Morning Brew Daily - Musk Paid $23B to Focus on Tesla & Is ‘Athleisure’ Dead?

Episode Date: August 5, 2025

Episode 641: Neal and Toby discuss Elon Musk getting paid a handsome number to stay on as Tesla’s CEO and to put his focus on saving the company. Then, Sydney Sweeney’s viral ad campaign with American Eagle has caught the attention of the President and sent share soaring. Plus, an Outdoor Voices resurgence may be on the horizon, but is the world ready to embrace athleisure wear again? Meanwhile, Toby dives into the world of spicy foods that’s being featured in restaurants all over the industry.  00:00 - Wolf problem out in CA 3:30 - Elon gets his $23B bag 7:30 - Outdoor voices founder returns 10:30 - American Eagle gets Trump bump 16:00 - Toby’s Trends: Spicy foods 20:00 - Sprint Finish! LinkedIn will even give you a $100 credit on your next campaign so you can try it yourself. Check out LinkedIn.com/mbd for more. Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. Listen to Morning Brew Daily Here:⁠ ⁠⁠https://www.swap.fm/l/mbd-note⁠⁠⁠  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, Brew Daily Show. I'm Neil Framman. And I'm Toby Howell. Today, Tesla found a new way to keep Elon Musk focused on work, a whole lot of money. Then American Eagles shares soared after Trump endorsed Sidney's controversial ad. It's Tuesday, August 5th. Let's ride. Good morning and happy Tuesday.

I want to quickly take us out west, where the government has been deploying some creative methods to combat a spike in gray wolf attacks against livestock. The problem they're facing is that the wolf population has surged, since being reintroduced to Yellowstone in 1995, leaving ranchers defenseless to protect their cattle and sheep. The latest solution, according to the Wall Street Journal, is to use drones to scare off the wolves by blasting the predators with haunting audio clips from the drone speakers. And by haunting audio clips, the recordings include ACDC's Thundersruck, and this is true, a clip of the fight between Scarlett Johansson and Adam Driver in the movie A Marriage Story. Toby, nothing more terrifying than Scarjo and Driver hurling barbs at each other.

I'd absolutely run the other way. Well, now I'm sitting here thinking about other things a drone could play that would have an animal sprinting the other direction. And the first thing that came to mind, unfortunately, was good. Marie Rue Daly's shit. Just kidding. Now, I'd have the wolf sitting at rapt attention. No, I feel like maybe playing Benson Boone would have them scurrying away or doing flips off of a piano. Don't do my boy like that.

Yeah, one of the two. My favorite part of this story, though, is the nominative determinism that's at play here. The USDA district supervisor who is piloting this drone program is named Paul Wolf. And now a word from our sponsor, LinkedIn ads. Toby, have you ever wasted something? Yeah, I wasted an invite to my birthday party on an ungrateful coworker who apparently didn't even want to be there. Well, I think you're also wasting energy still being mad about this, just like brands waste marketing spend. They waste time, money, resources, and effort.

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and the signature Southern Country Rock of Eric Church on July 19th. Tickets on sale now at yamava Theater.com, only at Yamava Resort and Casino, celebrating its 40th anniversary. You in? Must be 21 to enter. What would it take to keep you engaged at work? Maybe it's a 10% raise, but for Elon Musk, it's the GDP of Albania.

Yesterday, Tesla's board approved a new pay deal for their CEO, awarding him 96 million shares worth about $24 billion. And it's all about making sure he doesn't lose focus on Tesla for the next couple of years. In a note to shareholders, the board wrote that retaining Elon is more important than ever before. While we recognize Elon's business ventures, interests, and other potential demands on his time and attention are extensive and wide-ranging, we are confident that this award will incentivize Elon to remain at Tesla. The reason the board needs to incentivize Elon to remain at Tesla is because his previous pay package remains in legal limbo. Remember this drama? Back in 2018, Musk was handed the biggest

award in U.S. corporate history worth $56 billion. But last year, a Delaware judge struck it down saying that the process was compromised by Musk's influence over the board and the directors weren't acting independently when they approved it. While Tesla is currently appealing that ruling, the lack of certainty led the board to create an interim pay structure. It described as a first step good faith payment aimed at keeping the world's richest person engaged at job. So, Toby, instead of booting Musk for being too distracted, the board is doubling down on their guy and investors like the move sending Tesla stock up 2% on the day. You know what, Neil, I'm feeling a little distracted as well. Maybe I could use a little something to focus my attention

again. But yes, this bonus does not necessarily follow the structure of other bonus packages you would expect to see out of corporate America because executive bonuses are meant to reward good behavior, incentivize more of that behavior. But this bonus package doesn't really fit that pattern. It's more like throwing stuff out of wall and just hoping it will stick, hoping maybe Musk will change its ways and divert more of his attention back to their company. But it does seem like they are coming from a position of weak leverage saying like, please take this money, take all these billions and billions of dollars,

just focus us on us again, please. But they kind of have their back against the wall because without Elon Tesla does not have a true path. forward, their move into robotics or move into autonomous driving, that takes a massive hit. So they need Elon and it's clear by the fact that they're throwing all this money at him. I thought some of their reasoning was really interesting. They obviously think that Elon is their North Star. He is the company. But they also said that to be clear, losing Elon would not only mean the loss of his talent,

so his talents, but also the loss of a leader who is a magnet for hiring and retaining talent at Tesla. They said this was key against the backdrop of the. ever-intensifying AI talent war and Tesla's position at a critical inflection point. We've talked so much about Mark Zuckerberg's very personal and intense push to recruit these AI researchers who are dime a dozen. They think that Elon Musk plays that similar role for Tesla at a time when the competition is heating up to retain all this talent that pushes this automaker into the AI realm.

Also, Texas plays a big role in this as well because this new pay package, after the debacle that happened with Delaware. Elon moved the company's headquarters from being incorporated in Delaware to being incorporated in Texas. And Texas is basically immune from suits similar to the one that Delaware brought because to sue in the state, shareholders must own at least 3% of a company. Tesla is a massive, massive company. That is a very high threshold to meet. So basically, this next pay package is much more insulated from the type of suit that torpedoed his last gigantic pay package. So bottom line here, Elon Musk will probably be the CEO of Tesla for the next couple of years. And he's got a big turnaround job ahead of him. Tesla's stock

is down 18% year to date. They just had their worst earnings report for a quarter in recent memory. He's got a lot of work ahead and he will be paid handsomely for it. Remember Outdoor Voices, the millennial-coded brand that had everyone donning a doing things hat and rocking yoga pants on their coffee runs? Well, it's out. founded Ty Haney, once dubbed the Queen of Athleteisure, is back at the helm once more, ushering outdoor voices into a new generation with a new collection dropping today. Founded in 2013 amidst the rise of Lulu Lemon, OV rode monocolored leggings in the idea that people should wear workout clothes not just to the gym, but everywhere, to a $110 million valuation in 2018. But after

reaching the highest of highs, it all came tumbling down in 2020 amidst backlash against Haney, with the company knee-capped Outdoor Voices closed all its stores and was snapped up by a PE firm consortium brand partners to avoid bankruptcy. The big turnaround plan quietly asked Haney to come back home and try and write the ship setting up today's triumphant return. So what does Outdoor Voices 2.0 look like? In a recent interview with Texas Monthly, Haney admitted that despite helping mainstream it, she actually always hated the word athleisure and instead used terms like fashion-forward and sexy to describe Outdoor Voices' new drop. It's a much different fashion landscape now, too.

We've moved way past the Our Leggings Pants Debate. Clearly, the world has already decided yes. And at this point, Athlete's isn't just a category. It's just clothes. And it's into that landscape that Outdoor Voices hopes to regain its cultural cachet, Neil. I'm getting flashbacks to 2018, Tobat. I don't know if I could do this early. But back then, this brand was everywhere.

Tai Haney was one of those so-called Girl Boss CEOs, who was on magazine covers on panels. She was everywhere, and so was this brand. But then, like so many other D to C companies, I'm thinking Casper and Allbirds, that became huge via cheap Instagram and Facebook ads. It all came tumbling down, and since Tihani left, this company has been essentially a zombie company,

not really updating any of its products on its website, closing all of its stores, will be very interesting to see if she can capture some of the magic that she had back from 2013. to 2020 when this brand was truly everywhere all around New York City and they had a big community of engaged customers willing to go out and be brand ambassadors for it. I see the logic behind trying again because if I'm consortium partners, I'm looking at the athleisure market. It's absolutely exploded. It's projected to reach $716 billion by 2032

according to Fortune. But then I also look at rival brands that have emerged in the post outdoor voices landscape. Brands like Viori, who basically is like Lulu slash Outdoor Voices for guys, was valued at $5.5 billion last year. And then, of course, you still have Athleta, Lulu. Allo Yoga is another big one that's been making waves. So it's worth a shot, at least, to try to cash in on whatever cache this brand has left, whatever name recognition it has left, and try to run it back with Haney at the helm.

So I definitely see the boardroom conversation here that led to this relaunching. Moving on, in news that would make absolutely zero sense to someone in 2015, American Eagle stock soared after President Trump weighed in on the brand's controversial Sydney-Sweeney ad campaign. In a long post on Truth Social, Trump called the Sweeney spot the hottest ad out there and added that American Eagle jeans are flying off the shelves. Whether or not that's true, investors tried to manifest it, sending shares of the shopping mall legend up nearly 24% on the day to their highest clothes since May. And now with Trump's post, it is official. Every single person in the United States has offered their take on the Sydney-Sweeney American Eagle brand deal. To catch you up, last month, American Eagle launched its most expensive partnership ever, a jeans promotion featuring the actress of the moment, Sydney-Sweeney. But it's generated loads of controversy because of the messaging.

The campaign's tagline is Sydney-Sweeney has great jeans, which is meant to be a play on words with the denim pants and the basic unit of heredity. In some of the ads, the blonde, white, very attractive Sweeney leans into the DNA angle of it all, saying genes are passed down from parents to offspring, often determining traits like hair color, personality, and even eye color, my jeans are blue. Some on the left blasted the ads as tacitly embracing eugenics, being overly sexualized and targeting men when American Eagle is ostensibly trying to get women to buy these genes. The backlash prompted a backlash of its own, with others calling the ads critics to woke and humorless. In the middle of the crossfire is American Eagle. While the stock has soared since the campaign was launched, its reputation is in a more precarious place. Yeah, this certainly worked in the financial markets.

American Eagle has been kind of stuck in neutral over the first half of the year. It's stock is actually down 20% still, even after this multiple rises that have come from these Sydney-Sweeney ad, you know, outrage cycles. But Trump's comments doesn't introduce any new information about the company. It doesn't change anything about the fundamental of its business, it is just drawing investors into the hype cycle. So the real question is whether this ad campaign is actually going to convince shoppers to

buy the company's apparel. And that is still to be determined. A lot of analysts who cover the stock say, we don't really care that much about the noise. A lot of that is bringing new investors into the company. We're actually looking at the back to school season right now and seeing if people are actually going to start buying these jeans. So I'm very curious to see in a couple of months when the financials come out, if this did have any meaningful impact on the business. So we'll see, Sidney Sweeney is a brand ambassador

for at least a half a dozen brand. She is everywhere. And we could look at some other brand deals that she's worked with to see if she does move the needle. It looks like in some cases, perhaps she is a spokesperson for Hey Dude, which is a loafer company owned by Crocs. And the latest earnings report, Cox CEO came out and said that the working with Sydney Sweeney to reach Gen Z consumers has been, quote, performing really well. She also has worked with Dr. Squatch, which makes soap. That was recently acquired by Unilever for $1.5 billion in June. So it looks like she does push sales upwards in brands that she works with.

We don't know yet whether that's happening with American Eagle. We do know that people are interested in American Eagle for perhaps the first time in a few decades. Google trend data shows that interest for American Eagle is at its highest level in more than 20 years. So people are searching for it, at least. A lot of fashion talk on this show. We're going back to 2018 with Outdoor Voices even further with American Eagle. We'll see how our fashion takes age as we progress in the year. Up next, it's Tuesday, which means we have Toby's Trends.

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to emerge with the trend you should keep your eye on. And today's trend is restaurants going all in on spicy foods. Restaurant trains have been tripling down on hot foods that younger customers love. Chipotle rolled out its spicy adobe ranch last quarter, and May Taco Bell debuted its Mike's Hot Honey Diablo sauce on the heels of launching its Taliente Catina chicken menu the month before. Not to be left behind, Wendy's release a Taki's Fuego meal, while the usually mild Mediterranean chain Kava launched a hot Horissa pita chips in April.

In total, U.S. restaurant chains launched 76 new spicy menu. items from March to June, bringing the total number of restaurants that offer at least one spicy item on their menu to 95%, according to an analysis by Datascential. Of course, spicy foods aren't new, but they are particularly popular with eaters under the age of 30 who prefer bolder flavors. A study from Sprite, who itself has been trying to emphasize its own tangy mouth feel, found nearly 50% of Gen Z consumers eat at least one spicy meal a week. In general, Data Central found that mentions the word spicy online tend to spike too when new spicy items are introduced to menus. So, Neil, if you want to create buzz both online

and in customer's mouth, the best way to make that new hot food item is to make that food item hot. We're all just trying to feel something, Toby. One reason why restaurants are leaning into this trend so much and one reason why they're so happy that consumers want spicy food is that it's pretty easy to make and it offers a low-cost, high-return option. Imagine if Gen Z consumers were like, we love lamb and goat and they're like, well, we don't really have the supply chain to get all these new proteins in our menus. But to make a spicy food, all you need is some peppers and maybe some creativity in the kitchen. So they are loving this and they are going all in on spicy, at least for the time being, we know that Gen Z consumers are pretty mercurial and they

change their taste very quickly. Sweet and spicy was big. Slicy was. big last year. Nashville hot was big a few years ago. Now you don't see any of those on menus. So Gen Z is, you know, quick to change their tastes. So we'll see how long this spicy trend lasts. But at least for now, restaurants are trying to cash in. I do think that this does have a compelling case for enduring because of social media. Spicy foods and social media go together extremely well because there's something about watching people suffer or, you know, just have that really red mouth while they're eating a ghost pepper chip or something like that. There is something inherently compelling about watching that sort of entertainment. And the other aspect, too,

is muckbangs have produced a lot of viral spicy items. These are these live stream broadcasts of people just eating very large amounts of food. And large amounts of spicy foods are often more compelling than more stark and red than watching someone eat, you know, pudding or something like that. So I do think the fact that companies want to make a buzz on social media. People who are scrolling social media want to watch people eating spicy things. That's a match made in heaven and it's going to continue to, you know, power this hype in spice cycle. I want to get your take on this one final spicy release. So Doritos thinks it has a new cool ranch level flavor, one of its mega flavors that it's coming out with that will have the

popularity. It's calling it Golden Sri Racha, which plays on this trend. Golden Saracha. I do like, I don't understand the golden aspect. Maybe it's just because you can see it better, but I do love the idea of golden saraje. Oh, you've got to separate it from the normal cheesy color of Doritos. So golden saracha, I'm all in on that. Yeah, they say that younger consumers use tarotra as much as ketchup. All right, let's sprint to the finish with some final headlines.

Boeing's impressive turnaround has hit a roadblock. 3,200 machinists building fighter jets in the St. Louis area went on strike yesterday after rejecting a four-year contract with the company. The strike is the second walkout in less than a year for Boeing after 33,000 workers in the Northwest hit the picket line for seven weeks. CEO Kelly Orkberg, the mastermind behind Boeing's improving finances, downplayed the impact telling investors last week, I wouldn't worry too much about the implications of the strike.

We'll manage our way through that. But the striking workers are hoping to make him sweat. Yeah, Boeing does have a little leverage in this situation, though, because it operates non-union plans in the area as well. So, again, the general manager of the St. Louis site said, we are prepared for a strike and we have fully implemented our contingency plan to ensure our non-striking workforce can continue supporting our customer. So this is much different than the much larger machinist strike earlier in the year or last year, excuse me.

This is a smaller part of their business. It's still a meaningful part of their business. It's still a part of their business has actually lost a lot of money of late. It's lost nearly $11 billion dating back to 2021, but it has made some strides. It was on pace to be profitable again this year, but now you throw a strike into the mix. Not as bad again as the big one from a few months ago, but still kind of annoying if you are bowling. Palantir was the best performing stock in the S&P 500 last year, gaining over 500%. And this year, it's also the best performing stock in the S&P 500 and just had an earnings report

where it topped Wall Street's already sky-high expectations. The AI and defense software provider passed $1 billion in quarterly revenue for the first time ever and boosted its full-year guidance. Its CEO, Alex Karp, was nearly giddy with the results. In a letter to shareholders, he wrote, The skeptics are admittedly fewer now, having been defanged and bent into a kind of submission. He also kicked off the earnings call yesterday by saying, As usual, I've been cautioned to be a little modest about our bombastic numbers,

but there's no authentic way to have anything other than enormous pride and gratefulness for these extraordinary figures. A big reason for his optimism is Uncle Sam's checkbook. Palantir's U.S. government revenues were up 53% from a year ago. Neil Palantir is on an insane run right now and is now one of the 20 most valuable public companies in the U.S. after another 4% gain yesterday. This guy is going full, Muhammad Ali. I mean, he is riding high.

And another thing that he said, Alex Karp said in the earnings call that I thought was interesting points to a broader trend here is he said, we're planning to grow revenue while decreasing our number of people. So he said the goal is to get 10x revenue and have 3,600 people working for Palantir. We now have 4,100. There's been certainly a growing movement of CEOs being unbashly telling investors, that we want to reduce our headcount years ago, for entire corporate history, more people meant bigger company. And now with AI and other software coming into play, coming into the

workforce and streamlining operations, you can do more with less. And companies like Palantir are just openly bragging about that now. Moving on, my name is Toby, but switch a letter and you get Jobi, an electric air taxi company that is making big moves. Yesterday, Jobi announced plans to buy out a portion of Blades business, the helicopter taxi service for $125 million. Blade made a name for itself by allowing people to larp as big shots, taking short-distance helicopter rides to and from mainly airports in New York and Southern Europe. It's those short-distance routes that Joby has its eyes on. Its flying taxis are designed to hold up to four people plus a pilot and fly around 100 miles before stopping for a recharge. For a long time,

its air taxis have felt more like a pipe dream than a real mobility solution. It's a lot of but when you share three letters of a name with me, anything is possible. And thanks to an executive order signed in June, aimed at accelerating the use of air taxis, it looks like it might have its regulatory certification ducks in a row sooner rather than later. Neil, both Blade and Joby are publicly listed companies, and both dollar stocks jump about 18% yesterday. Maybe next time you fly out of JFK, you'll be riding in a Toby. I mean a Joby.

You tried to make it happen. I appreciate that. Yeah, it's very odd to see both. companies' stocks surge so much like that after an M&A deal. Usually the acquiree is go, the stock shoots up and the company that's doing the buying goes down. But clearly investors think this is a great move for both companies as we perhaps get electric air taxis coming. I know we've been, promised this for years. One potential benefit for consumers for this particular deal is that Blade CEO said that pricing could go down as they use.

Jobi's electric air taxis. Right now, he says they cost as much as an Uber black service, which I'm going to have to take his word on because I've never actually tried to book one of these Blades. And he said, now with these air taxis, they're cheaper to maintain and repair. So he's going to, he says it's not just for the few, it will be for the many. And I do need to call out something about Blades business that is just a very unique part of business lore. It reported $250 million in a revenue last year.

but nearly 60% came from its Oregon transportation business. This is a business that it kind of stumbled into. When you are talking about short-term flights and short-term routes, a great use case of that is transporting a live organ on ice from one hospital to another. So it didn't necessarily set out to be an Oregon transport business, but it's only spinning off its passenger transportation business. It's keeping this Oregon transport business as a separate thing altogether

because it's just been so lucrative and so successful. So next time you're in a blade or something like that or you're doing a short-term flight, maybe a heart or maybe a liver or something has been in that before you. So just a fascinating wrinkle and a fascinating part of Blade's business lore. The Los Angeles newspaper landscape is about to get a lot more rude and a lot more punny. The New York Post Media Group said it will launch an L.A.-based paper called the California Post early next year, bringing its loudmouth headlines and celebrity gossip to the entertainment capital of the world. It's easy to see why Rupert Murdoch's News Corp, which owns the Post,

thinks going Hollywood is low-hanging organic fruit. Already 90% of the New York Post's digital readership lives outside of the Big Apple, with Los Angeles home to the second largest concentration of readers. Meanwhile, the L.A. newspaper scene has been gutted by layoffs, leaving a void the Post is happy to fill with its brash tone, and I can't believe they went there covers. California, here they come. I weirdly don't hate this idea on a number of levels because you're right. A lot of viable news options in L.A. have been disappearing recently. The L.A. Times recently cut 115 staffers in January. That was just a few months after it laid off 74 more people. The L.A. Weekly magazine in the area also just lost a lot of its senior staffer. So there is a

news dearth in that area right now. And the New York Post, against all odds, has been a profitable business for the past three years, even though it's mainly a, you know, it's still a print business because it's just, it's zagged while a lot of other people have Zigg, its approaches to covering certain issues is much different than other news organizations out there. And it doesn't seem to make sense in New York. I mean, it has more of a conservative lean and New York is a very progressive place, and yet somehow it's still remained profitable in the city. So L.A. is another kind of location where it would have to do that seemingly counterintuitive bedfellow, um, for the audience it's serving, but excited to see it also cover AI and cover technology

and cover entertainment in its New York Post style of headlines. So definitely like not something that seems to make sense on paper, but I'm curious to see how it actually plays out in practice. All right. That is all the time we have. Thanks so much for starting your morning with us. Have a wonderful Tuesday. If you have any thoughts or feedback on today's show, send a note to Morningbrewdaily at morningbrew.com. And before I thank our team, Toby needs to get something off of his chest. Yes, it is my fiancée's birthday today, as I'm so fond of saying. So everyone, please wish Celia a happy birthday. Let's roll the credits. Emily Milliron is our executive producer. Raymond Lue is our producer. Our associate producers are Olivia Graham and Olivia Lake.

Hair and makeup is doing things. Devin Emery is our president and our show is a production of Morning Brew. Great show you, Danielle. Let's run it back tomorrow.