Morning Brew Daily - SpaceX's Starship Flies Further Than Ever & Hilton Invests $210M in College Towns

Episode Date: March 15, 2024

Episode 280: Neal and Toby break down the SpaceX mission that sent Starship further than ever and explain why it was a major advancement for the company. Plus, Vancouver gets a major real estate upgrade and President Biden is opposed to the US Steel merger with a massive Japanese company. The guys share their stock and dog of the week and Hilton spends over $200 million to get into college towns. And finally, Hans Zimmer is returning to the America. Use code MORNINGBREW50 to get 50% OFF your first Factor box at https://bit.ly/3UUZGG0 Grab a MBD Sweatshirt 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 Learn more about your ad choices. Visit megaphone.fm/adchoices

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pwc.com slash U.S. slash brew AI. That's pwc.com slash us slash brewaI. Good morning brew daily show. I'm Neil Fryman. And I'm Toby Howl. Today, Starship's third launch was its best one yet, but we're still a long way from harvesting cheese on the moon. Ben Hans Zimmer is gearing up for his first North American concert tour in seven years.

But is he better than John Williams? It's Friday, March 15th. Let's ride. The weather is turning a little bit. here in New York, it's the aides of March, but there is still a chill in the air, which means we have a few more weeks of hoodie season. You know what that also means, Neil? I sure do. It means our morning brew daily hoodies are back in stock. If you missed out on the comfiness the first time around, this is your chance to snag one. Or if you're new to the pod and miss the last drop,

this is also your chance. We're even tossing in a little 10% discount if you use code more MBD at checkout. Neil, tell them where you can find these. beautiful comfy sweatshirt. Yeah, head to shop. Dot morningbrew.com. Then apply code MBD at checkout for 10% off your order. Now, let's hear a word from our friends at Factor. One thing Neil and I look for in food is a variety.

Oh, yeah. I'm definitely one of those guys who tries to avoid eating at the same restaurant twice, if I can help. If you are the same, you should definitely check out Factor. It's got rain. We have mentioned their lunch and dinner meals, which are delicious, but they also have pancakes, smoothies, and even those well-nincolns. shots that go down easy and make you feel great. Factor having breakfast was so excited to me.

Most important meal today, but also, low-key, the most annoying to clean up. So much grease, so many eggshells, Factor is definitely the move. Agreed. So before you bust out the eggs and bacon, head to Factor Meals.com slash morning brew 50 instead. Then use code morning brew 50 to get 50% off. That's FactorMeals.com slash morning brew 50 with code morning brew 50 to snack that tasty 50% discount. Jimmy Johnson once said there's no such thing as a moral victory, but coach, you got to make an exception for Space X's Starship launch yesterday. On the third test mission in the past year, the most powerful rocket ever built traveled halfway around the earth before it disintegrated upon reentering the atmosphere about 45 minutes after it launched. And that's a much

better result than the first two missions, which both ended in Starship's self-destructing minutes after launch. For SpaceX and NASA, there's everything riding on Starship's success. NASA is planning to use it to bring humans back to the moon in the next few years, while Elon Musk is using Starship to colonize Mars. At least that's the plan. Toby, I know Facebook popularized the strategy of move fast and break things, but SpaceX is now the standard bearer of blowing things up in the name of progress. Yeah, I just want to reiterate that this was major progress, even though both the booster and the Starship did end up burning up. It went a lot better than the first two launches. Remember, after those two launches, engineers had to make 80 FAA commission fixes. It was a big

overhaul, and this one finally got the rocket to space. It was also a success on the engineering side of things, because when you're conducting these tests, you want to test out a lot of things that you'll eventually need to do on the mission. So Starship did things like it repeated that successful stage separation that it had a hiccup on on the last launch. They also tested Starship's ability to open and close its payload doors in orbit, which is something it will have to do as it releases these satellites into orbit. And then it also worked on the transfer of its rocket propellant from one take to another. Another thing we'll have to do in spaceflight.

For whatever reason, though, it did skip one core objective, which was firing Starships Raptor engines again while it was in shallow orbit. It didn't do that, and we haven't gotten a ton of information around that. But overall, it checked a lot of things off the boxes, even though it did end up burning. up. Yeah, and classic Elon Musk fashion, though, this is way more complicated than it needs to be because Starship is a Marship. It's not a moon ship. So they're trying to go to the moon, which you could do with a lot less complications, a lot less complexity, a lot less power than what Starship is. I just want to reiterate how huge this thing is. It's 90 feet taller than the Statue of Liberty

with the Starship stacked on top of the super heavy booster. It's extremely powerful. It generates 16 million pounds of thrust at full throttle. The second most powerful rocket, which is NASA's new space launch system rocket, generates 8.8 million pounds of thrust. So this is almost double the amount of power generated by the second most powerful rocket. So what is the future vision for Starship? On the people side of things, Elon wants to send people in cargo to the moon later this decade, ultimately fly it to Mars, as you said. On the more business side of things, also Elon sees Starship eventually replacing kind of the workhorse Falcon 9 rocket because Falcon 9 does very well and is reusable, but it can't carry as many payloads up to space.

So Starship eventually factors in heavily to the business. Little factor shout out right there. Business side of things for Starship for SpaceX, excuse me. All right. So this kind of blew my mind, and I don't think people understand what is going to happen when this thing goes to the moon with NASA, hopefully in a few years. It's not going to be one starship launch that goes to the moon because it doesn't have enough juice to make it out of orbit. So what's going to happen is they're going to send one starship up.

This will serve as the fuel tanker essentially. So it'll be in space. Then they have to launch in the high teens number of starships simultaneously from Texas and Florida. So you're going to get about a dozen starships going up in rapid succession and they will fuel the tanker. and then the one that goes to the moon will fly up last, go refuel at the tanker and then go to the moon. So there's going to be this choreography of up to a dozen starships blasting off at once while we have to go to the moon. That kind of blew my mind. I had no idea.

I thought it was just going to be one rocket going to the moon. But no, it's going to be up to a dozen. It's going to be incredible. It's not supposed to happen until 2026, which means it's not going to happen until 2030. But I really can't wait for that to happen. wait either. We can't get one up right now, but hopefully we can get a dozen up. Right. Time counts. Let's move on. Steel may be one of the strongest building materials out there,

but the recent acquisition of Pennsylvania-based U.S. steel by the Japanese company, Nippon Steel, is on fragile footing. President Biden issued a statement yesterday in the opposition of the $15 billion deal that was announced last December saying, it is important that we maintain strong American steel companies powered by American steel workers. Reading between the lines here, Pennsylvania is expected to be a key battleground state in the upcoming election. And Biden is clearly courting the steel union voters there who have never been a fan of this acquisition. Trump also said he would block the deal if he was elected. In the meantime, U.S. steel stockholders have been taken for a bumpy ride.

Shares were down as much as 11% yesterday, and the company has lost around a fifth of its value in just the past two days. Yeah. Business and politics really don't mix that well, because ostensibly, this would be a great deal for U.S. Steel. It's been struggling. It cut 25% of its unionized workforce over the past few years. Nippon Steel is the fourth largest steelmaker in the world.

It would inject it with billions of dollars in capital. It says they would keep the headquarters in Pittsburgh and create jobs in the United States, not close down any factories. Meanwhile, Japan is a stalwart ally of the United States, one of our closest friends. They're the largest foreign investor in the United States. They create one million jobs for Americans. So there's kind of tension here between on the surface, this seems like a pretty good deal. But because there's a lot of politics going on under the surface, a lot of union jobs at stake, both Biden and Trump are definitely wary of making this happen. Yeah, part of the issue, I think, is U.S. Steel is just so symbolic. And I

iconic. It doesn't have a huge share of the market anymore, but one, it's literally called U.S. Steel. So to voters, seeing that go overseas is a bad look. And also, it's located in Biden's birth state of Pennsylvania. It kind of embodies that 20th century U.S. economic and manufacturing rights. So it's not necessarily a company that you want to see go overseas, even if it is to an ally like Japan under your administration. So that's why it's become kind of this hot button issue. But for Biden to make a statement saying he opposed the deal and he said wouldn't block it, he just came out against it, was very unusual because this is under review right now by Sipheus, which is an important agency. It's the Committee on Foreign Investment in the United

States. This group of people, it's led by the Treasury Secretary, they review every single foreign transaction of an American company, no matter what it is, whether it's an ally or an adversary. They are in the middle of their review. And the fact that Biden came out and said, you know, he opposed it, is seen by some as sort of meddling in this, what's the same? supposed to be an independent review. And meanwhile, back to TikTok in China, Sipheus is supposed to review that, and they haven't sort of been a huge player at all in that. So this committee that's supposed to be very important has been kind of gutted and gone

around with over the past a few days in these particular acquisitions. It's got a long to-do list right now, and I don't wish it upon anyone on this Friday morning. My to-do list is looking a little more wide open than Sipheus is right now. Yeah, it's been just this week has been tough for. foreign acquisitions of companies. But yeah, I mean, it's very different when you have China owning a company who's our number one geopolitical rival and Japan who's a friend. Okay, let's head north of the border to Vancouver, Canada, where some real estate development development have captured global attention. The controversy explained in the magazine McLeans this week involves a huge complex called SNOC, an 11 tower development downtown that will add six.

thousand much-needed apartments to a city that's long been Canada's most expensive real estate market. But the people behind these shiny new high rises, it's what's generating all of the buzz. The land is owned by the indigenous Squamish nation, and the fact that they're building modern skyscrapers on their reserve has exasperated some local residents who expected the Squamish to do something with it a little more stereotypical indigenous, as in not massive apartment towers. planners, politicians, and residents of a nearby beachfront neighborhood have all fought against the development with one non-indigenous city councilor wondering in disbelief. How do you reconcile indigenous ways of being with an 18-story high-rise? Well, those 18-story high-rises are likely to bring the Squamish billions of dollars in revenue for one,

and it shows how Canada's indigenous people are using their real estate holdings to chart a vision of the future in the cities they were once pushed out of. Yeah, a lot of residents aren't happy at all, but it's gone beyond 10. typical nimbism because, of course, there's people who want to preserve the character of the neighborhood and they want to fight against these big, tall, high rises. But there's also this edge of almost disbelief to a lot of their protests that indigenous people could be responsible for these futuristic version of urban living. And then, yes, some urban planners are saying, when you're building 30, 40-story high-rise out of concrete, there's a gap between that and the indigenous way of building.

So, again, there has been just such a hot button issue. you, what does the indigenous way of living even mean? Why can't it be forward-looking? Why does it have to be backwards-looking? Right. And what is also very interesting about this particular parcel of land owned by the Squamish? It's not owned by the Canadian government. It is free of all of their authority and zoning rules and governance rules.

So the Squamish can build it denser, higher, bigger than traditional zoning rules will allow. And as such, it's going to become the densest neighborhood in Canada. And to some proponents of what are called charter. cities, which are these experimental cities that are free of the host nation's governance. It's a really cool way to experiment with new governance models, different ways of doing this, different ways of building cities, ways that haven't been tried before. And this is a great example of that. Yeah, I think the fact of the matter is that Canadians just aren't used to seeing indigenous

peoples in places that are socially, economically, geographically valuable. And so seeing them building or proposing this giant building project, makes a lot of people uncomfortable in ways that they haven't really confronted before. So this project will be one to keep an eye on again. It probably is going to unfold over the course of many years here. But the renderings, I have to say, do look pretty. It looks sick. Pretty freaking.

Meanwhile, Vancouver, I don't know if you know about Vancouver, but it is so freaking expensive. Like, it is really expensive. In 2023, a minimum wage worker renting the average one bed would have spent more than 50% of their income on rent. Vancouver needs more housing ASAP. Build more housing. All right. Up next, it's Stock of the Week, Dog the Week time right after this.

Tomorrow morning is knocking. Stock your fridge now. How about a creamy mocha for hapuccino drink or a sweet vanilla, smooth caramel maybe, or a white chocolate mocha. Whichever you choose, delicious coffee awaits. Find Starbucks Rappuccino drinks wherever you buy your groceries. It is time for Stock of the Week, Dog of the Week, our Friday segment where Toby and I share one stock that rose to the heavens like Starship

and one stock that disintegrated upon reentry, also like Starship. Toby, you won the pre-show parallel parking contest, so you get to go first. As always, though, we are just humble podcasts. It's not financial advisor, so please do not take any of this as financial advice. And Neil, in an ironic twist of fate, our stock of the week is actually a dog, specifically a dog with a hat on. Yes, the crypto meme coin dog with hat WIF, whose whole premise is that its logo is a dog wearing a hat, is now the fourth largest meme coin in circulation. Yesterday, its market cap topped $3 billion, which to put in perspective is bigger than Nordstrom's, sweet green, David Busters, and New York Community Bank.

Fans of the meme coin are not letting their moment in the sun go to waste either. holders of the token raised over $700,000 to advertise the logo, which again is literally a Shiba Inu wearing a hat on the Las Vegas sphere. Neil, if this isn't a sign, we are in a crypto bull market. We totally are. And the best thing about Dog with Hat is that it's not trying to be anything else. They know they're literally just a joke, they're a meme, their community, and they're totally embracing that.

If you go to Dogwith, I think it's either Dogwifhat.com or whatever their main website, you this huge banner that says, whiff isn't literally just a dog with a hat. It's a symbol of progress for futuristic transactions, yada, yada, yada, transcending boundaries and paving a new era in finance and technology. And as you stay on the page, slowly the animation comes and it crosses out all of that sort of fluff stuff. And what is left is left is just literally just a dog with a hat. So they're embracing the jokingness aspect of this. And I think putting the projection of this particular meme on the sphere is just, you know, the next iteration of that. Yeah. I mean, truly crypto companies love putting their name on this stuff. And it is very,

goes hand in hand with bull markets. I mean, we go back to last bull cycle, FTX arena. That didn't end up going so well. Crypto.com arena, where the Lakers play, has survived. So you do see when crypto starts doing well, there is this sudden urge. We've got to put our name on the biggest thing possible. And the biggest thing right now is the sphere and the biggest meme coin is, or the fourth biggest meme coin, is Dog with Hat, and now we're going to see the two married. And some people say, oh, this is the top, clearly. When you go on the sphere, it just means that everything's downhill from here. You get too high on your own supply. Okay, my dog of the week is a little more traditional. It's under armor. The struggling sports apparel companies sank 11% yesterday

after its attempt to pull a Steve Jobs triumphally returning to Apple, didn't have investors wanting to protect this house. You see, Under Armour made the abrupt change to bring back founder and former CEO Kevin Plank to head up the company. For decades, Plank was the face of Under Armour. He started it in his Maryland basement in 1996, built it into a sportswear giant by 2015, became a Baltimore icon, but left the job in 2019 following a series of scandals and a sagging business that couldn't really find its footing. in the competitive sportswear market. Four years later, though, he's back to see if he can revive Under Armour's fortunes sure needs a jumpstart. While once deemed the next Nike, the stock is down 86% since its peak in 2015. I call this the reverse Frank Slootman. Remember, we talked about

Snowflake a few weeks back as our dog of the week because its longtime CEO, Frank Slutman, left the company and the stock immediately dropped 15%, shaved off some $16 billion in market cap. This is the exact opposite where you have a CEO making his not-so triumphant return, making the stock fall itself. So it really does go to show you, one, the value of having a clear succession plan in place. You can't be hopscotching through CEOs as Under Armour has done in the past few years. And then, too, no one's super pumped about Kevin Plain coming back because he left the company under not-so-great terms amidst a lot of controversy. So I know you follow this sort of this industry very closely. So I'd love your thoughts. Under Armour right now has a 4.5% market share down from 5.5% last year.

You have the two biggest players, Nike and Adidas. They're kind of treading water at the top. They're doing okay. And then there's a few sort of insurgent companies on running and Hoka making inroads. Lou Llemon's also there. Where does Under Armour find itself in this landscape? Is there any way for it to grow again? I just think it hasn't innovated over the last decade, really.

its big innovation was those people call them underarmor those really tight-fitting dry-fit material shirts but now every single company has some sort of performance material like that so it hung its hat on that for a long time but now it's kind of just in this middle ground where it's it's not leading any it's not leading in basketball it's not leading in running it's not leading in casual apparel either so I don't really know what the the path for it is the one thing it still does have is good athletes it's got Steph Curry and it's got the Curry brand it's got Jordan Speath. So it does have some of those A-plus list athletes, but I don't really know how you turn this thing around. So Kevin Plank, good luck, buddy, but maybe you're better off riding

into the sunset. All right, let's move on. The steel and tech industry can't seem to get any big M&A deals done, but the hotel industry is aiming smaller and hitting its mark. Hilton has agreed to buy graduate hotels for $210 million in a deal that will give the bigger chain access to more locations situated in college. town's. Graduate hotels has carved out a nice niche for itself in the industry by targeting locations near college campuses in places like Ann Arbor, Michigan, Oxford, Mississippi, and Chapel Hill, North Carolina. These aren't just copy and paste hotels either. They reflect the communities they are located in. For instance, the Chapel Hill location has a replica of Michael Jordan's

UNC dorm room as well as a carpeted indoor basketball court inside, while the Duke one lets you complain to refs in order to get favorable treatment. I joke, but the UNC one is actually real. Anyway, Neil, feels like this is a smart move by Hilton, snapping up a brand that lets it establish a relationship with young families and parents in order to kind of start building that loyalty. Total bet on college towns. And for the past few decades, hotels, major hotel chains have kind of stayed away

from college towns because it's such a boom and bus cycle there. When students are in a college town, it's super bustling. Things are going on. There's a lot of economic transactions. But when they're gone, it can kind of be a ghost town. And I think that seasonality and the highest highs and the lowest lows just made chains just not really wanted to invest in these particular places. But I think there's probably growing recognition that in a very mature hotel market where you got all your hotels in major cities, where is the next growth area? Could be these college towns, which at this point are just more than college towns because they are huge life sciences hubs.

They're medical systems. And especially on college game days, when they're sports in town, especially football. I mean, they fill up. Sometimes they become the biggest city in their respective states. Yeah, I think that they're going about it in the right way, too, reflecting the local flavor, local community. Some of the way you get into the hotels, they look like the key cards of the universities that they're nearby. Also, you said the boom and bus cycle, but the boom cycles are just crazy. I mean, college sports events, reunions, parents weekend, all of these events drive business crazy, crazy.

it drives up prices to at these places so much higher. You've said you recently, where did you go to? I was in Oxford, Mississippi, where there is a graduate hotel? Which I was like, where was I? I saw a graduate hotel. It was in Oxford, Mississippi. We were staying in a random hotel there. It was December.

Not a lot was going on. The room was $70. And then we were like, okay, let's just see what the price would be like next November when Alabama is coming to town to play Ole Miss. And the same room we were in, upwards of $600. So that just shows you there's definitely not enough hotel supply, particularly on those days when the Alabama's of the world come to town in football,

football Saturday, football weekends. So, yeah, it seems like there could be a lot more supply here. And the Hilton CEO is like, yeah, I think graduate hotels, they have 30 to 40 locations now. I think it become a mega brand with 300 locations in college towns all across the city. So we'll see, I'm not a hotel manager. I would be a little wary about, you know, they're going up. about it the right way. They're going to the Madison, Wisconsin, the world, the Chapel Hills,

the Ann Arbors. Those are a lot more than just college towns. Those are very big town, cities in their own right. And so. And nostalgia, too. I mean, people love. I don't know if nostalgia matters when you're running a hotel business. I think if you get in there while your kids in college, then you're like, oh, I love the graduate. And then it just, that nostalgia cycle just feeds through generations. So they're playing the long game here, I think. Okay. Finally, the ERAs tour for movie score fans is arriving this fall when German composer Hans Zimmer will take his live tour to the U.S. and Canada, marking the first time he's performed in North America in seven years. Movie scores live? Well, when it's Zimmer, who compose scores for

Gladiator, both dunes and the Dark Night trilogy and lots more, it can be the stuff of legend. The last time Zimmer played in the U.S. was at Coachella in 2017, where he put on one of the more memorable performances in that festival's recent history. According to one review I found, bro, I did mushrooms for the first time an hour before his set. I visited the multiverse. You don't often visit the multiverse during a typical classical concert, but Zimmer doesn't put on a typical classical concert. I come from rock and roll and I believe in putting on a show, he says.

So you won't find a conductor, no sheet music for the musicians, no frames from the films he scored, just as cinematic soundscapes taking you to the great beyond. Toby, I feel like Zimmer's star has only grown brighter the past few years, especially among the younger generation. And here is why I love Hans Zimmer so much. Hans Zimmer, I can speak on this because he was my top artist on Spotify last year because he is who I listened to while I'm working.

I love Hans because he doesn't just rest on his laurels. He hasn't established his sound and then carries that through all of his movies. He is constantly reinventing himself because he works on a lot of these kind of forward-looking sci-fi-esque movies like the Dune franchise. And one of the things he said about scoring Dune was that if we're, we are in a society that is much more advanced than our society. We don't know which instruments are still around. So he actually tuned into the most timeless instrument of all, which is the human voice.

So that's why you hear all those like screams and really big vocals in the Dune. I'm not familiar, Toby. Can you, can you share a little excerpt? I am not going to try to replicate what the Dune franchise has been able to do. But yeah, I love Hans because he innovates. And some other composers, John Williams, doesn't innovate as much. much. So I would love to hear where you weigh in on this Zimmer. All right. So Toby just took a shot at John Williams, who I might remind you, has won five Oscars and currently holds the record for the

most nominations by a living person at 54. Let's just do a little tale of the tape between John Williams and Hans Zimmer. They're probably considered one and two on the greatest living composer, movie composer list. So we got the best Hans Zimmer scores here. I would say, Gladiator, Pirates of the Caribbean, Inception, Dark Night, Lion King, Dune, and Interstellar. Man, Toby is like that. Murderers are right there. Murderers, robot. But get this from John Williams.

Harry Potter, E.T. Star Wars, Indiana Jones, Jurassic Park, Jaws, Schindler's list. I think personally, this may be just a taste thing. I have to go with John Williams. I think his melodies, his themes, or characters in of themselves in the movies. Like, when you think about Harry Potter, you got Harry, Ron, Hermione, Snape, Headwigs theme. And then Star Wars, there's Luke, Darth Vader, Leah, Han, Imperial March. They're a part of the movie as much as the characters themselves. So I would give the edge to John Williams. That's the issue, though, is that basically what we're doing is debating which

movies we like more because it's so hard to extricate the score of the movie from the actual movie themselves. They're both incredible, though. And if anyone's got extra tickets, you know where to find me. All right, that is a wrap for our shows this week. St. Patrick's Day is on Sunday, and Toby, I'd like to propose a traditional Irish toast. Here's to you and here's to me and best friends we shall ever be and if we should ever disagree Well then F you here's to me you've got a slow Friday ahead Feel free to send us an email with any thoughts on the episode or random musings Especially your take on the Hans versus John debate to morning brew daily at morning brew.com

Let's roll the credits Emily Milliron is our executive producer Raymond Lou is our producer Olivia Graham is our associate producer Yuchinawa Ogu is our technical director. Billy Minino is on audio. Et 2 hair and makeup. Devin Emery is our chief content officer and our show is a production of Morning Brew. Great show today, Neil.

I wish you well.