Morning Brew Daily - Robinhood’s New Gold Credit Card & NCAA Wants Ban on Prop Bets

Episode Date: March 28, 2024

Episode 289: Neal and Toby chat about the new Robinhood Gold Card, its rewards credit card that looks to compete with Apple and Chase. Then, Sean “Diddy” Combs has faced a flurry of legal problems that’s led to the downfall of his once powerhouse business empire. Next, NCAA president Charlie Baker has some strong opinions on prop bets in college sports…he doesn’t want them. Also, Neal’s numbers from Trader Joe’s, adult diapers, and Ozempic. Meanwhile, the esteemed Daniel Kahneman passes away at 90. The guys recap what he meant to the world of economics. Finally, MLB opening day has stadiums buzzing…and he has nothing to do with what’s on the diamond.  Use code MORNINGBREW50 to get 50% OFF your first Factor box at https://bit.ly/3UUZGG0 Get your Morning Brew Daily Merch HERE: https://shop.morningbrew.com/products/morning-brew-daily-sweatshirt?utm_medium=multimedia&utm_source=podcast&utm_campaign=mbd&utm_content=shownotes Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow 00:00 - Intro 2:50 - Robinhood’s new credit card 6:45 - Diddy’s legal troubles 10:20 - Prop bet ban? 14:00 - Neals numbers 18:45 - RIP Daniel Kahneman 22:45 - MLB Opening day food Learn more about your ad choices. Visit megaphone.fm/adchoices

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Good morning brew daily show. Brian. And I'm Toby Howell. Today, the walls are closing in on Diddy, once one of hip hop's biggest moguls. Then Robin Hood launched a credit card this week, and holy moly, it's got some perks that we need to tell you about. It's Thursday, March 28th. Let's ride. Toby's MacBook broke yesterday, RIP, but there was some good to come out of it, because when you went to the Apple store to get it fixed, you decided to try a demo of the $3,500 Vision Pro headset for the first time. What is your review?

My review is the controllerless operating system where you just look at what you want to select and tap your fingers, a magical experience. It's so intuitive. I had a smile on my face, even just navigating through very simple menus here and there. So that was a huge, huge pro. All the negatives, though, I kind of agree with.

It was very heavy on the face, even after doing it for 20 minutes. I was like, ah, I got to get this off. And then also, you can tell that it is definitely a version one of the device. The amount of apps that you can actually play around with are mostly entertainment base. That said, very, very cool entertainment device, but just a very expensive one. So we had meta CEO, Mark Zuckerberg, on the pod last month, and he unequivocally said that his headset, which costs just $500, compared to the $3,500 Vision Pro headset, was the better device, do you agree with Zuck? I'm not sure I agree because

his point was that it is the better device, period, not just for the price point. I do think the operating system of Apple takes it to another level that using the controllers of the meta device doesn't give you. So I don't know if I fully agree with what

Mark was saying, but I do understand where he's coming from the general thrust of his argument that it's definitely not $3,000 better. So I still think you have to factor price in there for sure. Before you hear today's news, we have a quick word from our friends over at Factor. Neil, I woke up with a tear in my eye this morning because I realized, really have two days left of Factor ads.

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a factor truck bringing deliciousness to people's doorstep. You think of us. But enough reminiscing. There is still time to get a tasty discount on your first factor box by heading to factormeals.com slash morning brew 50. Then using code morning brew 50 to get 50% off. That's factormeals.com slash morning brew 50 with code morning brew 50 to snag a 50% discount. It's time to refresh your yard during spring backyard days at the Home Depot.

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made through its online travel porter, and a 3% match on all IRA deposits and 5.25% interest on cash, plus it's made out of stainless steel, so feel free to drop it in front of your friends to impress them at brunch. What's the but? Well, even though the card technically has no annual fee, you do have to be a Robin Hood gold subscriber, which will set you back $50 annually. And it's there that you start to see Robin Hood's game a little bit. With such generous incentives, this is a loss leader of sorts to try and loop people into its gold ecosystem where their lifetime value can offset some of the rewards users will rack up.

This card was met with pretty much instant praise from people because of just how juicy those cashback rewards actually are. Yeah, there's not that many cards on the market. out there. I don't think I can think of anywhere you have 3% cashback on literally everything. It's not specifically geared toward any particular category, but it's 3% across the board and for a $50 annual fee. I mean, you can say that's for Robin Hood Gold or anywhere. You're paying $50 and you're getting some pretty generous perks. So I can see why it was met with sort of widespread enthusiasm. And same with investors as well. Robin Hood's a publicly traded

company and its shares shot up 7% yesterday, which shows that people, investors think that this is actually a boon to their bottom line. I think you've heard us talk about everything apps on this show before, and it looks like that's what Robin Hood has its site set on. They want to be the, quote, primary financial institution for its customers, so you can open a spending account with them, fill up your brokerage account with them, access your credit card rewards them. It's a pretty compelling vision. CEO Vlad Tenev said all of their assets should be custodied at Robin Hood, and all their financial transactions should go through Robin Hood.

So that's the vision here, and that's part of the reason why they're launching this credit card. Right. Robin had started back in the late 2010s as a way to democratize investing. They completely obliterated the brokerage fee structure. They offered commission-free trades, which was extremely revolutionary. and the entire industry has followed. They've tried to become more of a holistic financial services app. They've opened features for retirement accounts. They have crypto trading now. They're trying to get into the UK and expand into international markets. So they do have a pretty steady growth plan here.

Also, we can't mention companies opening up new credit cards without talking about Apple. Robin Hood does appear to be taking a cue from Apple here. Apple launched its credit card a few years ago, and that's been doing really well. There's been a rocky relationship with Goldman Sachs, which is underwriting the card. Goldman Sachs and Apple's partnership may fall apart here. We're still seeing what's going on there, but the Apple card did top more than 12 million users as of January. So it feels like there is appetite for these more techy companies, these more fintech companies to launch credit cards and users be sort of amenable to that. I do think, though, that Robin Hood's card makes Apple's card look pretty paltry in comparison because

I mean, if you go to the savings rate offered on both cards, you get a 4.5% APY in savings on Apple compared to 5.25 for Robin Hood, up to 3% cashback on everyday purchases. Apple offers up to 3% cashback on everyday purchases, but only at a limited amount of retailers, including Apple itself. So Robin Hood is 3% cashback on everything. So even though there's definitely shades of the Apple card here, I do think Robin Hood's kind of eating Apple's lunch with just the sheer amount of rewards. that they're offering. Moving on, at one point, Sean Diddy Combs was one of hip-hop's most successful businessman. These days, his empire is crumbling, and Diddy's mounting legal problems only accelerated this week. Dramatic scenes unfolded when on Monday, two of his properties in Los Angeles and Miami Beach were raided by Homeland Security Investigations agents amid a widening criminal probe into sex trafficking. In helicopter footage blasted across cable news, federal officers were seen removing computers and other electronics from the homes, and they also stopped Diddy at an airport and took some devices from him, though they didn't arrest him. This raid comes after

Diddy was hit with several sexual assault lawsuits in recent months. While he's forcefully denied any wrongdoing, the allegations have still taken a wrecking ball to his business portfolio, which span music to fashion, to liquor, to cable TV. Toby, this has been quite the downfall for someone who is credited with taking hip-hop into the commercial mainstream. Yeah, Diddy's businesses are definitely fading a little bit. Remember, one of his big wealth gainers was his deal with Dia Geo, the spirits giant. He used to be the face of Surrock vodka and wrote that to a very profitable. Some reports say that he's been paid out over a billion dollars by DGA over the course of that partnership. But that relationship was already on the outs, even before these lawsuits started coming

up. Remember, he sued the company back last May, accusing it of racism and failing to support the new tequila brand that they launched together. And so now the kind of spirits division of Combs' business empire is completely gutted, according to insiders. So that's a major loss, not even withstanding some of the other troubles that other lines of his business have been going through. I think you have to look at the liquor business because before every single celebrity decided to launch their own tequila, their own vodka, which we take for granted now,

we're just like, oh, you're a celebrity, you're going to launch a gin, you're going to launch a tequila. Diddy was the pioneer here with Surak in 2007. He didn't own the business, but he was the face. He did control all of the marketing, and he inked a deal with Diageo to get 50% of the profits. And this really set the stage for what we just take for granted now as a celebrity, as every celebrity launches their liquor line. Then Diageo bought Casamigos from George Clooney for a billion dollars. And Didi accused Diageo of sort of putting more resources, behind George Clooney because he was white, and they did settle, but it did lead Diddy to leave

all of his, uh, all of his liquor brands, you know, in Diageo and he doesn't have any stake in it. Right. And the other big part of Diddy's empire is the music side of things. He's got bad boy records, but that's even bad boy records is a shell of, of what it once was. Bad Boy still has one artist affiliated with it and it's machine gun Kelly of all people. And then Warner Music Group also distributes the labels back catalog. but the only active bad boy artist putting out new releases is Janelle Monet. So it really has shriveled up to a much smaller business than it once was as Diddy was coming up. And then Diddy himself released his first solo album in 17 years.

Critics widely said they really did not like it. It didn't get past, I think 17 on the Billboard top 200 charts, even though it had a lot of heavy hitters on it, John Legend, the weekend, Justin Bieber, Mary J. Blige. But, Diddy's always been known for, he hasn't always been. the greatest actual musician, but he's got charisma in other areas of his life. But we see, you said the walls are closing in here, and we're definitely seeing that everywhere you look on his business right now. Let's move on. The uneasy marriage between the NCAA and gambling companies has always been on thin ice. But now NCAA president Charlie Baker wants sportsbooks to go sleep on the couch. He is calling for a ban on college prop bets in states that have

legalized sports betting. Prop bets are those wagers that aren't actually. actually related to the final score of a game, but instead usually focus on an individual player in their performance. For instance, betting that they will have over or under a certain amount of three-pointers or rebounds in a game. The thought process is, while it's relatively hard for a single player to intentionally throw a game given all the variables that play, it's very easy to hit the under on their props if they so choose.

I say that because a similar situation just arose in the NBA where a Toronto Raptors player, Jonte Porter, attracted outsized bets on his props during two games in which he exited early for somewhat dubious injuries. And that's an NBA player making millions now imagine the temptation an unpaid college athlete might feel. So Baker and the NCAA want to do away with a headache altogether. Yeah, I mean, this is Charlie Baker flexing his policy muscles. This is probably his biggest advocacy statement yet. Charlie Baker, as opposed to the former head of the NCAA, Mark Emmer, was a politician. He was the governor of Massachusetts. He has relationships in D.C. So he's really showing that he's really bringing these relationships to bear,

pressuring state houses to enact laws and maybe even get Congress to come in as well and perhaps provide a blanket ban on profits across college basketball. Currently, 11 states do allow college profits in some form. The NCAA thinks that given its sheen of amateurism and the level of harassment that college basketball, basketball players and college football players and college athletes get round profits specifically makes it just not tenable. Right. I think you hit the nail on the head there.

The two big points that Baker and the NCAA are looking at is the fact that it increases stress on college athletes because you have these growing men, these grown adults, badgering these college students to see who's playing, how injuries are healing, yelling at them on the court that they have money writing on them. And it doesn't have to be this individualized. it doesn't have to be, again, prop bets make you hyper focus on a certain player in conducting certain actions and it just doesn't have to be that way. And then there's also the amateurism angle as well.

Illinois coach Brad Underwood said that I would hate to see the day where nobody jumps for the jump ball because of a prop bet because again, you can bet on literally everything in a game and a jump ball is one of them. So he wants to see the competitive integrity remain in the game, even though as more money floods into the college scene. It felt like for the first couple years of legalized sports gambling, there was this wave of momentum. 38 states have now legalized it. And it feels like in 2024, at least in the first few months, there is some pushback.

There is growing recognition of the scandals and risks to integrity and the problems of addictive gambling. And we're seeing maybe the momentum shifts back a little bit with Jonte Porter and the NBA here. There's also the Shohei Otani scandal going on in MLB. So there are three concurrent scandals kind of going on right now. now in the sports gambling world, and Draft King's stock is showing a little hurt. It fell yesterday for its biggest loss in seven months.

So this is something that the industry has grappling with here in the first part of 2024. Up next, hold on to your coffee mugs because Neil is about to take you through some of his favorite numbers he came across this week. Own it all. Pay off your home, travel for life, drive a Ferrari. In celebration of the world premiere of the Monopoly Big Board Bucks slot machine by Aristot. Crack Gaming, Yamava Resort and Casino at San Manuel is giving one person a $1.6 million dream package. The biggest prize in Yamava's history. Club Serrano members can earn daily instant prizes and secure a spot in the finale May 29th.

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First up, you're going to need more than two dimes to buy a banana at Trader Joe's. For the first time in more than 20 years, the grocery chain is raising the price of its bananas from 19 cents by the each to 23 cents. That's only a 4-cent hike, but amounts to a more than 20% increase. Trader Joe's said the higher prices still represent a tremendous everyday value for bananas, and I don't necessarily disagree. Bananas, on the whole, have remained shockingly cheap, even as other food, I don't. have been rocked by inflation. The average price for a pound of bananas was 63 cents in February,

just three cents higher than 10 years ago. Compare that to lemons at $2.8 a pound, greatfruit at 171 and oranges at 155, plus potassium. Plus potassium. I love that bananas are just the goat of cheap fruits because despite their popularity, the U.S. imports more bananas by volume than any other country according to the FDA. The prices just really doesn't, don't budge. I mean, you gave that 10-year stat, the average price for a pound of bananas has never been more than 80 cents since 2004. It's just remarkable how that bananas remain low. It's got low labor costs.

There's good free trade agreements. There's favorable growing conditions. All those kind of combined to make bananas, just this unstoppable force of consistent value over the years. They are the most popular fruit in America, which does surprise some people. But it is funny. Comparing bananas to some of the other commodities that we talked about earlier. this week like cocoa, which can only grow in a certain part of the world. Bananas are just the goat of, yeah, the goat of cheap produce.

Okay, my number, my second number is zero, which is how many diapers a Japanese company will make for babies and instead focus on making diapers exclusively for adults. This week, OG Holdings announced that it will stop making diapers for babies because there just isn't enough little ones in Japan for a viable business. Japan had 758,000 babies last year, down from over 2 million in the 70s and the lowest number of births since the 19th century. Meanwhile, the market for adult diapers is booming as the Japanese population gets older. Almost 30% of residents in Japan are age 65 and older, and more than 10% are 80 and above. This diaper pivot might come as a shock, but in fact, sales of adult diapers in Japan have outpaced diapers for infants for more than a decade.

OG's announcement is just another sign to quote, the Japanese prime minister of whether we can continue to function as a society amid a population crisis. I was genuinely shocked when I heard this stat because even though that we know Japan's population is aging, the fact that diaper companies are just packing up shop and saying, it's just not a big market for us anymore. Let's go to the more profitable market, which is adult diapers. We've talked about the silver economy on this show a lot, but I don't think it's anywhere. It's more apparent than in Japan right now with their diaper market. For my final number, holy profit margin.

Novo Nordus charges $968 for a weekly injection of its ozempic diabetes treatment. But a new study found that the same drug could be produced and make money for less than $5 a month. The finding will only heat up the debate around whether the high prices for this new class of semi-glutide drugs, which can lead to significant weight loss, are justified. Drug makers are famously tight-lipped about how much. cost to manufacture a drug. But researchers at Yale, King's College Hospital in London, and the nonprofit Doctors Without Borders investigated price estimates for raw ingredients and the cost of developing diabetes drugs. And in a paper published in JAMA this week, they concluded that OZemPEC could be manufactured for 89 cents to $4.73 for a month's supply.

As the studies author said, the profit margin is immense. And there should be a conversation in policy about what is a fair price. Definitely a conversation. The most surprised, thing to me about this study was it found the biggest cost in producing OZempec was not actually the active medicine itself, which is called semi-glutide, but the disposable pens that you use to inject it. That's the physical hardware piece of drug making that you don't necessarily take into account. That said, the active drug in OZempec is very expensive to produce as a whole. Semic-cuitide costs over $70,000 per kilogram, but the amount of dosage that each semi-glutate or OZempic dose includes is very small. It comes out to around 29 cents for a month's supply. So that's

where you see these insane profit margins coming into play and that this study said, listen, you could be making this for so much cheaper. Let's move on. Daniel Conneman, the famed author of the book, Thinking Fast and Slow, died yesterday at 90 years old. Conneman was a Titan in the field of behavioral economics and won a Nobel Prize for his efforts back in 2002. He essentially invented the field, which led to a rethinking of issues as far ranging as massive infrastructure projects to the evaluation of baseball talent. The general thrust of behavioral economics is that it challenges the assumption that people act rationally and with their self-interest at heart. That's often not the case at all, and people more often than not act based on patterns

they've observed, derived from small samples that don't necessarily factor in the presence of luck. Thinking fast and slow brought these ideas to the mainstream and became, a mega bestseller. Neil, I believe I saw it on your bookcase the last time I was over. What are some of your favorite Connemon heuristics? Yeah, so they, Conneman and his longtime collaborator, Amos Tversky, created a bunch of these heuristics, which show, which are basically rules of thumb that show how humans do not behave rationally.

And the big takeaway here is don't trust your intuition, which is kind of sad, but it's true that the first thing you think of is probably wrong. Let's run through some of these experiments. One of these heuristics that I love is called conjunction fallacy. And here's the experiment. Students were told about a woman named Linda, who was an activist in college and was deeply concerned with issues of discrimination in social justice and also participated in anti-nuclear demonstrations.

They then asked the students, which was more likely, that Linda was a bank teller or that Linda was a bank teller and is active in the feminist movement. and the vast majority of the students said bank teller and active feminist, which mathematically is impossible because the probability of two conditions being met will always be less than the probability of either one. That is one where I talk to people about thinking fast and slow and they always remember Linda. Yeah, Linda is a very famous experience. He's also just famous for calling out universal brain kinks in humans. One of my favorite ones is the loss aversion fallacy where it explains actually why golfers have. been found a put better when putting for par versus putting for birdie on a whole because they

try harder for on a par putt because they want to avoid the pain of a bogey more so that they want to feel the joy of a birdie loss aversion is a big part of connemon's kind of outlook on life another thing that I think is so interesting as well is the the brain quirk of anchoring that's one of my favorite things we are definitely more influenced by arbitrary numbers and we'd like to give ourselves credit for. In the experiment, the common ran, he asked if Gandhi was, he asked one group if Gandhi was more than 114 years old when he died, while another group was asked if he was less than 35 years old. The first group, Grassey, he was much older than the second group.

Price anchoring is a huge deal in like SaaS companies these days. So if you ever see an outlandish price quote, part of the reason they're doing it is because psychologically it will make the other price quotes feel a lot less painful if one is very high. And on salary negotiations, huge deal. Finally, before we leave Connman, this is just a pro tip for people because in his later work, he talked about remembering memory and happiness. And the key takeaway from that is your remembered experience is much more powerful than your actual experience.

So the way to take that into your daily life is when you plan a vacation, make sure you plan the coolest, best day last because you always remember the vacation as a whole by what happened at the end. So whatever you do for the first three quarters of your vacation may not matter because all you will remember about your vacation and it will shape your entire memory of that vacation is what happened on the last day. So just a pro tip, schedule the very coolest thing last. Let's finish our show very strong then, you know, because that's, this is all that people are going to remember. That's a good point. All right. So we're going to end on happy MLB opening day for those who celebrate.

The vibes are not immaculate in the rainy Northeast, but still, baseball is back for another season with a full slate of games today, and that means spring is basically here. Lots of different storylines to tell you about ahead of the season. First is pace of play. This MOB season marks the second year

that the league will have a pitch clock aimed to speed up the game. In its first year, the rules did their job. The average nine inning game was 24 minutes shorter than in 2022, and when you multiply that across the 2,430 games played during the season. It means that more than 40 fewer days of baseball were played in total. Takeaway from that stat is just there are too many games to begin with. Anyway, the beginning of the

season also brings new food to ballparks, which are always looking to one-up each other in terms of creativity and clever names. Some new dishes I can't wait to try. Dungeoness crab pizza from Moto Pizza in Seattle, the LBLT at Fenway Park in Boston. That's lobster bacon, lettuce and tomato and tomato and the warehouse dog in Baltimore, hot dog top with horseradish, infused brick sauce, crispy onion, casso fondito served on a pretzel bun. You are saying we were talking before the show, the pretzel bun renaissance is fully upon us. Going through all these new opening day food items, a lot of them have pretzel buns. It does give you just an elevated field to some of those ballpark classics. I'm also very bullish on that dungeonous crab pizza.

This sounds amazing. My Tampa Bay Rays are looking pretty good, too, because they're offering a new braised short-ribed nachos, as well as a pretzel slugger dog. And you were looking through these and said, ah, nachos, kind of boring. But I will point out the fact that Morning Brew did a poll in conjunction with Generation Lab of our audience this year,

and we asked them, what's your favorite food to eat at a sports game? Nachos came in on top at 16%. So don't sleep on elevated nachos, Neil. Not people love nachos. Meanwhile, to the actual teams themselves, there are a few teams to watch here at the top of the power rankings. Braves, Dodgers, and Orioles are considered juggernauts. I want to highlight the Orioles specifically because they just got a new owner yesterday. The deal closed.

David Rubinstein, who's a private equity billionaire of Carlisle Group, is a Baltimore homegrown guy. And he just bought the team, and he's super pumped about it. Very sort of Steve Cohen-esque thing of what happened with the Mets when a hedge fund, billionaire financier took over their hometown team and hopefully propel them to greatness. The Orioles are on the come up. They had a great season last season. I hope they do well. I think there will be a lot of emotions surrounding the team, obviously, after the bridge

collapse. I'm going to put you on the spot here, Neil. Give us your predictions for this season. I am, you're my baseball guy. Who do you think is going to win the World Series? Billy's. Should have seen that one coming. Obviously, Philly.

So they're going to be good this year. Okay. That is our show for today. Have a wonderful Thursday. The weekend is so. Dang close. I can already taste the pancakes on Saturday morning. There's one thing we ask of you is to send feedback so we can get better. You can do that by writing into our email, 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, thanks fast, and slow. 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.