Morning Brew Daily - House Passes TikTok Ban & Dollar Tree Closing 1,000 Stores

Episode Date: March 14, 2024

Episode 279: Neal and Toby have the latest on the House of Representatives voting on a bill that would ban TikTok in the US and what it could mean for the future of the social media platform. Plus, the owner of Dollar Tree and Family Dollar is going to be closing up to 1,000 stores and why are college admissions so confusing this year? Neal shares his favorite numbers and we introduce you to the gold medalists that made their own AI. And finally, why candy companies are trying to bring gum back after slow US sales. Use code MORNINGBREW50 to get 50% OFF your first Factor box at https://bit.ly/3UUZGG0 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 for your daily show. I'm Neil Fryman. And I'm Toby Howell. Today, the college admissions process is a debacle this year, posing a long-term threat to America's universities. Then legislation to ban TikTok cleared another major hurdle yesterday. Is this thing actually happening? It's Thursday, March 14th.

Let's ride. Happy Pi Day. It's 314, a day to celebrate your math teacher's favorite ratio of a circle's circumference to its diameter. As an irrational number, Pi's death. decimal representation never ends. It goes on forever. But gosh darn it, if some people haven't tried to memorize it all. In 2016, a Japanese guy named Akira Haraguchi set the unofficial world record for reciting the most digits of pie, 100,000 of them over more than 16 hours. And he did it by

mentally linking each digit with a syllable and creating a collection of epic stories from the words those syllables forms. Toby, we've been teasing this for the entire week. Are you prepared to break Harri Gucci's record right here, right now on Morning Brew Daily? My story, my epic story, filled with syllables, is going to be a little shorter than Harraguchi's, but here we go. This is 100% off the dome. I am not looking at anything. I can confirm. I can confirm.

I'm closing my eyes. 3.14159, 265, 3535, 8979, 3238-8-264-3-279. I can keep going. Okay. No, Toby, good job. you so much. It's more than I can do. I spent all night learning that, so thank you for giving me my chance to shine. Now let's hear a word from our friends over at Factor. Listen, eating is something we all have to do, but man, can it get a little old? Yeah, one day you wake up and

realize that adulthood is just a never-ending stream of what should I eat for dinner and cleaning the same pan over and over again. But it doesn't have to be that way. You can give that pan a quick break and try out Factor instead. You don't have to think anymore. Factor. You don't have to think anymore. Factor sends you chef-repaired, never-frozen meals that you can pop in the microwave and enjoy in just three minutes. No cleanup necessary. Well, okay, you have to recycle the packaging, but again, way easier than dealing with that pan. When I eat Factor, I can tell my pans get a little jealous too. You would have jealous pans, Neil. Lacrucette is definitely the most jealous cookware type. But you can also make your pans jealous by heading to FactorMeals.com slash morning brew 50,

than using code Morning Brew 50 to get 50% off. That's Factor Meals.com slash Morning Brew 50 with code Morning Brew 50 to snag that tasty 50% discount. Things are getting dicey for TikTok on Capitol Hill. Remember that bill that kind of snuck up on us over the weekend giving the app's Chinese owner Bite Dance six months to divest from TikTok or else face a ban in the U.S.? Well, like the Boulder in Indiana Jones, it's gaining momentum.

The House of Representatives comprehensively voted in favor of the measure yesterday with a bipartisan vote of 352 to 65. And honestly, my neck hurts a little bit here from the whiplash of just how quickly this all developed. We heard about the committee vote over the weekend. The House passed it in record time. And now it's on its merry way towards a much less certain fate in the Senate. The Senate is simply not sold on it. Majority leader Chuck Schumer has remained noncommittal and hasn't clarified when he'll bring the bill to the floor, while other senators, including Rand Paul, are concerned that the

bill may violate the right to free speech. So here we are with a TikTok bill that's made it further than any of the previous iterations, but that last mile is still looking pretty uphill. Toby, first of all, I hope your neck is okay. Thank you. You should get that checked out. But yeah, this is real. This is becoming very real. This is the first time that a chamber of Congress has approved legislation. That could lead to TikTok span across the country. And as Bill Belichick would say, we're on to the Senate. And you're right, it's going to be an uphill battle. They need 60 votes, and we're just at the starting line.

They did get a big endorsement for this bill from the two very powerful senators, Mark Warner and Marco Rubio, a Democrat and a Republican. They're the two highest-ranking senators on the Intelligence Committee over there in the Senate, and they endorse the bill. They say, we're happy the House passed it, and, you know, we should take it up as soon as possible. We'll see if that comes to pass. But, man, down the House, you. It's through the House. President Biden said he'd sign it. So TikTok must be feeling

very nervous, and its defenders are probably a little quick and in their boots right now. Yeah. Let's go through some of the arguments for or against this bill. A lot of people arguing against it are coming from that creator side of things where people are saying, hey, we make a living on this app. 170 million people use it in the U.S. It is a valuable source of information for a lot of those people. Also, as I said, there's some free speech. It's a slippery slope when it comes to free speech, if we start banning apps within the U.S. borders that can kind of lead to other companies not feeling on steady footing here. And then also, the U.S. has been looking into this concern of bite dance harvesting U.S. user data for five years now, and they really

haven't turned up everything. So if your argument is that China is harvesting U.S. user data, the evidence hasn't been there so far. No. And another argument they hear people on the more progressive side of Democrats saying is that, why are we going after TikTok when there has been no evidence of China harvesting user data, even though that is potentially a threat? When we're seeing Zuckerberg and other huge U.S. social media companies, we know they're selling our data. We know they're hurting kids. We know there's privacy issues all across the board. This is not a TikTok issue. This is a big social media issue. And that is not unique of TikTok. So they're saying,

that we're singling TikTok out when there are much bigger problems to fry here just in the United States. But then on the other side of the coin, we're heading into an election year, and there's a very real fear that it's not some backroom data harvesting that's happening. It's happening right under our noses that China is controlling this algorithm that influences 100, again, that number, 170 million people in the U.S., a lot of them young people. So do we really want a foreign kind of geopolitical adversary? Our biggest one. Yeah, our biggest one having access to the youths like that. So there are definitely, there's a reason why this bill has progressed to the House and is about to reach the Senate because there are really real fears around that.

Yeah. And opponents also of TikTok are saying point to trade reciprocity, which is the point that China has banned all of our social media apps. So why should we allow a company that's owned by China to operate in the United States, a social media company to operate here? They don't allow us there. We shouldn't allow it here. So we'll see these battle lines being formed more often over in the Senate. Some Republicans still aren't sure about it. There's a lot of uncertainty, but we will keep our eye on it because this is going to be a big deal. If you're just looking at the betting market on Kalshi online, 63% chance it becomes law, according to the betting markets. Okay, you're about to see a lot fewer family dollar stores around the country because parent

company Dollar Tree said it's closing 1,000 locations in the next three years due to underperformance, and that's 12% of all locations. By underperformance, I mean, Dollar Tree has booked a $1.7 billion net loss on its family dollar unit, which had acquired in 2015 for $8 billion. And that acquisition is increasingly looking like a debacle. Since beating out Rival Dollar General in a bidding war to buy Family Dollar, Dollar Tree has struggled to improve the family dollar brand, and it remains a heavy anchor on the company.

And before digging into this story, I realize there's a lot of chains with the word dollar in them, which might be confusing. So here's the landscape. You've got Dollar Tree, which focuses mostly on middle-income shoppers in the suburbs. Dollar Tree owns family dollar, which sets up shop predominantly in cities and caters to lower-income customers. Their main competitor is Dollar General, which dominates rural areas. Okay, now that we're on the same page, what is your takeaway, Toby? Neil, if I had a dollar for every time you just said dollar, I'd have a lot of dollars right there. But yes, certainly not what Dollar Tree was hoping for when it won this bid for Family Dollar. This was supposed to set them on a path to compete with the really big boys, the Walmarts of the world, the Amazon's of the world.

It just hasn't been the case at all. Family dollars just been very mismanaged ever since that they got it. And it's also just been, honestly, facing a lot of kind of disgusting rumors as well. There's this one where there was a massive rodent infestation at a family dollar. Warehouse. Yeah, family dollar warehouse where they were literally storing food next to dead and decaying rodents. Not something that you want to see. They had the largest ever monetary criminal penalty in a food safety case, $41 million.

So it's just kind of emblematic of everything that went wrong with this deal, is that these family dollars were not up to par. And especially when you shot $8 billion, it's not what you want to see. No, there's also massive theft and safety issues at across Dollar Store brands. OSHA criticized Dollar Tree last year for continued disregard for human safety and suggests that the company thinks profits matter more than people. So there's a lot of violence at these stores. It's been knocked by federal regulators. That's another problem that Dollar Tree has faced with its family dollar brand. And then you look at Dollar General. It's the fastest growing retailer in the country. This is the one who lost out on the bid to acquire family dollar.

It's doing really, really well, although even that growth is facing some headwinds from the now mega-cheap online rivals like Shien in TAMU. So it is difficult right now because usually these brands are the ones that do very well during times of recessionary periods or pullback in economic activity. But even they have felt the sting of rising inflation. And especially when you have dollar in the name, when people see prices inching up above that dollar mark, it starts to. affect how consumers are spending there. So even though these are usually the stores that do well

in these times, they've been feeling the crunch as well. All right, let's move on. If you are a young person listening to the show, like applying to college young, I feel for you. This is the most chaotic college application period in recent memory. It's the perfect storm of stress. Schools are still digesting the Supreme Court ruling from last summer, which restricts the degree to which schools can consider race in admissions, making life hard on applicants who don't know what to disclose anymore. Also, the test optional policies that became popular during the pandemic have been getting reverse left and right, confusing high schoolers on whether or not they should include

their SAT and ACT scores. But the worst problem of all is that the free application for federal student aid, a.k.a. FASA system, has been having tons of issues after I redesigned launch in December resulted in outages and bugs. I'm stressed just reading that. And I already went to college, Neil. Yeah, I know. The biggest one is this FAFSA. It's been absolutely chaos.

So they've been trying to revamp this application process for decades now, and they did pass it in 2020. It was supposed to go live this year in October. That didn't happen. It went live in December, and when you tried to log on, there were so many outages. You got logged out. There are numerous, numerous problems. This was intended to streamline it and make it easier. They reduced the questions.

by half, but it is so important for people's decision making to know how much they're going to get in federal aid for where they're going to go to college. And they still don't know. Applications for FAFSA are 29% of all applicants submitted FAFSA by March 1st. That's compared to 45% at the same time last year. So it's a huge drop in applications for FAFSA, and it's really important for people to know how much federal aid they're getting to make a decision. And colleges have been pushing out their sort of commitment deadlines from May 1st all the way into June because people have no idea what they're getting and they don't know where they can go to college. Yeah, it's just leaving families and students and even college admissions departments kind of in the lurch right now. You are seeing this is not a thing that colleges normally do is push back, remain flexible on their commitment deadlines to, yeah, the midsummer like that.

So it is just when FAFSA works properly, you're supposed to input your details. send your assets to the federal government, they will come back with the report saying, like, this is how much aid you qualify for it. Then schools come in and package it with their own aid, so then it gives a comprehensive picture to applicants saying, like, this is how much money you can expect, and you can use that to inform your decision. If you don't have that information, you can't make the decision on where to go to college. Yeah, and this, you know, I said it way at the top of the show, but I think this is going to have a big long-term consequences for higher education in the United States. there are some estimates that overall applications for college will drop 19% this year.

Colleges are already hurting financially and to have lower freshman classes, you know, reduce freshman classes like this. It's going to be really bad. They need to know how much tuition they're bringing in to set their budgets for the future. So this is just a really bad news overall long term for our university system. Yeah, got to get FAFSA figured out. All right. Up next we have my favorite segment of the week, Neil's Numbers.

Welcome to Neal's numbers, the segment where I share three stats from the week's news that will make you think, dang, I really wish I had directed Oppenheimer. And that's because my first number is Christopher Nolan's final payday for directing the film, which reportedly comes in at just under $100 million. That payday is a combo of Nolan's salary, his back-end compensation, hitting box office targets, and bonuses for his two Oscar wins last Sunday, Best Director and Best Picture. bringing in nearly $1 billion at the box office, Oppenheimer became the highest grossing best picture winner

since the third Lord of the Rings 20 years ago. And it's not done yet. It'll be re-released in 1,000 theaters this weekend. And if it breaks the $1 billion mark, which it probably will, Nolan will see even more money in his bank account. Without a doubt, Nolan is the hottest director in the biz right now. Absolutely. Oppenheimer was made on a budget of $100 million.

And now, Christopher, Nolan's take-home pay is $100 million. He could finance it. himself. Yeah, he literally could just make another one. This is what I was thinking, though, where do you go next if you are Christopher Nolan? I mean, you've done the superhero vibe. Now you've done like the biopic. What's next for you? And I don't know. It's a, it's one of the, probably the biggest speculation going on in Hollywood right now. Everyone's like, what, you know, 700 page Pulitzer Prize winning book? Is he going to adapt next? I've heard a lot of the power broker, Robert Caro's biographies of Lyndon Johnson as well. So I don't know. That could be an

interesting, more of a political thriller. While we're on the subject of the Oscars, though, we haven't mentioned the ratings came out of how they did. It was a 4% bump to 19.5 million viewers, highest in four years. So definitely some optimism around award shows coming back. I still think that's a little bit disappointing, though, given Barbenheimer and the hype around particular movies this year, a 4% increase over last year. Doesn't seem like a huge bump that people were expecting, especially as they moved the starting time for the Oscars up to 7 p.m. So I think that's a little disappointing number. And then one final thing I want to bring up about the Oscars that Oppenheimer is interestingly the 11th World War II movie to win an

Oscar. So if you want to pause the show now and kind of think about the 11, the 10 other World War II movies to win Best Picture, you can do that. I'm not going to recite them. But some of them include King's Speech, Schindler's List, Patton, Sound of Music. I'm not going to recite them, but you just recite them. Just four of them. Okay, for my second number, you have the opportunity to guess as well. What is the fastest growing high school sport in the country? And the answer is girls wrestling.

The number of girls in high school wrestling programs is exploding. In 1990, just over 100 girls were on high school rosters in the country, and they often wrestled on boys' teams against boys. Three decades later, there are more than 50,000 girls wrestling nationally, and the sport experienced 60% growth last year alone. It's also being increasingly recognized at the collegiate level. The NCAA has designated girls wrestling an emerging sport, and it's on track to become a championship level competition in 2026.

Does this surprise you? Yeah. Whenever I see stats like this about huge booms in youth sports, I always go back to see what happened in kind of the Olympics in previous years. Absolutely. And in one women's wrestling star kind of emerged in 2016 Olympics, there's this American wrestler named Helen Marullis who took home gold in kind of this big upset victory. Here we are eight years later.

It's remarkable how much impact one person can have. Obviously, there's other societal trends that are kind of pushing more girls into this sport. But I do think that you see these effects, that you see someone on TV and you say, hey, I want to be like her. It leads to real change. So all I know is that in eight years time, there's going to be so many girls basketball players as well pulling up from the logo like the Caitlin Clark effect.

We talk about a lot in the show. but I think this wrestling stat also shows that it happens in other sports. Totally. And shout out to my mom's hometown of Palsboro, New Jersey and their wrestling team. Wrestling is a total religion down there. What an interesting sport. Okay, my final number is one of the biggest upsets in world history. Bigger than Appalachian State over Michigan.

Bigger than 300 Spartans holding off 300,000 Persians at Thermopyla. LaGuardia Airport in New York has been named the best mid-sized airport in North America, according to passengers in the airport service quality survey. Just six years ago, LGA was dead last in the same survey. It was a dump, a laughing stock. Even then, Vice President Joe Biden compared it to an airport you'd find in a third world country. But there appears to be no dilapidated transportation facility. $8 billion cannot fix.

Starting in 2016 and completed last year, the city spent $8 billion completely overhauling the airport. And based on the results of this survey, they did a bang-up job. I am buying all the LaGuardia stock I can get. It's my favorite airport to fly out of in New York, and it just goes to show you with a little elbow grease, a little Vim and Vigour, and $8 billion. You too can improve the airport that you fly into. Okay, it can get a little hard to keep track of which AI companies not named NVIDIA are worth keeping an eye on these days. But one that should be on your radar is this company called Cognition AI. It just rolled out an AI coding assistant called Devon that can be.

go beyond the standard fare of just auto filling some code here and there. According to Bloomberg, Devin can take on and finish entire software projects on its own. For instance, you give it a job like, build me a website that aggregates the best running stores in New York City. And then the software will quite literally do the rest. It will search for the stores, get their addresses, snag their contact information, then build and publish a full site displaying everything with minimal input from you. If that isn't cool enough, Devin also shows you everything it's doing. going as deep as finding and fixing its own bugs as it writes its code. So it has this collaborative element to it that people have enjoyed in early tests.

Cognition AI is still a super small 10-person team that just emerged from South with $21 million in funding. But it already has software developers kind of sweating a little bit. And when you raise $21 million in you're two months old, it's a bet. And this was actually from Peter Thiel's venture capital firm Founders Fund, which does not do a ton of investments. So they're quite bullish on this company. You have to look at who is in charge and who is doing this. So the 10 people who are leading Cognition AI are super coders.

They're not just a management team that comes from a consultant firm. They are the most elite coders sometimes in the world. They won 10 gold medals at a recent international competition. There's one guy on the founding team who didn't want to tell Bloomberg what his status was at Harvard because he hadn't had the talk with his parents yet. So something tells me that he dropped out of Harvard, and maybe that's a good decision because if you build maybe the future of coding, which this could potentially be,

then maybe I wouldn't go to school or pay tuition there either. Yeah, sport coding is this competitive sector of coding, which I didn't know existed, but they say it's actually done very well in helping them inform the building of this new AI bot. And I do want to get into why people are really excited about Devin in particular. The big hot keyword for Devin is that it can, quote, reason. Reasoning is kind of an AI speak for a system that can go beyond predicting what the next snippet of code might be and move towards something more like thinking or reasoning its way towards problems.

Devin seems to be actually doing that. You give it a job in a natural language command, which is just using plain old English, and it will set off and accomplish them. So it's like that chat, GBT, like that Dolly, but specifically for coding. And yet a lot of the issues that other AI bots have had is staying on task through these long sort of jobs. But Devin, in early testing so far, has been able to execute going from zero to one on a website or some other big coding tasks like that. So people are really, really impressed by the early looks like. Really impressed.

It's not just a one-to-one replacement for a coder. It's literally an entire software team. I don't know. If you're bringing up a kid and they're going to school right now, like I just don't know whether I would say learn coding. I would say, learn how to manage an autonomous agent like Devin and learn how to tell it what to do. It's definitely kind of spooking the programmer field right now. Okay, finally, what the heck is going on with chewing gum? Apparently, none of you are buying it anymore, and the industry is frantically searching for a path forward.

I know who you think killed gum, millennials. But no, it was actually COVID. When everyone was wearing a mask in 2020 and the quality of your breath didn't really matter that much, Sales of gum in the U.S. cratered by nearly a third. They've rebounded slightly, but as of last year, still remained 32% lower than 2018 levels, and the same problems are playing out around the world. Gum sales rose 5% last year globally, but they're still below 10% from their 2018 peak. Meanwhile, food manufacturers are wrapping up their gum units and tossing them in the trash,

highlighted by Mondalus selling off brands like Trident, Bubbellish, Dentine, and Chicklets in 2022. Toby, is there any future for chewing gum? I think there is a future, but the current iteration of chewing gum, I do think, is in the past because people are just kind of over the artificial sweetness aspect of gum. People are trying to limit sugar in their diets. They want to eat more stuff with natural ingredients, and that definitely limits the appeal of the current, very sugary, artificially sweetened variations of gum. Where I do think the future is, is you frame it more as either a focus A. there's been some brands that have popped up that appeal towards gamers because they're saying we're infusing it with minerals that helps you maintain your focus. Some people see gum as a stress

reliever as well, which if you know the gum chew in your life, and it seems like they're not doing it for the flavor, they're not doing it for the breath, they do it because it calms them down. It's just something to do. Fidget spinner for the mouth. Right. Exactly. And then also, I've just been on TikTok recently for, I'm just getting my last scrolls in before it gets banned. And I've seen a lot of brands pop up where it's made with very natural, holistic ingredients like tree sap, and they're trying to frame it as good for your teeth, good for the mouth bacteria. So I think if it turns itself into a health product and gets away from its historical sweetness aspect, there is a future for gum. All right. I didn't even have to say anything during that story.

Fantastic. That is our show for the day. We're so close to Friday. So make sure you lock down those weekend plans before it sneaks up on you. It's mostly a pep talk to myself. For any thoughts, feedback, hate mail, love letters, unhinged rants, you can reach us at Morning Brew Daily at Morningbrew.com. Let's roll the credits. Emily Milliron is our executive producer. Raymond Liu is our producer. Olivia Graham is our associate producer. Eugenio is our technical director. Billy Minino is on audio. Hair and makeup is even more irrational than pie.

Devin Emery is our chief content officer and our show is a production of Morning Brew. Great show today, Neil. Let's run it back tomorrow.