selling simple social and fun and they're changing the world and no their mission was okay i actually can pull up the mission here it says put people at the heart of commerce empowering everyone to thrive that's not bad that's not bad but it's a little it's about half of a peloton or a we work

type you know mission statement it's yeah i give it like a you know 2.3 stars on a two out of three stars in community adjusted ebitda numbers but uh yeah back to them they're going public at an estimated 2.86 billion dollar market cap if the pricing is where if it sits in their pricing range which i'd expect it to hit five billion dollars in market cap but at the pricing what 10 times sales yeah which i haven't looked at their revenue growth numbers or anything like that but it seems uh okay seems okay with their gross margin numbers and they're already they're already profitable um so maybe i'm simplifying it but it feels like if you have a brand people recognize your revenue growth is higher than 50 and exclude all profits and you come out you're

getting a price to sales above 20 yeah i would not be surprised to see them get up there although it has flown under the radar with the um all the geopolitical and stuff going on this week so maybe maybe there won't be the eyeballs on it but they have a quote here from the s1 they said 55 percent of gen z consumers rely on influencers on social platforms to discover new brands so that's kind of what their push is where they think they have the differentiation is people follow the users and they sell from them or they buy from them and then they end up selling and it's kind of a whole mismatch between people following each other yeah it is social commerce um in a big way i feel like one competitor could likely be instagram a lot of people think of that another

competitor could be pinterest and another competitor could be etsy uh but it seems different because etsy is more arts and crafts and this is you know clothing apparel so it's like instagram if everyone were trying to sell something yeah yeah yeah it's definitely true All right, I got a few questions that I thought we could discuss. Regardless of the valuation, does the business model interest you? Yeah, I mean, I didn't really take a deep – I didn't even look at the S1 at all. Were they generating any sort of profits? Yeah, they have net profits, cash flow.

I'm not sure. But they're either close to break even on all those. And gross profits are very strong or gross margin numbers strong. I do think I've had friends that use this, and it does feel a little bit like a glorified free and for sale. Really? And I think a lot of the people that are selling stuff on Poshmark are also selling it on other platforms. Oh, yeah, definitely, definitely. I mean, this is an easy one to get some anecdotal evidence on.

You can get the user experience down if you just go on, test it out, right? Yeah, I guess. I mean, I haven't used it myself, but yeah, I guess I'd be pretty interested. So do you think there is the need for the social shopping experience online? Because that's their thing. They were saying, you know, shopping used to be social in person. Now with Amazon and all those other people, it's not. So do you think that social commerce has a future?

Yeah. And do you think it could be them? I don't know. I have less enthusiasm about social commerce than most, especially like peer to peer social commerce. like if you're if you're doing it where like it's like a business on instagram or a business on pinterest like an already established business yeah i mean i already take issue with buying things on ebay that are like used yeah and so this is sort of so used social commerce

yeah it's uh i don't know if that has for me i don't know if that's big yeah i well i mean that's me as a consumer though the numbers might go against everything yeah they said that i mean And I think this is very female focused that over 80% of their users were females. And then 80% of the total users are millennials or Gen Z. So basically under 40. So we may not be the target market. And you probably got to talk to some female friends and see what they've been doing. But last question before we get to state of the fin to it.

Do you think COVID gave them a tailwind or a headwind? Because I couldn't really tell because sometimes you think about, you know, all right, people aren't really buying clothes and shoes and stuff. but the online marketplace was one of the only things open so do you think it was kind of a break even for them or what do you think yeah i don't think it changed much yeah i will say most of the people that i know that have used it are yeah they're clearing out their closet and they're like trying to get a quick buck but are they do they come back do they have recurring use or is it just we're doing the one-time thing we're not going back on this on a weekly basis no it's like

every time they're trying to get rid of something that they don't want and they're trying to see if they can sell it okay that could be an issue with them but i still think it's a business to take a look at the business model is there like the unit economics are definitely there because they want to have zero inventory have that high take rate which leads to great gross margins but yeah we'll see if it has that actual uh market potential where i mean you know maybe it's just a really small niche product maybe i'm underestimating it what about uh competitors competitors do you think there's anybody i mean it could be instagram i don't know sorry it's hard to say i gotta get some uh again i gotta get a user experience on this but

i mean it could i i think it could be definitely instagram it definitely could be pinterest those feel like the social commerce experiences that could you know have a competitive advantage over postmark because the users are already there yeah i would i disagree with the instagram and pinterest once because that's a form of social commerce is more businesses going after people like i'm not getting targeted like none of my friends on instagram are targeting me with like trying to sell something whereas postmark is probably competing more with like facebook groups and like local like that kind of thing like used stuff but you know just put a silicon valley spin on it yeah yeah definitely from silicon valley uh not sure i didn't check to be honest well

i mean unless they're from miami i'm not investing but okay um uh what else do we have current state of fin twit yeah so i got a lot uh uh you can go first then you go first okay uh so censorship was a huge topic this week and i'm not going to talk about like the whole political debate around the moral debate or whatever it happened but i you did start to notice the power of like the supply chain on some of these businesses especially with the whole parlor debacle oh with aws yeah and there's also the twilio thing where they can cut off access to those those types of things yeah twilio has power too it's like aws could shut off the lights on a lot of businesses if they if the terms and conditions or whatever are violated yeah that's true uh it seems like

they have you know fairly lenient terms uh right but the i mean i guess it shows why facebook does their own servers and why someone like roblox using their own servers people complain they're like oh roblox is spending like 100 million dollars on capex and stuff and they're like well i mean now they have their own ecosystem and now no one can tell them what to do i think with social platforms that have this risk i think twitter i'm not sure if they use aws or azure or something like that i think they have their own i have no idea but it just showed i mean it shows the resiliency the anti-fragility as people like to coin something that's using everything within their own ecosystem yeah i agree and it started to uh there was a tweet from jeff fisher who

runs i believe a fund from the mali fool yes yeah i think so um and he said greater regulation of social media will make it more expensive to operate the services in a compliant manner this favors the large companies already in the lead and imperils the small the large win again It's another example of why companies rush to scale. Do you think heavy regulation is going to force – or maybe just in general, do you think social media will go the way of tobacco companies where regulation sort of insulates them? I think you can make that argument in theory. It sounds good. I mean, it may apply, I think, to Twitter, but we've seen the evolution of Facebook, Instagram, Snapchat is, I'm not an expert on it all.

But it doesn't cost much to be compliant right now. I know, I know. But for, that is true, where if the regular, I mean, if it costs just millions and millions of dollars, I don't think it would be that expensive. But say it's like, you know, $100 million. I mean, yeah, no one's going to start up. But I don't know. Well, I mean, it seems a little, I mean, it doesn't seem far-fetched, but I'm having a tough time getting convinced because the social networks seem to be inherently, you know, demographic driven. They all start out with like college age kids, right?

Or a niche or something. Or a niche. They start out with, you know, I guess a lot of times they start out with like 12 to 21 year olds and it expands to the older demographic and then a new one starts, 12 to 21 year olds go on. so now the 12 to 21 year olds are on tiktok right yeah the 21 to 41 year 21 to 40 year olds are on instagram and you know the main people that are using facebook are like 35 and up now at least united states yeah it feels to me like that is a lot different than just cigarettes who are forced not to advertise yeah i guess but there's also the cost of having a legal team like these guys can afford to go to court and have all the regulatory scrutiny whereas if i'm a star or i'm like a few guys in a dorm and i'm like all right yeah here's this like new app that we can

share our thoughts on and then regulation cracks down yeah i think the question yeah no that is a good point but i think the catch 22 might be that you're the only way you're going to get um you know the parlor situation seems a little bit special it seems like a special situation with the whole you know terrorist stuff the catalyst yeah there uh yes that i think that is a special situation but in regards to getting regulated unless they do it for anyone that's even starting up a social company once you get to the scale that's when the scrutiny comes and then once you have the scale you're going to have to be you know the funds to be able to battle this so i think it kind of just works hand in hand where you're not going to get scrutinized until

you get to say 100 million users or 50 million users and then when you get there you have the ability to raise the vc round or raise whatever then you'll be able to defend yourself yeah does that make sense at all yeah i'm just curious that there's maybe higher barriers to entry than that like maybe maybe there's a hurdle before you get to scale yeah yeah definitely i mean it could occur though i think it could occur um but i don't think it's as certain as the tobacco industries whatsoever okay what else did you uh did you have for okay i think i think this one's gonna be fun this one is uh it's it's based on twitter but it's also based on the show uh so i think i'm going to try to do a month-long detox from not mentioning either a tesla or b bitcoin i'm gonna

do a competition with myself and have fun with that yeah so it's going to be uh it's like a fast it's like intermittent fasting i will not be participating so yeah you can participate you can say whatsoever it's basically yeah lent i'm giving up tesla and bitcoin for lent um but uh so the rules i have is again can't mention them by name uh obviously and no jokes alluding to them so no calling you know digital tulip bulbs or the ev company or whatever the fraudulent ev company as people like to say and i'll start this on january 12th and see if i can go till february 12th so no tweets or mention about it on the podcast um gonna be pretty tough i'm ready for this what happens if you break it what happens if i break it i don't know you gotta buy calls

or you have to buy bitcoin uh i have no that's that'd be too expensive uh i take i mean i guess i can buy like five bucks worth of bitcoin well you're already getting it for free on the cash yeah but i immediately sell those so okay all right um i think that's all we have for that next we have our interview with nick seipel so any big highlights from the discussion yeah i mean he's not like a trained analyst or cfa you know deal anyways he's very motley fool style um and he's actually an editor over there so he has a lot of experience with the way they like to invest but i think his frameworks for investing you know whether he's he's not like a big you know dcf guy or whatever like oh i have this price target on this but it's qualitative thinking is strong

for these businesses and yeah the game stop is very interesting he's observant like i mean i don't know it's sometimes it doesn't take a whole lot more than that to invest well yeah i mean the hurdle to yeah i mean have a little bit of valuation discipline and be observant yeah and we talk about match.com or sorry match group and we talk about um just the dating online dating in general and we talk about roblox which listeners you know a lot of people they've heard us discuss those two companies a lot, but you probably haven't heard anything about GameStop when we talk about that, which I thought was the most

fascinating part of the discussion. Yeah, I'd have to agree with that, but here you go. Cox Panoramic Wi-Fi includes advanced security to help protect all your connected devices. You'll get real-time alerts. Oh, like this one. So you don't have to worry about malware. Or when your kid downloads a song

from a shady link. And now all your computer can play is red color red color where are you all blocked thanks to advanced security included with cox panoramic wi-fi advanced security must be enabled in the panoramic wi-fi app restrictions apply okay today we are welcomed by nick seipel you might recognize his voice if you listen to thursday's industry focus show nick this is your first time on chitchat money so welcome to the show. Awesome. Great to be on here with you guys. Yeah. Ryan met you this summer when you were interning at the Motley Fool. So excited to get invited on the podcast. I guess we hit it off

well enough that you wanted to talk to me again. So I guess that's good. But yeah, excited to be here with you guys. Definitely. A little bit of background for you. How'd you get into finance to begin with? And then what was your course to the Motley Fool? Yeah. So it's kind of funny you say like get into finance. I don't think of myself as like a finance person. I'm wearing like a Kramer from Seinfeld sweatshirt right now. And like, you know, I don't know when the last time I wore a suit or whatever, but yeah. So as far as kind of getting into stocks and investing and working at The Motley Fool, kind of a winding road for me. So, you know, my whole life, I'd always wanted to be a lawyer. The path was always go to law school.

Actually graduated from law school before I came to The Motley Fool. I wasn't really kind of super into investing until I got into law school. A buddy of mine, Austin, one of my best friends, I was reading Peter Lynch's The One Up on Wall Street book, picked that up and really kind of ran with it ever since. It's kind of kind of funny. Like, you know, my mom always said, like, you know, the stock market is legalized gambling. Like, don't do it. So it's one of those things I never really paid it, paid a ton of attention to. But, you know, I went to college, always wanted to go to law school. Like I said, she forced me to get a double major. So in case I wanted to get a real job, majored in econ was one of the things that really clicked for me as well.

You talk about the legalized gambling thing. Alabama is where I grew up, right? Number one state in the union for illegal sports betting per capita. Definitely did a lot of that kind of in college, kind of coming up. And that taught me how to kind of handle losses and kind of think numerically. I was always like kind of a big card player, like played spades and hearts and all those things in high school. So that's kind of the background I brought to it. I've kind of had this kind of economics training, always wanted to be a lawyer, kind of picked up investing with the Peter Lynch School. And then, you know, kind of in law school, you know, after your first and second year, you go clerk and work for a law firm. You kind of do what you're going to do

when you go out to practice law. And I was like, man, this isn't that great. I was ready for my clerkship to be over. I was paying attention to my stocks and, you know, learning about the stock market, all those sorts of things. How I Found the Motley Fool is, you know, kind of a similar thing. My buddy Austin was like, hey, you know, you should check out these podcasts, right? Motley fool money, market foolery, all those sorts of things. Check them out. That's kind of was a big part of my learning. I think David Gardner really clicked for me in a similar way to how Peter Lynch does of, you know, there's a few basic things you want to look for in a company and, you know, buy the things you know and you understand and you can get kind of get incredible gains. So that

brought me to The Motley Fool. And so, you know, I had this idea of, you know, maybe I want to do investing. Maybe that's this is an area that I have a little more interest in than law. And so one day I looked at the job board The Motley Fool had out available and there was a job for editor analyst. I'd been on the lower view at the law school. So I felt I had a little bit of editing experience that I could bring to the table. And I knew enough to be dangerous on stocks to kind of check the box that they would need for that job. And so, you know, kind of came there. You know, the podcast opened up a little bit after that. And that's been a great opportunity to learn and talk to really, really smart people. You know, everybody I talk

to every week is smarter than me on the topic they're talking about. And if you do that long enough every week, I'm sure you all know from hosting this show, you get a little bit smarter every day. So, you know, I'm still, I don't think you can ever be an expert in the stock market, but I'll tell you for sure, I'm far from it, but I'm definitely come a long way in the past few years from, you know, kind of picking up investing now being someone that has to talk about it on a regular basis and get asked to do a podcast with people. Yeah. Perfect. And do you think, you know, you said you're not a finance guy. Do you think being a lawyer or I guess going to law school has helped you at all with investing, you know, investigating things, reading reports, stuff like

that? I mean, you know, is there any like, oh yeah, because of this statute, I have some special insight into a company. I would say no, not at all. But I would say as far as, you know, being analytical and I think the big thing law school teaches you about is like, all right, these are the three things you're looking for, like these are the elements of the crime or these are the things that I have to prove to win my case. Figuring out these are the three or four things that's important and figuring out how to filter through things to define those aspects I think is valuable. The legal field is very analytical in general. And I think you need to be analytical as someone who looks at stocks. But there wasn't anything like, oh, yeah, I know this law is going

to pass. So you got to buy this stock. But as far as kind of a mindset and analytical style, sure. I think it's helpful. Okay. And can you describe your style at all? I know you're at the Motley Fool. So you probably have maybe a bias towards investing in individual companies. But of those individual companies, where do you lean? Do you go for those heavy growth year names, kind of the rule breaker style, or are you more of the traditional value stuff and quality? I don't know. I shop from kind of all the buckets. I think, you know, I've tweeted about this. I think, you know, putting yourself in like, I'm a value guy or like, I'm a growth guy, I think kind of is limiting for yourself. I think if there's an attractive opportunity out there, I'll go invest

in it. I think in general, as far as approach, like I said, I like the rule breaker, kind of David Gardner approach. If you look for these companies that are first movers in their space, that can really be, be dominant. And I think the Peter Lynch school, I think is helpful as well. Things that you can understand, like sometimes, and I think Buffett's talked about this too, you know, the qualitative insights are where you can really make some, some incredible gains in the stock market. And there's not a lot of things that I understand, but I think that there's a few areas where I can get some insights just by kind of living my life and using my common sense. That those are kind of the opportunities I look for stuff that kind of jumps out and wax you in

the head. How do you generate most of your ideas and then sort of what does the process after that look like? So after you have something that's sort of interesting, do you have structured process before you buy something or is it kind of rough? Yeah, I wouldn't say that I have some like incredibly structured process. If you put in 1% here and then you put in a half percent here or anything like that, as far as discovering ideas, I kind of just try to live my life and kind of see the things that kind of bubble up to me. So, you know, my fiance is a fifth grade teacher. I'm hearing about what the 10 and 11 year olds are doing every single day, which is always very interesting. She's super active on Pinterest and Etsy and all these platforms. So I'm paying

attention to what she's doing. You know, like we said off the top, I work at The Motley Fool and edit a lot of the articles going on to the website. So just by the nature of my job, there's just constantly different opinions and ideas getting thrown at me on a day-to-day basis. And so, you know, every once in a while, there's a thing that whacks you in the head and says, oh my gosh, this is something I have to learn more about. And whenever those things happen, I try to nail those things down. Sometimes I'll buy one share of a position to force myself to go do the research because I know you'll probably this way sometimes where you'll get so many things that you want to look into and they never actually take the time to do it. But as far as kind of

building out a position, I don't want to ever have my initial position being over 5%. I just think that's kind of a comfortable number for me. Usually, it's about 1% or 2%. And, you know, sometimes, like, if I think it's, so, like, Unity this year came public, and I thought the valuation was kind of ridiculous. But when you look at the company itself, the prospects it has going into the future, lots of optionality, really dominant in online gaming. It came public. I put 1% into it. We're going to watch it for a year and see what happens. I think that's kind of a foolish approach to doing things. But yeah, there's not like some incredible science to how I build things out, but it's kind of how I feel based on risk. And then, you know, is this idea just an obvious

whack me over the head idea? If it's not, then generally I just will stop paying attention and just let it pass by most of the time. Okay. Yeah, I think we're going to talk about two sort of industries slash companies specifically, and that's online dating and gaming uh because you've been somewhat vocal about online dating on twitter uh and match i think is one of the only online dating public companies i might be wrong yeah you're correct um so what excites you about match and then um something that we we're both sort of bullish on match and we've thought a lot about competitive advantages um and what's to stop you know a smaller dating app from coming up and stealing market share from tinder and hinge so do you think match has any

significant competitive advantages? Sure. So, yeah, I'll, you know, am I excited about match? Sure. Yeah. I've been kind of vocal about this. So I think probably like a lot of people, you know, if you've read that the Tyro partners, Dan McMurtry's paper, they put out on online dating last year. I mean, there's a lot of things that I kind of observed in the world about how people date one another and ghosting and all these different things that paper really just, you know, checked all those boxes of like, yeah,

that explains all these things I'm seeing in the world that, that just didn't make sense to me. And like you said, Match is pretty much the only player of significance, right? You've got Match, which is like a $40 billion valuation. I haven't checked it today, but something in the $40 billion valuation range. Other than that, you've got Spark Networks, which is the company that owns Christian Mingle, JDate, and Zoosk that has $125 million market cap. And you've got Bumble, has about an $8 billion market cap. So Match 5X bigger than its next closest competitor. But the big thing is you look at that online dating paper, There's really kind of three things that I thought was interesting about Match.

First off, I mean, the online dating space itself is a rocket ship. So if you don't have to read the Tarot Partners paper, if you just look at that second chart they have in there where there's this red line, met online, going straight up to the right. You got this other line that's curving up of met in a bar or restaurant, which is all these people lying about the fact that they met online. If you do some of the data there, it's like two-thirds or three-fourths of people are meeting online. That's where people are finding new dates, all those sorts of things. Obviously, in 2020, that's got to be even more so because real dating was canceled, right? I mean, I'm getting married in six months. I haven't been on any of these apps.

But I imagine if you're someone who's dating and you want to find dates, the only place you can really go is online dating. So, we already had this kind of rocket ship trend in place. And then I'm sure we had this pulled forward in a really significant way this year. And then two, as you said, Match is really the giant gorilla in the room. There's really nobody else of significance to go up against them with the exception of Bumble. And again, Bumble is one property up against Match, which has Hinge and Tinder and Plenty of Fitch and the Match namesake platform, all those sorts of things. So, you've got this giant gorilla in a market that's just a rocket ship. And then third, the last thing you got to think about is like, all right, fine, you've got a monopoly on this market that's going to get huge. And I think it's, you know, you could squint and say the match, you know, has the better, the makings of a monopoly. Okay. Well, how valuable is this monopoly? How valuable are these customers? Well, the thing I think is really interesting about Match that I think is maybe kind of an insight that I've had. I don't think it's a unique one at all, but it's this idea. So, if you look at Match, who are the paying customers, right? Who are the folks that are paying to be on the platform?

It's obviously men. Look at all the data around how men rate women, the rate at which women get matches compared to men. Women just get that many more matches. There's really no reason for the women to pay for extra swipes or any of these sorts of things. The other way you can tell that the target market is men. have you ever, have you looked at Tinder's Twitter bio? No, I have not. No. Okay. Well, Tinder's Twitter bio is, Hey, you up? 18 plus. Who do you think sends the most? Hey, you up texts? Definitely men. Definitely men. Yeah. I'd say definitely men. Right. So the target market,

the target market is men. Like no doubt about that. Those are the people who they're going for hands. Just, just for another example, the dating app designed to be deleted. I think obviously a different market than the RU up question mark description. So anyway, so yeah, so you've got men, right? So this is the place where we talk about all the people are meeting online. They control the platforms of significance. That's the place where you go to find dates. If you know anything about men, I don't know if you've ever been to a bar, but the first time, you know, whenever my friends were like, Hey, you want to go to a bar? And I was in college. The question was where are the chicks at? That's the place you want to go. Well, they own all the platforms

where the chicks are at. Okay. They control the supply. And so men are going to come uh, to the platform. And then the last thing is so, so right. So the manner of the paying customers on the platform, what's their ability to pay. And I think one thing that just, if you were a user of the internet on a regular basis, I think one takeaway you can reach is just thirsty dudes do incredible things on a regular basis and they always surprise you to the upside. So I mean, you can look at only fans this year and how big that thing has gotten from zero. You can go on, uh, go on Reddit. I don't know if you've ever been on the subreddit called our creepy asterisks. That's one of the weirdest things you've ever seen. But it's like basically a bunch of weird kind of dudes on there. And so my thing there is just they're always going to surprise you on the upside with their ability to pay. So Match has a monopoly on this market that's huge and growing. I think if you have a monopoly on kind of how people meet and date, that's worth much more than $40 billion. What's the upside on that? I don't know.

But I will just tell you that whatever dollar amount I think dudes are willing to spend to find dates online or any of this sorts of thing, it's higher than whatever my estimate is. And so for that reason, I think matches is a compelling investment. You talk about competitive advantages. I think part of it is just scale network effect. Right. I mean, what. So do you all use online dating? Yeah. I mean, we use the various, you know. Yeah. Yeah, we do. Yeah. Okay. What, what platforms do you use? Hinge. Yeah. If you're a, if you're not the hot commodity, you gotta, you know, lower the playing field to get on a hinge, you know, or get off. Right. Yeah. Other than, other than that, that's where you have to go.

That's where, that's where the people are. Right. The other thing to think about is, so they've already got this huge network effect and if you're going to find online dating, like they're the place you go, that's the place where everybody is. So, so that, you know, that's, necessarily a big network effect. The other thing I would say is the swipe. What form factor is going to change from the swipe? What's going to be the technological innovation that comes and takes significant share from match that draws all these people away from where the audience is?

Because everybody wants to go to the bar where the people are. Nobody wants to go to the bar where nobody's at. So I think this is true for any of these social networks, but I think it's just that basic dynamic of people want to go where people are is definitely true. um, for online dating. Um, yeah. The last thing I wanted to say is just like the advertising, right? So, so with the whole name of the game is this, is you want to be where the people are. Right. And so the name of the game is just attracting customers.

You see that in lots of places. I think sports betting is a great example of where it's just an advertising game right now. I don't know if y'all have seen like the, the, the match, you know, uh, 2021 dating ad with the devil and like all that stuff. Yeah. They have the famous actor, correct? Yeah. Ryan Reynolds is now on the board. That was his production company, um, that made that advertisement. Um, my mom like called me the other day and was like, Hey, have you seen this? Have you seen this match ad? Like this

thing is hilarious. Like dah, dah, dah, dah, dah. Um, so you've got this company that already is essentially the giant gorilla in the room has all the platforms is the bar where all the people are. And then they've got like advertisement that is just incredibly quality. They've got, I think Ryan Reynolds is a genius. He took Deadpool, wasn't even going to get made, and he turned it into this huge franchise. I've got my mom talking to me about an ad for an online dating company because it was so good. I think when you layer on, they already have this huge advantage of just having the most people and being a well-known brand. If you layer on top what I think is just incredible advertising, I just don't know how you compete with them. Maybe somebody can, and if they

do, then maybe the thesis changes. But this is one of those companies where if you gave me infinity money and said, go displace Match Group, absent just starting to give people money to join my app, I don't know what the first place would be where I'd go to start. It's just a very difficult company to compete with. I just wouldn't want to bet against them. Yeah. And I think there's a real example of that. What was it? Three years ago, maybe two years ago, Facebook announced Facebook dating. Match Group took a giant hit because at that time, whenever some big tech company announced they were going into a business, you know, the company that they were competing with it probably dropped 20%. But do you think that's a good indicator that match has just

an inherent competitive advantage with the products they have and with the business model they have? Because if Facebook can't compete with you, specifically, I mean, I guess it was based on Facebook, it wasn't really like Instagram going after it, if they can't go after the dating market with all the relationship knowledge they have. I mean, who can't? Yeah, I mean, I think there's lots of people that are going to try to compete with them because dating is worth a whole lot of money. I think one observation there is just that sooner or later, every social media app is a dating app. So like Facebook is already competing with match. Like people are already sliding in the DMs left, right, and center on Tinder and Facebook and Instagram and all those

sorts of places, yet they still choose, you know, match is the place where they're going to go kind of swipe. I think there's, you know, the instinct of a lot of people. Well, here's a question for y'all. Whenever, you know, you're kind of college age, whenever you had someone that you knew that came up in your little kind of a spin wheel of people on online dating app. How would you react when you saw that? Oh yeah. I think the natural reaction is to just ignore you. You want to keep that separate. It's like the,

I think McMurtry has talked about this before on interviews where it's a dating within your friend group is getting harder and harder to do because it just can ruin that over the longterm. I totally see where he's coming from with that. We have, we have a lot of, I mean, there's a lot of anecdotal elements I have for that. Yeah. Yeah. Listen. Yeah. And I don't think like it takes some, this is kind of why I like the Peter Lynch approach. Like you just live your life. Like who is the target demographic for online dating? It's people like you guys that

are like the, they're young twenties that are in the dating market. Like this is, this is the people, if there's anybody that's going to understand when this is losing and when something else is taking over, it's all the people that are in this demographic. I think that's the other thing that kind of makes this kind of an exciting investment is, you know, if you're 30 and under, you have an insight on kind of the online dating category in a way that really not a lot of people have. Like not a lot of people that are running, you know, hundreds of millions of dollars spend any time on this platform, right? They're going to have to like talk to their kids or something like that. But on a day-to-day basis, I just talk to my friends and he's like, yeah, I've been on

Hinge and like, you know, Hinge is better for this, this, that, and the other reason. I think some of this is just kind of common sense and looking around. I haven't seen anything come up, you know, in the past five years that I think is a really significant threat to what Tinder has going. Maybe that maybe something else shows up on, you know, on the on the board, but I don't know. Yeah. And I guess one question with COVID, you know, you mentioned that COVID made it so that the dating apps were the only place that people could go. However, there's the flip side of that where going on the actual dates, you know, was you can really do that during quarantine. Do you think COVID has changed anything at all where I kind of think of it where, you know, you have

hinge you have tinder they're going to have a ton of growth from usage and then no one's going to really be able to go on dates during covid but then post covid they're already going to be on the apps and then they can use them to go on the actual dates themselves do you think about that at all so as in like are is that like are the people who kind of came on to the app because of covid going yeah like he's going forward yeah because it's tough looking at them now like you can't go on you can't go on an actual date or you haven't been able to since march and you probably won't for the next few months. And so that might, people might think, all right, well, the dating apps aren't going to be useful, but if all the users get onto these apps and then when they actually

can go back and to be, you know, physically dating and go meeting people or whatever, this stuff you want to do your end goal with using one of these apps. I don't know. I just think that could be more valuable. It might be a weird theory, but. Well, so there's people that have talked about, all right, so now that people are going on actual dates, restaurants, are they going to, I mean, you know, when I, when I talked to the, the Tyro folks on the, on the podcast, They talked about, you know, there's an opportunity for could you potentially move customers to restaurants and things like that, you know, as part of your date or what have you. I think there's certainly opportunities as things reopen because you have these people and say, hey, there are these people that want to meet. You know, maybe I can send them to your bar or restaurant or what have you.

I don't know. The big thing I know is they're dominant in online dating. And I don't think that trend is going to reverse. I think it's going to be very, very difficult to dislodge them. And there's lots of opportunities for different ways they can extract money out of this relationship with folks of how they connect people. So I think whatever happens, I think the opportunity in online dating is only getting bigger year after year after year. And it's just a question of them figuring out more and more ways to monetize that. Whether that's finding more ways to get dudes to pay for things on the platform. I'm like, the thing that blows my mind, people are paying for read receipts, like to pay to be

able to know that somebody read your message and hasn't responded to you. People are paying money for this today, which is just insane. So, I mean, I'm sure I will be surprised at the ways they're able to extract money from users in the future as well. That's kind of, I don't know how things look different in the future, but I think it's going to be bigger and they're going to extract more and more money. Right. That makes sense. And then if you look at the ARPU number, I mean, it's tough to quantify what is a low number versus a high number. If you look right now, it's below a dollar, I think, either on a monthly or quarterly basis. I mean, you just kind of feel like that can go up by a lot over time.

What about Bumble? I know they haven't gone public yet. I don't even think the S1 has been released, but is that something that interests you? Are you more inclined? I mean, Match is obviously more of a conglomerate. It has sort of an amalgamation of different apps within it. I think Bumble is just the one app. Is that still something that would interest you? Yeah, I mean, I'd be interested in Bumble. I haven't really been much of a user.

Like I said, I'm getting married in six months. Bumble was just kind of coming up last time I was on the dating market. That's another one where I might answer your question with a question. I mean, what do you all think about Bumble? Like, what are the pros and cons of it versus Hinge? You mentioned Hinge earlier. Product-wise, I don't think I've, I've never been on Bumble. Yeah, me neither, but I know a lot of friends use it.

it's definitely just seems just as big as either Tinder or Hinge, but it's not like they're clearly better. They have that, you know, woman first thing for the response. I think it's a lot of people on there, but as long as it doesn't hurt, and I'm kind of thinking of someone who is a potential match shareholder, as long as it doesn't hurt matches numbers, if they continue to grow their users and through their various apps, I mean, it's not a winner take all market as we've seen, you know, yeah,

everyone has their different niches. So I don't think it's a concern. Yeah, that's kind of, I feel a similar way. I would say like, you know, you mentioned earlier how important I think women are and attracting women to the platform are for success for any of these. So I think they're women first focus, maybe, you know, to the extent I have to look at the S1 whenever they file, but to the extent there actually is some meaningful data that they're attracting or keeping more women on the platform, I think that's valuable. I think everybody has been, I've used the bar analogy earlier, but I think everybody's been at a bar where it's, you know, all dudes there and nobody likes that. And so nobody's going to want to like a dating app that has all dudes on the platform. So obviously, you know, men are important for spending, but people are only going to spend money to be able to talk to women. And so to the extent that they're able to use that kind of women first approach to attract more women to the platform or keep more women on the platform, obviously puts them in an interesting position. And I think the whole online dating theme, like I said, that one chart from the Tyra Partners paper, it's just I want to ride that growth trend. I think there's a quote from Jeff Bezos in the 90s where he's like, why did you go start Amazon? on. And he said, well, one day I was just looking through data when I was working at the, you know, the hedge fund. And I saw this chart of internet use usage growth up year over year. And it was

some insane bananas number. And he said, I have to figure out a way to find a business plan to get into this kind of opportunity. And I think online dating is a similar opportunity. I'm not Jeff Bezos. He's much smarter than me. But, you know, it's kind of a rocket ship that I want to have a ticket on. Right. We can just outsource that growth to the match executive team. They can worry about figuring all that stuff out. But we'll transition to our second topic here. It is gaming. Specifically, we're going to be talking Roblox and GameStop, two completely different companies, but I think they're both interesting. So first up is Roblox. They just received another round of funding at, I think, a $30 billion private valuation. Obviously, we don't know

the valuation is going to be when they go public. I know they're going to do a direct listing, but in this market, if they list at $30 billion, it could easily double the first day. Does Roblox interest to you? And are you thinking about any market cap or is it just kind of similar to match where you see the growth story and you want to just attach your wagon to it? Yeah, probably similar more in the second bucket. We don't know what it's going to come out. And I guess the market's going to decide what it comes out at, that private money valuation, which is, I guess, the takeaways from some people is, and I tend to agree with it, is that that kind of sets a floor underneath what's going to happen with this direct listing,

right? The market has to go decide what it's worth, but they've kind of set a floor at this 29 and a half, a $30 billion valuation number where it's going to shoot out. Um, from there, I think, you know, I mentioned earlier unity where I kind of put 1% in it because I think this is a rocket ship and, you know, has a lot of opportunity, um, probably going to do the same thing. Uh, and it's probably going to shoot off to the moon. Um, just like, just like unity has done. Um, although, you know, there's no way the growth can, can match what happened in 2020. If they can match 2020 growth in 2021, then I don't even know what number they should be worth a ton. Um, but I think at the end of the day, it's similar to what I was saying with match. You

want to be where the people are. Okay. Um, you know, that's like, what is that? Like little mermaid? I think she said that. Um, but, uh, so it's two thirds of kids, uh, between nine and 12 use Roblox. So just think about if you're a kid in the, in, in a fifth grade classroom, which is, you know, what my fiance Lacey teaches, right? If there's 30 kids in your classroom and 20 of them are on Roblox, hanging out with one another, kind of discussing, doing different things, playing games. And you're, you know, in that other group of 10 kids, who's not on there, You sure as heck want to be on that platform. And you see lots of different data and surveys of of kids that say, hey, I want I want to, you know, Roblox box instead of candy or what have you for Christmas. I've got like I said, you know, we work from home. And so I've got, you know, the one end of the fifth grade class over here.

So I get to hear the kids sometimes. There's a kid yesterday said, yeah, I'm on Roblox every single day talking with my friends. OK, like I used to be a Minecraft kid and now I'm now I'm on Roblox. I think it's another one where you just don't realize how big these games can get. So, you know, I'm 28. I remember being in high school. I played Minecraft when it was in beta, like before they had any of the, you know, any there's all kind of stuff in it now. We like eat food and this, that and the other. Back then, it was just like very, very basic, like a few creatures and stuff like that. And you're kind of just surviving in the world. And now this has become one of the most popular games in the world with massive amounts spent on it. Microsoft acquired it for a billion dollars, and I'm sure it's worth some multiple of that

today. I just, in my experience, some of these platforms have just so much more growth than you'd expect. And so, yeah, I mean, I think Roblox is one of these, you know, rocket ship companies that if you talk to any kid, like any of those kids in that, you know, 10 and 11 demographic, they're on that platform and they're spending massive amounts of time on there. That's how you interact with your friends. And, you know, I'd love to own that relationship. The other thing is everything, everything people buy and sell on the platform is in Robux and they set the exchange rate. So, I mean, that's a huge option. That's a huge thing to have in your back pocket any given day to be able to control as an organization. Like, I don't think they're going to use that

for ill or anything like that, but gosh, that's, I mean, there's not a lot of companies that have that type of leverage, you know, over their operations and can, you know, make those types of decisions that'll change how much money they make. Yeah. I mean, there was that viral, I think it was, you know, FinTalk investors, that Twitter account that likes to show videos of, you know, young people talking on TikTok about, you know, investing. And he said, look, there's a kid on there that said, all right, guys, they make all their money on Robux. So if we just buy the IPO and then we just buy a bunch of Robux, we're going to be rich. Now that logic may have been misconstrued, but the fact that they make money when people buy these virtual dollars that don't

cost them very much money at all, seems like a very strong business model. Do you think that, I mean, I don't know how deep you are into the gaming investing, but do you think that they can be this concept of the metaverse? I know a lot of different companies have kind of taken a stab at it. We've had Chris Seifel on the show who said he thinks Unity can be sort of the leader that's tooling that.

Do you think Roblox kind of has the purest play at being the true metaverse? I'm putting it in air quotes here if you can't see me, but. Yeah, maybe, you know, best chance. I don't know. I certainly think that they do have a chance. I think the people with probably most likely

to be able to give you a correct answer to this question. Are those people between like nine and 12? The people that are on Fortnite and Roblox and all these sorts of things every day would probably be able to give you some great insight. I don't have, one thing I do think is interesting though is clearly Roblox is trying to go after this opportunity. So their founder and CEO put out a paper recently

that was about, we're going after this multiverse opportunity. When I think of the, what is it? Metaverse thing. I just think it's kind of just the next evolution of social media, right? So Facebook started out as it was this, you put stuff on your wall, Twitter used to talk about what you ate for lunch. And then it grew into this whole thing that Twitter is today, how people like me and you can connect. And some people can, for some reason, think I have a really intelligent opinion about stocks and listen to me talk about stuff. And I think Roblox is kind of trying to form

a similar social platform. There's a quote from Eugene Wei, I think a great paper everybody should read who's an investor. I mean, anything Eugene Wei writes is great, but he wrote a paper a couple of years ago called Invisible Asymptotes that I think is fantastic. But there's a quote from there. It says, there's this general pattern among social networks and products in general to broaden their appeal. They tend to broaden their use cases. It's rare to see a product adhere strictly to its early specificity and still avoid hitting a shoulder in their adoption S-curve. And so if you think about, okay, Roblox is a social platform, kind of like Facebook or Twitter or any of these others, it started out as this game where nine, 10 and 11 year olds

interacted, kind of spent their time on the platform. And over time, it's growing to offer these other things, right, where we had the Lil Nas X concerts this year, this idea that, you know, more and more people are spending time on there to socialize more than than just game. And so I think when you imagine, OK, what's this social platform going to look like 10 years from now? How is it going to look different? I think it's going to look incredibly different.

The important thing is just that they have they captured the important audience here, like how Facebook captured, you know, all the college kids or is this nine to 12, you know, 12 year old demographic, the important demographic when it comes to capturing the users who are going to decide how things change in the future. I think they've got a pretty good shot at it. You know, I guess the one criticism that folks have is that, you know, they're concentrated under folks, you know, 16 and under. But you see that in the past with lots of different companies ended up being incredibly successful. Right. So, Pokemon, most successful franchise ever, also started as a video game. Probably only kids are playing that platform, and now it's this huge successful thing. You could talk about Fortnite, just taking the world by storm, going after the same demographic. I mean, same thing, too, with Snapchat, right? I mean, Snapchat has become incredibly successful on the back of just teenagers and those sorts of things, even in the face of lots of different competitors, people copying their platform. I think Roblox has a great shot at it just because they've got this focus on, you know, social interaction and they've got lots of optionality they can build on top of that kind of core feature.

Yeah, I remember in the S1, the management talked about how they're trying to slowly move up the age demographic, because that is kind of the big worry that we discuss here is that the age demographic is mainly, you know, 18 and under, 16 and under. I guess this is kind of a hard question, but can they succeed without moving up the age demographic or do you think that they need to slowly move up over time to fulfill the valuation if it's like $30 billion plus? Yeah, because the 11-year-olds don't have super deep pockets, I guess. Exactly, exactly, yeah. I mean, I guess they're spending on Robux, but… I mean, they may have some deep pockets, but not as much as someone that's like 25 or 30. Yeah. So, what I would just say is, like, once you form a habit of how you interact with people and how you interact with your friends, it's kind of hard to break that habit over time. Now, like, so I first went on Facebook in, like, 2008, like, super early on, like, pre-high school.

I still have a Facebook profile. I still go on there on a somewhat regular basis. I know my parents were on Facebook way later than when I came on the platform. And now my parents and that generation are the people who are dominating the platform, the people who use it all the time. You know, all the kind of core users have migrated to other places. So the question is, have they captured enough demographic that they're going to draw other people onto the platform? And I think they have. I think they'll get older over time, whether that's, you know, just enough experiences being on the platform to where, you know, they have offerings for other people or like how Minecraft has become this game where people build these, you know, simulated worlds. If you want to visit King's Landing, you go on there. Like

there's plenty of people on the Minecraft platform that aren't kids these days. So sure, I think the platform has enough optionality on top of it to grow into something that the people of all ages use, just like, you know, people would have said, you know, years and years ago that only young people are on Facebook. I think that that's kind of a simple explanation. I think when we look 10 years down the line, I think there's lots of options for this company to do lots of things that we don't expect. You're a GameStop shareholder. So, what's your thesis around them? They're obviously a bit of a controversial name because a lot of people have obviously thought they're going out of business, but they have since recovered. I don't remember the last

time I checked them, but you seem to be in a small company there with just you, Michael Burry, and I think Jim Gillies. So, what's your thesis on them? Yeah, sure. So, I'd say just high level, the thesis is just the company is not going to go out of business. That was kind of what got me invested in the company to begin with. First, really got turned on to it in May 2019, was doing a podcast for Industry Focus, talked to Buck Hartzell, who you've had on the podcast just in the past month or so. And he said, we were going to talk about GameStop. He said, hey, you need to talk to Jim Gillies. He actually thinks they can cover this. This dividend at the time was yielding 15, 19%, something like that. The basic thesis is, this is a company, if you looked at the balance

sheet, had a net cash position, was generating positive cash flow, and then had this catalyst coming due at this time, since 2019, about two years on, this new console cycle. So you look historically, sales in the video game industry are very cyclical. Obviously, when the new hardware comes out, there's people really excited, want to go buy the new, latest, greatest technology. Often, there is lots of games launched to exploit that new technology, all those sorts of things. If you looked at the company today, the company was valued at $5 a share. You had net cash on the balance sheet, but there's this narrative that it's going out of business. It's the next blockbuster. So at the time then, basically all you really had to do, you could

see just from a fundamental point of view, the company is unlikely to go bankrupt. The company is likely to survive and at least be able to support this existing valuation. And then you layer on top, over 100% of the shares sold short. So when you're in a scenario where the company is about to print a whole bunch of cash, the company is because of this whole console cycle and all those sorts of things. And you've got a company valued very conservatively and 100% of the shares are sold short. I just don't think there was a ton of downside for you at that time. Obviously, there's tons of pessimism in the market. That's why 100% of the float was sold short at the time. But the basic thesis is that there's a catalyst to print cash for the business. They've got enough

cash on their balance sheet to meet their obligations as they come due. And as that console cycle thesis plays out, the sorts are going to be proven wrong. And there's a lot of buying present in the stock. Obviously, since then, there's been a lot that's gone on earlier this year. Ryan Cohen, who is the co-founder of Chewy, has taken a really significant position, most recently up to 13% of the overall stock. And so maybe the last thing to mention there too is over the next several years, I think the average term on their lease is two years. So So they have a significant portion of their leases rolling off here over the next couple of years.

So obviously, there's a problem with them being overstored. But in conjunction with this console cycle catalyst taking place, you've got a bunch of their stores rolling off. So they should be able to right size the business at the same time as they're printing significant amounts of cash. So when you start looking forward from here, after we're past the console cycle catalyst, or past this idea of, you know, based on the cash they're going to generate, you know, the company is cheaply valued. You know, it's definitely not as cheap today, you know, pushing around $20 a

share as it was a while back. It's what do they do with these existing assets? And they should be able to right-size. And looking forward, you know, you've got this optionality of why is Ryan Cohen, this guy who, you know, has more money than he knows what to do with, has historically been very conservative with how he allocates his money. He only owns three stocks. It's GameStop, Wells Fargo and Apple. Why is he running towards this fire? I think that's the other thing today that's kind of changed the narrative is that, sure, the valuation thing is here, but now we've got this great operator who has taken on Amazon and some of these other e-commerce folks and taken them down. What opportunity does he see to put this smaller, leaner GameStop to work?

Right. And you did mention the Blockbuster comparison. That's kind of the big thing where And I know a lot of people like us in general, we're just saying like, Oh, it's just like blockbuster. I can never invest in it. But when we look over the next five years, we kind of say like, you see that directional arrow of, you know, 99% of games may end up being downloaded over the internet or, you know, something like 95% of them. Does that concern you at all?

And does GameStop have a plan to transition away from that? Are they going into say like e-sports accessories? Are they going to go away from the physical stores, you know, entirely? Yeah. So as you talk about the blockbuster comparison, I guess that the easy response is just, you know, there's like a Peter Lynch quote, if you can't go broke, if you don't have debt on the balance sheet. And if you look at their debt situation, they've got about seventy three million dollars in debt due in 2021. They've got, you know, like I said, more cash than debt on the balance sheet should be easily able to pay that. The bond market reflects that that debt's trading at ninety nine and a half cents on the dollar. Their 2023 debt is trading at 102 and a half cents on the dollar. Obviously, the debt market

not pricing in any risk of bankruptcy. So, that's kind of the obvious comparison. With Blockbuster, you're not going to go bankrupt if you're meeting your debts as they come due and clearly no concern about that in the debt market and clearly no concern about that when you look at the balance sheet. Obviously, there's this trend toward more and more digital sales of games and certainly that's going to grow over time. I would say the only thing, you know, there's a quote people use all the time, right? The only thing faster than change is our expectation of the rate of change. And I think you could have pointed several years back to this idea that eBooks were going to take over the book business, right? So my future mother-in-law works at Books A Million and has

a significant role there. They've kind of found their bottom. We talk about Best Buy a few years ago. Like, why does Best Buy need to exist? Well, there's a lot of people that want to come in and do the whole Geek Squad thing and kind of get service in person. And that's kind of where GameStop slots into. I can give you an example. So, this year, I went to go get a game for my stepdad, right? To get him Call of Duty, the new Call of Duty game. He likes to play video games, all that sort of thing. I went to Costco because I had a Costco gift card, right? They didn't have it at Costco. Also, the gift card didn't work. It was a whole different thing. There was a Best Buy across the street. Went over to the Best Buy, looking for my Call of Duty game. I walk in there,

it's the big store. It's all these people over here. I go to the video game section. They're sold out. And then I go try to find somebody to be able to help me. I have to go to the front of the store, the customer service desk and get help. Okay. So I go to GameStop. Now this is bad. I'm going to GameStop last of the group. So don't judge that too much, but you know, it's just all convenience. I had the gift card to start out with. So don't judge me too much. But anyway, so go to GameStop. I walk in there five seconds later, this guy is like, Hey, what are you looking for? So I'm looking for the PlayStation 4 Call of Duty. I go get in the game, blah, blah, blah, blah. And then I have to sit in line for five minutes as a grandma in front of me talks to

him about all the things she's looking for for Fortnite and she's getting the Fortnite cards for her kids and all these sorts of things. I think it's a similar demographic to these folks that we think about who still goes to Best Buy. There's a lot of those folks who are still going to be going to GameStop and getting some of these games. The other thing is, you know, they have a staff that's trained that if you don't know anything about video games, you can come in there and tell them what you're looking for and they can help you out. They have, what's the number, 50 million Power Up Rewards members. That means they have 50 million people's addresses and emails and all those sorts of things to contact them about selling games. They're really an important

retail sales channel for these console makers, right? There's only one store in the country where people slept out overnight on like their makeup, you know, their put together mattresses and whatnot. And that's GameStop. That tells you something about the importance of that sales channel, at least in the near term for driving customers. You saw the same thing with the deal announced with Microsoft, where they're going to get some share of the lifetime value of customers who buy the consoles, I think GameStop is going to remain an important sales channel for video games, right? Is there going to be 4,000 plus stores across the country?

No, but I think there needs to be a specialty retailer for games. And I think, why not GameStop? And again, you talk about the leadership in place that can take advantage of some of that personal relationship, personal touch. That's exactly what Chewy basically did, right? They put the handwritten note in your box and all those sorts of things. And you hear Ryan Cohen talking about that. we have to use this relationship we have with customers to kind of drive our growth in the

future. So, I mean, you can tell a story for why they still need to exist and the niche that they can play in the market. And I think when you layer on top, again, that the management that's running towards the company, I think I would be shocked if Ryan Cohen isn't in some type of meaningful leadership position in the company here pretty soon, just with how aggressively he's been pushing in buying shares. And I don't know if you've looked at his Twitter lately, but there's some spicy, spicy tweets. But so you see you tell that story, and you've got a manager, I think it can be a great, you know, great at executing on that. Certainly, there's some headwinds when it comes to digitization of video games. But I think that floor on where physical games are going to be is

a lot higher than a lot of people would have you believe I don't know where it is. But I think it's higher than than we're underwriting. Okay, so it may not be the 95%. Like I was just estimating off of, you know, it might be lower, maybe something around, you know, 60 to 80%, or something like that, which still leaves an opportunity for GameStop to thrive. Yeah. I mean, so I would recommend if you're just like interested in investing in video games or just the business of video games at all, you read a book called One Up by Joost van Droenen. I had him on the Industry Focus podcast back in the fall. He's a professor at NYU Stern, talks about the business of video games, all those sorts of things. He had a chart in his book that just blew

my mind. Something like two thirds of video game sales, maybe even more than that, are still physical games. It's surprising how much of the video game sales today are still physical. And I think it's much higher than you would expect if you ask the average person. So again, I don't think it's going to go 100% digital, but I could be wrong. I'm wrong all the time and I'll certainly be wrong again. But my suspicion is that that floor on physical game sales is going to be a lot higher than folks believe. It is funny how fast like that blockbuster narrative took over because at one point I think GameStop was trading below its net cash position. It clouded my judgment for sure. Yeah. Yeah. So yeah, I think the idea is just, is the company, you know,

if you thought the company was going to survive, I think the past couple of years, it's kind of been interesting, you know, in kind of middle of 2019 through when it's gone on this crazy run in the fall. Definitely not as exciting here, kind of pushing up against $20 as it was in like, you know, the $4, $5 area. But I don't think, you know, they're going to become the next blockbuster. They're not going bankrupt. I think you still look, I looked this morning on CapIQ, you got 69.7 million shares outstanding total. According to their data, 68.1 million of those shares sold short. That's just the shares outstanding, right? And if you want to back out strategic shareholders, then you've got over 100% of the float sold short, right? So if you want to

back out Ryan Cohen's 13%, if you want to back out Hestia and Permit Capital, who have been activist investors trying to claim board seats in the past couple of years, and Michael Burry, all those folks together are 6% to 7%. If you take George Sherman, who's the CEO, that's another 3%. So you're just looking there at 23%. If you want to take those strategic shareholders out, you're looking at over 100% of the shares sold short with this catalyst kind of still in place of this console cycle earnings coming down the pike of, you know, Ryan Cohen looking to be, you know, continuing to press his short. And then it's not as not as short, excuse me, presses kind of activist position in the company to take a more active role. And then last thing,

if you want to, if you want to, you know, just just play in the, you know, the stock market mechanizations thing, you've got the stock with over 100% of the shares short, and it's a Wall Street bets like darling right now, you've got all the wallets piling on, squeezing on the short side. I would not want to be betting against this company right now, whether you agree with me that the floor on physical game sales is higher than the market things or that the company can evolve into something that's relevant in the future. I just don't know how you bet on the short side when there's people camping out in the guy's parking lot to try to get at one of these consoles. And over 100% of their shares are sold short. I just don't understand it. But it still is that

way. I still think there's probably some catalysts to send the stock up, but I don't know. We'll see. Yeah. The Wall Street bets darling thing. That's probably Burry's entire thesis right there. Yeah. He's a YOLO trader. Well, he's been in for a long time, so it's certainly not just that, but this is one of those where it's just strange. It's just strange of where you've got this activist coming in, buying up the shares, being very aggressive. And yet that short interest has really, really held up. Um, it, it doesn't make sense to me, but I don't know. Yeah. It'd be interesting to see how it plays out. Yeah. All right. Wrap up questions. Uh, these, we ask all our guests,

so I'll go first. What is one financial saying that you disagree with? Yeah. So I had, I had trouble, uh, with this one, but what I went with is like, I don't know if it's a saying, but I hear lots of people say it of, if you go on Twitter, like the whole like VC community is like, just start a business. You should just start a business. You shouldn't have a job. Just start a business. don't go to college, just start a business. And I think, you know, obviously entrepreneurship is great and everybody should do that. You know, and yours is an investing show. I talk about investing. I think if you take it from an investing mindset point of view, right, we talk about as an investor, you have to be able to manage a lot of volatility, a lot of uncertainty, curveballs get

thrown at you on a day-to-day basis. Sometimes you'll see massive amounts of money kind of disappear before your eyes, especially as you get older as an investor, and you have to be able to navigate that. I think that's on steroids when you're a business owner and it's not for everybody, right? Like the stock market closes. There is no point in time where, you know, the risks to your business stop. And, you know, you talk about the stock market. I think one of the super attractive things is that over time, it's a positive expected value investment. You know, if you have a diversified basket of stocks, you can hold them over time and they'll do success, you know, they'll do well. You're running a business. I mean, you could foreseeably have your entire livelihood

into that business. And that's a level of risk and that sort of thing that I don't think is for everybody. So I think a lot of times we walk around and you say, oh, yeah, see, look at this guy. He dropped out of college and went and started his business. And he's a millionaire today. We don't ever see all these people who took some of those same risks and things didn't work out well. I say you shouldn't start a business, but I think you should go into it with open eyes. And it's not something that everybody should do. And it's definitely not as simple as the average person thinks. And so, you know, you asked earlier, Brad, about like, what's something that I learned about from law school or whatever that maybe helped me as an

investor? It's just like, man, all the stuff that you have to worry about as someone who owns a business and all these kinds of different contracts and laws and all these things that underlie what you're doing. So I just say, you know, you definitely have a little bit more respect for the work that goes into really building and running a business and operating it on a day-to-day basis. It's you shouldn't, you know, just start a business. Yeah. That's a unique one. So you're not getting into any of these SPACs with no revenue yet? No, and I haven't yet. Maybe one day, one day, you know, I, there's a lot of people, a lot smarter than me and I'll leave it to them. Yeah. All right. I'll hit the last question here.

What is one piece of advice you have for anyone starting out a career in investing? I guess you're, you know, an editor. So maybe you're not technically, you know, a financial analyst over there, but just anything you've learned, you know, working at The Motley Fool, how to get into that world. Yeah, sure. Yeah. So I would just say, yeah, just for everybody. Yeah. These are all my own opinions. I'm just a guy on the internet with a portfolio, host a podcast. Sometimes definitely go to all The Motley Fool's official stock recommendations for all your official stock takes. So what's my advice for people that want a career in investing or want a career in finance? I think number one is just make sure that you like it. I think for any job is don't do it just

because it pays a lot of money or just because you know a lot of people make a lot of money, you have to do it every day. So, the great thing about my job is I'm looking at, you know, kind of stories in the stock market, what's going on with companies every single day. And I like it. I find it really interesting. I would have done it for free. I took a pay cut relative to what I could make as a lawyer to go here and do this. So, I'd say definitely make sure you like it no matter what your job is. And then another thing I would say, probably another thing I learned, you know, in law school or whatever, is just try not to get paid by the hour if you can, no matter what job you go into. You don't want to get paid by the hour. It's not a good,

it's not a good thing. So I just say, you know, basic advice is just make sure you like it. Oh, also, you know, just don't be afraid to apply for a job, right? So I just kind of on a whim looked and saw there was this editor analyst position in the Motley Fool and kind of ended up here. You know, there is no downside to sending an email or asking someone for advice or, you know, asking someone to coffee or anything like that or applying to a job. You never know what could work out for you. So when there's something that has lots of upside and no cost to you, that's a great investment of your time. So, so definitely do that. Definitely. Okay. I think that's all the questions we have, Nick.

Thank you for joining us. So, yeah, so happy to be here. I hope I, you know, I lived up to all the other guests. I think you've had so many smart people on here. I just feel so, I got a little bit of the imposter syndrome going on, but I hope I did. I did an okay job. Didn't really do too much. Where can people find you if they're. Yeah. When is the industry focus energy show?

Yeah. So yeah. So the industry focus podcast, You can check it out on any of your favorite podcast players, Spotify, Apple, Stitcher, et cetera. The name of the podcast, Industry Focus. I host the Thursday edition on energy and industrials. We talk about renewable energy, oil and gas, electric vehicles, all those sorts of things. You can also check out all the other episodes throughout the week. On Monday, Jason Moser does financials.

Emily Flippen does consumer goods. On Tuesday, we got wildcard. Wednesday, we talk about all kinds of different things. Then on Friday, Dylan Lewis talks about tech. So definitely check that out. But I think I think the Motley Fool, all the Motley Fool podcasts, I think are super valuable to me, particularly if you're a beginning investor. It's a great way to kind of get a daily dose of the stock market in a way that's entertaining. And, you know, we try not to make it overly complicated so that, you know, regular people can understand what's going on.

Because at the end of the day, this stuff isn't really all that complicated. But folks try to try to make it that way. And so if you want to find me, keep up with what I'm doing. I'm also on Twitter at Investing Nick. I had to make sure I only got my first name in the Twitter handle because nobody can spell Siple. So, you know, I figured out a handle that would let me make that happen. So at investing, Nick, you can go find me on there. Perfect.

All right. Thank you. All right. Thanks, guys. Welcome back in. Next up, we have hot water. I only have one. And so I'll probably go first.

You know what it is because you gave it to me. So it was Dorsey. Dorsey is obviously in hot water. Jack. Jack Dorsey. So according to a Business Insider article, I think it's Business Insider, Jack Dorsey was vacationing on an island in French Polynesia this week, probably the biggest week in Twitter's history as a public company. I feel like that's the bear thesis right there. Yeah.

That's all it is. Or it's the bull thesis if you think that he's going to be gone real soon. But as long as he's there, it feels like it's just – I mean, one, it's his afternoon job. And two, he seems to be vacationing. Maybe this is in spite for everyone telling him he can go live in Africa. He's like, no, I'm going to go worse. I'm going to go live on an island in the middle of the ocean. It's so – like, come on.

Like, does he not – does he not read any tweets? Apparently not. Well, as I like to brag, he did like one of our tweets before. I do – I think Paul Singer's political orientation might be the driving force behind what happens to Twitter in the next two years. Yeah. I mean, well, that might be going a little – Maybe he keeps that separate. But, I mean, if he's like, dude, you weren't even here and you banned him on a Zoom call, you banned the president of the United States.

Yeah, that's – I'm in the process. Yeah. Yeah. There could be a lot of complaints. I mean, to be honest, like, yeah, just got to be where everyone is, you know, dude. like what i mean that's it's just a it's just bad luck for jack yeah i mean you're you're not broke fly home like it's a pretty important sign yeah you're worth a few billion worth a few billion all right well that's all i have okay uh hot water is the efficient market hypothesis emh

sorry eugene fama um which is the funniest name of all time because it sounds like you're miss saying it every time uh you know what i mean yeah yeah all right mama why is it in hot water okay well um elon musk who i can't say anything else about when are we starting this uh it's on january 12th he's not but that's he's a day when people are listening i know but he's not starting the he's not part of the deal i just can't he tweeted or i can say someone tweeted use signal in reference to um the private messenger app because whatsapp's going to start giving their data to facebook and shares of signal advance a company that has nothing to do with this app have shot up over a hundred times since then yeah it's great stuff great stuff

that's sometimes it's better to be lucky than smart he just trounced like every headphone managers return anyone that accidentally owns signal events i don't know who's owning that but it was i think it was worth what would be because they're like a one billion dollar market cap now imagine if this is like some deep value play and someone's been sitting there in like a micro cap value strategy definitely a micro cap before and all of a sudden they return they wake up one day i mean but you can't well i guess it'd be pretty easy to sell into that wow there's also this new there's a parlor with like er and i was thinking that would be a great business to be in right now wait what do you mean er uh p-a-r-l-e-r oh it's a public company no it's not a public company but

the app like i looked it up to see if it was on the uh apple store thing yeah and there was this like different parlor i'm like god that would be i'd love to be the ceo of that company right now free marketing right there okay my next one is billionaire condos um a condo on billionaires row in new york city just had a 51 percent resale loss tough look being a person of means um it just doesn't mean what he used to it would really suck to be a billionaire right now yeah i would hate it i would hate what a tragedy yeah all right next uh spac naming so i think um i think these names are getting ridiculous gambit no there's queen's gambit one uh but these are even worse so we had a Cobra Kai SPAC

last week which is all based off of that I've seen the show yeah there's a Cobra Kai one and then this week we had the

LMF Acquisition Opportunities or LMFAO SPAC and their ticker I think is LMAO

so it's the these the YOLO whatever the Wall Street Bets the Robinhood Traders they're leaning into it

they're eating the market SPACs are leaning into Wall Street Bets right now yes they are because they they know what can happen yeah i mean uh it's an interesting name for spec for sure kind of brilliant honestly that's good marketing i guess wsb should be the next ticker yeah that'd be fun

yeah all right you got any more last one yeah robin hood haters so what do you think about this uh the company is apparently mulling quote mulling that's kind of the corporate speak for when someone's thinking about something uh they're mulling selling shares directly to its clients for its ipo so it's just it's just an infinite that's i mean that's the real infinite money loop or what i was thinking about this what if they give away free shares of robin hood to people that are plugging like the robin hood promotional thing you know how you get the free one yeah is there a violation there is there any value created there either no there's no value created there but it reminds me of that guy uh it was a kid on you know fintalk the fintalk

investors twitter page who was saying that everyone needs to buy robux and then go buy the roblox ipo i think we talked about this in the interview oh we did yeah or we had talked about it offline yeah but that example as well um it feels very similar to this but in real life it's a it's a flywheel effect yeah it is the real flywheel um okay that's all you have right buy sell hold the theme this week is uh regulated companies that get broken up so if big tech gets broken up oh so what parts would you so buy sell hold it's three different parts of those companies so companies within companies i have aws instagram and youtube and let me just say if the debate comes down to like big tech should be broken up over censorship i am totally on board

because i would love to buy some of the parts of these companies independently you know like aws on its own that'd be great if and if it all happens because censorship or fake censorship yeah yeah either way i mean i'm i'm gonna be on that i'm gonna be in the camp let's break them up yeah i mean i've always thought a lot of these companies should be broken up just for value creation well not for value creation just for other means that might make actual sense but okay we don't know the valuation so I'm like

just businesses. I mean AWS is the best business and then probably I think Instagram I know Instagram seems to have more momentum but YouTube seems more permanent to me. What about WhatsApp? No. Okay. Oh wait they don't

make any money off of it right now. What about Waymo? Waymo? That's interesting. Right now I mean I mean, right now, I don't know, the valuation it would get would be a lot higher than the valuation I would pay because, I mean, that's a classic Kelly Criterion bet. It seems like they have a, you know, they're going to lose a lot of money. It seems like they have, what, like a 25% chance of success. The potential returns are super high, but only if you buy it at the right price.

But, yeah, I think I'd go YouTube ahead of Instagram just because it's Excel Instagram. I think there just is a small risk that these social media apps, I don't know. I just think there's a lot of – there's more risk to Instagram being usurped than YouTube. There's not even a sniff of anyone getting close to usurping YouTube. Yeah, I agree. Well, Quibi, watch out. Watch out, yeah. Yeah, for sure.

But yeah, you're right. I do think – I don't know. I feel like everyone's like Facebook's got this impenetrable moat. And yeah, as a conglomerate, they do maybe. But I don't think Instagram is impenetrable. i'm sure tiktok has reduced the hours people spend on instagram discord roblox and there's other stuff out there well don't forget about kappa the kids on roblox can't be on instagram oh what do you mean child online privacy and protection right right

thing that shamath oh with young young investor 12 yeah rip young investor 12 we're feeling for there uh anecdotal evidence i really don't have much this week and we i just sat around for an hour reflecting on everything i did this week this is kind of when we do that is when i'm thinking about anecdotal evidence um and it's pretty sad it's kind of depressing that i don't have a single anecdote yeah winter winters and winters in seattle during a quarantine really not much to do i will say um twitter if there's ever time to make it a subscription now was the time i mean yeah you've been given a golden opportunity to be like all right you're only allowed on if you pay yeah yeah or not i mean yeah that is true it does come back to the

the fact that like twitter is a you know we're in a free market and twitter can make their own choices no shoes no shirt no service kind of deal right yeah all right what's your anecdotal evidence uh okay uh i know a lot of people like lemonade i know a lot of people we know drink uh not no not the drink the company right yeah sorry i should have uh disclosed that there uh but does this constitute a red flag to you so ceo shay winninger shy shy actually uh who has been selling many shares of his stock into this amazing rally i think i saw a number of 60 million dollars worth which good for you uh he tweeted about short sellers on seeking alpha and disinformation trying to like you know classic like similar to elon musk type deal which i guess you mean

similar to trevor milton trevor milton yeah excuse me and uh yeah and he said that they're just trying to drive down the stock does that constitute a red flag to you i hate when i do hate when people uh great ceos don't spend their time bothering with short sellers no the only well reed hastings did but he didn't do it like a two-minute quip he wrote like an essay on what they're doing and why like it was basically an essay outlining their business strategy and he was saying like i give you good luck we're not going to tell you to stop doing this but this is where we're going and we think we have a great opportunity here you know what i mean also the only reason he did it is because he's the guy that shorted it serves on some board of like a

school like a low income school area thing some initiative they're doing and he's like i don't want you to lose money so i'm going to send you a letter on all the reasons your short report is wrong um which that's like he wouldn't have done it if he didn't care and so now like bezos wasn't spending time worrying about it like it is the biggest red flag for me if yeah if he took to instagram live it's a bigger red flag oh is that uh that's the old milton yeah trevor was like i'm so disappointed that these people are trying to yeah dude i'm so i feel so proud that i was that i called uh nicola being a fraud like in may or june yeah that's one of my that's one of my you weren't the only one i felt like everyone thought it was no no not may or june it was a

rendering it was a picture of a truck that's a yeah well that happened in july well maybe i can't pat myself yeah it's a bit of a red flag what a bigger red flag for me with lemonade is that like disrupting businesses people are like well insurance right is ripe for disruption it's Like those companies are around for – have been around for 100 years for a reason. Yeah, they might be wasting a ton of money on – And low overhead isn't a competitive advantage in my opinion. No, no, no. And they're just selling insurance for less than it costs.

I don't know if that can work anymore. As a customer, I'll take it. Oh, I'm going to use Lemonade if I have to get insurance. So maybe we're wrong. For sure. Yeah, I mean whatever. If you want to sell me something for less than it's worth, go right ahead. It's got a good story though.

you know i mean i guess some stocks that get bought up a little too much always have to have a good story but it's gotta like disrupting the legacy players you know oh yeah they definitely tell a good narrative with that charity stuff too they tell a great narrative yeah and i don't think that's all you know it's not like yeah it's not bullshit at all but it's i mean when a ceo is taunting short sellers we all know about the great short squeeze uh that you know there's a definite a red flag for me because there's so many companies out there and you want management's the most important part management business model valuation if you're completely legit and you're going to disrupt insurance who cares what short sellers say yeah unless you're the

one selling shares and it's lower in the price like yeah then maybe it's a concern and something to be upset about but yeah i don't know i guess we do have a lot of people that like lemonade so yeah hope they do i hope they hope they do well not banging us a company really hope they do well all right is that it that is it okay we want to remind our listeners that we're not financial advisors anything we say or discuss here on chit chat money is not formal advice or recommendation uh oh leave an apple review because they help yes yeah definitely we i might stop saying that no no we okay let's play let's make it a game if you leave a review and it's funny you make a joke or you can roast us or something like that for shorting a company i can't name anymore

uh then yeah you know we'll read on the show it'll be fun but yeah the five-star reviews they they really they definitely had help out and we fixed our audio so the people complaining about that um yeah we made it you know we got a brand new pop filter yeah we spent a whole like 50 bucks we spent like yeah two we spent like 2 000 satoshis on that all right all right uh that's it thank you guys for listening we'll see you next time We'll be right back.