Morning Brew Daily - Pharma CEOs Condemn TX ruling, Tupperware tumbles, Reformation rewear trend

Episode Date: April 11, 2023

Episode 36: Neal and Toby discuss hundreds of pharmaceutical CEOs signing a letter calling for a reversal of the abortion pill ban ruling made by a Texas judge. They also explain why Tupperware may be in trouble as their stock takes a tumble. Plus, how FTX completely mismanaged funds and why Bitcoin is over $30k for the first time since last summer. Toby discusses why Reformation is subtly taking advantage of TikTok virality. Oh, and if you haven't been paying attention to Ryan Reynolds and Rob McElhenney's soccer team, maybe you should. Learn more about our sponsor, TaxAct: https://www.taxact.com 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

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Good morning, Brute Daily Show. I am Neil Fryman. I'm Toby Howell. And Neil, just a quick preview of what we'll be talking about today. Has the lid closed on Tupperware? The iconic kitchen brand is on the edge of going out of business. Dun dun dun. Also, we're talking 5th Division English football.

That's all I'm saying for now. If you know, you know. Also, we're going to chat about new revelations about how poorly SBF ran FTX. Pretty juicy stuff. And Toby, you're going to teach us millennials on what the youth are up to in our weekly segment on an emerging trend to keep an eye on. which I like because I don't have to do any research and you just kind of teach me. But I also want to bring up, it's the first, it's the 101st day of 20203, which means we've lived

through 100 days of the year so far. I was thinking about what we would put maybe in the time capsule of 2020, the first hundred days. Definitely Chinese spy balloon. That captured all of our attention. SVB collapse sparked a banking crisis. Chad GPT taking over the world. And we became podcasters.

Those are the main four of that I can remember of 2020. we want to sprinkle in some Pedro Pascal in there as well because he kind of took over entertainment for a while. So it seems like a solid time capsule though. All right. Hopefully the next 100 days are less eventful, I think, than the first 100 was kind of busy. To kick off the show, I want to circle back. Yeah, I used it. Fight me. To the abortion pill ruling we discussed yesterday. So to recap in an unprecedented fashion, a Texas judge suspended FDA approval of an abortion pill that had been on the market for 23 years. We talked yesterday about how a judge going over the top of the FDA was a huge deal for the pharma industry because it kneecaps the FDA's authority and could freeze development of drugs because they could be suspended. Why spend billions developing something and a judge comes in and says you can't sell that anymore?

So the entire industry in response got together and they do what execs do when they're angry. They wrote a strongly worded letter. Very scary. 400 leaders in biotech and pharma wrote, open letter blasting the ruling, saying that the decision completely disregard science and could upend their industry. And I quote, any medicine is at risk for the same outcome as Miffa Pristone, they said. Yeah. A big tack that this letter was kind of taking is that it actually targets innovation in the industry as well, because they say if regulatory uncertainty, it reduces the

incentive of investing in new drugs. So why would you, again, spend billions in dollars developing an experimental new drug to get FDA approval only for that approval to then be revoked by a court ruling. So they really took the tact of saying this might just kind of torpedo drug research and new innovation. So I can see why they're upset. What struck me is that many of the signers had nothing to do with reproductive health. Pfizer barely makes, barely has any kind of mix in with the abortion pill production. But he, his, the CEO Albert, Borla was kind of the headline name in sort of exposing how big of a problem. This could be for the wider pharma industry, not just for drug makers that make abortion pills or other reproductive

health. Right. And it was interesting, too, to see that not only was the pharma industry pissed off as shown by this letter, but also the legal experts are saying that this sets a horrible precedent as well, because then they're saying if you start legislating or making rulings based on political lines, then other experimental drugs might be under fire, such as an HIV preventative. So it's a slippery legal slope and then an even slipperier biomedical slope as well. Final word on this, I just kind of want to zoom out to companies increasingly taking stands when it comes to social issues, which has been called corporate activism. You see it happening with Disney that came out against the don't say gay bill in Florida,

and now it's in a feud with Ronda Santis. when it that's been increasing in recent years it kind of wasn't a thing for all of this abortion roe v wade stuff it's such a sensitive issue and companies mostly didn't touch it at all this to me is the first time that i can think of that companies and a huge sector have kind of you know put their voice into this debate no it's definitely we said it yesterday unprecedented but yeah when you attack potentially a pillar of research in the uh the drug community obviously you're going to elicit a response. So that's our update on yesterday's story. Neil, we're going to go in a totally different direction now. Tupperware is in trouble. Yes, you heard that right. The company

that has become eponymous with the product itself is in deep trouble. So the stock fell more than 50% yesterday on news that the company's on the verge of going out of business and won't have enough cash to fund its operations if it doesn't secure additional money. So how did it get into this place? Basically, Tupperware's business model is stuck in the 1970s. Their main sales channel, which I learned very recently, is the once groundbreaking, I'm saying that in quotation marks, of having existing customers make sales at Tupperware parties in people's homes. But that ain't working anymore, Neil. No. You call it, what did you call it earlier today?

I forget. An MLM scheme. It is. No, it's not an MLM scheme. It is a multi-level marketing company. Right. It's not necessarily a scam. But yeah, they had these representatives of moms, basically.

They weren't working for the company, but they would host these Tupperware parties, bring all their friends over, show, you know, I guess package up their day-old green beans, and then sell it to their friends. And then you could also make a commission. You make a commission on that, and then you can also make a commission if one of your friends also becomes a representative, and then you get this, you know, they call, you know, it looks like a pyramid a little bit. Right.

So you get this pyramid scheme. Just wild that that was Tupperware's main sales channel until only- Pioneered, yeah, it was one of the first that, you know, pioneered multi-level marketing. I think I was reading up the first one was in the 1940s, but this kind of came on the scene in the 50s. Yeah, but I don't think many of us are going to Tupperware parties anymore. I know they try to do it online and then, you know, Zoom Tupperware parties was even worse than the original. Yeah, that does not sound fun. But some of just to highlight how precarious of a position Tupper is in right now.

So they need to raise money in order to keep afloat. and one of the reasons why they're finding it tough is because they don't really have assets. It doesn't really, it's a very asset-like company, so they have their production facilities, but beyond that, like there's not, they don't have any really physical retail stores or anything like that.

So they're finding it very difficult to raise money. There's also very little innovation going on in the company still. There's a really funny quote that this company used to be a hotbed of innovation with problem-solving kitchen gadgets, but it's really lost its edge. That's from an analyst. And I just think it's funny to think of Tuftware as this one's innovative cutting-edge kitchen technology company. I mean, I take my leftover seriously, don't you?

Yeah, but you, we were just saying that right now. You probably jump on Amazon and just get the cheapest option. Cheapest option or just the one with the most reviews. And I don't know what the brand is. I brought in lunch today and I just looked at the cover and I was like, oh, glass, blah, blah, blah. I don't know what it is. Just had great reviews on Amazon. And the reason that Tupperware is failing right now is because young people,

in their kitchens have no affiliation with this brand anymore. Right. And then just to finally zoom out into more of a trend portion is that the pandemic was a big surge for Tupperware where a lot of people started cooking at home and they started packaging their stuff up in Tupperware. So it did get this little pandemic boost. That is definitely wearing off now. People have emerged into society once again.

And so Tupperware is kind of feeling the effects of it. All right. Well, maybe Tupperware will die, but the name Tupperware. won't die because I still call it. It's an epidemic. Yeah. I guess I call it Tupperware. Right. It will never die. It will never die. All right, let's move on. Toby, imagine you bought a house that you knew was a fixer upper. You knew you had some issues with it. You knew it needed a new kitchen. But as you do your walk through, you keep finding more problems that you know you have to clean up. That's basically what's happening with FDX's new management team right now. So after they took over Sam Bakeman-Fried's crypto exchange when it went bankrupt, they've been going through its documents to see what really went on there. And it was total chaos. Yeah. Total chaos. They released a new report yesterday that exposes just how casually, and I mean casually, SBF was running this $30 billion company. Here are a few details. Expenses and

invoices for sometimes tens of millions of dollars were approved by an emoji on Slack, which obviously doesn't leave it for perpetuity. I can't find anything on Slack. So you have these invoices that are just kind of lost in the ether. Financial control. controls were basically non-existent, and SBF knew that. He said his hedge fund, Alameda, was hilariously beyond any threshold of any auditor being able to even get partially through an audit. Okay. And then that's because he treated his company's cash like, I treat a pair of cheap headphones. He goes, we sometimes find $50 million of assets lying around that we lost track of, such as life. So basically, my eighth grade robotics club had tighter financial controls on FVX.

That's honestly such a flex to say we found $50 million. assets lying around. I guess I was reading Matt Levine's newsletter, though, that said, if you could find 50 million of assets lying around, you probably might find 50 million of liabilities lying around as well. And if you don't know what's going on under the hood, that's a real possibility. And that's what brought them down because they didn't know about $8 billion in liability. Right, exactly. And I also just think an interesting angle to this is John Ray, the CEO, who has taken over. It keeps releasing these reports, trashing FDX. And it's a really interesting thing because his job is to return money to to make creditors whole again, return some of the assets to the people who lost money in FDX.

But here he is, he keeps trashing the very company he's supposed to be, I don't know, saving or turning around. It's not normal, right? It's not normal, but maybe it is normal in the sense that he's showing that, look at all the due diligence we're doing. We're really getting into what causes this problem and so we can return your money. But yeah, it is a little bit of an interesting tact. Yeah, I also want to just highlight some more nuggets from this report. So one, they kept private keys to a ton of their FTX's group's crypto assets in an Amazon password manager that if anyone had the password, they could access. They also stored virtually all their funds in hot wallets.

The difference is between a hot wallet and a cold wallet and crypto is a cold wallet. It's not connected to the internet. And so you're not supposed to keep customers' assets in hot wallets because it makes them very liable to hacking. And here they were on Twitter, Sam Bankman Free was saying like, oh, we're using the typical like cold wallet storage system going through hot wallets. Everything was in hot wallets. So just basically lying. And they, Matt Levine had another great quote that saying FTX was great at talking like they were running in a reputable crypto operation, but they weren't actually running one. Meanwhile, though, as we're all feeding on the carcass of FTX, Bitcoin, out of nowhere.

So yesterday it hit above $30,000, which was its highest level in 10 months. It's up 81% year to date. It killed every other major asset in the first quarter. It's still 57% from its all-time high. But over $30,000, when you get this symbolic round number for whatever reason, it gets people like us talking about it, gets people like you listening to it. And then saying, yeah, this FOMO situation. And, you know, they're saying that some of this rally is fueled by, you know, increased levels of adoption in Hong Kong.

So it's also banking crisis helped for sure, too. Yeah. Like this, we saw it jump when SVB kind of went under because, yeah, Bitcoin is the antidote to the traditional financial system. So you can see that. But I also just want to do a check in on the Bolly G. One million dollar Bitcoin bet. So just from some background, this guy made a bet.

that Bitcoin will hit $1 million in price in 90 days. He has 65 days to go, and Bitcoin's at $30,000 right now. So he needs another increase of $969,884. And this is a $1 million bet. He's going to lose $1 million. He's almost there, yeah. Okay, that's our Bitcoin check-in. Before we jump into the next story, we're going to take a quick break.

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Xbox wireless controller learn more at Windows.com slash student offer while supplies last ends June 30th terms at AKA.m.m.S. College PC Well it sure seems like no one is upgrading their laptop anymore. case, look at mine right now. You just get an orange juice spill, you ride it out. New data shows that

the computer shipments by PC makers fell 29% in the first quarter of this year. It was even worse for Apple whose computer shipments plummeted by 40.5%. That's the biggest drop since 2000 when Apple wasn't even cool. But it's not just Apple, Del Lenovo and ACE's shipments fell more than 30%. HP, which I guess is still around, fell 24%. What's going? not. I was reading into this, and it turns out that people buy laptops and PCs in cycles. Typically, the lifetime of a laptop or PC is three to five years, which honestly seems a little low to me. Like, who are these people who are replacing their laptop every three years? But since a lot of people kind of upgraded their home setups and their work from home setups during the pandemic, everyone kind of

got on the same cycle. And now we're in this low period where everyone just upgraded in 2020, 2020, And so now they have no need to buy these computers right now. So I think what we're seeing is something that is a macro trend. And we'll probably see a pickup in sales once people's pandemic computers kind of cop out on them. I don't know. This does not seem like a very exciting or growing business hardware, laptop hardware. I mean, you don't see any startups being like, we're a new laptop company. Feels a little bit like cars, like internal combustion engine cars, where you're just getting these upgrades every so often.

and no one's kind of producing. There's very little growth in the industry. Everyone who has a laptop already has one, and all they're doing is exchanging an old one for a new one, which is kind of where we are with the smartphone market as well. Right. I mean, if we want to look at Apple in particular, though, it is kind of a, we call it a drop in the bucket.

Their sales of max, it's only $40 billion, which is wild to say. But that only makes up 10% of their overall sales. So it is not their growth driver right now. Their growth drivers actually serve. services revenue, which accounts for 20% of their revenue. Apple Music Classical. Exactly. No, that's where they're devoting all their resources right now.

So their services revenue, that means ICloud, Apple Music, Apple TV, Apple Arcade, and Fitness Plus. This has been kind of Tim Cook's baby in the post Steve Jobs era. He's really leaned into services. So I think what we're seeing is kind of the death of one era of Apple. We might be overstating it in the rise of its new. Zombie shrug. Well, iPhone still accounts.

for 52% of sales. It is a so profitable iPhone. You can charge over $1,000 for it. So I wouldn't, I think hardware is still the cash cow while services may be growing. But, you know, the growth areas also could be Apple Watch. And then what is the other? Oh, AirPods. I don't know how they, but you do. Yeah. That's like a $300 product that you could, you, they're selling headphones. You're selling headphones for $300. I mean, that's pretty good. And then the big hardware release to look out for is coming in June, which is this mixed reality headset. And, you know, that is hopefully, that is what Apple thinks is going to be the next iPhone that we're all going to be living in the metaverse one day and we need one of its headsets and it's going to charge upwards of $3,000 for it.

I really hope whoever the powers at B who make these decisions at Morning Brew lets us buy one and try one on air. That's good content right there. It's great content. If you're listening, Austin. All right, Neil. Let's move on to Toby. I'm back with another segment where I, a Gen Zier, take you a millennial, through a new internet trend that has come across my radar. I was actually mulling over a new title for this segment, terminally online, Toby. That's maybe better than Toby's trends. We'll workshop it.

All right, but onto the trend, this past week my internet travels led me to a substack post from a social media writer named Rachel Carton. Rachel was scrolling through her Instagram feed when she noticed a video from the clothing brand Reformation. This particular video was of a woman talking about the state of dating right now, and it showed a picture of a HINZ profile with a guy standing on a horse. And I only say that because it's a pretty recognizable video, one that Rachel was pretty dang sure that she had seen before, so she did a little digging, and she actually found that the exact same creator had posted the exact same video in January, but in the more recent, video, the only difference was she was wearing a Reformation shirt. So through some digging, she found a couple more examples of this. And it turns out this is a social media strategy that Reformation's employing, where they're paying creators to recreate their video,

frame for flame, shot for shot, but wearing Reformation clothes. So it works. Is this SponCon? Does it say sponsored by Reformation? It's on Reformation's brand page. So it's not on the creator page. Oh, they're not posting it again. They're not posting again. It's literally just Reformation is taking these viral videos, copying them, paying the creators to do so, but just having them wear, it's super subtle. It's not in your face. It's just literally they're wearing a shirt and they have a little button that says you can shop this look if you want.

So they're just trying to capture the viral moment and extend its life a little bit more and kind of put their own little clothes on it. I think it's genius because here you're basically have no risk because you know these videos are going to go very viral. When I say viral, the video I mentioned, it had 2.6 million views on TikTok in January. And then the one that they posted on Reformation's brand page already has 1 million views. So you're basically taking a formula that you know that works and just inserting your brand in a very, I don't know, subtle way into it. So I was like, this is almost, this is pretty genius.

And some of the commentary actually Marketing Brew wrote about it. Some people are calling it sneaky and smart. But then there's also this idea of it's potentially kind of entering the uncanny valley where you're scrolling and you know you've seen something before and it gives you the sense of uneas. Are like, am I living in a simulation? Did I not just see this video like a few months ago? So it is rubbing some people the wrong way, but I'm actually all on board this strategy. Seems like many other brands are probably going to do something similar.

Right. So now Reformation has seen success. That is truly when we are going to enter the simulation where all we see is the same videos reapplied over and over again with just slightly different brand activations within them. So it's a little dystopian but right now I think it's pretty genius what Reformation. We should do that.

We should sponsor a creator with a viral video and just have them wear Morning Brew stuff. Yeah, it's not a bad idea. Or I thought you were going to say we should just recreate viral video on the show. Our own viral videos, of course. Okay, that was Toby's trend. I tease the next story, our final story at the top of the show.

we're going to get to talk about Fifth Division Welsh football match, which I know you're excited about. Now, some people's ears perk up when they hear that, but others probably have no idea what I'm talking about. So for anyone in that ladder camp, I'm, of course, talking about Wrexham AFC, the soccer team that Blake Lively's husband,

Ryan Reynolds, and always sunny in Philadelphia creator, Rob McElenny, bought together three years ago with the goal of promoting this small club from the 5th Division of English football all the way up to the first division. So now Rexham is currently in the 5th division. It's an absurd goal that Rob and Ryan are trying to pull off, but they have this multi-year docu series

that they're producing with Hulu, and they have this huge marketing spend that they are building up their social medias and using their power as these Hollywood personalities. But so the big news is that yesterday, Rexham defeated Knott's County three to two, to put them in the driver's seat to potentially get promoted to the next tier. And this was a wild game.

I know. Is it weird that I was actually watching it live? No, because they're huge now. Everyone knows Rexum. Right. So there was three to two, and Rexum saved a penalty in the 96th minute. And it was just utter bedlam, you know, was on the front page of the Guardian, BBC. And, you know, it's all anyone can talk about.

And I was literally watching this game. It's, Toby, can you put, like, give us perspective about, how low level this is. This is like watching my high school game almost. The level is probably right around college soccer in the U.S. That's what I was talking with some of my friends, like how good are these players? And obviously,

Rexum has been able to bring in some players that are probably a little better than the level they're playing at because they have this movie star money. They have this brand exposure. And so that's kind of the level we're talking about. But the fifth division of English football is so far from the Premier League I can't even plan. You can't even talk in the same.

It's almost like me saying, I want to play in the Masters in a couple years. That's like me sitting on my couch at home and saying I want to be at the pinnacle of the sport in a few years. But that's what Rob and Ryan are trying to do. They're trying to pour money into the club. And they're trying to escape from the doldrums. And this game was a huge stepping stone and potentially getting them out of the fifth division into the for.

And you can see the emotion on in the owners. I mean, we have a clip here of Ryan Reynolds talking after the game. I don't feel like I have a heart anymore. I think I used all the beats that I had left during that that match. That was that was unlike anything I've ever seen before. And indicative, of course, of all of you lifers who have watched and participated in this game, this beautiful, torturous game forever. I'm actually grateful in this moment that I didn't care about this years ago

because it would have just eaten me alive. That was really something. All right. Well, it's not really an underdog story anymore. I know, but you can tell how much he just absolutely loves it and cares, yeah, which is good to see. I would just say the profile is only growing. TikTok is a sponsor of their jerseys. TikTok would never go anywhere near this team if it wasn't owned by Rob and Ryan.

They're playing in the summer here in the United States against Manchester United and a bunch of other MLS teams. And finally, Ryan bought a house in this random village, five miles from the stadium. And so can you imagine living in like a random village, like town in, you know, near Cleveland or a random Ohio town? And then some big Hollywood celebrity comes in. They're all in. They're all in it. Yeah. All right.

That is our show. We're all aboard the Wrexham Train. I hope you are. Toby, I got to kick it to you before for a shoutout. I know. Quick shout out. I forgot to give my dad a happy birthday shout out. His birthday was on Sunday.

I forgot on Monday. So here it is, Dad. Happy birthday. Belated shout out to Eric. You can always reach us at Morning Brew Daily at Morningbrew.com. Please email us. We love hearing from you. Let's roll the credits.

The show's producer and editors, Emily Milliron. Our technical director is Eugenna Nuauugu. Our supervising producer is Bryce Belloff. Kai Morgan, welcome. And Raymond Lou are our associate producers. Dan Bousa is our sound mixer extraordinaire, but he does a lot more. Hair and makeup, move to Wales. 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. Yamava Resort and Casino at San Manuel is California's number one entertainment destination for today's superstars. Catch the Jonas Brothers return to the Yamava Theater stage on April 30th, the powerful vocals of Demi Lovato on May 17th and the signature Southern Country Rock of Eric Church on July 19th. Tickets on sale now at yamavaitheter.com.

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