Morning Brew Daily - Adam Neumann Buying Back WeWork? & Eli Lilly Worth More than Tesla

Episode Date: February 7, 2024

Episode 252: Neal and Toby explain how Adam Neumann is attempting to buy back his bankrupt company WeWork. Plus ESPN, Fox and Warner Bros. are teaming up to bring a massive streaming service for sports. It's kinda like... Cable! Next, Eli Lilly's stock price is giving Tesla a run for their money and Taylor Swift is threatening legal action against the college student tracking her jet. And finally, why magic mushrooms are on the up and Nebraska's state slogan is no more. Buy Morning Brew Daily Swag Here! https://shop.morningbrew.com/products/morning-brew-daily-sweatshirt?utm_medium=multimedia&utm_source=podcast&utm_campaign=mbd&utm_content=shownotes Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

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pwc.com slash US slash brew AI. That's pwc.com slash us slash brewAI. Good morning, BrewD Daily Show. I'm Neil Fryman. And I'm Toby Howell. Today, Adam Newman just couldn't stay away from the cucumber water. He is trying to buy back Wii work. Then Taylor Swift's legal team is coming for the guy who publicly tracks the movements of her private jet.

It's Wednesday, February 7th. Let's ride. We have a major announcement to start the show today, ladies and gentlemen. our first Morning Brew Daily merch drop is live. By the time you are listening to this episode, you will be able to head to the Morning Brew Shop and pick up your very own Morning Brew Daily hoodie. I'm so excited.

We put together this drop because it's still cold outside, and these hoodies are comfy, cozy as can be. It's also the perfect gift for the MBD superfan in your life, especially if that super fan is you. Yeah, whether you've been with us since the very beginning or if this is your first ever episode, these hoodies are sick. Neil and I rock them constantly.

Also, Valentine's Day is coming up, and what is more romantic than giving the gift of Morning Brew Daily show? I truly can't think of anything. Okay, Toby, where can people buy this hoodie? Okay, a few ways. You can go to shop.mortembrood.com, or you can head to the show description wherever you listen to your podcast, or we'll also link it on YouTube.

By the way, if you want to see what the sweatshers look like, head to the YouTube because Neil and I are rocking them right now. We'll also place with a link all over our socials at MB Daily Show, so you can find it there too. One final note, this is like one of those streetwear limited drop vibes, so please, please go snag one ASAP because supplies are limited. Neil, I'm just so excited to see this out in the wild. Before we jump into the show, we have a quick word from our good friends over at VIME. Neil, scale of one to VIM. How are you feeling about the show today?

Like a seven? I'm confused about the parameters of the school. Well, one is you're feeling bad, and VIM is you're feeling confident and secure and resilient. I guess still a seven. All right. Well, I am feeling VIM today, and yes, VIM is an adjective, as well as the number one global market leader in data protection and ransomware recovery. Check out VIM.com today to learn more. That's VEEAM.com today.

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Now through May 6th. Exclusion supplies to homedipo.com slash price match for details. So I want to put a sequel on everyone's radar. We Work episode six, return of the Newman. And it's not out of the realm of possibility after Adam Newman, the WeWork founder, went public with his attempt to buy his former company out of bankruptcy yesterday. Newman's lawyers sent a letter to WeWork's advisors asking them to consider his takeover approach, which he's been lining up for months with financing help from hedge fund third point.

If this happens, it'd be one of the most dramatic executive comebacks in business history up there with Steve Jobs' returned to Apple in 1997 after getting booted 12 years before. But this is the part of the story where I remind everyone, There is a long way to go. We work does not appear to be rolling out the red carpet for Newman because Newman said he's been stonewalled for months as he's tried to get information. Plus, he'd have to win the support of the senior creditors who are poised to gain control of the company following bankruptcy proceedings. Toby, I have to give you credit, you know.

A few months ago, you predicted this would happen. This would happen. And now that it has, or at least it's moving in that direction, what is going through your mind? I mean, let's freaking go. you and I were sitting waiting for some smoothies yesterday when the notification for this story hit our phones and we both just celebrated. It was as if the news gods had smiled upon us and sent us this new Greek comedy or Greek tragedy of epic proportions. Of course, it is just a headline for now.

The closer you look, the more the cracks begin to appear. I mean, even third point, the hedge fund that he was getting the financing from said it had made no commitments as of now. And it was still only in preliminary talks. And then also WeWork respondent says, hey, we get a lot of offers like this on a week-to-week basis. So this is just another one. So, but whatever. For one blissful moment, we were as excited as could be. Well, I think this is a serious offer because he, in the letter, they detailed how he's tried to buy WeWork for months now.

He said he put up a billion dollars in financing. He offered $200 million. And another reason why I think this has some legs is because WeWorks, creditors, and landlords are frustrated with the company for not turning itself around when it should have. I mean, there was a hearing yesterday where the creditors and landlords went up and just complained nonstop about how there wasn't enough liquidity. WeWork wasn't, you know, doing enough to quickly enough to get out of bankruptcy. So I think there is pressure on management at the company now to make moves to get an influx of capital. And so that, that I think is one factor that could help Newman's bid because they, you know,

the people who are owed money by WeWork are getting very frustrated right now. Yeah, and let's just entertain the idea that we've entertained on this show before is that this is also weirdly a perfect time, in our opinion, for WeWork to thrive in the current environment. Remember, office rents and office prices are kind of falling off a cliff as the rise of remote work has led to higher vacancies than ever. But also this new class of kind of hybrid remote worker kind of needs exactly what Wework provides, which is this flexible short-term desk rental situation. And there's also other companies out there that are kind of doing what WeWorks set out to do very well. IWG is a company that's growing in this space. As of September last year, it had 3,455 locations.

This is a really big co-working company. So I still think that there is a world in which WeWork can work, whether it's under Adam Newman or someone else. Yeah, but we should remind everyone that Newman didn't exactly crown himself in glory when he ran WeWork. He ran it up to a $47 billion valuation, which was impressive, but that all collapsed when they tried to IPO back in 2018. And when he looked under the hood of this company, there was very shady corporate governance. There were accusations that Newman was self-dealing. So he's going to have to win support of these senior creditors, one of them, including SoftBank, who poured $16 billion into Newman's WeWork and lost a lot of money, you know, more than $10,000.

billion dollars worth of that. So you can understand why, you know, they might be hesitant to welcome Newman back. Yeah, remember the good old days of community adjusted EBDA. That was just one of the craziest financial metrics of all time. Let's move on. The world of sports on TV just got yet another shakeup in what was already a very shaken up industry. Fox, Warner Bros. Discovery and Disney are combining forces like the Power Rangers to launch a new streaming joint venture that will move all their sports content under a single brand. That means content from ESPN, TNT, and Fox Sports. We all live on a new standalone app called Cable.

Just kidding. We don't know the name of this new thing right now, but you can make all the cable jokes you want because, gosh, dang it if this doesn't sound a lot like what freaking cable is, pricing will be announced at a later date, but estimates put it in the $75 to $80 per month range, which is right around what services like YouTube TV or Hulu Live costs. What we do know is that each company,

would own one third of the new outlet and they'll license their sports content to it on a non-exclusive basis. And we're going to get a new brand name too. Okay, a lot of info there, Neil. Thoughts on this new venture. I know you and other people are making jokes about how streaming is just turning back to cable. But I think what really is happening is cable is turning into streaming with this new joint venture. This isn't the cable of old. You can't surf channels. You have to go into various apps and, you know, click on a particular game. want to watch, but it is just another sign that the last bastion of the cable bundle, the only thing that the cable bundle had left was live sports rights. And we've seen just in the past

few months with Netflix getting WWE with that exclusive game, NFL playoff game on Peacock, that this is just a tidal wave of sports moving to streaming platforms. And I think it's not fair. It's not, you know, crazy to say that at least by far next year, you know, 90, 90% of the sports you watch, you're going to be clicking into a streaming app to watch it. Yeah, absolutely. The concentration of top sports under kind of one singular roof, if you will, is very significant. I mean, between them, they own ESPN. Warner has most of the rights to NHL and NBA, while Fox and ESPN control a majority of the

rights to Major League Baseball right now. So you've got hockey, basketball, baseball right there. Football is the, obviously, the crown jewel of everything. And while Fox and ESPN do have deals with the NFL, The NFL is more distributed than most remember. Sunday night football, it lives on NBC Universal. Thursday night football is on Amazon and CBS owns a lot of the Sunday afternoon game. So that is still the one thing that isn't being concentrated under this new power structure. So I do think that you're missing a little bit of the crown jewel here.

Let's talk just quickly about the intended audience. Maybe it's the sports, the big sports fan who doesn't want to pay for the YouTube TVs of the world. That's $8.80, but also has cut the cord. So finding that middle ground where someone's like, I just really want to watch a ton of sports, and that's only what I want to watch on TV. And they're trying to find, this is for that particular person. We don't know how much it's going to cost yet, but CNBC reported that a logical starting price point would be $45 to $50 a month. Do you think that is attractive for people?

I think I want a sports super app so badly. I do not want to have to watch the Premier League on Peacock and then go to find the NBA on this app. I just genuinely do want one single app. If you call it Cable Plus, then send me some royalties, Fox, and everybody. But I do want this super app. Moving on. I've got another in and out for 2024. Hope it's not too late for that.

Last names out. Two first names in. And that's because pharma giant Eli Lilly has now surpassed Tesla in market valuation, leading some to argue that it should replace the automaker among the magnificent seven stocks that rule over Wall Street. Eli Lilly only strengthened its case yesterday when it reported earnings that showed why it has investors foaming at the mouth. Its obesity and diabetes drugs Zepbound and Monjaro are selling even more than expected and there were already sky high expectations. Monjaro booked $2.1 billion in sales in the fourth quarter up from just $279 million a year ago.

Not only that, a study found that Lilly's drugs appear to improve fatty liver disease known as mash, adding to the wide list of health problems. these diabetes drugs seem to help treat. Meanwhile, Eli Lilly rivaled Novo Nordisk, the maker of Wagovi, also reported blockbuster results last week. So if we take a step back and look at these two major revolutions going on right now, I'd argue Microsoft and NVIDIA are the early winners of AI, and Eli Lilly and Novo Nordisk are the early winners for weight loss drugs. Yeah, a lot of the pieces we were seeing yesterday was the fact that EI.

Lilly passed Tesla in market cap for the first time, or not for the first time, but for the first time in a while. And so that to me is kind of like a passing of the baton. And a lot of these pieces kind of drew parallels between Tesla's like EV Revolution and what's going on at Eli Lilly right now. I mean, these are two companies that are being traded at valuations that you don't see in their industries. I mean, Tesla trades at 50 times its earnings. Eli Lilly trades at 55 times its earning. There is technically a justification. Both these are big dominant players in markets with huge growth potential. But also, it is so interesting to see. see where you got Ford Motor at a 6.6 multiple.

Johnson & Johnson has a 15 times multiple, and yet you have these two like golden children being valued way, way above their peers because they think that they have such great growth potential. Yeah, I mean, Zepbound is expected to be, if the forecast are true, it's going to be the best selling drug of all time. This weight loss drug market is supposed to be a hundred billion dollar market. Like the growth potential is endless. And the only thing tripping up Novo Nordisk and Eli Lilly right now is production.

And a very interesting development last week when Novo Nordisk bought a contract drug manufacturer, Catalan, which makes drugs for a variety of manufacturers, of drug developers. And that shows, it's a very unusual deal, and it shows just how important expanding production capacity to fill demand is for Novo Nordisk and Eli Lilly. It's the limiting factor right now on their sales. Yeah, again, it's a very like Tesla-esque story arc where the limiting factor for Tesla for a long time was their production capabilities, which is something that they nailed. So I do think we are seeing a similar like production race to try to see who wins this market. Okay, before we jump into the next part of our show, we're going to take a quick break. Wishing you could be there live for the big game, soaking up the atmosphere of the crowd.

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Find Ollie Sleep Solutions for the whole family at Ollie.com. That's OLLLY.com. The name Jack Sweeney probably doesn't mean much to you all listening, but one person definitely knows who the UCF Jr. is Taylor Swift. You see, Jack Sweeney has been running accounts for years that track the takeoffs and landings of the private aircrafts of everyone from billionaire tech CEOs and Russian oligarchs to, well, billionaire global singers as well.

The data Jack uses is publicly available from the FAA and can be utilized like hobbyists like himself, but that hasn't stopped the targets of Jack's accounts to take action against him. Taylor Swift's attorneys wrote a cease and desist letter back in December saying Jack's action have left her in a quote, constant state of fear for her personal safety. And Swift is not the only person who feels that way. When X is still Twitter, Sweeney's account was banned for sharing what Elon Musk called. his assassination coordinates.

Neil, these accounts have fueled all sorts of free speech and privacy debates, but especially when it comes to Taylor Swift, who routinely deals with stalkers. Free speech, privacy, and also pollution, because he tracks the sort of carbon emissions from private jets, which are known to be, you know, much higher than the average commercial jet. So yeah, he's fighting back like he fought back against Elon Musk. He said, I'm not going to try to be bullied by billionaires here. I'm not putting a GPS tracker on someone or invading anyone's privacy. This is literally public information by the FAA.

Any hobbyist with maybe a little extra time, maybe his classes don't start till 11 at UCF, so he has a little extra time, can do this. So he's pushing back and saying, look, look, I'm not violating any laws here. I understand that Taylor Swift has stalkers and it must be very, you know, uncomfortable and scary. But what I'm doing is not necessarily heightening the danger for her because she's, She publishes her tour dates. People know if she's going to the Chiefs game or not. So this is a very interesting free speech thing. But he's saying I'm really not violating any laws here.

He might not be violating any laws, but the lawyers who wrote the letter to him said, like, while this may be a game to you or an avenue that you hope will earn you wealth and fame, it is a life or death matter for our client, which, I mean, it's very true in some sense. When you're as biggest star as Taylor Swift or even Elon Musk, you attract everyone from across the craziness spectrum and any little details about their location. can represent a threat to their safety. There is steps that Sweeney's taken. He is now publishing the location of Jets 24 hours later.

Because he has to. Elon made it, so it violated the terms of service on X to publish the live locations of people. So it is just extremely interesting. This is such a combination of so many different storylines from the pollution to the privacy, to the public speech. Swift's carbon footprint from her private jet

has definitely come under scrutiny over the past couple of years, because she topped the list of the biggest carbon dioxide polluters of any celebrity in 2022. She emitted about 1,100 times more than the average person does, according to the Digital Sustainability Consultant Yard. And her people fought back saying she's loaning out her jets to other people. And before her heiastore, she bought carbon offsets. So she's like, you know, offsetting her emissions.

But she is number one. And so that's also put a target on her back. And everyone's, you know, definitely going. going to be tracking her flight, if they can, from Japan back to Las Vegas for the Super Bowl coming up on Sunday. So, yes, this is a wide thing, but I have to say, I know we were arguing a little before the show, but I'm totally on Sweeney's side. I think he's, I think her flight, you know, hers and any billionaire or any public figures in the public interest, and if you're not, you know, doing any particular illegal snooping, then it should be fine to track her flights.

People want to know it, and you're providing a useful service. And that flight from Tokyo to the Super Bowl might be one of the most tracked flights of all time. Moving on, the shroom boom is upon us. And how do we know that? One metric you can look at is the number of busts executed by law enforcement officials. And a new report out yesterday showed those have skyrocketed in recent years. In 2022, officials confiscated 844 kilos of mushrooms containing psilocybin, aka magic mushrooms, which is a 273% increase from 2017.

And the jump reflects soaring demand for shrooms, as more studies have come out showing that it can potentially treat a variety of psychiatric disorders. In 2018, the FDA gave psilocybin a special designation to accelerate research into its treatment for depression, which could lead to approval for clinical use. And that approval hasn't happened yet, but the hype is hyping and the money is flowing in from VCs to startups, hoping to capitalize on the increased interest. 50 psychedelic companies now trade on U.S. stock exchanges and some forecast call for the industry to grow to more than $10 billion within a decade. Still, shrooms are still considered in an illegal substance federally, which is why you see these drug busts by law enforcement.

But it's clearly a sign that we've entered the age of the shroom. Yeah, the shroom, the psychedelic renaissance, whatever you want to call it, it's definitely happening right now. I mean, Michael Blue Blay was just at the NHL All-Star game at the podium saying, like, sorry guys, I'm high. on shrooms right now, which went very viral. So it just goes to show you kind of the level of desigmatization that we've arrived at. Another thing I think plays into this too is that it's kind of undergoing what happened after kind of marijuana got legalized. You started seeing all these clinics pop up and also this elegant packaging. It kind of looks like a millennial branded, all these different gummies and whatnot. And shrooms are going through that same thing. You can buy

shrimp chocolates. You can buy these pills now. They come in these beautiful. packaging. It doesn't feel like you're getting trumes. You don't get a dime bag of like fungi. So I think that we're seeing kind of like this match maturization of the industry and you can, it's evident in the packaging itself. Certain states have decriminalized it, which I think has also led to, you know, increased demand. Most of the seizures, interestingly enough, happened out west, 43% of the total. And I think that's an indication because a lot of, or most of the decriminalization and sort of deprioritization of mushrooms has happened out west. And I think that's where you see more of the action happening, though.

Also, the Midwest weirdly had a lot of seizures as well, so it's happening there. One, the Wall Street General did just recently publish an article, too, about how a lot of working moms are turning towards shrooms, microdosing throughout the day. A lot of people have said it's replacing kind of the classic glass of wine and that when you go out to socialize, you might see people just popping in a pill of microdosing streams instead of pouring themselves a glass of wine. And so you are seeing it infiltrate lots of different parts of society from Silicon Valley all the way down to the suburban mom. Experts do say that, you know, maybe the hype is getting ahead of the science, which not surprising and that people are self-medicating.

And while it's not the most dangerous drugs, magic mushrooms can lead to seriously bad trips and kind of just scar you for a while. So they do caution, like, be careful when you do this. It's not approved. A lot of the studies are, you know, theoretical in nature. we still need a lot more research out there. So kind of just take it easy. Take it easy. Let's move on.

State slogans are not a thing that you probably think about very often. But honestly, maybe it's time you start because there is some drama that goes around these things. Take Nebraska, for instance, who is retiring theirs just five years after introducing it. Here is what they are ditching. Nebraska, honestly, it's not for everyone. Which was funny and edgy five years ago. But now it just kind of calls attention to the fact that Nebraska doesn't really have the sparkling beaches or glorious mountains of other states.

Technically, it was successful, though. The director of Nebraska Tourism Commission conducted a survey of tourists and found interest in Nebraska rose from 19% in 2019 to 39% more recently. Also in the portrait of American Travelers Report last fall, Nebraska had risen all the way up from dead last to 41st as the state travelers were interested in visiting. But Nebraska Governor Jim Pillon called it nonsense in a recent address, and now it's up for replacement. Neil, this whole industry of state modos and state marketing is actually super

interesting. Yeah, I think Nebraska's was so bad. It was good. Because I don't know if you remember when they released it five years ago, but everyone talked about how everyone talked about it essentially how bad it was. And that in turn, you know, it functioned as exactly what it wanted it to be. It got $7 million in media exposure alone in the two months after because everyone from Stephen Colbert to Kelly and Ryan were talking about it. So it was so bad.

It was good. And it reminds me of a bunch of other debacles in the past. If you want me to run through them. Yes, please run through them because, yeah, we went down the rabbit hole of state slogans. And there are some hilarious ones. Well, the number one thing that comes to mind back in 2016, Rhode Island, a state, you know very well, released cooler and warmer as its slogan. And that was actually a huge debacle. It got the chief marketing officer for the state fired.

It was the governor's worst week, according to one paper. So, and I think the reason is they paid, you know, $5 million to this marketing firm to do this huge campaign and then they launched cooler and warmer. And then the video they put out also contained pictures of Massachusetts and Iceland. So this was a complete chaos. It was, that's the most bizarre state model I've ever heard, Rhode Island, cooler and warmer. That is just purely nonsensical. I do want to just clarify state slogans are not the same as state mottoes. Modos are more of a unifying messages.

Those don't change. Those are kind of like written in the state constitution. A slogan is tied much closer to tourism. So in Florida, the current one is must be the sunshine, which I actually stand by. That's pretty good. Texas had a really famous one for a while. That was, it's like a whole other country. Too real.

Which is too real now. So apparently they have this new campaign going called Let's Texas, which is a lot worse. Do you know what Massachusetts is right now? Visit Neil's home. It's all here. So Neil's home is there as well. I kind of like that. Yeah, there's some other really.

cringy one. Seattle rolled out one called Metro Natural one day. So we got cities getting in on it. Oh yeah. Everyone needs a target slogan. And then last year, this one was really bad. Regina, I don't even know if I should go into it, but that's the capital of Saskatchewan and, you know, I guess I'll just leave it there.

My favorite one, though, is Virginia for lovers. I think that is so iconic. Very solid. Okay, that is our show for the day. Have a great Wednesday and a reminder to pick up your MBD hoodie ASAP. You can find it at shop. Morningbrew.com in the show description. where you're listening to this podcast on our YouTube page

and on Morning Brew's social accounts, Morning Brew Daily social accounts, I'm sorry. And you can't buy a hoodie at our email address, but we do have one if you want to share any feedback on today's show. That's Morning Brew Daily at MorningBrew.com. Let's roll the credits. Emily Milliron is our editor and producer. Raven Lou is our associate producer.

Yuchinawa Ogu is our technical director. Billy Menino is on audio, hair and makeup. Honestly, they're not for everyone. Devin Emery is our chief content officer and our show is a production of Morning Brew. show today, Neil. Go buy a hoodie. Let's run it back tomorrow. All. Pay off your home, travel for life, drive a Ferrari. In celebration of the world premiere of the Monopoly, Big Board Buckslot Machine by Aristocrat Gaming, Yamava Resort and Casino

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