Motley Fool Hidden Gems Investing - Twitter's New Owner

Episode Date: April 26, 2022

Now that Elon Musk has a deal in place to take Twitter private, we have a few questions. (0:20) Bill Mann discusses: - The mediocre performance (to date) of Twitter's business - Whether Tesla shareholders should be nervous about Musk running another company - How other ad-driven businesses like Pinterest and Facebook are feeling - The latest results, and near-term future, for bellwether stock UPS (14:00) Inflation is rising, but that's probably not a good enough reason by itself to expect a raise at work. Alison Southwick and Robert Brokamp talk with Kara Chambers, head of People Development at The Motley Fool, for insights and suggestions. Stocks discussed: TWTR, DRI, TSLA, FB, PINS, UPS Want even more stock ideas? Get a copy of our FREE investing starter kit - http://fool.com/starterkit Host: Chris Hill Guests: Bill Mann, Alison Southwick, Robert Brokamp, Kara Chambers Producer: Ricky Mulvey Engineers: Dan Boyd, Rick Engdahl Learn more about your ad choices. Visit megaphone.fm/adchoices

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Because we have your number. We've got some questions about Elon Musk buying Twitter, and we've got suggestions for getting a raise in your salary. Motley Fool Money starts now. I'm Chris Hill, joined by Motley Fool Senior Analyst Bill Mann. Thanks for being here. What do you want to talk about, Chris? There's a little something in the news. Earnings from UPS. And we'll get to that shortly. But But first, we've got to talk about what everybody in the financial media is talking about, which is … We've got to talk about Musk, don't we?

We absolutely do. We absolutely do. Even though I was thinking earlier today, when was the last time there was this much oxygen spent on a company that's being taken private? And I think maybe it was when Warren Buffett and 3G Capital got together to take Heinz off the public markets. Yeah. Similar consumer profile, I guess. They're taking over big ketchup. In this case, they're taking over Big Tweet, I guess. Big Tweet, yes. There are a few things to get to here. I'm going to start on Twitter. Josh Brown, the CEO of Ritholtz Wealth, who does not tweet often, but tweeted on Monday the following. Twitter does $3.5 billion a year in revenue, a business roughly the size

of the Olive Garden. You have to admit that this is hilarious. He makes a good point because there are a few ways to look at Twitter. One is its influence as a media platform. Another way to look at Twitter is a way we look at businesses all the time. What does this business generate in revenue every year? If the news today were Elon Musk is buying the Olive Garden from Darden restaurants, we'd be having a different conversation. We'd still be talking about it though, but that would be an entirely different thing. Twitter, it's not a good company. It's not a good company. They have yet to find what it is that they want to be as a business. It is an incredibly powerful platform. The only other business that

I can think of that's really like this, and this is going to sound weird, is the Princeton Review, which was not that great of a business. But if you wanted to pass a test anywhere in the world, world, you needed them. I'm glad this company is being taken private. It really, really needs to be out of the hands of Wall Street. Great point, and one that I think we've probably talked about in the past in ways that didn't involve Elon Musk at all, but just like, does this thing need to be out of the glare of the public markets? Elon has said he wants to do things like, in terms of the changes to the platform, he wants to remove bots and limit content moderation and enable long-form tweets and an edit button and all this

sort of thing. But to your point about the underlying business, when the news came out that he was a major shareholder, that made sense to me. I looked at that and I thought, okay, I get why he's doing that. I'm not entirely sure why he wants to buy the entire business, because as you said, there's nothing in the considerable track record of this public company to suggest this is a great and growing business. It's also, and this seems bizarre talking about $44 billion, the amount of money that Elon Musk is putting into this is pocket change for him. Now, I happen to agree that taking the company private in its entirety is a better move. And we could talk about Elon Musk a bunch of different ways, but we can just simply

talk about him as a rich guy and what his plans seem to be, and that is to align Twitter's business with the fact that it's a public trust. I mean, you could call it a passion project, if you will. I don't know, Chris, I hope that I'm not being too optimistic about this, because I happen to think the fact that Twitter is being removed from the public markets is a really good thing, and that someone who really doesn't need to worry so much about whether it's hit its cash flow numbers for three months or a year, I tend to think that's a good thing, simply because of Twitter's role as the virtual public square in our society.

I agree with that. Since Olive Garden is not available as the public square. No, but it is tastier. If you're a Tesla shareholder, you are watching this and maybe you're not exactly thrilled. Shares of Twitter down about 9% today on this news. Tesla down 9% today. What should be the level of concern for those shareholders? Because there are only so many hours in a day, and If Elon Musk decides he wants to be the CEO and a very active CEO of Twitter, by definition, that takes time away from Tesla. It is funny that Twitter has gone from being under the control of one multitasker to another. Jack Dorsey only recently stepped

down as the CEO and Chairman of Twitter because he was also the CEO and Chairman of what was then Square and is now Block. I don't know if you've noticed, but it's not a great day in the market all the way around. I don't know how much you can assign today's Tesla action as being people are worried about the amount of attention that Elon Musk has. He is unique in this way. I think it's fair to say that he has done an okay job being as involved as he is in SpaceX and Tesla and the Boring Company. This is another piece of the pie. I don't know how much time he's actually going to spend on it. I mean, obviously, his bread is buttered primarily at Tesla, so I would not worry so much about him

taking his eye off of that ball. Even though Twitter hasn't rewarded shareholders in a meaningful way over the past decade. Way to undersell that. Look, it's an advertising business, and it competes against the likes of Instagram, the Trade Desk, probably on some level. There are other businesses that are watching this very closely as well. If you are competing with Twitter for ad dollars, are you happy about what's happening? Are you nervous? Is it neutral? Because I could honestly be talked into anything at this point. Same, actually. Next topic. No, I'm just kidding. Yeah, it's actually the same. I mean, so Jack Dorsey, again, kind of came out and he said that they've been very dependent on

the advertising model. So, you get the feeling. In fact, you don't even get the feeling. You have to know that Jack Dorsey and Elon Musk have had lots of conversations about what this business could be. And it sounds to me like they don't want to depend on advertising for their revenues or for their structure as much anymore. And that's something that they feel like they'll be able to make those changes more easily as a private company. I'm really not sure what the impact would be on other advertisers. I do think that Twitter has horribly underutilized the data that it has available to it. And I think what we're going to find is that you're going to have much more value extracted from Twitter that way. I don't know if that's good news or bad news,

but I think that that's the case. I think if Twitter gets out of the advertising business, I think if you're Pinterest or Facebook, I think you're happy about that. Let's move on to UPS, because as you said, not a great day for the market. Maybe if it were a good day or even a neutral day, shares of UPS would be moving higher. Just in terms of the underlying business. First quarter results, profits and revenue came in better than expected. The overall shipment volume was down for UPS, which is to me, among other things, an example of the pricing power that this business has. We can get into the guidance if you want, but just on the surface, what caught your attention from UPS? What really caught my attention from UPS

is that they pulled out every stop that they could to have a good quarter. The quarter was fine. It was $3.05 a share in earnings for the period, which was higher. But ultimately, there's only so much pricing power can get you. The fact that volumes were down and they did not really have great things to say about upcoming period as far as they can predict. News flash, they can't predict anything, but they do try to. As a bellwether company, and I think that this is a company that can be viewed as a canary in the coal mine for the economy in the U.S., success. It was not a great quarter. It wasn't a terrible quarter. But the fact that volumes are down to me is meaningful. What should be the expectation? I don't

want to go too far in the future, but just in terms of the rest of the year. They reaffirmed their full-year guidance. They seem to indicate like, look, costs are going to go up, but think that's going to improve late in the year. Is this a situation where if you're looking at UPS as a business, does the increase in shipment volume have to go up three months from now? If we're talking about overall volume is down yet again, do we see this really impacting the business in a much bigger way. It does bear stressing that UPS's share price has more than doubled since the beginning of COVID. I don't want to extrapolate too much. This is obviously a COVID beneficiary. In some ways, their short-term will still be linked to

the amount of time we are spending in our houses as opposed to going out and shopping and doing other things. UPS is one of those companies, and there are a few, Zoom is one, where a lot of habits that did not exist or were lesser before COVID, they're not going back. So the fact is that UPS doesn't know what the next year is going to bring. UPS's quarter was actually fine. It was good. But they are going to be beaten along as a macroeconomic beast for the upcoming future. One silver lining for UPS, I guess, is when you think about an environment where costs are rising and businesses across the board are looking at the money they are spending. It probably helps a business like UPS that they're not planning to spend a dime on updating their brand because

they've just, it's the same brown trucks and it's like, no, we're good. We're sticking with this. We're not doing a refresh of any kind. No, they aren't. And it's really important to note, Whenever I see an earnings report, it's easy to go to top line, but I want to view where they are earning their money. They actually raise their prices the most on small businesses. Obviously, there's some marketing spend that goes into attracting smaller businesses. You're right, they're brown. Brown's not changing at all. Their margins went up. I think, again, you've got to wonder in a rising rate environment, in an environment in which we've got inflation, what the impact is going to be on UPS's core customers, particularly where they've been

getting their growth from. Bill Mann, always great talking to you. Thanks for being here. Thanks, Chris. Twitter has been talked about so much that it's easy to forget just one week ago, Netflix was in the spotlight. On tomorrow's show, we'll have a bull versus bear debate on the streaming giant. But up next, let's talk about you. Inflation on the rise in and of itself is probably not a good enough reason to expect a raise at work. So how should you ask for a salary bump? With more, here's Robert Brokamp and Alison Southwick. You've probably seen the headlines in the Wall Street Journal, Economist, New York Times,

or points elsewhere. Something along the lines of, now is the perfect time to ask for a raise. Why? That's because unemployment claims in the U.S. are at their lowest level in half a century. This side of a labor market means Americans have a high level of job security and the upper hand. According to a survey by FlexJobs, almost half of employees who asked for a raise last year received one. How can you improve your chances of getting a raise? Joining us is Kara Chambers. She's the head of people development at The Motley Fool, and she spends a lot of her time pondering compensation. Kara, thanks for joining us. Kara Chambers Hi, thanks for having me.

Here at The Motley Fool, we famously invented Ask for a Raise Day. I can say famously because Inc. actually wrote about it. It was a day, or really a week, we set aside and encouraged all employees to ask for a raise. We even gave them a playbook for how to build their case and help increase their chances of success. And Kara, you made ask for a raise day happen. So I feel you're uniquely qualified to talk to us today. And one of the reasons we did ask for a raise day, if I'm remembering correctly, was to encourage employees to have conversations about their compensation, to normalize it a bit. So Kara, why is it so hard to talk about compensation? Well, because it's so taboo and so personal. So ask for a day kind of

forced us all to have that discomfort conversation. And we learned a lot. Then a lot of us kind of mentally, even though this isn't true, associate that number with just our worth. Right. And so it feels very personal. It takes some boldness and some vulnerability. I can remember people coming to me on ask a raise day and saying things like, I never want to sound ungrateful. I love my job. Right. And so pushing them to have that conversation was good because it just helped open up a door and, and have a conversation. We're all just too uncomfortable to have. And the managers also, I, not a lot of them really liked to ask for raise day. And I said, Hey, this is going to happen when your best person is ready to leave. Um, you're going to

have to deal with it. Why not kind of get some practice now when the stakes are lower. So we, we know it's uncomfortable. It's uncomfortable on both sides, but it happens. And usually it only happens when things are really at a head. So normalizing it and making it more comfortable is better for everybody. All right. Well, let's just get into it. Kara, what is the first step if you want to ask for a raise? First steps about asking for a raise, we talk about soul searching, right? We just talked about the idea that unconsciously we all believe it's a number tied to our value as a person, but that's not really true. So thinking about why you want to raise right now, and is it a step that you're taking to

get into a new job? Are you looking to actually leave your role and look for something else? Would more money make you happier? Is it the job itself? Is it the role? Or are you really seeing data out there in the world that is saying, I believe I'm underpaid? And so the first step is to say, is it really a negotiation where you're ready to walk? Or is it just a conversation you just want to push yourself to have? I think that's the first step you would take. Is this the point when you want to be thinking about what am I going to do if I don't get the raise? Yes, that is kind of negotiation 101, right? To think about what you're putting on the table. Even if you're feeling uncomfortable, it could be okay that you're just want to have this conversation

with your boss or whoever the decision maker is. You want to just learn a little bit more about what the expectations are for you. Getting feedback is also really difficult. So it could be learning, it could be asking, but it also could be you feel ready to make a move right now. So I think making that decision ahead of time is going to help you think about what frame of mind you want to be in when you go into that conversation. All right. So after you've looked internally and you know why you're entering into this negotiation, what do you do next? Do some homework. There is a trend toward greater salary transparency out there. So you should be able to find a little bit more. The other thing is external factors are one piece, but the other

one is internal. Depending on the size and culture of your company, who is making the decisions? Do you have a very strict salary ladder? Can you only get a raise if you have a title? How is your company doing? How is your pay reflected out in the world? Who makes the decisions? Is it your boss? Are they limited to a budget or are they able to pull some strings? It's going to be different for everybody, but I think knowing who your stakeholders are, knowing who the decision makers are, will get you started down that path. And again, thinking about what your role might pay out in the world, you can use a couple of salary surveys. They're usually a little imperfect, the ones that are publicly available,

but they give you a start. So I would say look externally, but think about the culture that you're in and the calculus that goes into your pay. It is never the value of your worth as a human to your company. It is budget, it is politics, it is all the fun things. And so that's where you would start. Now, well, your reason for wanting a raise might be because of inflation. That likely isn't going to be a compelling argument for your employer. I mean, yes, because of inflation, you'd need at least an 8.5% raise annually to stay even. But you're probably going to need a more compelling case than that. Absolutely. Companies are also feeling the pinch of inflation as well. So that's why we do want

you to look at the whole environment that you're in. So some companies are feeling higher costs as well. So they're also feeling that. So generally speaking, when I've coached people through asking for raises, I do try to tell everyone to stay away from talking about your personal situation. You really want to drive it more about the value that you're creating for the business and the value of your role and your skills and not about your personal situation. Because everyone's personal situation is different and you can't expect a manager or someone in a role like mine to be making decisions on everyone's personal situation. I think it's also important to know that inflation is a backward-looking number. It's what happened in the past to prices.

And if you're a company, you're not looking at what happened to inflation in the past, you're trying to project your revenue and your costs forward. That is a much bigger determinant of whether the company can afford to give you a raise, not what happened to prices in the past. All right. So, you talk about how when you're preparing your case to get a raise, you want to talk about where you've added value to your business. And advice we also gave to fools was that they should also look to make a case for where they are looking to develop as well and go in the future, right? Correct. I mean, that's one possible outcome is you are going to have this conversation and you'll hear, we only give raises to people who do this. And you'll

learn what this is. And again, it could be up to now that someone hasn't done a great job articulating that to you. So thinking about how you're adding value, what progress you've made over the past year, those are good things to talk about. Last year when I was hired into this job, I was doing this, this, and this. Now I have also added these skills and I'm able to do this, this, and this. So these are ways to think about progress you're making in your career. And I think that that's really helpful to think about how you have developed your skills and added value as a contributor. As you know, Kara, we have a coaching program here at The Motley Fool and I'm a coach. So I have six coachees. And one thing that I do that I've told my coachees to do or suggested to

them, is that every year I create a new document. It's basically everything I've accomplished in that year. It could be some way I've helped the business, some way I've helped a colleague, nice things that you all say when you rate our podcast, emails we get, any way that I can show at some point in my conversation, this is one way that I have added value to the company. That way, you catalog the actual evidence so that when you're in that conversation, you have the examples right there to say, look what I've done over the past year. And I think I deserve a little bit more money. That's so great, bro. You're such a great coach. That's amazing. You know what? It's true. I think we have a coaching program and a lot of people

think that their managers are doing this, but every manager out in the world is not perfect at their job, right? They're not keeping an accurate catalog exactly of your accomplishments. So doing some of that work for them wins it over quite a bit. So that's a great idea. You touched on in the past about how important it is to understand the state of the business and where you fit into it. Can you talk more about how you can work that into making your case? Absolutely. The more understanding you are of the decision-making framework your manager is in and whoever is, what criteria are they using to decide what's added value? Now that you've got that list that Bro articulated, you want to be listening in that conversation about what's most important

to the overall business strategy right now. Generally, we talk about, Are you close to the cash register? Do you have a unique combination of skills, right? Those are also really helpful things to talk about is what does the business need from you and are you delivering in that? Is your business thriving right now, the one you're in, or is it struggling as well? That might make it more difficult, but having that and understanding it will help you walk in with some more confidence. If someone came to me and said, I am a welder and I'm also a brain surgeon, but we are paying you for your welder job at The Motley Fool right now. If you are saying, but I'm also a brain surgeon, but you're not doing that and that's not part of

your company's business, it's hard to make the case for your company to pay you that for a higher paying job. So you want to think about how your skills apply to the business itself, regardless of how talented you are, making sure those talents are being leveraged at your company would help make the case. So regardless of the outcome, there's, and we talked about this, perhaps a bigger existential question here. Will more money really make you happier? The science says maybe not. A 2010 study from Princeton found that having a higher income increases happiness, but only up to about $75,000 a year. After that, more money doesn't make you much happier. What's been your experience as the head of people development who has probably seen

people receive thousands of raises here at The Motley Fool? Has money made people noticeably happier or does something else make them happier, like a role change or having a different manager? I think happiness is an interesting role in there. I think that study is right about kind of a minimum number and where you are for your financial comfort, which is why you're listening to this podcast in the first place, the stress of struggling to make ends meet absolutely will take away a lot of happiness from you. At a certain point, it absolutely does start to fade, right? As you get more financially comfortable, you're looking for other things in life. And financially comfortable is going to mean something different to everyone. So

solving for some of that first, and then you're right, more money doesn't add more. You want to think about autonomy and flexibility and contribution to the world, right? Are you making a difference? The people you work with, then some other factors like your commute, the type of work you're doing, all those things come into play. And so I love the phrase, there's a book called Designing Your Work Life. And they use this question that I love. It's called, what role do you want work to play in your life right now?

Right? Is it there just to pay the bills? Then you're really going for the highest paying possible job you can get. is it there for other reasons for you then then that's that's kind of for you to figure out everyone's formula is slightly different and it will change depending on where you are in your life but that the other piece is that is that sense of unfairness too right are you paying we haven't addressed this but do you feel underpaid compared to your peers in some way that's also something that will inhibit your happiness right if you feel like your peers are

getting rewarded more than you are absolutely but all things being equal you have to just figure that part out about what role you want work to play in your life and where that financial comfort is for you. You mentioned it earlier, but one of the biggest trends in the workplace right now, right up there with the great resignation and working from home, is increased pay transparency. This could include sharing the salary along with a job listing, disclosing the average salary for various roles at a company, or even going so far as to share what every individual employee is making at a company. So advocates of wage transparency say it helps fight pay inequality. Everyone else is bemused or terrified. So what's your take, Kara?

I like it. I think it has some healthy conversations. I think when I see it out there in jobs that are extremely formulaic and they're exactly the same, it works really well. The minute you move into a more strategic type of job, it becomes an art and it becomes debatable and it's a lot fuzzier. And so what can happen is you can say this director of something job pays this. I think I should do that. Some conversation is going to say, well, you're not a director because this, and they'll tell you something. Maybe you don't have enough experience. You don't have enough direct reports or, or something, but in a lot of cases, it's a little fuzzy. And so that's where it doesn't, it seems really clean. Like it should be obvious. Everyone

is paid exactly transparently. I would love that. It would make my job a lot easier, but most jobs are, are creative and they're complicated and they have all these variables. And so I think using it as a guideline, knowing if you're way off and it's, it's a nice, healthy, neutral way to say, I've seen jobs posted and they're paid at this. I'm paid at this. It's great for those conversations. It's great for what I've learned in the recruiting world is that calibration at a time, what type of candidate do we need for this job, right? That calibration is starting to happen a lot sooner, which is really nice. As you have to make a decision about what you're going to pay a job before you post it, that calibration becomes a lot clearer. So your offers are probably becoming

more fair and more competitive, which I think is a great development. All right, Kara, before you go, what's your parting advice when it comes to increasing your chances of landing a raise? I think your most likely answer might be not yet. Um, it's just a great answer you can get. I mean, your ideal answer is yes, absolutely. We should pay you more, but a conversation that you have with your boss or wherever the decision maker is that says, I would love to give you a raise, but I can't because these things need to happen. Now, you know, you have much more information. You can move forward. So going into this with curiosity instead of don't wait until you're

angry, right? Don't wait until you're feeling really resentful. You found out that so-and-so makes more than you do, having the conversation now and getting your not yet answer is actually way better than waiting until you're just fuming and complaining to your friends at happy hour about it. So I would say walk in with curiosity and humility. It gives you a great building block, right? It gets people thinking about you. As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. I'm Chris Hill. Thanks for listening. We'll see you tomorrow.