Motley Fool Money - Hot IPOs, Big Banks, and Twilio CEO Jeff Lawson

Episode Date: January 15, 2021

JPMorgan Chase reports big earnings. Citigroup surprises. Wells Fargo disappoints. Online clothing reseller Poshmark and fintech company Affirm have big Wall Street debuts. Petco rises on its IPO. Zoom Video and Lemonade issue secondary offerings. Visa and Plaid call things off. Beyond Meat rises on a deal with Taco Bell. Intel gets a new CEO. And Ben & Jerry’s launches frozen dog treats. Motley Fool analysts Emily Flippen and Jason Moser discuss those stories and share two stocks on their radar: Penumbra and Pinterest. Plus, Motley Fool co-founder David Gardner and Motley Fool analyst Tim Beyers talk with Twilio co-founder and CEO Jeff Lawson about his new book, Ask Your Developer: How to Harness the Power of Software Developers and Win in the 21st Century. Learn more about your ad choices. Visit megaphone.fm/adchoices

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What? Oh boy. Fantastic. You guys go hard. Daredevil Born Again official podcast Tuesdays and stream Season 2 of Marvel Television's Daredevil Born Again on Disney Plus. Everybody needs money. That's why they call it money. From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money Radio show. I'm Chris Hill, joining me this week's senior analyst Emily Flippin and Jason Moser. Good to see you both.

Howdy, howdy, howdy? Morning, Chris. We've got the latest headlines from Wall Street. Twilio CEO, Jeff Lawson, is our guest this week. And as always, we've got a couple of stocks on our radar. But we begin with the big banks, City Group, Wells Fargo, and JPMorgan Chase all out with earnings reports on Friday morning. Jason, you host the financials episode of our industry-focused podcast every Monday. Am I wrong or was J.P. Morgan's fourth quarter the most impressive of this group? No, you're definitely not wrong. I would agree with that. To me, there are the big banks and then there is J.P. Morgan. It's the bank that stands out among the rest. And I think that's for a few reasons. I think when you look at the banks in total, J.P. Morgan City Group, Wells Fargo, they were

all pretty good reports, relatively speaking, right? I think J.P. Morgan is the bank that has performed the best throughout the past several years because of leadership primarily. I think that Jamie Diamond, he's been the CEO of the company since 2006. He has always taken this philosophy of making sure that they are never caught, essentially asleep at the wheel, so to speak, right? There's a section on their earnings report called Fortress Principles. And, I mean, that just goes back to the idea that they're creating a balance sheet that will let them withstand any type of economic crisis. And clearly, they've been through a couple, at least.

Wells Fargo, clearly a story of turnaround still. I think that going into this quarter, the thing that I was, watching most was sort of the status of all of the reserves that these banks have been putting aside here over the past several quarters based on the pandemic, the economic conditions that have come from what we've been going through. Going into this quarter, J.B. Morgan, for example, had set aside about $34 billion in reserves. And so during this quarter, they were actually able to release close to $3 billion of those reserves. And that's good, right? That's a sign that they believe things are getting better. I think there's a

continue to slowly but surely release those reserves. City Group, a very similar story. They're able to release one and a half billion dollars in reserves. Wells Fargo, you know, this is still a turnaround story, right? I think they're doing the right things. But Mr. Sharp there has certainly been dealt a tougher deck. Any time you get a turnaround company, it's difficult, particularly when that turnaround is related to a relatively toxic culture. And I think we could say that culture was toxic for a while. So a lot of respect for what they're doing at Wells Fargo. They've still got a little ways to go. But all in all, I think these results portend a pretty good year for these banks to come here in 2021.

On our year-in-review show a few weeks ago, Ron Gross said that 2020 was the year that the blockbuster IPO returned to Wall Street. And that trend appears to have spilled over into 2021. Because this week, we saw a bunch of splashy IPOs, including shares of Poshmark rising more than 130% on its opening day, and Petco shares up 60% on its opening day. Emily, there were other IPOs. I'm curious, based on what you've seen so far, what stands out to you? It's funny because as an investor, I really didn't have a lot of fear about frothy IPOs until this week. I made it through the entirety of 2020, but we really instilled fear into me as an investor is looking at Petco's IPO, mostly because,

I looked at their S-1 when they filed it in late 2019, and it was amazing to me what a bad company this was. Sure, I mean, not to sugarcoat it. They are a turnaround story. But even in fiscal year 2019, so pre-pandemic, this was a business that still produced more than $100 million in net losses. So not a sustainably profitable business. It was a business that's highly indebted, owned by a PE.

firm and has margins that are worse than their peers. So by no means was this a business that I was particularly excited about. And when I heard that Petco was going public, I chuckled to myself as an investor in Chewy, which is partly owned by PetSmart, thinking this is a business that is trying to capitalize on the hype and excitement around pets during the pandemic. It's smart of them to try to get some value out of the equity during this time. But I think investors are smart enough not to buy it. And when I see shares up nearly 60% on opening day, it occurred to me, maybe not all investors. Jason, another IPO we saw was a firm, which is a fintech company looking to disrupt the credit card industry. shares of a firm doubled

on its opening day. What do you make of that business? Well, I mean, fintech and sass, right? I mean, if you want to really garner some support from the market, just classify yourself as a fintech or SaaS business. I mean, hey, you put those two together, and I mean, the possibilities are limitless. I think in a firm's case, this is a company that's focused now on this sort of burgeoning, buy now, pay later market, right? It's this market that's just really starting to come into the consumer's mindset here and that you can buy something now and you can pay for it incrementally over time. And that really is what a firm is all about. They make their money a couple of different ways. From merchant customers, they earn a fee when they help them actually convert

that sale. And then from consumers, they earn a little bit of interest income on those loans, essentially when they're doing those buy now, pay later deals. And you can believe that in today's environment, that's not the most attractive line of business in that interest income, given where rates are today. But I think part of the enthusiasm behind this company, it is something that I think I noted this on Monday's market fullery. There's this notion now that Consumers are really happy to turn to technology companies they trust in order for financial services. There was a survey conducted by the Harris Pollack in 2020, where 64% of Americans would consider purchasing or applying for financial products through a technology company's

platform instead of a traditional financial services provider. And then that sentiment actually rises to 81% for Americans' age between 18 and 34 years. And that really is the target demographic for a firm's customers. So, I'm not saying the valuation makes sense, but I do understand the enthusiasm, something to keep an eye on. Their top merchant partner is Peloton, responsible for about 30 percent of the company's revenue right now. I would rather see them diversify away and not be so lever to one particular company. I suspect that'll come in time. In addition to IPOs, it was also a week of notable secondary offerings. Zoom video announced It's going to raise $1.5 billion through a secondary stock offering.

And Lemonade announced a 3 million share secondary stock offering that they are planning. Emily, you buying? Neither of these companies were particularly punished by the market for these secondary offerings. And while I have my own reservations about Lemonade, I think it's fair to say both Lemonade and Zoom investors are not investing in these businesses because they expect for them to buyback shares or, issue dividends, they're expecting growth. And so when you look at these businesses, Lemonade, unprofitable, but looking to raise money, you have to ask yourself, okay, what is the business going to do with this money? In the case of Zoom, they're profitable, but raising more than $1.5 billion, investors ask themselves, man, that's a lot of cash. What do I think Zoom is going

to do with $1.5 billion? So growth investors are definitely expecting Zoom to maybe reach out to acquire, expand their product suite. So I'm looking forward to potentially some exciting acquisitions coming from Zoom. And in the case of Lemonade, raising more than $500 million from their three million shares, additional issued, they're looking at expanding their insurance suite. So getting into things like life insurance, that's what investors in these businesses want to happen, right? They want for them to continue to expand growth, even if it is at the cost of further dilution. So neither is. is particularly bad, expect for the stocks to be under a little bit of pressure. That's understandable,

but long term, if they reinvest this money to support growth, all fine and dandy. Like you, Emily, I was struck by the fact that on the day that both of these were announced, and they were announced on the same day, shares of both companies were up. Typically, when the average company comes out and announces a secondary stock offering, we see a little bit of a sell-off. Is that more unsettling to you than what we saw from, Petco's IPO or is Petco's IPO still number one on your fear-inducing list? Petco IPO definitely wins for number one on my fear-inducing list. I think if I was an investor in businesses like Limitor Zoom, I would ask myself,

what are they going to do with that money? If you are raising equity, but you do not create value from whatever you reinvested into, and eventually does need to turn into cash value, right? Cash creation. If they're not able to do that, then it would concern me more. But I believe, especially in the case of Zoom, that they'll be able to do something really smart with that money. Coming up, a consumer goods giant unveils the product launch we never knew we wanted until right now. Details after the break. So stay right here. You're listening to Motley Fool Money.

Welcome back to Motley Full Money. Chris Hill here with Jason Moser and Emily Flippen. A year ago, one of the big stories in the financial industry was Visa's acquisition of Plaid, a fintech startup company, in a deal worth more than $5 billion. This week, Visa said the deal is off due to antitrust concerns raised by the U.S. Department of Justice. Shares of Visa down 6% this week. What do you think, Jason? Should Visa have fought Uncle Sam to push this one through? There are just so many great spaceballs jokes that came from this deal.

And I'm sorry to see it die, but I do think that with Visa, I mean, I think they saw the writing on the wall. Well, when regulators are already referring to you as a monopoly, it's going to be an uphill battle. Though it's worth noting in November that MasterCard was allowed to buy Finicity, which is a very similar style business, a fintech business. I think a lot of that has to do with fact that MasterCard is a smaller business with smaller share in the debit market. And I think that was regulators' concerns was the potential for Visa's monopoly status in the debit market. That really would have been difficult to overcome with Platt acquisition, because while Plad doesn't really have a status in the debit market today, it's a fintech company. It is working on building these types of tools that enable money to get from point A to point B more quickly and more,

more cheaply. And so I think on the flip side, this certainly opens up another opportunity for an IPO to triple on its first day of trading because I would imagine Platt eventually is going to go public. But I do understand regulators' concerns there. Now, with that said, this is really all about the evolution of how we move money around technology is changing it and bringing costs down considerably. That's nothing new. Visa and MasterCard's toll booth models, they work well today. They've worked well for a long time, but they're not undisruptible, right? Nothing really is. This is a situation where you get a couple of companies, massive, massive market capitalizations, closing it, I think, on about a combined

$1 trillion market capitalization with the two of them. They have a ton of resources and the ability to compete. So I don't think this is something that is devastating to Visa's business. It definitely has to kind of send them back to the drawing board to see how they want to pursue this idea going forward in regard to fintech and the way technology is changing the space. Shares of Beyond Meat up more than 15 percent this week on the news of an unlikely new partner, Taco Bell. That's a That's right. Taco Bell is looking to bring in vegetarian customers and says it will be testing a new menu item later this year with a Beyond Meat product. Emily, why not?

You know, Chris, I don't appreciate your sarcasm, if I'm completely honest with you. The tone of your voice, you know, the way you say Taco Bell, I feel personally a little bit attacked. I think that the people who are Taco Bell, like lifestyle enthusiasts, may also feel a little bit attacked, but this is actually a great deal for Beyond Meat. The reason is because food service sales for Beyond Meat over the past few quarters have been extremely tough and the stocks been under a lot of pressure because of the fall off from restaurant sales as a result of the pandemic. Getting deals with fast food and fast casual restaurants is critical for bringing Beyond meat back to growth. And the reason why this is so big and the reason why it's up 15%

on a simple deal with Taco Bell, which is great, by the way, is because they actually won this out over competitors. Back in 2019, Taco Bell met with a Beyond Meat competitor. That's impossible foods to potentially roll something out. And they decided not to take that partnership. And this year, going with Taco Bell, excuse me, going with Beyond Meat, says something about its product. And I look forward to both investing in Beyond Meat, seeing where that brings the company, but also consuming whatever delicious creation these two companies come up with. Taco Bell Lifestyle enthusiasts can send their angry emails to me at Radio at 4.5. Tech Giant Intel is getting its third CEO in the past three years.

Bob Swan is stepping down next month. VMware CEO Pat Gelsinger will take over at Intel. The immediate reaction from Wall Street was clear. Shares of Intel up 15% this week. VMware shares down 5%, Jason. Yeah, well, I mean, remember we were talking about J.P. Morgan and that advantage of having focused leadership for so long there in Jamie Diamond. I mean, Intel, that's kind of the opposite, right? Three CEOs in three years. That's not what you really are aiming for. I think Intel's

problems transcend leadership. I think it could be argued their troubles are a direct result of kind of wanting to have their cake and eat it too as a designer and a manufacturer. It's really slowed them down. And I think for Intel, they really need to choose. Elaine. And to that point, they kind of have. I mean, they've been transitioning away from a PC-based company more to a data-centric company. And that certainly is a very big universe, data-centric. You go a lot of different ways with that. I think that Mr. Swan, he doesn't have the tech background. That doesn't really seem ideal. So that could have been a problem. Conversely, you look at a company like Qualcomm, for example, even outgoing CEO, Mr. Malenkov and incoming CEO, Cristiano

Amon, they both have electrical engineering backgrounds. So I think that's really helped Qualcomm's calls through the years. I actually think that in this case for Intel, they may be thinking they need to find a meaningful acquisition as soon as possible in order to get things moving. Because turning things around at this stage of the game for a tech company like this, when things are already moving so quickly, it's going to be really difficult. And then you look at the overall environment here, Qualcomm just making an acquisition of Nuvia for $1.4 billion. You've got Nvidia and arm merging, Marvel acquiring Infi, AMD acquiring Xilinx. There's consolidation going on in this space.

And Intel, it's a big company with a lot of resources, but they're kind of getting left in the dust here. And if you look at just Qualcomm's performance compared to Intel over the last several years, Qualcomm is just leaving them in the dust. And so I think it's going to be a big challenge for Intel. And maybe new leadership is the answer, because it doesn't seem like they've really found the right mind yet to take this company to the next level. Real quick, Pat Gelsinger does have a tech background.

He was the first ever chief technology officer at Intel. So he's going back to Intel. How long before we know if he's the right person for the job? A year? Well, I mean, yeah, I think a year is a fair number to at least start. assessing because you've given them a full four quarters to report and demonstrate what the strategy is. Much more than that, though, like I said, this space moves really fast, so they've got to really get things going. Exciting news this week from Unilever, the Consumer Product parent company

of Ben & Jerry's. This week, the ice cream maker is launching doggy desserts, a line of frozen treats available online and in grocery stores. Emily, I saw this news and I thought, well, that's cute. And then I realized, no, this isn't just cute. This is really smart business. So this is playing off of a longer-term trend that we've seen in the pet space. It's the same thing that's catalyzing Chewy and this crazy Petco IPO. It's that people love their pets. And that really shouldn't be a surprise. These are people who treat their pets like kids. And as a result, are willing to do anything. And in this case, pay anything to make their pets lives as wonderful as possible.

It's actually amazing to me that we didn't think about things like pet or dog in this case, ice cream earlier. But this is where Ben & Jerry's is going, expanding their product line into pets. The issue here isn't pet ice cream. It's the fact that this dog ice cream looks so good. I think I might eat it. Emily Flip and Jason Moser. We'll see you later in the show.

Up next, a conversation with Twilio CEO Jeff Lawson. Right here, you're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. One of the best performing stocks over the past five years is Twilio. The cloud communications platform that adds messaging, voice, and video to mobile apps and apps on the web. Twilio shares have risen more than 1,300 percent since 2016. Jeff Lawson is a software developer, who also happens to be a co-founder and the CEO of Twilio. He just published his first book, Ask Your Developer, How to Harness the Power of Software Developers and win in the 21st century. He recently talked with Motley Fool co-founder, David

Gardner, and tech analyst Tim Byers about how Twilio is organized, the values that guide the company, and, of course, software. The amazing thing about software is that you can continually iterate on it. You're never done. You can always listen to your customers and hear something better that you can be doing, get a new feature request or even if it's something simple, like making it faster or whatever. There's always ways in which you can improve the software. And that creates kind of a cycle of continuous improvement, but in the market of also competition between, you know, companies who want your business. And so that pace of software, you hear like, oh, the business world is getting fast.

and faster and a lot of that is because of software, because software invites you to continually iterate and make it better and better and better. Think about all those apps on your phone. They're downloading updates, now kind of silently. You don't even know it. You're getting new versions of those apps pretty much every week. They're fixing bugs. They're getting better. And they're adding new features and functionality that are going to make your use of that app even better. And so that's really the superpower of the world of software. And that's one of the reasons why it's so important for companies to really embrace that, because if your competitors are really embracing that and iterating quickly and running a lot of experiments to figure out

what customers want and they don't want, and you're not, you're relatively static. You wrote the software a few years ago and you just let it sit there. Well, guess who customers are going to actually find to be a better option, right? The company that's always testing and iterating and getting better and better and better. And that's why it becomes a little self-fulfilling. You mentioned that like Twilio provides the infrastructure for developers and companies to be able to do that. And you're right. You know, we arose because software developers and the companies who employ them saw the need to work more iteratively and to move faster. And therefore, infrastructure like Twilio or Amazon Web Services or Stripe arose to serve those customers, to enable them to meet the cadence of software and to serve, you know, their customers at Internet scale and Internet speed.

But then because we exist, now more companies can get on that bandwagon and more companies can execute with that iterative spirit. And then that makes the importance of it even more for every company. And so it really is folding into this whole build versus die thing because just the nature of business and the speed of iteration and the speed of competition has just accelerated in recent years because of that power of software. It's just kind of built in. Really well put, Jeff. And I think about, well, I used to say around the halls of Foolish, whoever has the most techies wins. And so I'm very much, I guess,

sympathico with you on this. And that's been part of how I think about every industry when I pick stocks. So, you know, ask the developer. Who has the developers? Many of our viewers who have not yet gotten to see your wonderful book, don't know that the title comes directly from,

well, basically a billboard that you put outside Silicon Valley for everybody to drive by and you were working with their marketing team and nobody came up with a good idea. And then you finally just said, let's go with Ask the Developer, which is a brilliant stroke. And so this has to be one of the few books that I can think of that started with a billboard as the title eventually of the book.

I want to just to shift briefly to Amazon. You speak highly of Amazon, Jeff, both of your time there and where it is today, of course. And that's been another long-term hold for us a great company. Specifically, though, Jeff, you credit Amazon for the inspiration for organizing and small teams. I'm curious if you'd like to just lay that out a little bit for our members so they can hear and understand what that means. And then maybe was there another best practice that you've learned from Amazon? Absolutely. You know, most companies, there's a tendency as they get bigger and bigger and bigger.

They slow down. They get more bureaucratic. And, you know, decision making gets obfuscated. And the employee base just kind of lose its energy that it might have had when it was a startup, right? That's the natural tendency of companies. And here's the interesting thing about Amazon. I got hired there in 2004. My friend Dave Chappelle hired me.

And the company, he had started at Amazon when they were about, 100 people. I got hired in companies about 5,000 people. Dave promptly quit. He was like, okay, I've been here long enough. He left shortly after I got there. He went and started a startup. And that startup later got acquired back by Amazon. And when Dave landed back at Amazon, the company was 75,000 people. Okay, so here's this guy, my friend Dave, who's like, you've been at this company. You saw it at 100 people. You saw it at 5,000 people. And now you see it at 75,000 people. And I called him up one day. This is about 2011. Because I was starting to scale Twilio and I'm like, how do I make some good decisions here?

I said, Dave, can you compare and contrast those three versions of Amazon? 100 people, 5,000 people, 75,000 people, because it must be totally different. And he thought about it for a minute. And he said, you know what? It's exactly the same. The same energy, the same drive, the same bounce in people's step, the same intellect of the employee base. It's the same company. It just, I work with 100 people closest to me. I would just have no idea that there's like, you know, 75,000 other groups of those people all around the company because it feels

like that same startup I joined in 1997. And I thought that is astounding. And the secret to that is keeping it small, small teams. And when you build a company, when you're growing the company, the goal is to try to keep that energy, that intrinsic drive that every employee has, the early days of a startup and replicate it many, many, many times over as you get bigger. And the way to do that is to continually divide the company and divide the mission of the company into small teams, teams of no more than, say, 10 people. And organize those teams around three things. Number one, a customer. Number two, the mission for what they're trying to solve for that customer. And three, the metrics of success that tell you if they're actually succeeding in

that endeavor. And with those three things, now what you've done is you've unleashed that team, ability to go sprint for that customer every day and to go innovate and try to be as autonomous and independent as possible. In that small group setting, every member is really connected to the customer and really connected to the mission because it's small again. And nobody, you know, and you think about a small team of, say, 10 people, if there's a low performer on that team or someone who's checked out, you're not going to get by for long in that type of environment. Whereas if you're one of 500 people on a team, you're like, yeah, it's easy to kind of get lost in the shuffle. But when you're one of 10 people,

with a strong sense of ownership over what you're trying to accomplish, somebody who's checked out won't make it very long. And everybody is very close to the decision-making and very close to the customer they're serving. And I think that's the magic of how you scale a company while keeping everybody really motivated, really driven, and coming from a position of really understanding why they're there and what success looks like at the local level, like at their team level.

And Jeff, have you just described how Twilio is organized? Yeah, so that's how we've done it as well. And I talk in the book, you know, it sounds easier said than done because you're like, okay, I'd say you've got an, you know, if you're a small company or a startup, okay, I got 10 people. If you're a big company, you have a new initiative. Maybe it's got to 10 people. But then it's succeeding and it starts growing.

So it becomes 20 people or 30 people. You're like, oh, what do I do now? My team that was nice and small just got big. Well, the answer is you have to keep. It's like a mitosis process. You keep dividing the team and you divide the missions and you divide actually the technology, like the code behind it so that you can continually dividing. back into small teams that tackle various parts of the business, but every team in that story

is connected to a mission and has a lot of drive to do that thing really well. And so I talk in the book about how you can scale something, whether it's a startup or whether it's an initiative inside of a bigger company and continually divide it to keep that entrepreneurial spirit, even as the company or the initiative continues to grow. Jeff, do you think that's indicative of the way you talk a little bit in the book about how you try to make the values very actionable. And Twilio has, if you look at it, I encourage anybody if you're an investor or thinking about investing in Twilio, definitely take a look at the site and the list of values that Twilio has. One of them is wear the customer shoes. You talk about this in the book.

And it seems like what you're talking about just there, about dividing into small teams, is sort of a way to actionably wear the customer's shoes. Because if you have a huge team, most of the people can't be near the customer. But how do you make it where, say, like the accountants are near to the customer? Like, there's only so many people that can be near to the customer. But can you talk a little bit about this value and how you get everybody a little bit closer to the customer? Well, you know, it's interesting. When you think about it, companies, you know, in the early days of a company,

I'll talk about the early days of Twilio. Yep. In any given day, like, I might be writing some code, talking to a customer who's like a sales prospect, supporting a customer with customer support, and, you know, paying some bills. Like, you're doing everything. And as companies grow,

the tendency, of course, is for there to be silos because people get more functional. You hire experts to do each of those things, right? And there's a lot of great things about, you know, hiring an amazing customer support team so that the developers who are building, the product, don't have to answer every support ticket. Obviously, that is beneficial. But the problem is, if you let it go too far, you end up putting these walls up that separate all the functions.

And you're going to have a sales team who's doing sales. And their job would be to not have to bring the developers into every conversation with a customer. And you've got sales engineers to do that, right? Or the customer support team, his job is to answer the support tickets as opposed to having the engineers have to do it all. And if you do it perfectly, what you've done is with all good intentions, you have accidentally siloed the people building your product from the very customers they're building it for. And again, you know, it all came from good intentions, including product managers, many product managers, see their job as protecting their team from the distraction of customers. And I think the best product managers are those who see their job as facilitating

interactions between their team and their customers. And yeah, it's not every interaction. But if you don't poke holes in those walled silos that arise in the company, then yes, you will isolate your team from the very customers who are trying to serve. I love the story of one of the product leaders at Twilio. His name's Ben. He started his career. His first job out of college was he was a developer at Bloomberg, writing software for the terminals. And he got there, bright-eyed and bushy-tailed and showed up, and he said it was manager. You know, like, hey, so when do we get to go to a trading floor to talk to, you know, traders who are using our software. And the manager kind of laughed and said, oh, you know, that's, that's a funny idea, right? We've never actually done that. And Ben was a little

dumbfounded. He's like, you mean, we've never met a customer that uses the software that we every day show up in yield? He's like, well, not really. And so Ben actually just found his own path. He went and found a friend of his who was a trader. And he said, can I, you mind if I stop by, I just want to see. So Ben showed up at the trading floor. And they had always assumed that their widget that they were building. Like, they spent every day building this widget. They assumed it was the full, you know, 7-inch screen was their beautiful widget. Well, it turns out that the trader had it in some tiny little 16 by 16 box in the corner of their screen. And it wasn't even legible. You couldn't read the fonts like nothing. And it was completely different than how they imagined

their software was used. And it wasn't until they actually went and interacted with a customer that they actually found out. And then that changed their roadmap entirely. Like, we've got to make fonts that work at small scale. We got to change the on all these things happen. So I share that example in the book because it's a really good example of what happens. happens when you actually don't, when those walls between you and the customer are so tall that you actually have no idea how your customer is actually using your product. As leaders, I think it's our job to intentionally poke holes in those walls that separate our teams from the customers their service.

Jeff Lawson's book is Ask Your Developer, How to Harness the Power of Software Developers and win in the 21st Century. It's already an Amazon bestseller, so check it out when you can. Up next, Emily Flippin and Jason Moza return with a couple of stocks on their radar. Don't go anywhere. You're listening to Motley Fool 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. Don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money. Chris Hill here.

Once again with Jason Moser and Emily Flipin. Let's dip into the Fool mailbag before we get to the stocks on our radar. Our email address is Radio at Fool.com. I know the Taco Bell lifestyle enthusiasts are already typing out their emails, but we also take stock questions like this one from Kyle Newberger, who writes, love the show, keep it coming. This question may seem simple, but in your experience, when should you sell a stock if ever? A great question, Kyle. Thank you for that.

And Jason, this is one we get often from people because it's one, you know, it's one of those things, Particularly in the wake of where are we now, year 11, year 12 of by and large, a bowl market, you know, people who are sitting on some gains are trying to figure out whether or not they should sell at least some of their stocks. Yeah, I mean, it's something that I think we all think about. It seems, it may seem like a simple question, but really I think it's far more nuanced. And when we look at insiders, for example, that own stakes in the companies that they lead, we talk about those insider transactions. We kind of say, and Peter Lynch really popularizes this, you've got one reason to buy,

but you've got many, many reasons to sell. And that really is the bottom line, is there many, many reasons to sell. And it does depend on the individual where they are in their life. I think just a general rule of thumb, though, if you're sort of a younger investor with a lot of time in front of you, You look at selling a stock, number one, have the reasons that you bought it changed, right? Are the reasons you purchased that stock in the first place, have those reasons changed? If they have, then you do a little bit more of an assessment there. Do you feel like that it still offers opportunity if it doesn't?

I mean, there could be some reasons to sell there if the thesis is broken and the reasons have changed. But clearly, there are going to be many, many more reasons someone needs to consider it. And it really kind of depends on where you are in your life and kind of what you need to do with that money, what your investing goals really are. Emily, obviously some people, if they've been investing for a while, maybe they look at the stocks that aren't doing as well in their portfolio and look to sell those off sometimes for tax reasons. How do you think about selling? Yes. Well, there are two biggest mistakes that investors can make.

One is not buying companies that end up being disruptors and game changers that become the next Amazon's and Netflix. And the second one is selling those companies too early. So if you're an investor who's looking at their portfolio and feeling the need to sell for issues of valuation, just remember that good companies that are disruptors are hard to value for a reason, and they end up growing longer and faster than many people expect. So that alone, in my opinion, isn't a good reason to sell. But what is a good reason to sell is when the thesis for owning the company has changed. Maybe that means that it's been a bad, bad performer and you think to yourself, this money could better be invested in a disruptor

in a company that I have higher conviction. That's a perfectly fine reason. Or another perfectly fine reason is if you find yourself staying up at night worrying about companies because they've come such a large part of your portfolio, if you find yourself constantly afraid of the fact that you have maybe 20% of your portfolio and Shopify, just to name one, even though you believe in Shopify, I think selling that to get it to the point where you're not losing sleep when you're not feeling stressed over your allocation is also a perfectly fine reason. We've got just a couple of minutes left. Let's get to the stocks on our radar. Jason, you're up first. Dan Boyd's going to hit you with a question. What are you looking at this week?

Yeah, I've been digging into a company called Penumbra. Ticker is P-E-N, and it's a global healthcare company that designs, develops, manufacturers, and markets, medical devices and technology focused on neurovascular and cardiovascular applications. The numbers are pretty astounding, actually, on a global basis, stroke is the second leading cause of death, the third leading cause of serious long-term disability. And that really is the problem that Pannumbra is trying to tackle. Founder-led business, co-founder's there. Still own a little bit of a stake in the company. I think it's really neat. But what really has my attention is this real immersive system that they developed. It's an advanced rehabilitation technology that uses virtual reality for therapeutic

activities. So you talk about folks who have strokes and the need rehabilitation while they're trying to tackle that using immersive technology. And so it has definitely got my attention. It says the management said it represents by far the largest total market opportunity that Penumbra has ever taken on. So got my attention. Dan, question about Panumbra? Yeah, sure. Jason, it looks like late last year, Penumbra had some recall issues. Is that anything to worry about going forward? Well, it is something always to keep an eye on with medical device makers, recalls are kind of part and parcel of the business. It does look like something that they have accounted for, but it's always something to keep in mind. It's a risk that comes

with these types of companies for sure. Emily Flippin, what are you looking at? If I was smart, I would have talked about Bark Box today with all the pet news, but the company that's on my radar this week is actually Pinterest. With all the excitement that Poshmark is getting in the news, it's reminding me about Pinterest, which is a social media meets e-commerce business. that I like a lot more than Poshmark. Pinterest has over 400 million monthly active users, and it's just at the precipice of effectively monetizing that audience. Dan? You know, not really a question, Chris. More of a comment. Pinterest terrifies me because I know whenever

my wife is on it, it means that an impending large purchase is going to happen. Maybe that means it's a good business. It does. Dan, I'm assuming you never make large purchases of any kind. What do you want to add to your watch list this week? Listen, man, I've seen it happen so many times. I'm going with Pinterest. I think they're on to something over there. All right, Jason Moser, Emily Flipping. Thanks for being here. Thank you. Thanks for having me. That's going to do it for this week's show. The show's mixed by Dan Boyd, our producer's Matt Creer.

I'm Chris Hill. Thanks for listening. We'll see you next week.