Morning Brew Daily - The Billion $$$ Impact of a Government Shutdown & AI in Your IG and FB Feeds

Episode Date: September 28, 2023

Episode 158: Neal and Toby discuss how contract workers would be impacted by a possible government shutdown. Plus, Meta brings AI photo editing and chatbots to their social media apps and struggling Peloton strikes a deal with Lululemon. Neal shares his favorite numbers and why are brands so... online? And how are they trying to make money off of it? And finally why one Vermont town has banned tourists from taking picture of it's foliage. 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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I'm Neil Fryman. And I'm Toby Howell. pod, the federal government is barreling toward a shutdown. We'll go through what that means for the economy and for your daily life. Then meta kicked off their annual developer conference yesterday, and it's featuring a little less metaverse and a lot more AI this year. Name changing coming. It's Thursday, September 28th. Let's ride. All right, Neil, quick update on another story we've talked about on the show. Delta Airline CEO Ed Bashan admitted that they probably went too far in making changes to its frequent flyer program.

Remember, the changes made, it made, made it a lot harder to get into airport lounges and to earn status. Neil, I consider this a win for complaining online because boy, was the outcry so loud, we got a whole dang CEO apology. Yeah, you do not want to make your most loyal and, frankly, richest customers, angry. And you got to follow the three rules of corporate apologies, candor, remorse, and a commitment to change. I think a lot of people could take those lessons to heart, including celebrities.

Okay, let's head to our first story. A government shutdown is looking increasingly likely this weekend as House Republicans are failing to produce a spending bill that would fund the government into the new fiscal year. So the question you're probably asking is, what does a government shutdown mean? What's going to happen? What are the implications for me and my daily life? We're going to run through all of that. At a high level, a shutdown means that the 4.5 million employees that are on the federal government's payroll, which is the largest employer in the United States, won't collect their paychecks. Some employees that don't perform functions that are considered essential will be furloughed,

but others that are deemed essential will continue to work without pay and collect what they're owed after the shutdown is over. The White House Office of Management and Budget is responsible for drawing up contingency plans for each federal department, determining who goes to work and who stays home. And the sad reality is that they've had to do this planning before for previous government shutdowns. So you do have a playbook to go by. Toby, I'll kick it to you to run through some of the ways that people's lives will. and won't be impacted from this or some things that stood out to you? Yeah, one thing that stood out to me is not only is the U.S. government a huge employer in itself,

but they also employ a lot of contract workers as well. There are roughly 3 million to 4 million contract workers. So in total, that's 8 million people who are employed by some form of the government. And so most federal employees usually receive back pay when the government eventually starts back up again, but millions of contract workers likely won't recoup any of the money that they are owed. And these contract workers span the absolute gamut of employers. So federal contractors range from Elon Musk's SpaceX and even Pfizer who provides COVID vaccines to the government. But then there's also the local janitorial service that provides service to federal buildings.

So while big orgs like SpaceX, like Pfizer, will probably be fine. It's the smaller kind of maybe unseen workers that are going to be hurt by this. Yeah. I want to talk about some of the markets impacts because maybe that's not the first thing you think about when you think government shutdown. but we're going to see a delay in government reports. So things like we love talking about the inflation report, the jobs report. Those bureaus are not going to be working. So we won't get that information.

And while you might think, oh, darn, like, I don't have the jobs report this year. I don't know, or this month. Like, I don't know what inflation is happening. That's actually a big deal for people like Jerome Powell and the Fed because they use that information to make really important decisions on interest rates. You know, Jerome Powell has said for the past few months, I will follow the data to determine. interest rates, but now we're not going to have any data, so he's going to be flying blind.

We're flying blind, too. Screw Jerome Powell. It's about us in our podcast. And speaking of markets as well, the SEC is going to be completely gutted. 90% of this agency, which is Wall Street's watchdog. Basically, it's the biggest federal regulator of markets is 90% of the workforce is going to be staying home. So SEC chair, Gary Gensler said yesterday, if you want, if you're a company and you want to IPO, do it by tomorrow, do it by Friday, because we're not going to have anyone to review your applications. So we've talked about the IPO market coming back a little bit with Instacart and some of these other companies. Well, they could not go public if as long as this government shutdown has happened.

Yeah, now it's running to a halt. And then one final thing about how it might impact everyday Americans is that Social Security will still go out. It's considered a mandatory program, so it still will be funded. And then other food assistance programs like SNAP or WIC have to rely on backup funds. So they will continue providing funds, but eventually those emergency funds kind of run out. So it depends on how long the government shutdown extends to it. That's the key point here. It's like the economic impacts are not expected to be so bad if this government shutdown doesn't last too long.

But the longer it does go on, the further you're going to see impacts go from just the federal workers to spillover effects. to the broader economy. And the one final thing, I don't, this is super sad, but the three pandas at the National Zoo are leaving for China later in the winter, and they're having this big celebration to send them off because we haven't, you know, we've had pandas for a long time, and now the National Zoo in D.C. is not going to have any pandas. And so their birthday celebrations, or their send-off celebrations are going to be cut short because of this shutdown. And I will not stand for that. News, you pass a spending bill. Right there. All right, Neil, moving on. I know we just did an AI roundup two days ago on the show, but man, is it already time for another one.

The big news I want to lead with is that META is currently hosting its two-day developer conference where the AI-themed announcements are coming thick and fast. First up, METU is rolling out a bunch of new AI chatbots, including a chat-GBT-esque personal assistant that can help you with everything from playing a trip with friends in a group chat to answering questions you normally go to Google for. Speaking of that last part, META also announced a part of a partner. partnership with Microsoft's Bing to provide real-time internet-connected results, something other chatbots haven't been able to do up until this point. That was until OpenAI also said yesterday that ChatGBT is also partnering with Bing to bring you real-time web results.

Beyond its own version of ChatGBT, Meta also unveiled a bunch of other chatbots based off real-life people spanning from Kendall Jenner and Mr. Beasts to Jane Austen and Tom Brady. so you can open WhatsApp and talk with Snoop Dog, for instance, about whatever's going on between him and Martha. Neil put it all together, and the result was that meta reminded everyone that is still a force to be reckoned with in this space. Maybe. I don't know what problem this is solving.

These AI chatbot personalities, this seems kind of like window dressing and just getting your buzz out there. Because I'm talking to my friends on WhatsApp or a group chat. I'm going to be like, hey, Snoop Dog, like, what's going on? I don't Google in front of my friends. I look things up privately. So I am curious your take on to what the particular use case of these AI personality chatbots are.

I am on board with the fact that the personalities is window addressing and is just something buzzy to get people talking. But what I am extremely bullish on is this kind of group chat setting. Let's use the example you just cited of you're in a group chat. maybe you're traveling to a you're on a bachelor party and you type in WhatsApp like hey what's a good brunch place around here the AI chat block can come in in the group chat setting and say hey here are five places I found would you like me to get a reservation so it is it becomes this group assistance assistant and that's the other thing too is technically open AIs chat to BT could do that but it's just a

one-to-one relationship so you would have to then transpose it into a group chat setting the fact that it's right there for you and it's so easily accessible, I could see it becoming a very, very integral part of people's kind of social planning. If I do, if I ask what the, you know, ask for a reservation for a restaurant, then in a group chat setting, everyone's going to pile on and be like, oh, we should go there, we should go there. I'd rather just do it by myself. But anyway, Zuck has proved me wrong before. He's not, while there were a ton of AI announcements here, there also were Metaverse announcements. Zuck has not given up on the Metaverse. Facebook or Meta released the Quest the Quest 3 headset, which is third version of its hardware VR AR headset, which is the best

selling virtual reality headset that's ever been produced. It's not an amazing seller. Not everyone has it, but it is the best of its ilk. And it also released its second version of these smart glasses in a partnership with Ray Ban. And Zuck is saying that, that the advancements in AI and the metaverse work together to produce a better outcome for everything, which I don't know what that means. My takeaway from this was just what a difference a year makes. I remember last year we saw the pictures of everyone wearing the meta quest, everyone, it was all Metaverse, how it's going to change how we work, how we play, how we game. And then this year, it's all about how AI is going to change all those things. So, I mean, again, you never know where, like, the technological winds are going to blow,

but it was a very, very stark difference one year to the next. All right, Neil, let's move on to our next story where I want to talk about a match made in heaven. This match is so heavenly, in fact, that when I read it, I couldn't believe they weren't already partners. So are you ready for this, Neil? Lulu Lemon agreed to a five-year partnership with Peloton yesterday that involves teaming up on apparel and online workouts. Peloton's beleaguered stock, which is down 42% this year, jumped 30% in after hours trading on the news before settling up around 15%. One casualty of the deal, though, is the fitness startup mirror that Lulu acquired for $500 million just three years ago. Peloton content will be available on the interactive fitness device going forward, but Lulu Lemon will stop selling the device by year end.

Neil, we tried to avoid business jargon on this podcast, but I can't help but slip one in here. The synergies between Lulu's apparel business and Peloton's fitness classes are enough to make any NBA drool. What stood out to you about this? It does make a lot of sense, but Lulu Lemon back during the pandemic when everyone wanted to get in on the at-home fitness craze, when after Peloton, they acquired Mirror for $500 million, and they thought this would be their Peloton competitor. Mirror is a smart mirror that displays workouts for you that you can do in your home. That acquisition has been, honestly, the biggest flop you've ever seen. It was a $500 million acquisition.

They wrote off the value of most of it. So they basically lost almost $500 million on it. But separately, to me, this shows that Peloton is moving away from being this walled garden. They wanted to be this exclusive brand where you can only access their content through their hardware. and it was going to be this like Apple of fitness type thing where they were going to go, they were going to zig where everyone's going to zag. And now that they've decided, now that their stock price has collapsed and they're struggling to even live as a company, they're opening up their content, they're opening up their garden

to a lot of other companies and working with a lot of other brands on these partnerships as a way of staying afloat. Yeah, this new Peloton CEO, Barry McCarthy clearly has a playbook. Last year when he took the helm, he started making deals. He made a deal with Amazon. made a deal with Hilton hotels. So the new Peloton, I think, is just get Peloton in front of as many people in the minds of as many customers as possible, because you're right, it's struggling. Lulu, on the other hand, has not been struggling. It's just been plotting around. It's a juggernaut.

Up 17% this year so far, up 133% in the last five years. It's just been slow and steady growth because to them, they weren't as reliant on the COVID-era home fitness trends. You wear Lulu to the gym. You wear Lulu at home, too. so I just think it's an upholding example of a clothing brand that didn't get out ahead of its skis. The mirror acquisition was its first time that it really did slip up, but they're kind of remedying that, walking it back, and now we have this awesome partnership. All right, Neil, before we jump into our next story, we're going to take a quick break. Study and play. Come together on a Windows 11 PC. And for a limited time, college students get the best of both worlds.

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Let's head to Neal's numbers, our Thursday segment, where I present three stats from the week's news that will transform your world from black and white into color. The first number is more a collection of numbers that show all the ways Taylor Swift's earth-shattering visit to Arrowhead Stadium to watch her rumored boyfriend Travis Kelsey had a major business impact this week. Here are just a few examples.

Her appearance got a lot more women to watch football. The Chiefs Bears game on CBS had a 63% increase in female viewers age 18 to 49 than the previous week. In terms of apparel, Kelsey's jersey sales jumped 400% after Sunday's game, putting him in the top five jerseys across the league. the podcast that Travis hosts with his brother jumped to the top of Apple's charts, presumably just ahead of ours. And Kelsey's Instagram followers popped 276% after the game. Just saying that out loud makes you realize that dating Taylor Swift is pretty good for Kelsey's brand and the NFL. And the league is probably hoping he keeps this going through the end of the season.

So many people who don't care about football will tune into Chief's games just to see if Taylor Swift is there. Yeah, we're going to keep talking about this. This is not just a one-time thing. I also think that Travis and Jason, his brother, have done really well in capitalizing on it, where Jason said, like, how does it feel that Taylor put you on the map? That's been the joke going around. And then Travis has been very respectful at all saying, like, listen, I'm not going to go too deep into it, but obviously it was awesome for her to be there.

You know what I think could transform these broadcasts is if they can use Taylor Swift music during the production. So if they were going to go to commercial and use Taylor Swift music, that would get people going absolutely crazy. and Fox when they knew or I think it was sorry it was Fox when they knew that Taylor Swift was going to perform

or going to be at the Chiefs game they reached out to Taylor Swift's people and asked if they could use the music and Swift's people said no but I think going forward they're going to continue asking it can you imagine if a Taylor Swift song came as they were going to break

and they showed her on the broadcast if it saves us from the announcer puns then I'm like to do. I know they're so bad okay let's pivot from superstars to real stars because the next number is about a space record being broken

U.S. astronaut Frank Rubio returned to Earth yesterday after spending 3751 days in space, making it the longest space flight in history for an American. But he wasn't in space trying to bake a record. Rubio was supposed to return home in March, but a micrometeorite pierced a hole in the Russian-made ship that was supposed to take him back to Earth, so he had to wait for another six months at the International Space Station before they sent a backup to nab him. Can you imagine breaking down on the side of a road and waiting six months for AAA to go home get you? And if the side of the road was space, and if this was your first trip to space ever, over a year is a long time to be in one location, never mind one where you can't even shower.

Yeah, I miss me with that. I do not want to be stuck in space for that long. Some of the other stats do, they logged 157 million miles while they're up there and circled the world nearly 6,000 times. That's mind-boggling. It was funny to hear the interview with Rubio when he came back. He's like, all I want to do is just sit in my backyard and be quiet because there's this constant hum of machines that are going on in the International Space Station. So you don't get silence ever. So I can just imagine him sipping a little beer in his backyard. Sounds amazing. Listening to the crickets at night. Good for you.

Okay. This final stat is truly bizarre and you probably won't hear it anywhere else but the Morning Brew Daily show. It's about the world's best performing currency this quarter. and you'll never guess where it is. Afghanistan. Yes, Afghanistan, run with an iron fist by the Taliban for the last two years, cut off from the global financial system due to sanctions, and with much of its population living in extreme poverty,

had the best-performing currency in Q3, with Afghani up about 9% according to Bloomberg. It's not because the Taliban have suddenly unlocked the key to economic growth. The Afghani has risen mainly due to billions of dollars in foreign aid coming into the country via planes to help the two-thirds of households who struggle to afford basic items. Plus, Afghanistan also has seen a slight uptick in trade with its Asian neighbors. It's got an estimated $3 trillion in natural resources, including lithium, which everyone wants,

and other countries are eyeing mining investments there. Yeah, that is a crazy piece of trivia that no one would think about that. But yeah, it, do not equate their currency being up to the economic situation, being good there because, yeah, unemployment's still rampant. Yeah, you mentioned that two-thirds of households are still struggling. So even though we see that number, it's not necessarily a good thing overall. And women are just barred from public life there. Right. Yeah.

Still, you said Iron Fist and that's definitely true. All right, Neil, let's move on. We talk a lot about trends on the show, but we don't often talk about what happens when a trend goes fully mainstream. Luckily, we have a perfect example to break down today thanks to Panera Bread rolling out a special Roman Empire menu in reference, of course, to the TikTok trend

where women ask their husbands or boyfriends how often they think about the Roman Empire. Now, the actual items on the menu have pretty much always been on Panera's menu, stuff like macaroni and cheese, cinnamon crunch bagels, and of course a Caesar salad. But Neil, I want to use Panera's maybe heavy-handed attempt at riding the coattails of an internet trend to talk about how this is becoming increasingly common in the restaurant industry. In July, Popeye sold a girl dinner themed menu, which consisted of a variety of size that you can make into a meal.

And of course, we had the grimace shake trend for McDonald's, which involved making these weird, eerie videos featuring the purple milkshake. Neil, the Panera example is definitely a bit eye-rolling, in my opinion, but we've entered an age in which internet culture is culture, so I can definitely see where they are coming from. Yeah, this is, to borrow another word from corporate jargon, low-hanging fruit. They're not developing any new products from this. They're just putting together existing things in new ways that will get people talking,

will generate buzz. So, to me, it makes a lot of sense as a marketing play. There's also, you didn't mention, but Heinz is doing this new sauce, or not even some new sauce, we'll talk about that, but it's rolling out a sauce that's calling ketchup and seemingly ranch, which is an allusion to what Taylor Swift allegedly ate at the chief scheme. Some internet poster said she was eating sauce that was seemingly ranch. So immediately, Heinz was like, okay, let's roll out this seemingly ranch sauce. Little do people know that it already has a cranched sauce, which this is. This is. Catch up and ranch.

Catch up and ranch. So basically what it's doing is just putting a new package on its existing sauce. So again, this all speaks to ways that corporations or fast food places are already making stuff. So their marketing teams are like, okay, how can we repackage them in ways that will vibe with the culture? Yeah. So I talked about the grimace shake trend. And even though I slid it in with the Panera menu, I do think it's a different approach to internet trends. One, Grimmis rolled out the McDonald's rolled out the Grimmish shake.

And then an internet trend emerged from it versus Panera bread is reacting to an existing internet trend. And by the time they've reacted to it, we've already moved on from it. So I do think there's a subtle difference between having your food actually created an internet trend versus jumping on a trend. I think the former is the way to do it. The latter makes you seem a little like, OK, boomer, like out of touch. We've stopped talking about the Roman Empire a week ago. That's last week's news. So I would not actually recommend brands do what Panera is doing.

instead try to, I mean... Oh, we're talking about it. I know. Why not? What's the harm? And I'm sure there are a lot of people listening to this podcast, and for the past five minutes have been like, none of this is English to me. I don't know anything, what's going on. I'm not online. Whatever Panera is doing, I don't care.

Like, this doesn't pertain to me. But I do want to point out that TikTok and social media does drive a lot of food trends. It's really powerful. So we do have to talk about it because it may seem cringy and, you know, these viral memes, live online with just younger people who are terminally online. But it does filter out to the real world, and people do make decisions in real life

based on what they see off of TikTok. It's a big thing. I know. And remember in 2020, Duncan partnered with TikTok star Charlie Demalio. That totally worked because when that promotion launched, they rolled out a drink called the Charlie. Duncan hit its all-time record for daily active app users. So again, you might roll your eyes, but you're right.

It does drive actual results. Yeah, it's crazy. Okay, I'd like to begin the final story by quoting a Robert Frost poem. Two roads diverged in a wood, and I took neither because too many influencers came and they had to shut them down. Yep, just like you remember in middle school. So ahead of peak fall foliage season, the town of Pompfrit, Vermont, is closing a section of a road that has been flooded with photographers and influencers, trying to snag a pick of Sleepy Hollow Farm, the most photographed spot in Vermont each fall because of its big barn. It's old farmhouse, the trees bursting with color, and the perfect light.

When you think New England fall foliage, you envision this place. I'm looking at it right now on our screen. It is just absolutely stunning. But as word got out on the internet about this place, it got love to death. In recent years, visitors have bombarded this small section of the road, blocking emergency vehicles from getting where they need to go and stomping around people's private property. It got to be too much for locals to take, so they went ahead and blocked the road leading

to Sleepy Hollow Farm. until mid-December, mid-October for any non-resident. Toby, this kind of sucks, but it is a familiar story of too much social media-driven tourism causing backlash among local residents. Yeah, I mean, we're talking about Vermont here, but this is happening everywhere around the world. I mean, in Venice, they say the main islands now have more tourist beds than actual beds for local residents.

And then if we want to talk about a more serious example of this is what is happening for fall for is. That's what Maui is and was dealing with post-wildfire. They need tourists to support their economy, but it just feels wrong to welcome them back into community still in recovery. So again, this relationship, the symbiotic relationship between tourists and the actual destination is something that's only going to grow more and more pertinent as tourists. More people travel and the internet. The internet showing places. I know, because we were talking about a place that we like in New York City that has a particularly good menu item.

And we were like, if we post, not that we're big influencers, or anything, but who knows what could happen if you post something and it goes viral and a lot of people see it. And we were thinking, like, we don't want to post this on the internet because there's going to be a huge line out the door and there's going to be, I'm not trying to guts us up at all. I'm just saying, if you post something online, say somebody who's more famous than we are, posted something about this particular place that we like online, then it could overwhelm it and then we lose our little corner of paradise. Neal's a gatekeeper. So, so I don't know, there are pros and cons to posting on social media and it leads to places like,

this, which are absolutely gorgeous, you know, being closed to visitors. But I like one guy who said they interviewed one of these guys, one of the local guys, and he's like, honestly, it's been photographed so many times. I don't see the point anyway. Because I'll just go to Google and see it. So that's, you know, if I take a picture of it, I'll, I'm the kind of guy that I'll just go to Google images and be like, all right, I don't need to take a picture. I can see it right here. It's gorgeous. You are that kind of guy. I like that. Okay, we've got to wrap it up there. Happy Friday Eve. If you've got something to get off your chest, give us a out at MorningBrewdaily at MorningBrew.com.

Let's roll the credits. Emily Milliron is our editor and producer. Nala Nduga and Raymond Loo are associate producers. Eugenua Ogu is our technical director. Billy Minino is on audio. Hair and makeup got stuck in space. Devin Emery is our chief content officer and our show is a production of Morning Brew. Great Saturday, Neil. Let's run it back tomorrow. Spring just slid into your DMs.

Grab that boho look for that rooftop dinner, those sandals that can keep up with you, and hang some string lights to give your patio a glow up. Springs Calling. Ross, work your magic.