Morning Brew Daily - Buzzfeed News Shuts Down, SpaceX Rocket Explosion, Ikea's $2-Billion US Investment

Episode Date: April 21, 2023

Episode 44: Neal and Toby explore the path that led Buzzfeed to make the decision to shut down their news division. And on Thursday SpaceX launched their Starship rocket, and even though it exploded about 4 minutes into it's flight path the mission was still considered a success. Plus, Ikea's $2 billion American Investment. And finally how one woman accidentally found herself on the verge of winning $250k by playing... Candy Crush? Learn more about our sponsor, Fidelity: https://fidelity.com/stocksbytheslice Listen Here: https://link.chtbl.com/MBD Watch Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

Marketers, tell us if this sounds familiar. You invest in something that seems incredible like millions of views, but then don't see any revenue. Instead, invest in what looks good to your CFO. LinkedIn Ads generates the highest row ads of all major ad networks. Spend $250 on your first campaign on LinkedIn ads and get a $250 credit. Just go to LinkedIn.com slash MBD. That's LinkedIn.com slash MBD. Terms and conditions apply.

Good morning, Brew Daily show. I am Neil Fryman. And I'm Toby Howell. Today on this Friday show, why Starship exploding into a fireball only four minutes into its mission was not a total disaster. And there could be more Swedish meatballs in your future. Then we'll check in on an elite esports athlete from Ohio, who also happens to be a mom of three. Then finish up the show with a couple of nature stories ahead of Earth Day tomorrow. Neil, it's Friday, April 21st. Let's ride.

Neil, this is a blue checklist show. We lost our verification on Twitter yesterday. I don't even know if people can trust that it's us anymore. No, this is actually not me. This is a Neil impersonator. This is my evil twin. I was actually sad because Elon took away a lot of verifications yesterday. And I, for some reason, had deep down to my heart.

Like, what if you forgets mine? And I'll just stay verified. Didn't happen. You're not paying for Twitter blue? I'm not paying for Twitter blue. I might, though, because I miss it. I miss my checkmark. I could not care less about my checkmark.

I'm just going to quote iced tea here. the fact that we're even discussing blue check marks is a sad moment in society SMH LOL. I've never seen an SMH LOL together. I love that. All right, before we get into the show, we got to do this every Friday. It's fast week, slow week. Toby. Neil, lightning fast week for me.

I can't really put a finger on it, but this week absolutely flew by. The only slow day was yesterday, so I contemplated changing to a slow day. But I don't know what it is. I think summer's in the air, springs in the air, and the week's flying bus. Fast week for me too. Yeah, I'm like, it's almost May have to get a house, you know, want to plan something for Memorial Day and I got to get a beach house in the Jersey Shore to do something this summer or else it's going to fly by. Just for everyone keeping track at home, I'm collecting these stats, our statistician. Six fast weeks for me versus two slow weeks. Toby has five fast weeks, three slow weeks. And we're encouraging side betting here. I'm taking the over on fast weeks for the summer. I think I'm living life faster than you. I'm going to die earlier. All right, let's get into the news. Yesterday, BuzzFeed announced it was cutting 50% of staff and shutting down its news division,

which is a landmark moment that sort of represents the end to a particular era in digital media. And I know we've been saying end of an era a lot this week for various news stories, but this really is it. And so many listeners are probably wondering, I didn't know BuzzFeed did actual news. I thought they were just listicles and quizzes and things like that. Well, that's what BuzzFeed was when they started in 2006, but in 2011. 11, Busfeed decided to aim at the big boys like the Wall Street Journal and the New York Times by launching BuzzFeed News. They initially got laughed out of the room, but this team did some serious reporting and in 2021 won a Pulitzer for using satellite imagery to expose Chinese detention of Uighur Muslims in Xinjiang province. So, but making money from news is really hard, downright impossible, and hiring reporters around the world is super expensive.

and BuzzFeed News cannot make its way to profitability. It's kind of crazy to say it now, but BuzzFeed was supposed to be the grand disruptor of media. When it first came on stage, legacy media outlets were quaking in their boots because BuzzFeed nailed the social media era of news distribution in the sense that they knew how to get their content to go viral on these social media platforms.

And so back in the day in the mid-2000s, BuzzFeed was the hot thing. It got a ton of VC investment. over 700 million in 10 funding rounds, it peaked that evaluation of over $1.5 billion. And yet now it's a shell of its former self. It shut down its newsroom. And yeah, it goes to show that sometimes the future of media

is not always like a new trendy thing. If you build your traffic on these kind of platforms, you can get the rug sweeped out from underneath you really quickly. Yeah, they lived by social media and they died by social media because these social media companies don't care about you. they care about what's bringing in eyeballs. And right now, eyeballs are creators and vertical video. And Facebook changes algorithm in 2022 to demote news and links from news publishers.

So they put all their bets on social media distribution. And that was taken from them. And now they can't get anybody to look at their content. News is not great in general because advertisers don't like to put their, you know, toothbrushes or t-shirts. against Chinese detention camps. Right. It's not exactly the easiest thing to sell.

And then also, we've got to talk about the elephant in the room, which is AI. So in January, BuzzFeed announced that it was going to start using AI to start producing content for its website. That sent the stock spiking 150% at the time. So people clearly thought, like, wow, AI and BuzzFeed go together, like peanut butter and jelly. And so they didn't really mention that in this shutting down of the newsroom. Insider actually also laid off part of its newsroom. they have recently started investing in AI, but they didn't mention it either.

So it's kind of like this, is it AI? Is it not AI? Who knows how much of a role it actually played? But you've got to think it played a certain factor in these decisions to lay off. We're just going to start seeing these news organizations become trying to lean into more lifestyle content and different revenue sources to subsidize news, which is not profitable. Right. So there's this famous stat that the New York Times gets, you know, more than 40% of its new subscribers from games, cooking, and audio.

And then Washington Post. I go to the Washington Post for my own research. Half of the articles, it seems, are like lifestyle stuff, like cooking tips, life tips, when should I exercise, six things you should do with your tax refund. That type of content is really what people are looking for. As Morning Brew knows, because we try to make the news as little as possible, you know, we try to make it consumable in five minutes or less. For sure.

And on this podcast, 20 minutes, we know that lifestyle content is what really brings in people, and that's what is more safe for advertisers. So I think BuzzFeed News shutting down just shows how hard it is to actually run a news business model in today's landscape. Neil, you summed it up well, but the only thing harder than running a business news publication is launching a rocket into space. So we're going to go on to our next story, which is the SpaceX launch that happened. yesterday. So I'm just going to paint the picture for our audience. Yesterday, after taping the show, me and you rushed out to our desks. You tossed on the SpaceX YouTube live stream, and we watched the 390-foot Starship rocket, the most powerful rocket ever bit gleaming in the Texas sunlight.

So after a few false starts, the countdown started in earnest. We got really excited. The 33 Raptor engines fired. The rocket slowly, painfully began climbing into the air. On the stream, you heard people cheering. We were cheering. We were like, oh my gosh, this is so awesome. For two glorious minutes, it was flying through the air, and then came the second moment of truth. Starship was about to separate from its booster

and continue its journey into space, but that moment came and went. It kept doing somersaults in the air, and after about 30 seconds, it exploded into a fiery ball of stainless steel, rocket fuel, and Elon Musk's hopes and dreams. Yeah, this was super exciting. I think what's funny is they are saying,

this is actually a great success, the fact that it just got off the ground in the first place. I know it was supposed to go to space and detach from the booster and land near Hawaii, but, you know, the fact that it got off the launch pad in the first place is Elon Musk's benchmark, right? He was like, as long as this thing gets into the air and doesn't melt the crap out of this cement base that we're, you know, launching it from, then I will consider this a success. Yeah, it was definitely, basically they were saying, like, this is how science works. Right. You need, this is a data treasure trope for us. We're going to go look through, see what went wrong.

You know what I think is funny, though, is that NASA was there watching, obviously, because NASA has their fingers crossed because Starship is supposed to carry live human astronauts to the moon around 2025. So you've got to think that they were at least a little bit nervous to see this thing just blow up in mid-air. So even though everyone's saying, like, yes, this was part of the plan. It's part of the process. You just know. It's a little jarring. NASA was like, oh, no.

Like, did we really mess up here? But yeah, they considered it as success. And why is Starship so important? It's really like this huge. We've talked about this earlier this week, but I want to reiterate, like, how much of an unlock this is for space. And maybe this is an exaggeration, but I was thinking about the 19th century and you want to go west.

You're living on the East Coast. And you're like, well, I can only, well, I got this horse and carriage. I can only take this much stuff with me. It's going to take me forever. That's a pretty perilous journey. And then all of a sudden, you get this train coming along. It can take so much more stuff. It comes back and forth.

It's reusable so you don't have to build a new train from scratch every time. And that's really what Starship will do for space travel. You can take so much bigger payloads. You can take so much more cargo. You can reuse them so it's so much cheaper. So maybe this is Space's train moment. And maybe I'm exaggerating the crap out of this. No, I think the...

This seems what this is the moment that space travel has been waiting for for a long time. I think the analogy plays, Neil. That worked quite well. Finally, we just have to talk about the space length. go because this is what everyone was making fun of on the internet yesterday how they said the explosion was a rapid unscheduled disassembly I know and so you got to love how the scientists I don't know if it's spin zone because everything has a technical term right right and so that we all know now that explosion is a rapid unscheduled disassembly and as it was kind of doing these somersaults and looking

bad with the guy on the live stream the technical engineer was like obviously this is not a nominal situation so these are two new vocabre you can apply that too your dating life, you didn't break up, you just actually had a rapid unscheduled assembly of your relationship. All right. So the takeaway here, Starship performed admirably in its first orbital launch, and they're hoping to do another one in a few months, but the time is ticking to 2025. All right. Next story. For anyone who loves to complain, why isn't there an IKEA in my city? Well, there could be one soon. The Swedish furniture giant, which, by the way, is the largest furniture retailer in the world is planning a 2.2 billion expansion in the next three years in the United

States. That's its largest ever investment in any country and will lead to 17 more stores opening. The idea here is IKEA senses blood in the U.S. furniture market and it thinks it can gain market share in the states right now. In a few years, it expects that U.S. will overtake Germany as its largest country in terms of sales. That was that tidbit was really surprising to me that Germany is their biggest market right now. I mean, it's one of the larger economies in the the world, but that kind of took me by surprise. Also, what took me by surprise is that IKEA already has 51 stores here, which is kind of a lot, considering just how big they are. Like, they're very, they're very noticeable. You mean like the where, you mean like their size of their stores.

Their literal size of their stores are gigantic. It's like the size of Rhode Island. And we honestly learned an interesting fact about the corporate structure of IKEA. IKEA is technically a franchise. And so where it gets complicated is that one, franchisee called the INCA group represents 90% of IKEA sales. So it's basically like one company is franchising most of IKEA's. But technically, you and me, Neil could pool some funds together. Okay. Open a little IKEA store. And I don't know if there's a lot of room in Manhattan, but we could find a good spot somewhere. I'm surprised you figured that out because we were looking to IKEA's organizational structure. It is so complex. My little brain could not comprehend it.

If any of you want some homework this weekend, just Google IKEA's organizational structure, and it is so confusing and complex. I can't understand it. It's kind of like their stores. You can get lost in it forever. But the key here is that it is not a publicly traded company, and they are very conservative with their cash. They do not take on debt.

This is like the Dave Ramsey of companies. They are very conservative. They don't spend more than they can make. So the fact that they are spending $2.2 billion is actually a big deal, and they're looking at what's happening in the U.S. furniture market right now. Wayfair lost $1.3 billion last year and lost 5 million customers. Home Depot misses sales expectations for the first time in Q. And since 2019 last quarter.

So people, Americans are pulling back their spending on, you know, the great furniture revolution, home furnishing revolution of COVID is kind of over. And there's maybe recession fears that people are pulling back their spending. But IKEA says, okay, you can get this nice little lamp for a little bit. so you're going to come to IKEA and maybe not more expensive options. I'm excited. I love IKEA. I can't wait to see them popping up more. Okay, before we jump into our next story, we're going to take a quick break. Okay, Neil, we're back with our favorite Friday segment, Stock of the Week and Dog of the Week,

where we take you through one company that performed really well in the last week and one company that performed not so well. And as always, I have to give our little financial advice disclosure. This is not financial advice. We are simply humble podcast. Not so humble. But we are podcasters. And we're not financial advisors. And we're not verified either. Okay.

I have Stock of the Week this week. I get to tell you about something, a company that did very well. And today's stock of the week is Las Vegas Sands Corporation. Now, you can probably tell from the name, but Sands is a casino and resort operator that has properties all the way from Las Vegas to the Far East. Its stock is up nearly 8% over the last five days as it's ridden the bounce back from COVID, quite nice. So the real moneymaker has actually been the revival of Macau. So Macau is this autonomous

region located on the south coast of China. It's basically like Las Vegas on steroids. The casinos are bigger, more ornate. The gambling there is even bigger and it's a major moneymaker for companies like Sands. So here's the kicker though. Sands revenue jumped 125% in the first quarter and Macau isn't even close to fully open yet. 31% of Macau hotel rooms are still out of service. The ferry capacity is still not fully to the region. And then the Macau airport passenger volume is still at just 39 percent of 2019 levels. So it's got a long way to run. It does, but there's always this cloud hanging over in Macau that the fact that Chinese authorities are going to crack down and extract more revenue from them. I remember there was this ruckus a couple

years ago, even before COVID, that, you know, they clamped down on all of these casinos and it caused all of these casino companies to go poof. But it is really interesting just to look at Macau, and I think it does three times the amount of gambling revenue as Las Vegas, because you have these high rollers coming in from China with really high intent to gamble. Yeah. Because I think, you know, they're kind of the same size, but Las Vegas, you have a lot of families coming in. You go see a show, you go see Cirque de Soleil, you do all these other things, and gambling

might be a side option for you at this point. And Macau, it's like, you're going there and you hit the back rat table. No, you're totally right. I watch poker online a lot. some of the biggest games happened in the Macau. So I've been very familiar with the Macau poker scene for a while. It's a wild, wild place with incredible characters for sure. I've got to go. I'm not good at gambling. Anyway, my dog of the week, the stock that did not perform very well is WeWork. God, We Work. The co-working company is facing delisting on the New York

Stock Exchange with its stock closing below $1 on average over a 30-day trading period. Its stock is currently at 48 cents. That is not good. WeWork shares are down 65% this year, and its market cap has fallen to 361 million. To put that in perspective, right before founder Adam Newman tried to take it public in 2019, it was valued at $47 billion, which I know no one actually believed it was worth $47 billion, but someone paid to invest in it, SoftBank, at a $47 billion valuation. Meanwhile, Adam Newman, long gone from the company, raised $350 million for his new real estate adventure. So he raised about as much as WeWork is valued.

now. You can't write headlines like that. You've got to love that. The news gods shine upon us sometimes. Honestly, WeWork is kind of the anti-Ikea in the sense that it is just loaded with debt. So last month, it closed on a deal to restructure more than $3 billion in outstanding debt. So it just spent so much money on these office buildings. It plowed money into them to make, give it the WeWork aesthetic that we all know and love. And it just is being weighed down by that. And SoftBank, man, they're still plowing money into it. Like they lent the company $250 million in January. So they've increased.

They're basically totaled the amount of money that they've put into it is $10 billion at this point. It's basically gone to zero. It's really tough for them. I was, I have to admit, I was extremely bullish on WeWork when all this pandemic stuff happened. I was like, all these companies are going to pay their employees, WeWork to have their employees go to WeWorks in these satellite offices.

and people who are in their bedrooms are going to be like, I don't want to work here anymore. Oh, I can just go to a place where there's coffee and cucumber water and people around that I can see. So I was like, oh, we were going to capitalize on this. This is great for them. And you're kind of right. Just the final point on this is it has 682,000 memberships at the end of last year,

which is the most in its history. So it actually is riding that wave that you describe. It just has too much debt to, like, get out of. So I think there's light at the end of the tunnel because they have a ton of but we'll see if they can get out from the way to the day. It might not be a public company for the longer. Okay, Neil, we're going to totally shift gears here, and I want to tell you about someone named Aaron Rodin.

She's an ordinary person from Columbus, Ohio, she works at a roofing company, she's a mom of three kids, and she's also the top-ranked player in the semifinals of the largest Candy Crush tournament in history, which she entered by accident. So there's a lot going on in that story, but basically she is this mom who loves playing Candy Crush.

she accidentally hit Enter on one of those tournaments. You get this pop up all the time on Candy Crush asking if you want to join a tournament. She pressed it, and now she is absolutely demolishing the competition. Her son actually posted a tweet on Twitter that went viral saying my mom is this incredible Candy Crush player. And now it's being picked up and covered by a lot of these outlets. Amazing story. I love her. Yeah.

I don't really know much about Candy Crush, but I'm curious about when your Candy Crush peak happens. because I know that chess players peak at like 19, you know, like early 20s, late teens and you kind of lose your skills as you go along. But maybe as you, maybe your candy crush skills grow as you get a little older. She's played,

she's been playing for the last 10 years, she said. And so she's clearly put a ton of hours in. And she grew up a gamer. She used to play, the funny quote from these articles is that she grew up playing like player versus player games and she used to love her words, demolishing players.

But now as she's a, and has become a mom, she's like, I like Candy Crush more because I don't get that rage in me that that happens from playing against other players. She said that Wordle was too easy. I know. I love her. She's great. And then I just want to talk about how big Candy Crush still is because I know everyone

knows Candy Crush, but it still currently has 270 million players. It generated $1.2 billion in 2021. And it's also just an absolute moneymaker for King, which I'll let you say the fact. But, Thank you. Yes. Give us back to them. King is owned by Activision Blizzard, and Microsoft, it wants to buy Activision Blizzard for $69 billion.

And Xbox's CEO said that Candy Crush was the main reason why Microsoft wants to buy it. And they make Call of Duty. Everyone was talking about Call of Duty as being the biggest thing here. And there you have a Microsoft executive just saying it like, yeah, we're buying it for Candy Crush. These mobile games, man, they just rip. So, congrats to Aaron. I hope she wins the whole damn thing. It's a $250,000 prize pool tournament.

When is this happening? I mean, it's over like the next week. It's a long tournament, so hopefully we get a headline coming. It's probably crushing energy drinks. I know that Aaron took it down. All right, finally, Earth Day is tomorrow, and as Lil Dickie says, we love the Earth. So let's run through some climate and environment headlines from some recent news. I want to start us off with the Great Pacific Garbage Patch that just underwent a snazzy rebrand.

So the great Pacific garbage patch typically refers to an area of the Pacific Ocean between California and Hawaii in which floating trash kind of concentrates due to factors like wind and current. So it's this big old trash soup, but a recent study has found that the garbage patch has actually become a thriving ecosystem where hundreds of sea creatures and marine organisms make their home. So scientists went and started taking pieces of trash from this and studying it. They found 46 different species of invertebrates living in the patch, many of which are typically only found in coastal areas, and that previously were thought couldn't survive in the open ocean. So suddenly this bad thing, objectively bad thing, scientists are saying, like, wow, it's actually created this totally new and unique ecosystem. That was the main takeaway that the fact that we're polluting is kind of changing the way

that organisms interact with each other. So the fact that these coastal, these animals that lived near the ocean, lived in the middle of the ocean and the animals that lived near the coast had kind of developed their own ways of life for millions of years. And then all of a sudden we started throwing trash and microplastics into the ocean. And like millions of years of evolutionary biology is kind of just getting thrown out the window and they're coming together. This makes me so bullish on nature. It's ridiculous. Oh, they can adapt. Unbelievable.

These are truly, you said it right. Like, these have, in a million years, they will never, ever interact. And now they're co-living together. Like these sponges, these oysters, these things that shouldn't be there have just totally adapted and can live in the open ocean now. Maybe it's survivor bias, though, and there's another garbage patch where the coastal marine organisms and the open ocean ones are powered each other. And we just don't know about it because they all died.

But I do love this quote from the study author. He was like, they're having a blast. I know. They're having a blast. Scientists are having a blast too because they love this stuff. Garbage patch, not always a bad thing, but sometimes a bad thing. All right, finally, let's discuss the California melt, and I'm not talking about the avocado and Swiss sandwich. This winter, while we stayed mostly dry over here on the East Coast, California got absolutely hammered by snow.

The snowpack there on April 1st was 233% above average. You remember all of those headlines about Sierra Nevada's getting feet and feet and feet of snow in a matter of snow. People were just snowed in, yeah. But spring has arrived and this snow is going to melt and it doesn't just evaporate, unfortunately. There are trillions of gallons of water in the Sierra Nevada's right now that are going to rush into rivers and reservoirs and create potential flood conditions in areas that are already soaked to the brim from the winter. I mean, poor California, it goes through droughts and then it gets a ton of snow and now it's about to undergo floods. They cannot catch a break.

The one thing that is catching a break is all these reservoirs that have been under drought pressure, Mead being a big one, which is in kind of the Nevada desert area, they are expected to see a rise of 168 feet by the end of the year. And this is a lake that has been under a ton of pressure. The level drops so low that we were bodies were being exposed, like volcanic rock that we haven't seen in years were being exposed. So hopefully it does kind of replenish those reservoirs, even though there's so much water that it's going to cause some mayhem and destruction as well. Yeah. You just hope this doesn't cause disruption to California's big agricultural economy. We could be going to the store, the grocery store, in a few months from now, and strawberry prices will be 1199, and they'll be like, we just got flooded.

Sorry. Yikes. So the winter snows will have an impact throughout the next few months. So this winter, this crazy winter snow pack will just be living with us for a long time, especially people in California. That is our Friday show. You can always reach us at Morning Brew Daily at Morningbrew.com. We hope you have an amazing weekend. Let's roll these credits.

The show's producer and editor is Emily Milliron. Our supervising producer is Bryce Belloff. Dodgeball champ Macy Gilliam and Raymond Lue are associate producers. Dan Bousa did something important for the show. I'm not 100% sure what. Hair and makeup underwent a rapid, unscheduled disassembly, and is floating somewhere in the Gulf of Mexico. Devin Emery is our chief content officer.

Our show is a production of Morning Brew. Great show today, Neil. We wish you all well.