Motley Fool Money - A Force Bigger Than Star Wars

Episode Date: February 12, 2016

Disney slips on concerns over ESPN. Pepsi serves up a dividend increase. Panera serves up an earnings surprise. Tesla revs up on future guidance. And TripAdvisor takes flight. Our analysts discuss those stories and share some stocks on their radar. Plus, Wharton professor Adam Grant offers up some original insight from his book, Originals: How Non-Conformists Move the World.     Learn more about your ad choices. Visit megaphone.fm/adchoices

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From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money Radio show. I'm Chris Helen, joining me in studio this week from Million Dollar Portfolio, Jason Moser, and from Motley Fool Deep Value, Ron Gross. Good to see you, as always, gentlemen. Ew. Earnings, Faluzer rolls on. Best-selling author Adam Grant is our guest this week,

and as always, we will give you an inside look at the stocks on our radar. But we begin this week in the Magic Kingdom. Shares of the Walt Disney Company falling this week after fourth quarter results, Star Wars, The Force Awakens, made every bit as much money as we all thought it would. But that was trumped by questions about cord cutting and lower revenues from ESPN. Help me understand, Jason. This wasn't just Star Wars. The theme parks were looking good.

Consumer products was looking good. Sure. This is a good quarter. It was a good quarter, and it really shines light on one of the things we like. like most about Disney's that they make their money a number of different ways. But the focus on ESPN I think absolutely makes sense. But I think your investing timeline should more or less dictate whether you see this as a threat or as a potential opportunity. And I think that the way we view it here, because we are long-term investors, we focus on three- and five-year

periods. We see this really as an opportunity. I think in the short term, it's understandably a threat. It brings more uncertainty into the model, and the market doesn't like uncertainty. But looking further out, we see ESPN still as a very valuable property that ultimately this just becomes a question of distribution. So certainly ESPN was the big theme of the call. I believe it was mentioned 37 times in the call for Disney. And you're saying something. But as we see this shift towards internet TV, and you see Netflix and HBO and Showtime, and all of these media properties offering these a la carte options. Disney will do this at some point with ESPN. I'm confident in saying that, but they're not in any hurry. They actually saw a little bit

of an uptick in ESPN subscribers this past quarter. And along with that, like you said, Star Wars made all the money. Studio entertainment operating income of 86 percent. Normally, they can be fairly lumpy from quarter to quarter in year to year. We think it's going to be a little bit more reliable here over the coming five years or so because of all of these Star Wars movies that they'll be rolling out. So I think everything's looking pretty good for Disney right now. Jason, those other investors, those non-foolish investors, we'll say, you know, ESPN, we're going to keep hearing about it for the next several quarters at least. And it's going to be a rocky road. It's likely the stock is going to trade down further unless they really

get their act together quickly. We'll probably continue to see declines. So why should I buy the stock now if I'm going to be able to get a cheaper three to six months from now? Well, can you guarantee me that you'll be able to get a cheaper three to six months from now? So that's potentially one way to sort of answer that question. And another way to answer that question is for investors who are interested in Disney, it's worth looking at it potentially as not having to buy it all at once, right? You may take the amount of money that you want to invest in the company. Buy a little bit now.

Try to add opportunistically as you can. I think that when we look at the way this company makes its money and we stretch that out over time here, shares really are at a pretty good discount right now. But your question is a very good one, and I think it's reasonable. It is at its lowest point in over a year. But to go back to something you touched on, Jason, I'm surprised that Bob Eiger, for all of his success that he and his team have had over the last decade with this company, I'm surprised that essentially shorter-term investors on Wall Street are assuming that they've got no solution.

Even though it's not here immediately, even though it might not come in the next 12 months, the lack of faith in Iger and his team is a little surprising to me. Perhaps, perhaps, but I think that Iger is really well known for that tri-effective acquisitions that he's helped really build Disney into what it is today. And none of that really revolved around ESPN. So there is maybe still a little bit of a proving ground where that's concerned. And I suspect that as time goes on, the uncertainty I think dissipates a little bit. I think Disney's still very strong business in the long run.

And those other investors I was talking about, the ones that kind of move the market on a daily basis, They're not going to give benefits of the doubt with their capital. They're going to say, you know, I'm going to sell this stock until you figure it out. Maybe I'll miss a little bit of the upside. Then show me what's going on, and then I'll come back in. And that's kind of what we see in the shorter term with the stock that's going under. A little bit of transition. Pepsi's fourth quarter profit rose 31%.

The company also raised its annual dividends, 7%. Big beverage company, Ron, but also the parent company of Frito Lay. Anything stand out to you? You know, I think this was a good quarter. It was a little confusing because revenue was down 6.8 percent, but we kind of understand that that was really as a result of that strong dollar that we're constantly talking about. Profits, if we focus on that, very solid. North American solid. Price increases leading the way, as Warren Buffett loves to say, a business that can increase prices is a strong

business. Frito-Lays sales only up 2 percent, but again, profits up five, a little bit more healthier than the revenue. They spent a lot of time on the call talking about the global economy, and the word delicate was used. And the CEO talked about sustained headwinds across most economies, and they could bleed back into the U.S. and hurt the business. So they were kind of cautiously optimistic. They kind of positioned this stock as a good defensive stock with a nice dividend yield. Things are going well, but they were kind of cautiously optimistic, and I think that led some investors to be a bit nervous. This is not a luxury item, though. I mean, we're not talking about Tiffany here.

That is true. I will buy my Fritos regardless of the economic headwinds, but some investors get a little bit nervous. Rollercoaster week for Twitter, the stock hit an all-time low after fourth quarter result showed no user growth for the first time since the company went public. But the stock bounced back on Friday to finish positive for the week. Jason, we were talking about this earlier in the week. CEO, Jack Dorsey, this is all about him and his vision. And if you are a believer in Jack Dorsey, then this is a stock to look at.

I think you hit the nail on the head there. I think that they approached this quarter with a different way of announcing earnings. They wrote a letter to shareholders that was certainly more substantial than what we've seen from them in past quarters. And I'll say, honestly, I've studied this company quite a bit. I learned more this past quarter than really I have in all other quarters combined. It was a well-written letter that really shine to light on their strategies, what matters to them.

and going forward, I think that investors need to feel good about the fact that Twitter finally has a leadership team in place with a strategy and an understanding of the platform's strengths that'll be able to take this business forward. I think it's a testament really to the fact that leadership before Jack stepped back in there really didn't know what they were doing. In hindsight, that's plainly obvious. It was a little bit more difficult to see then. But 2016 is going to be the year, I think, that really makes or breaks this story.

You have a couple of big catalysts and events coming up with the Olympics and the presidential election. And we are seeing positive advertiser response. They're growing their advertiser base now to 130,000 clients, which is up 90% year over year, and up over from 100,000 in the previous quarter. You'll look at the spending in Super Bowl over the Super Bowl, and 90% of those customers, those advertising clients that spent on TV, also spent on Twitter. So they're showing that there is value there. They will need to grow that user base. And The market analysts will continue to focus on that, but Twitter can be a very successful business, even if it doesn't grow that size of user base that Facebook does.

And this will be something that, again, I think we peg this year is really the year that tells the story of whether they're going to really perform well or have to maybe become part of something bigger. And I'd like to announce that I just surpassed 400 followers. I mean, how is it not 4,000? That's at Ron Gross 144. Come look me up. That is the reason to be on Twitter to follow the likes of Ron Gross.

And more importantly, our man behind the glass, Steve Broido, at Steve in DC. It was nearly two years ago that Panera Bread CEO, Ron Shake unveiled his plan to improve the dining experience at his restaurants. It looks like it's starting to pay off. Fourth quarter profits came in higher than expected and shares up more than 5 percent this week, Ron. I will applaud this company. They're doing a great job.

You mentioned two years ago. We spoke a lot about Panera, and we said they had a problem. But it was kind of a good problem to have. that they were having trouble taking care of the demand, getting the customers through, not making mistakes on the orders, and that was hurting the customer experience, and it was really eating into the profitability of the company. But if they could figure that out, they'd be in pretty good shape. And here we are two years later, and they've done a really nice job on Panera 2.0, their

digital service offering kiosks in the stores, converting the stores into a faster, more rapidly PACE store, adding delivery. They've done a wonderful job. They're going to turn about 100 stores into that 2.0 offering in 2016. They've already converted 410. I think it's showing up in the numbers and it will continue to show up. We go there a lot. A new one opened, what, about a year ago, I want to say. Right across the street. Yeah, right across the street and you just order online or from their kiosk, you go in. Their food is literally waiting for you on a shelf. You grab it, you go. I applaud them. I've got to say, I couldn't agree with you more there. They really, really hit on something

with that new store concept. Other stores are sort of following that lead. I think McDonald's, for example, is trying to implement that into more of their stores. It's not that you don't like maybe going up and interacting with a person, but really, it's more convenient. Sometimes it is. It's very convenient to be able to go in there, know what you want, order it, and then, you know, it's just seamless. It's very quick. There's no friction there. chances of getting the order wrong become, it seems, exponentially lower. I've not had to give one back yet from the Panera across the street. Have you, Ron?

No. They've done a great job. And not just improving operations. They're doing a good job on the financing side as well. They're going to sell 50 to 150 companies in low-performing markets. They're going to use the money from that to buy back $500 million worth of stock. So they're really getting it done on both fronts. And I got to give credit to Ron Shake because the phrase he used a couple of years ago when he was unveiling the 2.0 program was Mosh Pit. He was talking about, you know, look, it's tough inside some of our restaurants. You're ordering in one of a couple of different places. It's a fight to get your food. And I have to believe there are at least a couple of people either on the

board of directors or on his executive team who just cringed when he said that. But give him credit because he didn't sugarcoat it. He said, yeah, look, we know that it's not as great as it could be and we're working to fix it. And he executed. Really good job. Coming up, we've got the Travel industry, automotive, video gaming, and more. Stay right here. You're listening to Motley Full Money. I've got $2 in the Chew Box. Welcome back to Motley Full Money.

Chris Hill here in studio with Jason Moser and Ron Gross. Shares of TripAdvisor up this week after fourth quarter profit and revenue came in much higher than Wall Street was expecting. Jason, the short interest on this stock was somewhere around 15% earlier in the week. And this was one of those times where the shorts kind of took it on the chin. Yeah, maybe so. I think reading through the call last night and looking through the release, this is really, I'm really excited for this company in the coming years. It's because of the excellent leadership in CEO Stephen Koffer and his ability really to see sort of the long road here, not focused on making short-term decisions to try to achieve profitability or Wall

Street goals, but rather taking sort of the long view here and setting this business up for success. And when I talk about that, I mean the instant booking product that they're building out on the platform here. It's a perfect example of a decision where they knew it was going to cause some revenue headwinds in the short run. But what it does, it opens them up to a really a much bigger market opportunity in the long run, as well as improved profitability. So it's just going to take a little time to roll this out. But they've seen so many positive results that they are rolling this thing out on a global scale when really initially they were talking about going more just slowly paced U.S. than perhaps UK. So maybe taking a little bit of

a page from the book of Reed Hastings and sort of realizing that international opportunity and wanting to capitalize on it. But this is a big platform with a lot of content. They pulled an 82 million contributions in 2015 alone. They now have 320 million reviews for travelers to go consult. And as a user myself, and I know Mac back there is a big fan as well, It just really is amazing the content they have, how useful it is. And then what's even better is when you use it, you feel compelled to offer your take on things too, to be part of the solution as opposed to maybe being part of the problem, Ron. I am part of the problem in this particular case, because I find the user experience is very

difficult. If I look up a hotel and it says, you know, it's number three out of 50 hotels, it shows me the list, but it's not number one, two, three. They're never in order. What am I doing wrong? Are you looking at it on the mobile side? No, desktop. No.

So I do agree here. The desktop experience is less than optimal. I only use it on my phone now, and I find that they really nailed the mobile experience. So give that a shot when we get out of the studio here. But remember, this relationship with booking.com, I think, is going to be a big deal. It's a win-win, thanks to TripAdvisor's position in the transaction chain. It's the first place you go when you're trying to figure out where you want to go, and that works out well for both sides. Tesla Motors' fourth quarter loss was much higher than expected, but the company's guidance

for 2016 was so rosy that shares popped more than 8% on Thursday. This is the opposite of what we've been seeing this earnings season. We've seen companies put up good earnings and have tepid guidance in the stock tanks. We're just going to take it on faith that Alon Musk is going to crush it in 2016, I guess. Really, 2020, to be honest with you. And to be honest, I think that's what this is. This is you take it on faith. This is not your traditional investment, certainly not a value investment, but even just

a regular investment, you are betting on his ability to get this done. The current results almost don't mean much. We have the 11th straight quarterly loss here. Analysts were expecting a profit, but again, as you say, they shrugged that off. He's maintaining his delivery target of 80 to 90,000 vehicles this year. And they admitted some missteps with the Model X sport utility vehicle. The delays there. A lot of focus right now on the Model 3, the $35,000 electric car that will really appeal more to the masses that will be unveiled on March 31st, and deliveries are scheduled for 2017. But this is a story even past that. This is 2020 and beyond where he promises to sell Musk that is 500,000 electric cars annually by 2020.

If you believe that, I'm not even sure the stock is cheap, but certainly you've got to be a believer in that to want to own the stock. Wholefood stock has been cut in half over the past year, but shares up this week after first quarter profits and revenue. Both came in higher than expected. John Mackey co-CEO at Whole Foods is on the board of directors here at the Motley Fool. Jason, the other co-CEO CEO, Walter Robb, when he was talking after this report came out, I really liked his tone. He had a calm and a cautious optimism that made me feel better as a shareholder. Yeah, I think Walter Robb is a very good communicator. I agree with you there. He sort

sets the expectations, lays out a good ground plan, and then really just kind of tells you where they are in regard to that. My biggest concern with Whole Foods from an investor's perspective, at least, is I feel like the competition has perhaps caught up with them a little bit faster than maybe they anticipated. It seems that for the longest time, Whole Foods was certainly much more differentiated than it is now. And I think that many more stores out there today are carrying those same types of products, have gone in there and revamp the stores, to make it a better experience. And that's really what Whole Foods has been known for so long. And it's not to say that this is a bad investment idea going forward. I think

it's just something that we need to be aware of as investors. For a while, the market gave Whole Food shares a little bit of a premium because it was so differentiated and really such a great performer. They continue to perform. But again, I think the competition is going to do nothing but heat up from here. So we're seeing margins get squeezed a little bit. They're not really going to be able to exercise a lot in the way of pricing power. And again, you look at it, the numbers just tell the tail. Comps were down 1.8% versus up 4.5% last year. Top line growth was relatively modest compared to double digits last year. So you can see sort of where the traffic is going to other places. They're going to continue to work on that experience.

We're going to see those 365 by Whole Foods market stores opening up later this year. I think that'll be a great indicator as to any additional market share they can pick up there. Again, a lot of growth left. I just think the expectations probably need to be tempered. Activision Blizzard is the company behind video games like Guitar, Hero, Skylanders, and Call of Duty, which was the number one console game of 2015. And yet, Ron, that still was not enough to keep fourth quarter profits and revenue from coming in lower than expected. Stock down more than 8% on Friday. Tough holiday season for Activision. It's really their first earnings missing four or maybe

even five years. Revenue down 14%. profit down 12. Yes, there was some strong dollar weakness in there, as with everyone. But they actually saw some weakness in several game titles, which you don't like to see. Competition is tough. Disney was out there with lots of Star Wars offerings in the Toys and Game segment. Consumers shifting to mobile continues to weigh on them. We do have the humongous $5.9 billion acquisition of King Digital, the makers of Candy Crush that will close shortly, that will help their offerings in mobile, but Candy Crush actually is weakening. And so they'll have their work cut out for them as they see that shift to mobile. But, you know, the stock has

performed well over the last several years. Up next, a conversation with best-selling author, Adam Grant. Stay right here. This is Motley Fool Money. Welcome back to Motley Full Money. I'm Chris Hill. So you've got a great idea, but what's the best way to communicate it? And what can you do to improve your chances of success? Those are just a couple of the questions covered in Adam Grant's new book, Originals How Non-Conformists Move the World. Grant is the top-rated professor at the Wharton School. Earlier this week, Motley Fool's CEO, Tom Gardner, interviewed Adam Grant before a live audience

and started by asking him why he wrote the book. Well, I guess, to be honest, Tom, I've always been a conformist. I was the kid who, like, I got called to the principal's office once and I cried, even though I wasn't in trouble. And I've always followed the rules and respected my elder. and I've, I guess, become increasingly convinced that that's not the best way to move the world forward and wanted to better understand, one, how can individuals champion new ideas?

And two, how do leaders fight group think? Awesome. Let's just start with the bad news, your decision not to invest in Warby Parker. What was the thought process that went into that and why do you look at it and see mistakes in the process you took? Thanks for making me relive that. Yeah, so what happened was the first class I taught at Wharton,

Neil Blumenthal was a student in it, and he came to me one day and said, you know, I'm thinking about with three friends starting this company to sell glasses online. I was like, that's crazy. Who would ever order glasses online? And then it turned out that they didn't seem very committed. Three of the four guys did internships over the summer instead of working on the business. They all lined up full-time jobs as backup plans just in case. And the day before the company launched, they didn't have a functioning website. The whole company is a website. That's literally all it is. Right. And so I just, I thought they weren't serious enough to succeed.

And they were just named the world's most innovative company and valued it over a billion dollars. Which is why my wife handles all our investments now. But I learned a bunch of things. It turns out when you study original people who, you know, who live nonconformity, who drive creativity and change in the world, they feel a lot of the same doubts and fears that the rest of us do. They have tons of bad ideas. They're procrastinated constantly. And they hate risk.

And so it really upended my notion of what it meant to be in original. So the first section of the conversation will be a little bit about evaluating ideas, how to determine if we have a good idea, then we're going to talk a little bit about advocating them, championing them, and how to dissent in an organization as well. So how can we tell if our new ideas are good ideas or bad ideas? I mean, we in the investment world know that in order to be a great investor in the public markets, you're right really only maybe six to seven at most out of ten investments. If you're a VC, you're going to be right two or three. So there are many people that probably turned down Warby Parker. There are probably excellent investors. It's just the nature of the odds and the stats of how well you do.

So how can we tell if we have a good idea? What are the best ways to get some evaluation around our belief? Thanks for making me feel better about myself. So I think my favorite way to look at this comes from this study that a former student in mind, Justin Berg, did. He's now a professor at Stanford, and he wanted to know, how do you predict the success of new ideas? So he studied circus artists, like at Cirque de Saleh. He got them to submit videos of their own acts, really novel ones like you've never seen before.

So different ways of juggling and acrobatics and clowns, although it turns out everyone hates clowns. But he was interested in, could you predict, how successful the videos were going to be with audiences? So 13,000-plus audience members watch the videos, they rate how much they like them, they share them on social, they can also donate some of their own money to them to see if they really would pay to see the performers.

And the first group that he looks at is people judging their own acts, the artist themselves. They are awful. They're way too positive on their own performances, and they fall in love with lots of bad ideas. Then he looks at middle managers, and they are disastrous too, for the opposite reason. They're too negative. Every brand-new idea that they see, they compare it to a prototype of what's been successful in the past, and they're like, yeah, this isn't going to work. They look for all the reasons that an idea is going to fail, not why it's going to succeed.

Then there's a third group that's better than both of them, which is peers, fellow creators, circus performers judging each other's acts. Unlike the artists themselves, they've enough distance to say, you know, this is really not a good idea. But unlike the managers, they're invested in the creative process. So I think we could all do a better job seeking peer feedback. If we're managers, one of the things we can do is we can get ourselves to think more like creators. So Justin did a study where he had people judge ideas. And first he just gave them five minutes to generate ideas of their own. And that made them more open to novel possibilities because they experienced them instead of just evaluating them.

So as an investment company, it would be smart for us to encourage those who are looking for new investment ideas to evaluate as many companies as possible. You know, the idea that Mozart, as he wrote, has written so many compensations, 600 plus in order to have maybe 10 to 12, like true masterworks. Yeah, it's amazing how the people who succeed the most with original ideas are the ones who failed the most because they tried the most. Edison is such a good example of this, right? he invented a talking doll so creepy that it scared not only kids but adults too. I've had nightmares looking at pictures of this doll. And do you judge him for that? No, you celebrate him for inventing the light bulb.

He was also trying to mine iron with magnets, which didn't work very well, and he tried to create a fruit preservation technique that failed. 1,093 patents, only six or seven of them really did any good. The more ideas you consider, the more variety you get, the better your shot at coming up with something truly new. And in terms of succeeding and evaluating those ideas, it turns out at least one study that handbag buyers who are excellent at evaluating fashion succeed when they have a lot of time to look at each handbag, right? Maybe.

So a lot of it depends on how much experience you have in the domain. The more experience you have, the better intuition gets. So if you're somebody who's trying to figure out whether a handbag is counterfeit or whether it's authentic, if you have years of experience, than if you're given five seconds to make a snap judgment, you're actually more accurate than if you have 30 seconds to sit down and analyze. Because the snap judgment happens on intuition, right?

It's a gut feeling. And all intuition is is pattern recognition. So if you build up years of experience, your unconscious mind can process things a lot more quickly than your careful rational analysis. However, if you go into a domain where you have no experience, take novice handbag buyers, they are way better when they do analysis

than when they work on intuition. And so I think we have a lot of investors, like Steve Jobs was a great example. of this, who say, you know, I'm famous for succeeding based on gut feel alone. And that works out really well in the world of software, where he knows quite a bit about computers and phones and music players. Then he goes over to the segue to bet on transportation technology, and he uses the same intuition. His intuition is wildly inaccurate when it comes to transportation, and he wants to bet $63 million on a technology that's only used by mall cops.

Do you believe or do you favor, does your research favor a leader who has deep experience and therefore a high level of successful intuition, or do you favor somebody who has less domain expertise and is aware of it and relies heavily on data and testing? If you had to pick one of the two, perhaps that's a meaningless hypothetical. No, present company excluded, definitely the latter. I think that if you look at, I mean, the core job of a leader is to come up with original ideas and make them happen, right?

That's the only way that you can succeed in a competitive world is by thinking differently from everyone else. And so one of the traps of having a lot of deep expertise in one area is that you get entrenched. You get stuck in familiar assumptions, you take for granted things that need to be questioned. And it's often people with the broadest knowledge outside their domains that are the most original.

So look at fashion houses. If you look at the most innovative fashion collections that come out over a couple decades, what you see is they come from directors who have the most experience not just traveling abroad, but working abroad in countries different from their own. So if you're a leader, it's not that helpful if you're American to go take a trip to Canada, right? Although it may help the Canadian economy.

But what you want to do is you want to go and take a job assignment that rotates you to Eastern Europe or Latin America and exposes you to new cultures and norms. And that just doesn't happen cross-culturally, right? It's about rotating functions and disciplines and really getting experience outside your comfort zone. Let's say that you have now gotten the evaluation of your ideas. Your peers have evaluated your thoughts. and now it's time to start advocating them inside of an organization, and you're meeting with resistance. The first question is, do you have enough control and commitment

that it's worth a try? Can you have some influence, and do you really have some kind of investment in the organization's success? If the answers to those questions are yes, I think the best thing you can do is go to your most disagreeable peers. So most of us, when we have a new idea or a suggestion, we go to agreeable people.

They're warm, friendly, polite, and we think they're going to be our cheerleaders, and they're great at supporting us in that face-to-face conversation. But they're also afraid to rock the boat. They like harmony. And so they won't necessarily advocate for us when it comes to pitch the idea to somebody

who doesn't find it that exciting. Disagreable people, much more likely to enjoy conflict. And they will tear your idea apart. But that will be useful feedback. And then if you can get them on board, they will run through walls for you. Can you tell the story of Carmen Medina and a little bit about the angles

in addition to trying to advocate an idea when you're also a, you're in a gender minority, an ethnic, racial minority, and what her story is and how she, the unexpected twists in terms of her work in the CIA. I can't. Do you want me to do it? Yes, and because we have 15 minutes,

try and do it in nine seconds. No, we're getting through a lot of this very quickly, so thank you. Yeah, Carmen Medina was a CIA analyst who, in the early 90s, believe that intelligence agencies ought to be sharing information. and she started advocating for the use of the fax machine and then the internet to share across different agencies

and people told her she was insane. They said, look, this is dangerous for your career, don't do it. No one can trust the internet, right? The reason we use printed documents is because we can classify them and protect them. And she ended up speaking up so vocally that her career basically torpedoed and she had to look for jobs outside of the CIA.

There was only one job within that would take her. And what she learned was she, especially as a woman and a member of a minority group, she's Hispanic, a lot of people perceived her as aggressive when she spoke up with ideas that were perfectly reasonable. And the way that she was able to overcome that was she said, look, I need to find a way to earn status before I exercise power. I need people to respect me and my ideas and my sort of conventional accomplishments, and then they'll give me a little bit of license. It's called idiosyncrasy credits that, you know, yeah, okay, so you. you've really contributed a lot around here, now it's okay to deviate.

And the way she did that was she took a job where her core role was to actually protect the CIA against security leaks. So her job is to maintain safety. And she does that extremely well. And at the very bottom of a list, she puts on the priorities, you know, we should probably explore the idea of maybe the internet as something that could help protect us against security leaks. So she's able to sort of smuggle this idea inside a Trojan horse.

Eventually, she gets promoted to be deputy director of intelligence. and she greenlights the first use of the Wikipedia technology to share information across agencies ends up preventing a few terrorist attacks, not bad. So how might any of us more effectively communicate that unique idea and even thinking about our team having an idea rather than just the individual? The team is tapping out the song of what they believe needs to change,

but others can't pick up that tune because they haven't been in those group meetings or they haven't had that original idea themselves? I think the first step is to master the art of repetition. So it takes usually 10 to 20 exposures to a new idea before people are most comfortable to it, or excuse me, with it. And that's not to say you should go to your boss, like on Tuesday six minutes after your idea is shot down.

We're like, you know that idea I just mentioned? Well, here it is again. What you want to do is you get shot down on Tuesday. You come back on Friday and you say, look, I took your suggestions into account. Here's another spin on this. What do you think? And people do tend to start to warm up.

as they get more exposure to it. So now you're going to meet with your boss or somebody who has decision-making authority around your idea. You're ready to communicate. You've heard the point. You want to get in the game and increase frequency. And you're so passionate about it that you're going to advocate the things that you believe in most in the most overconfident or highly confident or highly convicted way. Why might that work or not work? And who is Rufus Criscombe?

Rufus, I found to be the most fascinating idea pitcher that I have come across. So Rufus started this parenting website called Babel, where he wanted to give people honest advice about how to raise kids. And he went to investors, and he included in his pitch, here are the three reasons you should not back my company. Now, of course, this captured attention, right? Because who does that? But he walked away with over $3 million in funding that year.

And I think a couple of things happened. One was he showed that he was self-critical, that he was balanced, and he wasn't just to Pollyanna who only saw the pros of his ideas. Two, he made it a lot harder for the investors to think of their own objections, right? Because they'd be going through their list and they're like, you know, I had two big concerns, and he just mentioned both of them. And then to feel smart, they would get into a joint problem-solving session about how do you address these issues, as opposed to saying, well, here's all the reasons your idea won't work.

So two years later, he goes to Disney to try to sell his company, and he includes a slide that says, here are the five reasons you should not buy Babel. And Disney ends up buying it for $40 million. So how inside of an organization, non-entrepreneur running their own founded enterprise, but somebody who's looking to advocate their ideas that has a real belief in them, how should they, might they present those ideas to improve their chances of success? I'd say go back to what we all learned in debate class or in critical writing, which is you're always supposed to consider counter arguments.

But we forget to do that when we're making suggestions and pitching ideas. So I was very tempted after writing originals to open the book by saying, here are the three reasons you should not read it, but did not go there. I think what we want to do is say, look, here are the reasons I'm excited about this idea. Here are the problems or concerns that I have come across that I haven't worked out fully yet. And then, you know, here's why I think the strengths outweigh the limitations. Let's talk about building alliances in the process of collaborating around ideas, around original ideas. So maybe just a sentence or two about how vegans view vegetarians.

Yeah, I like this. You would think that they would immediately ally around their ideas. You would. That's what I thought. This evidence is fascinating. It turns out that vegans hate vegetarians even more than they dislike meat eaters. Because they see them as sellouts, right? They're not purists. And this is an unfortunate fact of life that groups that have common goals are often driven apart by those shared objectives. Because the more extreme group sort of looked down their noses at the more moderate group. And Freud actually wrote about this. It was like one of the only good ideas he ever had. He called it the narcissism of small differences. And I think this is something that unfortunately makes it really hard to attract allies when we're championing a movement that's not that popular. The easiest way to get around it is to say, look, it's not so much about the goals that you have. It's about the means that you use to achieve them. So oftentimes alliances sort of spring up between groups that have very different objectives, but they have the same methods for working. So let's maybe a little bit about ambivalent relationships versus bad or negative relationships, which are more important in building.

alliances around your ideas. All right. So most people think relationships are either positive or negative, but those are two independent dimensions of a relationship. So you've got to draw the two by two of how positive is this connection and then also how negative is it. And you find there's this fourth kind of tie, which is high positive, high negative.

It's called an ambivalent relationship. They're basically frenemies, right? People who are sometimes your buddies and sometimes not that nice to you. And there's all this research suggesting that frenemies are literally unhealthy relationships than having pure enemies. If you look at the number of close relationships that people have with people they

really dislike or people they're ambivalent toward, the more ambivalent ties you have, the worse your physical health is. And this seems to be largely because when somebody's an enemy, their behavior is predictable. You know they will never be on your side. You can avoid them or minimize your interdependence with them. For enemies, you just expend a lot of emotional energy trying to manage and navigate, like, okay, is Dr. Jekyll or Mr. Hyde going to show up today. Up next, we'll give you an inside look at the stocks on our radar. This is Motley Full Money. 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. Welcome back to Motley Fool Money. I'm Chris Hill, and joining me in studio. Once again, Jason Moser and Ron Gross, time for the stocks on our radar. We'll bring in our man, Steve Broido, from the other side of the glass to hit you with a question. Jason, Moser, you're up first. What are you looking at? Sure, this is one that announced earnings on Friday. The stock finished up for the week here because of a great report. Ellie Mae, ticker is E L-L-L-I. It's one I've talked about here before. It's when we own an MDP. It's performed very well for us in a short amount of time. But they have a goal of automating this complex mortgage origination process, and they are doing a great job at

it. A lot of regulatory barriers to entry there. This is a business that's growing because as their customers continue to use their product, the switching costs grow higher, gives him a chance to exert a little pricing power, which is nice. They booked another 8,700 seats for the quarter. They now have 136,000 active-encompassed customers, 25% better than last year, and still plenty of room to grow that base for a small company here. They noted in the call that the mortgage market has moved towards a purchase dominant market, no surprise there, and that it will remain that way for the foreseeable future. So it'll be interesting to see how things shape up here in the course of 2016, but still a wonderful business, one that we

are definitely keeping close on our radar. Steve, question about Ellie Mae? If the market continues to have a rough go of it, is Ellie Mae do better or worse? It's been amazing to watch this story play out because it has been one of the more resilient names out there. It is held up in the face of a lot of volatility. And this recent earnings report really, really, the market reacted positively to it. So it's done very well in the face of a lot of volatility. I do want to say she was amazing on the Beverly Hill.

Love her. Yeah. Easy to pick a stock. Just pick a great company that's down as a result of this market. I chose MasterCard MA. Shares are down 13 percent this year. Hurt by the strong dollar, of course. This will even out over time. Growth of the Master Pass digital payment system, I think, will be big for them. They have a big runway overseas, so continued expansion there. Shares will be volatile, depending on what happens with the global economy. But this, I think, is a core stock that you can hold for years

in years to come. Steve? Have you ever had credit card debt, Ron? Yes. As a graduate student, I did have a fair amount of credit card debt, but I made sure that went away. Steve, Mastercard, Ellie Mae, one you want to add to your watch list? Mastercard sounds pretty interesting. All right. All right. Jason Mozer, Ron, gross, guys. Thanks for being here. You can check out past episodes of Motley Fool Money. Just go to our brand new podcast center. Go to podcast.fool.com. That's podcast.com. That's going to do it for this week's edition of Motley Pull Money, our engineer is Steve Broido, our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We will see you next week.