Morning Brew Daily - Cameos as Propaganda? & Tech Startups Are Out of Money

Episode Date: December 8, 2023

Episode 209: Neal and Toby preview what to expect from today's jobs report. Plus, Russia was using celebrity cameos as propaganda and are tech startups really running out of money? The guys share their stock and dog of the week and Krispy Kreme is heading to Paris. And finally, why Pantone says "Peach Fuzz" is the color of the year for 2024. 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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Good morning, Brewers Daily Show. I'm Neil Fryman. And I'm Toby Howell. On today's pod, Office Culture in Paris will never be the same because Krispy Cream just arrived in town. Ben, if you're thinking about repainting your dining room, hold off for a bit because the 2024 color of the year

was just announced by Pantone. It's Friday, December 8th. Let's ride. It's Friday, which means it's finally time to announce the winners of our Morning Brew Daily mug giveaway. We ask you all to take a screenshot or a selfie of you sharing the podcast with your friends and family.

And it was an absolute pleasure to see you guys in action. We got an inside look into family group chats, Slack channels, and even company all hands meetings where listening to this podcast was on the agenda. So in short, thank you all.

And without further ado, here are the five winners of the mug giveaway. Take away, Neil. These five winners are Shelby Amaker, Karen Cockbane, Alana Gottlieb, Jordan Eggleston, and Nathan Marshall. Thank you all for sharing the podcast

and be on the lookout for an email from us later today to get your shipping information. Before we jump into the news, a quick shout out to our friends over at Yahoo Finance. Toby, it's Friday, which means we are going to give our picks for stock of the week and dog of the week. And honestly, that section alone should be sponsored by Yahoo Finance because of how helpful the site is in preparing for it. Oh, yes, the mean purple streets of Yahoo Finance, good for digging into market data

and gating the news while you're doing it. It's the all-in-one nature of it, Neil. It just gets the people going. I'm fired up. You are fired up. We're all fired up to go check out finance.yahu.com today. It's time to refresh your yard during spring backyard days at the Home Depot. Get low prices guaranteed on propane grills starting at $179 like the next grill three burner gas grill.

Or get $50 off a select Weber Spirit grill and bring big flavor to your backyard. Then set the scene with Hampton Bay string lights that bring it all together. Shop spring backyard days for seven days at the home. Depot. Now through May 6th. Exclusion supplies, see Home Depot.com slash price match for details. Let's begin by going full college game day with a preview of the jobs report out this morning, which is probably one of the most high stakes data releases in recent memory. Economists pulled by Reuters are expecting that U.S. employers added about 150,000 jobs in November, which would be the same as in October. So why is this report such a big deal? Because a clear narrative has emerged

in the markets this month, that the Fed is on the past. to achieving the nirvana of a soft landing, bringing down inflation without tipping the economy into a recession. And if you imagine a poker table, investors have put all of their chips into this wager. In recent weeks, stocks have been surging and bond yields have been cratering in the expectation that the economy is continuing its slowdown, high inflation has been vanquished once and for all, and the Fed will begin cutting interest rates next year. So what we're rooting for here, counterintuitively, is a low jobs number. That would signal a cooling economy and cooling inflation, precisely what we want and where we've put all of our chips.

Any surprise to the upside, a higher jobs number than expected could mean everything we thought we learned about the economy this fall was a mirage and the market could react violently. So that's where we're at ahead of the jobs report release at 8.30 a.m. Eastern. In general, we've just seen a bit of a slowdown on most fronts. employers aren't in a hiring frenzy anymore. They're taking down some of their job posting. They're just kind of raining things in. And then employees aren't playing hopscotch as much anymore. They're not bouncing around to different jobs and getting pay increases along the way.

So I would just say a bit of a calm has settled over the job market a little bit. It's not steaming hot as it's been for a long time and it's not super cold either. So again, we talked about Goli Locks a lot. We talk about the soft landing a lot. And that's generally the vibe around the past. job reports and also the one coming out this morning. Yeah, one thing I think that may fly under the radar, but something that our listeners may want to pay attention to is these revisions.

So when they get these new job reports come out, they always say, okay, actually we kind of messed up on the bass month. It was instead of 150,000 jobs, it was actually 120,000. And for the past 10 months or so, those have been revised downwards by an average of 30,000 jobs, which shows that the job market was perhaps a little cooler than we expected for this entire year. Yeah, looking back holistically on the labor market, it may have just been weaker than everyone and the headlines you constantly saw thought it was, because of course, this is a good thing for Jerome Powell and his quest to cool down the labor market. So, yes, those revisions are

kind of like the hidden data point that you don't necessarily see. Also, I want to talk a little bit about job cuts year-to-date. You're to date, they're sitting at around 686,000 job cuts, which outside the pandemic influence year of 2020, that's the highest January through November. total since 2009, where 1.2 million jobs cuts were announced. And a lot of that has come from big tech with some sweeping cuts, but it speaks to just how quickly people have been actually able to land new jobs because the unemployment rate has been holding steady at around that 4% number. So, again, there's some mixed signals out there because lots of layoffs, but also lots of people finding jobs quickly after. That's just another one of those conflicting signals that

we're seeing right now. And I mentioned that investors were putting all of their chips into the economy cooling. The best indicator of that is the 10-year yield. I know it doesn't sound sexy, but it kind of runs the economy. And the 10-year yield put a lot of pressure on stocks when it surged to above 5% this fall. It has completely cratered. And it's now about 4.2%. And this sets borrowing rates across the economy. So one piece of good news that has come with this bond yield fall is that mortgage rates, they were around 8%. Well, they've been falling for the six straight weeks now and just came out yesterday that they're sitting at right around 7% still pretty high, but it's, it might kickstart a little growth in the housing market as people start to refinance

or maybe say, okay, well, it's not 8% but it's 7%. Maybe I could dip my toe in it's not so egregious anymore. Wait, so you mentioned college to game day, which side are you picking the job support is going to come in hot or not? What mascot am I putting on? I'm going, I think it's going to come right on the 150 number. Okay, you're saying. I think we're going right there. I'm bullish on the forecast. You heard it here, folks. All right, cameo, the app that lets you pay for your favorite celebs, pay your favorite celebs for a quick video message is in the news for all the wrong reasons right now.

Internet trolls from Russia tricked at least seven celebrities, including Elijah Wood and Mike Tyson, into recording short videos that were then edited to appear like they were supporting various Russian talking points. The scammers mostly posed as someone named Vladimir, who appeared to be struggling with substance abuse. But then those videos were manipulated to make it seem like it was actually Ukrainian President Vladimir Zelensky, not the fictional Vlad, who is suffering from drug and alcohol issues. Other clips have since been identified by Microsoft researchers that show Breaking Bad actor Dean Norris. John McGinley of Scrubs and Kate Flannery of the office had also been tricked.

Neil, obviously there's been a propaganda war out of Russia from the very beginning of its invasion of Ukraine, but involving U.S. celebrities is definitely a first and obviously a very bad look for cameo. I can't believe they did Dr. Cox like that. That's a tough look. But, no, we were talking before the show, and we were saying, look, this is, there's a lot of ingenuity here. Russian troll farms are some of the best in the world at manipulating mass media like this and using new tactics. But the fear has been that generative AI and deep fakes are going to cause a wave of misinformation that warps people's minds. But you can do it just by conventional cameo that has existed for years.

And you don't need dolly or mid-jurney or these fancy AI tools to sort of warp people's minds. No, it actually speaks to just how powerful a front-facing video from a celebrity is. because what they did is made it seem like they were talking on Instagram Live or their Instagram story, and that alone just lends credibility, something, just putting that Instagram filter over a cameo video. So it is interesting how in the age of AI, sometimes it is just a simple kind of video editing trick that can influence public opinion. But I also just want to say how, like the PR cycle that cameo is currently in isn't great right now because the other reason they're in their news is because former rep George Santos began posting on Cameo.

He's charging upwards of $400 a video after he was expelled from Congress. Apparently, he's already made more than his $174,000 congressional salary and less than 48 hours after posting on Cameo for the first time. So I don't know if that's good or bad PR, but... He's charging $400 a pop. I would say that's good PR because Cameo has been completely gutted. They had almost 400 employees at one point, and now they have $400. 33, they were a unicorn and their star has fallen a ton, and now they become flooded with

sort of D-list celebrities. So the fact that George Santos is making more in a few days than he did his entire career as a politician, I think could entice other celebrities who had been on the fence to maybe come in, but then again, you don't want to necessarily affiliate yourself with someone who's lied for their entire career. So I see both sides of the coin, but I think, honestly, cameo will take, besides this Russian disinformation campaign, I think they... will be heartened by the news that George Santos, I think it's been, a lot of people have been

talking about it. Is he higher or lower than D-List celebrity in your mind? Higher. He's higher. Higher. B-minus? Higher than that, even. All right, we just talked about cameos fall from Grace, but it can feel a bit better knowing

that it is far from alone. Startups in the U.S. are having their worst year in at least a decade, the New York Times reported. Just consider these three companies. We work, which raised $11 billion in funding. the healthcare startup, all of AI, which raised $850 million, and the freight startup convoy, which raised $900 million. All of those companies have either filed for bankruptcy

or shut down in the past six weeks. Yes, the unicorns or startups that are worth $1 billion are becoming a dying breed. For the last decade, it seemed like there was a never-ending gusher of venture capital flowing to e-scooter companies, gig work platforms, crypto marketplaces. From 2012 to 2012, investment in private U.S. startups jumped eight-fold to $344 billion.

But with the Fed jacking up interest rates, NVC's getting burned on many of their investments, the TAP has been turned off, and startups that grew with the expectation of getting more funds to keep themselves running are being left in the lurch. About 3,200 private venture-backed companies have gone out of business this year

that have collectively raised $27 billion in funding. Neil, I just want to kind of peer through the startup graveyard even more because one of my favorite startup graveyard stories is Bird, the scooter, the micro-mobility scooter company that raised $776 million was recently delisted from the New York Stock Exchange because of its low stock price. And get this, its $7 million market cap was less than the value of the $22 million mansion that its founder bought in 2021. So if that is not emblematic of the rapid rise of this increase of money flowing into

venture capital-backed startups, and then the rapid fall of those same startups, I don't know what is. Yeah. There might be a little bit of Schadenfreude from people here being like, okay, these companies were doing stupid things and their founders were being super annoying on social media. Like, maybe this is their comeuppance. But I would argue that the VC community in the U.S. is remarkable. And it's led to amazing companies like Uber, Moderna, Airbnb, companies that make our lives so much better and has fueled the U.S. to become this tech behemoth. And so the fact that we don't, that VCs are pulling back their money right now is, and startups are failing, we should probably be a little alarmed by that. And we can say there probably was a bubble going on

in what people call ZERP or zero interest rate policy, which happened after the recession and until this year. But I don't know, it seems like a little worrying that we're not funding startups with the same level that we used to be. Yeah, I think those emotions come when it's companies like Byrd, which raised so much money and all it was was an e-scooter startup. So I think there's some, like, I don't know, cognitive dissonance, if you will, of these companies raising such big rounds and not necessarily changing the world as they promise. But there's also some cognitive dissonance in the industry right now because AI companies are still getting funded, even as the industry as a whole is suffering and a lot of funding is being pulled back. So that's just another one

of those things where AI has certainly put the team on its back recently, but maybe it's not enough. Right. Open AI raised 13 billion, Anthropic, which is a chat CBT competitor, Open AI competitor raised 4 billion from Amazon. These are the massive rounds that you were seeing in other industries that you don't see anymore. But I agree that we were in a VC bubble because money was essentially, capital was essentially free. And this is probably a good thing to, just a good reckoning that's happening right now. This is the funniest part to me, though. One non-AIA startup that's doing super well, it's called Simple Closure, which helps startups wind down their operation. And their founders said that they've barely been able to keep up with the man since an

in September. All right, Neil, before we jump into the next part of our show, we're going to take a quick break. Study and play. Come together on a Windows 11 PC. And for a limited time, college students get the best of both worlds. Get the Unreal College deal, everything you need to study and play with select Windows 11 PCs. Eligible students get a year of Microsoft 365 premium and a year of Xbox GamePass Ultimate with a custom color Xbox wireless controller. Learn more at Windows.com slash student offer. While supplies last ends June 30th terms at

a.k.m.m.m. Today we helped a latte for Sam. Coffee shop get an insurance quote simply and easily and made sure a floral delivery van was able to make someone's day. We're the Hartford, with decades of experience

ensuring millions of unique small businesses. When it comes to your small business insurance, Thank you. One size, absolutely does not fit all. quote or find an agent today at thehartford.com slash small business. Neil, stocks, just like people, have their ups and downs.

And we want to highlight two of them today in this week's edition of Stock of the Week, dog of the week, where we look at one stock who already bought all their presents for the year and one stock who forgot the holidays were coming up. As always, we are just humble podcasters. So please do not take any of this as financial advice. Neil, you actually won the pre-show Christmas cookie bake-off, so you're up first. Of course I did. My stock of the week is SpaceX, which is not a stock because it is a private company, but if it were, it would be a rocket ship.

Pause for Grun. Elon Musk's space company is reportedly planning to sell insider shares at a valuation of $175 billion, which would make it one of the biggest startups in the world and the biggest aerospace company in the West outside of Boeing. Just to hammer the point home, SpaceX at a $175 billion valuation would make it among the 75 large. largest companies by market cap, about on par with Nike and T-Mobile. Musk has indeed built a juggernaut. SpaceX was the first to deploy reusable rockets, which dramatically lowers costs, and has lucrative contracts with both private customers and NASA to send cargo and people to space.

According to Musk, SpaceX will launch more than half of Earth's missions into orbit this year, and it will carry about 80% of all of the mass going into orbit. Barron's put it best, SpaceX is the de facto gatekeeper to space. right now. I mean, I just want to touch on that Boeing number, too, because Boeing as an entity is valued at $190 billion, but that's only when you include their net debt into its valuation. If you just look at its equity valuation, its market cap is only $143 billion. So technically, SpaceX is not just a little bit bigger than the equity valuation of Boeing. It's a lot bigger. But if you compare kind of their space businesses, it makes a lot of sense. They are the gatekeeper to space and that they are just

absolutely dominating this industry that is going to prepare. propel the next millennia of humanity, so I can see why it's $175 billion. There has been some talks of IPO, always there's going to be talks of IPOs whenever a company gets this big privately. There's no plans in the future to take SpaceX public, but there has been some whispers about maybe spinning off Starlink, which is their internet business, into a separate public company. Even that, Elon Musk is saying like, yeah, probably not, but if one part of the company were to go public, it probably would be. end up being Starlink. All right, Neil, my dog of the week is British American Tobacco. First of all,

yes, that is a real company that is traded on the New York Stock Exchange. And secondly, it's not exactly operating in a thriving industry right now. Yesterday, it announced it was taking a $31.5 billion hit as it wrote down the value of cigarette brands like Camel, Palmall, and Newport. It's not hard to figure out why these brands have cratered in value. People just aren't smoking that much anymore. Growing awareness of the health risk posed by cigarettes and ever stricter regulations have put immense pressure on the tobacco industry, not to mention rising inflation has also put pressure on consumers' wallets. The CEO of BAT described the move as accounting catching up with reality, and the stock is down around 7% the last week. It's not a great reality for cigarettes anymore, Neil. No, this is sad news for Don Draper in his Lucky Strike account for sure.

But what struck me was that these brands, these cigarette brands, are in host. care. They're not going to last longer. The CEO said the write-down reflected the shift from indefinite life to a finite life of the economic value of these brands. And he said, in that period of time, there is no way to justify the presence of the brands. So this is a wind down of these things will not exist in a few decades as these cigarette companies shift to vapes and e-cigarettes, which is where the industry is going. So I do want to talk about that. BAT says it has a plan. It has a new ambition to generate 50% of its reverendant. news from non-combustibles by 2025, which are things like vaps. It's so funny to me, though,

because it sounds like we're talking about an EV company. While he doesn't believe cigarettes will fully disappear in 30 years, they want to move away from combustibles, similar to like combustible engines. So I just thought that was funny that the electrification of industries are happening from cigarettes all the way to cars. It is, but I think people are a little more attached to the internal combustion engine than lighting up a cigarette. Because if you look at the youth, Fewer than 2% of high school students say they smoke cigarettes compared to 10% who used e-cigarettes. But I wonder if cigarettes will make a comeback in this, you know, nostalgia-driven era. Driven era.

Driven era. Drown era, right? Yeah. Yeah, I don't know. I mean, I hope not. But you might see, like, people saying, oh, this is, you know, maybe there will be a movie where a major celebrity is smoking a cigarette. And there's, like, a little bump.

But I agree with British American tobacco and saying this is this industry. is just kind of dying. Toby, as you know, I'm going to Paris in a few weeks, and I'll be making sure to visit the country's busiest attraction right now. Krispy Cream. Yes, Krispy Cream, the American donut chain, opened its first store in France this week, and Parisians were stoked.

A line 500 strong was waiting when the doors opened Wednesday morning, and they were greeted by a red carpet, a DJ bumping dance music, and a Krispy Kreme mascot handing out fresh donuts. People listening might be glazed and confused. Aren't French people supposed to be. supposed to be snobby about their food? What about the Paris of baguettes, Michelin-Star restaurants, and three-hour lunches? These days, that vision of Paris does not reflect reality

because the French love American fast food. For McDonald's, France is the second most profitable country outside the U.S., and it's also the second biggest market for Burger King. France is El Dorado for American fast food brands, one restaurant consultant told the New York Times. The French went to get their food more quickly and they don't want to sit down as much and who does food on the go better than Americans? Nobody. Another interesting thing to me about this Krispy Kreme opening in particular is the cultural impact of Krispy Kreme. A lot of people waiting in line said that they had seen Krispy Kreme in various TV shows like The Simpsons that they had watched to improve their English. And so now that one was coming to their city, they were very curious to actually try it.

Another person said that seeing Kylie Jenner dig into Krispy Kreme on TikTok sealed the deal for them. So what does American do best other than fast food and entertainment? Those are our two best American exports right there. So it's not just the fact that it's a new fast food restaurant. It's the fact that Krispy Kreme also has a wider cultural impact than I think we're aware of. Yeah, no, I think just in general, Hollywood is America's biggest export. It's the source of our soft power abroad. It's why we can send KFC to all of these countries.

We can send McDonald's and Burger King. It's because people want to learn English. They watch Netflix. They watch shows that are in English. And obviously, these American brands are everywhere and there. They see their celebrities, people they look up to eating these brands. So it's a pretty easy pitch for a company to an American company to go abroad. But we should talk about why France in particular is receptive to this.

And because diners are changing. Like, this isn't the Paris of the three-hour lunch anymore. People want food on the go. They want delivery. people are just eating differently. And Americans are just in a very good position to capitalize on that. Also, donuts themselves are attraction in France because they're not very well-known in France. It's the land of croissants and pan al-chocolat.

Whoa. I know. I was really nervous to do that, but we got it done. So it's not just a fast food thing. It's also a donuts thing. Also, not every fast food restaurant works over in Europe because, I mean, I'm just going to say it. Domino's pizza closed down. its last 29 stores in Italy recently because Italians did not receive it the same way as the

French are embracing some of these other fast food exports. And Burger King was also originally forced to pull out of the France market before reentering a decade ago because it insisted on keeping its Americanized version of its burger menu. McDonald's has done much, much better at appealing to the French audience. They source their ingredients from France. They have different menu items like a Crokema'am that appeal to the French audience and their interiors also resist like the French cafe that you've come to know. So you can't just go willy-nilly American guns blazing into these markets. You have to kind of treat them as the individual markets that they are. And surprise, Starbucks, which went into Italy in 2018, everyone thought it was destined to fail

because Italians are very particular about their coffee culture. But they started in 2018, and now they're expanded to dozens of different locations because of what you said, because they've been massaging the what makes Starbucks Starbucks with what makes Italian coffee culture that, and they merge it together. And they're being super successful in Italy by everyone's surprise. Okay, Neil, for our final story of the day, I want you to close your eyes. Everyone listening at home to close your eyes as well. I want you to envision the year ahead.

Imagine your goals, the joy you'll feel in the podcast you'll listen to. Now I want you to imagine a color. What color do you see? Well, according to the Pantone and stuff, The color you should be seeing is peach fuzz, which is a light, fruity orange color that according to them conjures up images of peace and serenity. You can also open your eyes now, everyone. Pantone chooses the color a year for 2024 by sifting through high fashion, interior design trends and tapping into human psychology to make their pick. And apparently this peachy orange has been simmering in our psyches for years now.

Beyonce wore it to the Met Gala all the way back in 2016. Florence Pugh wore it to the premiere of Little Women in 2019. and The Rock wore it to this year's edition of the Oscars. Neil Peach Fuzz, you like it or not? It seems very neutral. I think that's the point. Last year was Viva Magenta, very bold, and I think they did a good job of predicting it

because what was the color of the year this year? Probably Barbie, hot pink, very bold, very out there, very in your face. And next year, I think they're saying that people want to kind of return to gentle, calm vibes without ruffling any too many feathers. But my, you know, we can say that they're predicting it, and they say they are predicting it. But how much of this is actually them trying to put their imprint on this and make it as self-fulfilling prophecy? Because when they roll out this color, they also roll it out with numerous brand partnerships. So this is a way to just say use this color, obviously.

But I'm all in on Pantone's business. If you think about what they're doing, they're literally monetizing like the wavelengths and the light spectrum, it's color should be free these days. and yet Pantone has continued to make a business of it. I think what they've done really well is shroud their process in mystery a little bit. They have these things called color economists and color psychologists.

These people who are canvassing the world looking for colors trends. So that layer of mystique makes it seem like they have this hidden color knowledge that you can only get from one of their paper, strip, booklets, or fabric swatches, not online on some random, like, RBG website, RGB. So I think it's interesting

that this business has been able to continue to monetize color. despite the fact that colors are technically all around us right now. Right. So their insight, their genius was to create a standard for colors. They literally just categorized colors and then sold that categorization, creating a standard across industries because you need to match up colors in various industries, and that wasn't happening before the 50s and 60s, before Pantone came and had this particular light bulb moment, and now they're making bank.

They are making bank, and they sell these forecasting reports to do that companies can buy to see what they're forecasting for the colors of the future. So if you want to get ahead of 2024 and look into 2025, I guess check out Pantown's forecasting reports. We have reached the end of our shows for the week. I also have good news. Today is the earliest sunset of the year, at least in New York, so the evenings will only get brighter from here on out. Why the earliest sunset is not on the actual shortest day of the year, December 21st, is a very complicated question that I encourage you to look up on your own because I for sure can't explain it. As always, feel free to send your thoughts on the show or just say hi at our email address morning brew daily at morning

brew.com. Let's roll the credits. Emily Miliron is our editor and producer. Samantha Velas and Raymond Lou are associate producers. Isabel Wynn is our technical director. Billy Minino is on audio. Hair and makeup is hoarding all of the peach fuzz accessories. Devin Emery is our chief content officer and our show is a production of Morning Brew. Great show today, Neil. I wish you all well. 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 at San Manuel is giving one person

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