Motley Fool Money - Bridges and Digital Toll Roads

Episode Date: March 27, 2024

Merchants are going to be taking a bigger cut of credit card swipes, what does it mean for VIsa and Mastercard?  (00:21) Bill Mann and Dylan Lewis discuss: - The tragic Francis Scott Key Bridge collapse in Baltimore and how it affects the port and the companies with goods going in and out of it. - Visa and Mastercard’s $30B settlement with merchants over interchange fees.  - A curious crypto story with Nilam Resources. (12:09) Tech insider Kara Swisher joins Deidre Woollard to talk about her new best-seller “Burn Book” and how a tech CEO helped her kids use social media a little less. Companies discussed: V, MA Host: Dylan Lewis Guests: Bill Mann, Deidre Woollard, Kara Swisher Engineers: Dan Boyd Learn more about your ad choices. Visit megaphone.fm/adchoices

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Soon merchants, are going to be happier to see you pull out the plastic. Mottley Fool Money starts now. I'm Dylan Lewis, and I'm joined over the airwaves by Motley Fool Senior Analyst, Bill. Thanks for joining me. Hey, Dylan, how are you? Welcome back. Yeah, it's great to be back after taking some time off. It's great to be back with you. We haven't done a show together since my vacation, so it's nice to be back in the seat. We're going to be checking in some curious stories in crypto today. We're also going to be looking at some thoughts on the tech industry from Kara Swisher. First up, though, Bill, a bit of disruption.

in our own backyard. An absolutely tragic scene in Baltimore this week with the Francis Scott Keybridge collapsing after being struck by a cargo container, the early hours Tuesday. Bill, I've been on that bridge. I'm guessing you've been on that bridge as well. This is one that hits home for us. Yeah, many times. This is not just a local thoroughfare, but it is one of the major north-south arteries in the United States. So a very important road and port. The port of Baltimore is one of the largest transshipment points for cars coming into and out of the United States. It's also a huge coal facility for shipments coming in and out. At the moment, the Port of Baltimore completely cut off, you did start by saying tragedy,

and I do want to start by saying it's the loss of life that ultimately is the thing that we should be concerned about first and foremost. It's very, very sad what happened. It's a mirror Not more people were on that bridge, not just a miracle, but incredible, incredible work and foresight by the captain on the ship. So that has to be to be called out. But yeah, this is going to be a while before it gets cleaned up. Obviously, there's a lot of ways to get from, say, New York to the southern part of the U.S., but there are not that many ways that are better than Highway 695 for hazmat trucks. for example, the cost to commerce is going to be substantial. The hit to our infrastructure has been substantial. Yeah, Bill, I think this is one of those stories that is going to take a very long time for all of the pieces to come out, all the details to come out, and all the consequences to kind of be mapped out.

But I think one of the clearest takeaways at this point is it is going to be incredibly disruptive to the local Baltimore area and really anything that passes through it. And as you were just saying, so much activity flows through that port. Yeah, and there's a book that I read a couple years ago, and it's a great book if you're ever talking to someone at a cocktail party and you'd like to end the conversation. You'd like to end the conversation. Mention, that you've been reading the book Box by Mark Levinson, which is the history of the shipping container. And it's a fascinating book, but doesn't sound so on the surface. But when we think of ports, we tend to think of them as being interchangeable.

at this point, right? Like, hey, it's a place where a boat can pull up to the side and, you know, there's a crane that pulls things on and off. Ports now are specialized. So the port of Baltimore is specialized for the types of products that flow through that port, particularly cars, jipsum, lumber, coal, things of that nature. So while there are other ports that can take that volume, it's not just as simple as saying, okay, now you're going to Norfolk. Now you're going to, you know, now you're going to Newark. Those ports are not geared to handle that volume in the same way that Baltimore is. Well, Bill, that's all we have today. I got to go. You got to read a book. You joke that it was a good way to end the conversation. I'm just kidding. I love it when you go

deep, and I love when we get wonky. Yeah, I think it's a fascinating story. And I love the book recommendation there, Bill. One of the things I'm curious about is, as this clearly is going to disrupt supply chain and logistics. What it means for the companies that wind up flowing a lot of goods through a place like Baltimore, we have seen companies try to tap into interruption insurance in the past. Do you feel like this is something that we are suddenly going to become experts in in the way that people do on Twitter? Yeah, you know, I became a Twitter expert in shipping law. I got my master's yesterday in it. So, yes, I think that, you know, and again, usually when you talk about these things you're talking about tragedies. There were there were a huge amounts of

business interruption cases that happened after the 9-11 attacks. There were there were huge numbers of business interruption insurance claims after Hurricane Katrina. And there will be more here. Right at the top of the list is the port of Baltimore, which is a port authority, but it is, it operates under concession. So yes, there are companies out there that offer business interrupt in church. Berkshire Hathaway is one that has been known to do so. There will be claims and there will be big, but I would assume that many of the claims will be opportunities for companies to perhaps cash in a little bit. And I only say that not pejoratively because that's what's happened every single time in the past. From the supply chain and cargo world, over to the

digital toll roads. We have some updates in the credit cards. landscape, Visa and MasterCard's toll roads, about to get a little bit cheaper for merchants, Bill, the two largest credit card companies settling suit with merchants over their interchange fees, which will save about $30 billion in fees over five years for merchants. How big of a deal is this for the credit card companies? For the credit card companies, there's only a certain part that's really that big of a deal, because Visa and MasterCard don't actually get these interchange fees. These are what goes to the banks that underwark.

write the, that underwrite the cards themselves. So Visa and MasterCard, if to the, if they were the ones who were negotiating, we're actually negotiating with somebody else's money, which is a great place to be negotiating from. Now, one of the big issues is that, is that those swipe fees were somewhat unbound. One of the agreements, though, that could impact Visa and MasterCard is that it would allow the merchants to charge different prices to consumers, based, on which credit cards they use. So you might come into a situation where a merchant would say, well, there's a 2% fee if you're using a Visa or a MasterCard. There's a 1.2% fee if you are using Discover. And a lot of these fees are things that exist today, but because they are standardized,

you don't necessarily see them. So in some ways, this is much, much bigger for the merchants than it is for Visa and MasterCard. And in some ways, it's much bigger for the best. And in some ways, it's much bigger for the banks than it is Visa or MasterCard themselves. If I'm not mistaken, the only way we've really seen that in a consumer-facing way in the past has been, hey, we don't accept American Express. It's been that simple. It hasn't been the negotiated menu of this for this and that for that. It's just we're not going to accept Amex. Does it not feel like a little bit like cable television where for years we wanted unbundled pricing and now that everything's unbundled and we all have 34 different things we

have to pay for? Like, man, I wish somebody could just bundle this back up. Like, this feels like that a little bit. Like, if I pull out a Discover card, do I get a lower overall fee? If I pull out an American Express card, do I get it for free? I think we may be seeing things like that, although, again, consumers tend to love simplicity. So I'm not sure it's all that big of a deal. But anytime you have one of those friction costs, I think at the end of the day, it's going to be a benefit to consumers, the fact that it seems like it's going to be lower or at least have a bound put upon it. All right.

We're going to stick with payments for our final story in our news roundup. Payments of sorts, more of a store of value, perhaps. The world of crypto, specifically Bitcoin, has had an incredible march up 20% this month, up over 50% year-to-date. Bill, not surprising that when we see a huge surge in interest in crypto and the price of crypto, the activity of companies hitching their wagon to crypto also goes up. Not just companies. We've seen stories about how the North Koreans are suddenly very active, again, trying to hack

into some of the lower security crypto projects, and they've stolen several billion dollars from them, probably much more so by the time all is known. There was a fascinating story that came out starting about two days ago. A company that, and I'm not making this up, had a market cap of $925,027. That was it. We're not used to working in those units. No, no. And as I said earlier, please don't go out and buy this called Nilem Resources,

announced that they were starting a joint venture with a letter of intent to acquire 24,800 Bitcoin. Now, I don't know if you're that much of a math guy. Like, I had to take off my shoes so I could count high enough. But that was about 1,700 times higher than the actual market cap of Nilem resources. So I don't know how they thought they were going to do it. Yeah, where does that money come from? I mean, like, Bill, I saw this, when I saw this story, Bill, so there's the announcement, there is the very predictable share price movement for the business that is just absolutely

nuclear, goes crazy, and then we see that the CEO steps down immediately. This, to me, I know we're recording this in late March, had the feeling of someone leaking an April Fool's Day script a couple days early. Honestly. This is the kind of thing we would put out as a news story on April. April 1st. Right, exactly. Unfortunately, there was a real stock attached to it, and the former CEO had left, and basically called this a classic pump and dump. So we can use allegedly all we want to. And so when you ask where the money was going to come from, you're going to be shocked to know that

there was a JV that was announced with a country that has somewhat lacked security. laws and somewhat lacks extradition laws. And I don't know what the game was other than the stock went up about 1,500 percent yesterday. And as of this recording, is only down 95 percent today. So it's just one of those games that when I see in the market, I'm like, I understand that this was a sub one million dollar company. And at the end of the day, it was not even a rounding error in the market, but it is the kind of thing that I as someone who likes to believe that the U.S. markets have integrity, it really, really concerns me. Bill, man, appreciate your takes on crypto, shipping containers, and all things weird in the market. Thanks, Dylan. Coming up, Tech Insider Kara Swisher joins Deidre

Woolard to talk about her new bestseller, Burnbook. They discuss innovations that she's optimistic about, and how a tech CEO helped her kids use social media a little bit less. You use this phrase in the that I like and I use all the time, too, which is the math wasn't math thing. And you talk about that when looking at companies, especially, you know, before the dot-com bust. You know, we do the same kind of thing here. How does focusing on the numbers help you make sense of these companies? Because I think a lot of journalists don't do that. And you always have to know. I actually took a course, an executive accounting course at Wharton, because I needed to understand how spreadsheets worked. I don't think I did. Awesome. So that was when I was a young.

person I took the train up to Philadelphia from D.C., because they're really, at Wharton, because I thought it was really important to do that. And any opportunity I had to read about accounting because the company I was covering, AOL was a very tricky accounting company. They would hide expenses and goose revenues in ways that were kind of tricky. And so it was really important to understand. I think accounting is one of the most creative jobs in any company, if they were how to make a company look, whether they're doing well. Ultimately, a performance is what matters. But it didn't at that time because the stock would take off on just the smallest of things. And so I really wanted to understand the math. And now,

you had to have a suspension of disbelief because even if the math didn't work, if it didn't math, it didn't matter with some companies, right? Like right now, Tesla's worth 20 million times more than all the car companies put together. Is it going to be that big? I don't think so. But obviously, the market does. So that's what it's worth. You know, sometimes when people get upset, it's not worth that. I'm like, that's what it's worth. That's what people think it's, That's what people are willing to pay for it. But from a real gravity perspective, much of what was happening was, you know, puffy, to say the least. Yeah, well, there was always that all you needed was like a good PowerPoint to raise money.

And yeah, I think that's changed since then. No, because no, it went into crypto, had the same thing for a minute. Now, AI. Eddie, do you put AI, slap AI on your company and you're an AI company. So, you know, that's what happens. and then there'll be significant companies in each area, right? It doesn't mean the area's wrong. It means that everybody rushes to a trend.

And that's kind of okay. I don't care. Just buyer beware. Well, it's sort of like the more things change, the more they stay the same, right? Because, I mean, so little has changed. I mean, your descriptions of like Mark Andreessen and some of the others in the early days, you know, the tech bad boys, we still sort of are seeing some of those tech bad boys.

I mean, are we ever going to see a subcontative thing? Yeah. They're just growing up men now. They were bad boys, and now they're really deeply grievously irritating old men. That's what they are now. What about the new batch? I like a lot of the newer people more. They have a little bit, they have a little more humility.

I don't expect a lot of humility necessarily. But I think they've got more sense. Some of them are more mission-driven in a real way. Before they used to say they're going to change the world. but it was very fuzzy, but they actually wanted to change. They just wanted to make money and disrupt things, as toddlers want to do. But I think a lot of the newer ones are really interesting. I think they're more thoughtful, they're better read.

They've seen what happened. Money is not, money's important to them, obviously, but it's not the most important thing necessarily. And I do, a lot of them, like climate change check people. I'm really interested in them or people are doing health care stuff. I'm interested in them. I don't think money's their first and only thing. or the stock is that I think it's important, but it's not their only thing. Do you think, you know, there's so much talk of like the next Steve Jobs,

do you think that there can be or should be a next Steve job? I mean, it's obviously not Elon, so. No, it's not. It's never was. No, you know, people are saying Sam Waltman, but I don't know. We'll see. He's got some time to go. You know, Steve leaves a real legacy, you know, he kept having hit after hit after this guy and the company keeps having hit after hit after it. So, you know, they're a little like the Rolling Stones over there at Apple.

They keep going and eventually they'll get too old. But even Tim Cook, he's 10x the company in terms of value and real value, real revenues, real changes in the software and services. So, no, I don't think you need that. I think lots of industries have, I mean, you don't know who the head of the electrical electricity world is, but you did know Thomas Edison. So I think founders have a certain romance at a certain moment in history. But you certainly don't, again, who's the insurance guy? Who's the head of, you know, Hollywood even has sort of dissipated of who's the big moguls. I mean, I guess Bob Eiger, but is he?

You know, that kind of thing. You've covered entrepreneurs, but you're also an entrepreneur yourself. And I'm wondering what lessons could you have learned only by going through that experience yourself? I thought it was important. I think sometimes business reporters don't know how to run a business, right? Like, come on. How can you judge it? Let me tell you about Uber.

I was like, I think I'll run a business. I don't run Uber's business. but I certainly understand P&Ls. I certainly understand management. I understand fundraising and things like that. And it's on a much smaller scale. Media is a much smaller scale of everything compared to these companies. But I have a sense of what it's like to be an entrepreneur,

and I have been one, and I've created lots of different companies, not just one, half a dozen, you know, and I've moved into other directions. And so you have to sort of have a risk profile that media tends not to have had in the past. Now there's lots of new interesting things happening. But I certainly, you learn a lot by doing, right, instead of just talking about it. And so I really, you know, a P&L creates a certain kind of discipline in your mind.

And especially you understand, say, even their problems or what they're lying about. You know, oh, no, no, I know I did that, that kind of thing. Yeah, and I think also the role of partnerships, too, because you had a great business partner in Walt Mossberg. You know, you probably saw from the inside what can go wrong. in partnerships and what we never did. We never had a fight her whole time. It's incredible. Amazing. But yeah, the importance of a good partner for sure. And, you know, you, every, any time you have a business, you run into toxicity, you run into great things. You run into problems that weren't problems and then become problems. Every day I run something. Although I don't have, I don't

have staff. I can call myself staff zero. I have people who work for Vox, who then do stuff for me. And I guess I'm ultimately the boss, but I don't manage them. Well, you've got young children, but you've also got older children. I'm wondering, what's the difference between what you're probably going to tell your younger children about technology versus what you told your older children? Neither, nothing. I think I was pretty clear. You know, my older kid's other mother was the chief technology officer of the United States of America under Obama and also was an early Google executive. So there wasn't a lot we need, and I was good at technology.

So they didn't really get anything over on us, which was sad for the, them. You know, they couldn't go, oh, mom, you don't understand this. We're like, oh, yeah, we built it. You know, or I would call, sometimes when my sons were using too much Snapchat, I ran into, I introduced them to the head of the Snapchat. And I, I jokingly said to him, like, will you turn it off if I need to? And he was like, absolutely, Kara, boys don't use it too much. So I had a, I had an, of course, he didn't do that, but you know what I mean? My kids were like, what? You can, what? Like, you know, I was like, that's like using Santa or something. Yes, that's correct. I use. He, he, he wasn't.

Santa to them. They were never more thrilled when they met the founder of Snapchat, Heaven Spiegel. But no, I don't, you know, I trust my kids. I raised them to think, to have a broad outlook on a lot of things. I don't mind if they read online as long as they read, right? I don't, I think people's focus a little too much on the thing. I definitely had a talk with the boys, the older boys about porn and about the deleterious effects of that kind of stuff, you know, because I was aware of it, you know, more than probably many parents about what was going on online. And I think with my daughter, I'm going to have a long talk about how you behave online. And also not just how a woman behaves, but things that can come at you that are particular to women, especially young girls, about self-esteem.

I talked to my boys a little more about loneliness, you know what I mean? Because there's a lonely, men are suffering in many ways. Her boys are. And so, you know, I think one time my son got, when in-app purchases started on the iPhone, my son spent $2,000 on things. and I, he did not do that again, let me just say. It was on, it was on a game that he was buying himself, you know, blights or whatever the hell you buy yourself. And I literally, it was like, yanked him out of bed.

I'd kill you. And luckily, because it was so hidden, I got the charges reverse, because then, and I got some insight to it because, because I was like, look at how tricky this was. How would a nine-year-old, why are you letting a nine-year-old do this? And also, he couldn't tell what was for sale and was. And so they reversed it pretty quickly, but still, you know, I learn a lot from them. And like Reddit, my older kids, I knew Reddit was going to be where young people are watching stuff and not necessarily other places because my kids used it a lot or watching YouTube and Reddit, which I thought was interesting.

So goes both ways. So are there any companies outside of the tech space you're finding particularly interesting right now? Yeah, I'm really interested in climate change tech. I would put the middle tech thing, but it's really climate change innovation. I'm fascinated with a lot of the health care innovation, and you could say tech, but it's innovation, like, around data and AI and more and cloning and gene folding and all kinds of things. I'm super interested in the food area, the innovations in food, like, you know, urban farming, farming that's in a, you know, without what the same water goes through and build an office buildings. I have this dream of all the farms being in the cities, and then you get fresh vegetables right there. you know, it'll start off expensive, like those strawberries that are so delicious and then move down the stack.

I'm interested in, obviously, water, desalitization of waters, things like that, things that are real. And obviously politics. I spend a lot of, I live most of my time in Washington now after the pandemic. Long story, I didn't choose it, but there I hear I am. I spent a lot of time on regulatory issues, that's for sure, around tech. Last question for you. We're in this, another. tough spot for media and journalism. We've been there before. You and I have to do a few of these journalism cycles. Does this one feel different? And what's your hope for the future of journalism? It does not feel different. It's the same thing. It's like, you know, I just feel like this has been

going on for 30 years, the decline. I covered, you know, I was at the Washington Post when it was at its top thing, the top time. But then I was covering retail, which was dying, local retailers. So I watched the economic devastation when they lost all those local retailers to Walmart, actually. That's what Walmart didn't advertise it, but the local retailers did. And then when I saw Craigslistcom, their classified got hit. This was 25 years ago. And then free news meant they had to make a product that was worthwhile for people to pay for. And before they just won on news that was commodity-based, essentially.

So, you know, I think the big problem with media is that it treats it like it's not a business. It's called the news business for a reason. and it's a business. So I think they didn't get costs in line fast enough. They agonized over tech instead of jumping right in. They relied too much on tech, as if tech didn't want to be in the media business. The tech is in the media business. And they're better at it because they have more money and they have more resources and they don't care so much about accuracy. But they're in the media bin. There's no question TikTok is a media business as far as I'm concerned. And so, you know, media's got the right size itself and then try to figure out what

It can sell to people that's substantive. I've done it on a smaller level and everybody else has to. It's just we have a kind of a romantic vision of ourselves in the media that I think we need to shed. We can be important and viable at the same time. You know what I mean? Or the other options are the government pays for it like BBC, but that's never happening in this country. Or billionaires. We rely on the kindness of charitable billionaires.

That's been what we've been doing so far. Yes. but let me just tell you, I know them. Don't do it. It's a mistake. It's a mistake. Some of them will be good. Some will be bad. I'm certain their children will be good. So I don't know what to tell you about that. That's not a long-term solution to what is a secular, again, a secular problem, just like with commercial real estate. Like come up with new ideas to get, keep your audience and understand the important part you play in democracy. But, you know, this is a, like the first line of the book, it was capitalism after all. It is capital.

after all. As always, people on the program may own stocks mentioned, and The Motley Fool may have formal recommendations for or against, so don't buy us the only thing based solely on what you hear. I'm Dylan Lewis. Thanks for listening. We'll be back tomorrow.