Motley Fool Money - The Hidden Upside for Stock Investors

Episode Date: May 13, 2022

"This is a once in a blue moon butt-kicking." And we've got the numbers to back it up! (0:30) Jason Moser and Maria Gallagher discuss: - Historic numbers to put the current market into perspective - Disney's better-than-you-might-think results - Rough times for coffee chain Dutch Bros - Unity Software's drive for profitability - Signs of life from Affirm Holdings - The latest from Roblox, The Trade Desk, and Peloton (19:00) Bill Mann talks with Okta co-founder Frederic Kerrest about lessons from his new book, Zero to IPO: Over $1 Trillion of Actionable Advice from the World’s Most Successful Entrepreneurs. (34:15) Maria analyzes Airbnb's platform enhancements, then she and Jason share two stocks on their radar: Airbnb and Home Depot. Stocks discussed: DIS, BROS, U, AFRM, RBLX, TTD, PTON, OKTA, HD, ABNB Host: Chris Hill Guests: Maria Gallagher, Jason Moser, Bill Mann, Frederic Kerrest Engineers: Dan Boyd, Rick Engdahl Learn more about your ad choices. Visit megaphone.fm/adchoices

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Good to see you both. Hey, hey. Nice to see you. You've got the latest headlines from Wall Street. Octa co-founder Frederick Karris is our guest. And as always, we've got a couple of stocks on our radar. But we begin with a question from listener Chris McCullough, can you please do an episode where you just say that everything is going to be all right over and

over and over again? You know, we could, but I think that would get old quickly. Jason, I understand the sentiment because it's been a rough six months for investors. A lot of stocks that we focus on have had big pullbacks. And sometimes you just want reassurance from an old guy like me to say, we've been through this before. It's going to take some time, but we are going to get through this. Yeah, yeah. I mean, I would put myself in that same old guy like you category and having been through stretches like this before. I am confident in saying that things eventually, I don't know when, but things will get better. It obviously is a very tough stretch for investors. I was reading earlier in the week that this is the worst year today for the S&P in six decades. And I know that

sounds really bad, but honestly, to me, I feel like that should make you feel better about things right now in that, really, this is a once-in-a-blue moon butt-kicking. The market is handing everybody. I mean, nobody is immune to this. And if you can stay invested and keep investing, I think that you'll look back at this time as one of immense emotional value. And I speak from experience. I mean, the bare markets and the recessions that I've gone through as an investor, they just make you better as long as you can stay the course. I'm not saying you'll execute perfectly throughout them all, but you'll learn a lot of lessons along the way that will help you the next time that comes around.

Now, I can read you all sorts of data regarding bear markets. I can tell you that stocks lose 36% on average in a bear market. I can tell you that half of the S&P 500 index's strongest days in the last 20 years actually occurred during a bear market. Those are actual facts, right? I mean, that's true. I don't know that it makes you feel very good right now. But I do think those are things worth keeping in mind.

In one of my favorite quotes, quote that I always come back to during times like these, Shelby Davis, he said, you make the most of your money in a bare market. You just don't realize it at the time. And I mean, there's a lot of wisdom in that, in that you really are taking advantage of a situation here where there is a lot of pessimism in the market. We're finding a lot of assets with proven track records of long-term appreciation. that are far cheaper today than they were several months ago. So even if it's just a matter of keeping that paycheck,

keeping that contribution from your paycheck, going into your retirement plan and just investing in an index fund, just keep that ball rolling because this will get better, and it will make you a better investor for it. Maria, I know you're not old like me and Jason, but I'm sure you have thoughts on this. Well, I would just say, in addition to all of the wise words, Jason said, I think it's important to know that the average time of bear markets since 1957 is about 1.7 years.

So over the last 15 bear markets, the average downturn is a loss of 30%, lasting just under a year to reach the bottom, taking a little more than a year and a half to break even. Eight out of 15 of those broke even in under a year. Again, I don't know that that will help people feel better right now, but I think it's always helpful for me to help kind of soothe me to say, okay, these things have happened before. We have come out of them, and here's what we learned from last time. And if you like stocks, if you're like a valuation person, small and mid-cap stocks are now cheaper than they were during the 2018 bear market. They're approaching levels of March of 2020 based on forward PE. So there are opportunities to be had, I think, in this market.

But I know that we are all, you know, looking at these numbers with you and understanding that as well. Let's move to some of the companies making headlines this week. Disney's second quarter report was highlighted by more subscribers. for Disney Plus, but parks in Asia were affected by closures due to COVID. I don't know, Jason. It seemed like one of those reports that had something for bulls and bears. Yeah, it does.

It does feel like the market seems to really be judging Disney fully on its streaming aspirations, first and foremost these days. And I feel like that's a very short-sighted view on things. I mean, they certainly are transforming the business and investing a ton into this direct-to-consumer offering. But the core business itself is really performing well, especially considering the current state of things going on around the world. So if you look at parks revenue, that better than doubled for the quarter from a year ago, $6.7 billion in revenue, $1.8 billion in operating income.

If you go back to the same quarter of 2019, those numbers were $6.2 billion and $1.5 billion, respectively. So we can see some improvement there from a time ago when things were a bit more normal. Per capita, guest spending at domestic parks was up 40% from the same quarter in 2019, and up 20% versus 2021. So that's very encouraging. The median entertainment revenue up 9%. They're still chalking up tremendous operating losses due to expenses in the buildout with all the content.

Speaking of subscribers, they ended the quarter with more than 205 million total subscriptions, added 9.2 million for the quarter. Now, that includes 7.9 million Disney Plus subscribers. They reiterated in the call again. It keeps them on track to reach their 230 to 260 million Disney Plus subscribers. scriber goal by fiscal 2024, it's worth noting. I mean, there are 138 million global paid Disney Plus subs today.

They've got some work to do to hit those targets, I think, as well as getting Disney Plus to profitability by 2024 like they're targeting. With that said, they are opening up an ad tiered model, right? So that probably will work to their favor. They're going to spend $32 billion on content this year. We've been very critical of the content, right? It seems that they're really expanding that library. for all demographics. So I think that works out well in their favor. When you consider the whole of this

business, all of the IP, the parks business, everything that they do in totality, it really does feel like the market is not giving this business enough credit today. On Thursday, Dutch Bros, the drive-through coffee chain warned of slowing sales growth, saying that inflation is keeping younger customers from taking afternoon coffee breaks. Shares of Dutch Bros. felt 26, percent, putting the stock well below its price when the company went public last fall. Maria, I take a backseat to no one in my love of coffee. Should I be taking advantage of the sale on Dutch Bro's stock? So it's pretty interesting. So their revenue was up 54% to 152.2 million. They had system-wide stream store sales growth of 6%. They have about almost 600 shops. They're guiding for

about 30 new shops in the next quarter, but they're planning for flat to slightly negative same shop sales growth. So they had spoken on a previous quarter about how they had only raised prices about 3% since the beginning of the pandemic, but due to rising labor costs and unforeseen 25% spike in dairy prices. They're considering another 3% raise in prices. They're working on energy drink, offerings, rewards programs. They're expanding in Texas, in Oklahoma, building out a footprint in Southern California. For me, what my problem is with this company is that it kind of lives in the space. It's not as big, established well-known as Starbucks, but it is still considered a chain, so it doesn't have the loyalty

of your small cafe right near your house. And it is a drive-through. So it's just a one in-and-out kind of transactional opportunity. So you're not really building that type of loyalty, I think, with customers the way you do when you have an in-person sit-down place. And so I think it's kind of living in an unprofitable space where it's not a well-enough-known chain that people will say, oh, it'll always be kind of the same, but it's not quite small enough to have that loyal following, even though I am on the East Coast, so maybe people on the West Coast will correct me on that. Clearly, it's all about the coffee if this is not a place you're going into and soaking in the ambience, but I do consider the fact that on their latest call, Starbucks talked about most of

the new locations they plan to open, they're focusing on those drive-through lanes. Yeah, I think that's a good point. I think that Starbucks is trying to have it both, right? They're trying to have you go in and you sit. And then also if you want the option, you can drive through. I wonder if Dutch Bros will be able to have the opposite of you know them for drive-through and they're saying, and now you can come sit. I wonder if that works the same way in the opposite direction. Unity Software posted a loss in the first quarter and shares of the video game software development company fell nearly 40% on Wednesday. CEO John Rickettello says he expects Unity. to be profitable in the fourth quarter, Jason. Yeah, a bit of a crazy week. I mean, down, what, close to 40%, and then up 15% the next day. I mean, just a very, very, very nutty week for a lot of these businesses. I mean, let's be clear, this wasn't a bad quarter, right? This was actually a pretty good quarter.

There was an outlier event, though, and ultimately, they incorporated some bad data from a large customer, which ultimately corrupted one of their algorithms and the Unity monetized business. That's part of their operate segment. So that put the business behind the proverbial eight ball as management needs to fix this mistake. So there's time and there's money that comes with this that ultimately resulted in downward guidance, which probably is what really ultimately spooked the market. But there are plenty of signs that they're making a lot of progress and fulfilling the thesis of expanding their business into new verticals and use cases well beyond its core gaming expertise. And so you look at the numbers. I mean revenue, $320 million. It was up

36% from a year ago. That was at the top of their guidance. The create segment of the business that outperformed, that's the subscription side. Revenue is up 65%. The operate underperformed, and that's what I was talking about a little bit earlier, that revenue is up just 26%. But the end of the quarter, they have 1,083 customers each generating more than $100,000 of revenue in the trailing 12 months. That was $837 just a year ago. And dollar-based net expansion rate of 135% remains in their target range. And ultimately, as I mentioned, going into new verticals. I mean, there are a lot of good examples here. The digital twin business continues to expand. They entered 2022 with nearly 3,000 customers in this space. And for the quarter, they closed 34 deals above

$100,000. It was up 126% from a year ago. That I think is a lot of competition out there for folks who have been paying attention to Matterport, right? Because that's ultimately what Matterport does as well. And then you look at just big customers beyond that core gaming. Lockheed, Martin, I think, is a model example. Good example of that in action, right? They just, first project with them started in 2017. They bought a few seats for design visualization, but you look five years later, and Lockheed now has 500 licenses across nine business units for multiple use cases, including simulation, training, guidance, collaboration. So I feel like this is working out. There was a valuation thing and the revision and the guidance is really what I think sent people selling.

Signs of life for Affirm Holdings. Third quarter revenue for the Buy Now Pay Later company came in higher than expected. The loss for the quarter was smaller than expected. And shares of a firm moving higher late in the week. What do you think, Maria? I think that the Buy Now Pay later space is pretty fascinating. So a firm specifically, their revenue was at 54% to $354.8 million. Their active merchants increased from $12,000 to $207.7.

thousand. That's driven primarily by the adoption of shop pay installments with merchants on Shopify's platform. So that's a huge growth for that one quarter. Their active consumers were up 137 percent. Their total transactions were up 162 percent. So I think a firm is really executing well, but I'm really interested in following this space and more elements of it because we're seeing increased regulation for these buy now pay later spaces in the UK. You have Klarna that's now going to start impacting credit scores. They're going to start reporting customers data to credit to their credit bureaus in the UK, which will impact about 16 million people after pay was facing lawsuits about not adequately representing their hidden costs. About 43% of Gen Z users

have missed payments. They're talking about how this is the new layaway. This is the new increasing debt. So I think there's questions about the ethics of these sort of payment plans. And I think that the next probably couple of quarters, next couple of years, is really going to see a shakeout between by now pay later and see if it's a sustainable type of system or if it isn't working as well as it's selling itself. After the break, we've got more gaming, entertainment, and more. So stay right here. This is Motley Full Money.

Welcome back to Motley Full Money. Chris Hill here with Jason Moser and Maria Gallagher. Roblox's first quarter loss was bigger than Wall Street was expecting. But CEO Dave Bazuki says that bookings in April are improving for the video game developer. Maria, when you look at Roblox, what stands out to you? So what I always like to look at with Roblox are things like their daily active users and their hours engaged. So daily active users is up 28% to 54.1 million, which is an all-time high. Their hours engaged were up 22% to 11.8 billion.

They have a lot of notable innovations on the platform, including different voice innovations allowing users to communicate directly via speech. There are more choices in expressions of avatar with layered clothing. But two positive trends that I really wanted to highlight here with Roblox is that percentage of users that are over 13 are growing in all geographies, which is really important to keep people engaged for longer. And they're growing within monetization of users and working with these new advertising plans within Roblox. So I think that these are the two questions is how can they grow with their older demographic as we were leaving COVID? And how can they effectively monetize all of their cohorts in the next couple of quarters? And so those metrics so far are looking pretty

positive to me. The trade desk first quarter revenue grew 43 percent. And CEO, Jeff Green says he's optimistic. The Trade Desk can partner with every major streaming company, including Netflix. Yeah. I don't know, Jason. Seems like that would be a win for the business if they can get involved with Netflix plans to sell ads on their platform. It feels like a world of opportunity could potentially be opening up for this business because the tail wins on connected TV and ad-supported video on demand are only gaining strength. It was a good quarter of management exceeded guidance they set on both fronts with

the revenue of $315 million up 43%. Adjusted EBITAB, $121 million, and ultimately non-gap earnings per share, up 50%. Customer retention remains over 95% during the quarter as it has for the past eight consecutive years now. And when you look at the growth estimates in the digital advertising space for the year, those estimates range anywhere from 8 to 14%. But any which way you cut it, I mean, clearly the trade desk is gaining share. and it looks like they could be poised to gain more.

You mentioned Netflix, Chris, the word Netflix was used 35 times on their earnings call this quarter. A year ago, Zippy, Zero, bagel, goose egg, none, right? And that all really points back to this ad-supported model that Netflix is talking about, right? And remember Disney talking about the same thing here. So, Jeff Green, he's very optimistic to be able to work with Netflix in some capacity. Remember David Wells, former CFO of Netflix, sits on the trade desks board. They developed a very good relationship during that time. The company's calling for 30% revenue growth here for the current quarter,

so a good business that seems to be poised to keep on doing good things. Peloton's new CEO, Barry McCarthy, was brought in to turn around the company, and that turnaround cannot come soon enough. Peloton's third quarter report this week highlighted how much cash the company is burning through, leaving the business, as McCarthy described it, thinly capitalized. Maria, you tell me, how bad is it? It's not good. It's the new CEO

started his shareholder letter with the phrase, turnarounds aren't easy. And then it just got more depressing from there. Revenue was down 24%. They had larger losses than expected. They had $200 million in write-downs,

$30 million covering inventory. The company thinks it can't sell. Membership was up about 5%. Connected fitness revenue was down 42%. Gross profit was down 59%. operating expenses were up 101%. So everything is trending kind of in the exact opposite direction in which you would want it to be trending. The only positive thing, the only thing that I would say I am always impressed by Peloton and have to give them props is that their churn is super low,

consistently below 1%. People are really loyal to the platform, but there has been a year over year decline in the average monthly workouts per fitness subscription. They spoke of how, like you said, thinly capitalized they are, they're working on a $750 million loan with J.P. Morgan and Goldman Sachs. There are plans to see a Peloton in a clearer direction, but it's not looking great from where I'm sitting. That's truly impressive that their churn is that low. As some have suggested, Peloton is increasingly a candidate to be bought by a larger company. You have to figure that is part of the selling point, isn't it? I mean, people, it's not as many people as they'd like, but the people who use Peloton really seem to like it. Yeah, people really love them.

There's that one, there's one instructor that everyone loves on TikTok. There are people who are really into the platform once they get onto it, but I think it's just not as many people as Peloton wants you to think it is. Feels like that thinly capitalized thing. That could put you in a little bit of a tough spot rate, a little bit more of a desperate seller of, you know, potential buyers, potential suitors catch on to that thinly capitalized. They could use that for some leverage. All right, guys, we'll see you later in the show. Up next, advice for entrepreneurs from ACTA co-founder Frederick Karrisht. Stay right here. This is Motley Full Money. Welcome back to Motley Full Money. I'm Chris Hill. One of the biggest trends of the past two years

has been more and more people starting their own businesses. Someone who is familiar with the path of an entrepreneur is Octus co-founder and chief operating officer, Frederick Karrisd. He's written a new book, Zero to IPO, over one trillion of actionable advice from the world's most successful entrepreneurs. And he recently shared some of the ideas and advice from the book with my colleague Bill Mann. Who is this book for, Freddie? And what made you want to write a guideline for people who are entrepreneurs? Well, this is kind of the field guide, Bill, that I wish I had had when we started 13 years ago. Look, I think entrepreneurship is, you know, I think it's the best career out there. Certainly from a personal perspective, I think it gives a lot of agency. It allows people

to really determine their future, take it into their own hands. Certainly in terms of moving the world forward, if you look at net job creation over the last 50 years in the Western world, it's all come from net new companies and startups that have not only created all these jobs, but actually replaced all the jobs that are gone from the giants of yesteryear. But there's a lot of hidden secrets. There's a lot of tips and tricks in there in building successful companies. And frankly, a lot of them are tractable problems. You just need to know how to do them. And so, you know, as I went along, we were very fortunate. Todd McKinnon, my co-founder at Octa and I, we got a lot of help from the generation of entrepreneurs ahead of us. And, you know,

I wanted to kind of pay it back. So over the last few years, I've been fortunate to help a number of very, very good CEOs and founders. And I just started taking a lot of notes on the questions they would ask, which were a lot of times very basic ones. You know, the CEO of yesterday year was a salesperson. The CEO of today and tomorrow is a technologist. Technologists know a lot about technology. They don't know a lot about sales, about GNA, about go-to-market. And so they'd have basic questions on how do you hire salespeople or how do you raise financing. And again, these are tractable problems. So we figured we'd, I figured I'd put them all in a book, put them in one place, make it easy to use. And again, just a field guide that people can use as they

go through building companies and building the future, a better future for tomorrow for all of us. You're describing a path for entrepreneurs that for a lot of people, it really might seem that you're describing a strategy for how to win the lottery, right? So let me talk about you for a moment. You and I, we're the right color and the right gender. And you had to Stanford in the Sloan School at MIT for your MBA. So your dad is the CFO of multiple companies. So you have and had networks.

You are a member of networks that are really difficult to crack. And so your book says it has a trillion dollars worth of advice in it, but you rightly call out that an entrepreneur can come from anywhere. But how do people who do not have those legs up get, square one. Well, that's a very important point, and it is actually one of the reasons I wrote the book, is to demystify this concept, right? First of all, if you're one of the folks out there who dreams of building a company, you'll read the news, and there's a very barbell story that's produced. It's either massive successes, Elon Musk or Ariana Huffington, or you go down the news, or

massive failures where people lost a billion dollars and everyone's going to jail. What people don't talk about is what happens to 99% of entrepreneurs 99% of the time, which is you just get up and you work really hard. You put one pant leg on at a time and it's 16 hour days. We're in our 13th year of business and I'm still working just as hard as I did in year one. So the first thing is just understanding that there's no magic to it. It's a lot of hard work. Now, you bring up a very important point, which is we are the right skin color. We went to the right schools, all these kinds of things. You brought up my dad. He didn't. He was an immigrant from France. He showed up with $500 in his suitcase, didn't speak the language. And from there, he built an amazing professional

career. He was a six-time public company CFO, as you said. But I mean, that was actually a big guiding light in my life. Of course, I was very fortunate. I got to go to the right schools. I got to meet the right people. But that was a very good example that I saw every day. You just get up and you just get up early. You got to get lucky. There's luck to it. But you also got to work very hard and do a lot of those things. We do talk in the book about some of those specific situations. though. Networks is a great example of them. Unless you live in Silicon Valley, unless you went to Stanford, unless you're in all these groups, you're not going to get to meet some of these investors. But there are other networks out there. First of all, you can build your company anywhere now.

So if you look at the pandemic situation that we're all coming out of now after two years, it certainly has made it very easy for anyone to build a company anywhere, number one. Number two, we do talk a lot about networks. And we talk about specifically how you can optimize on whatever group you're in. So there are whisper networks for female founders. There are whisper networks for black founders. There are actually venture capital funds now that focus on funding only black founders or founders of color. And I think that is great innovation. And that's something I'm very excited about. And frankly, demystifying that and allowing everyone to have the inside edge from what I learned, that was one of the points of writing the book. And I also want to make this

point that you make in the book, which I really, really like. It's called zero to IPO, which is which is a process that most companies never make it to. So when we talk about being an entrepreneur, you're not necessarily talking about a company that is starting from ground zero and is going to end up a $40 billion company with a ticker in it. You're talking about people who are creating jobs and creating something at whatever level in whatever business where they have their passion, and their idea. Yeah, you're absolutely right. So look, my expertise without a doubt is enterprise software.

I got a computer science degree. I started working in enterprise software 25 years ago. I consciously thought in writing the book about emphasizing it wasn't just for enterprise software people that were building the new SaaS companies, software as a service companies in Silicon Valley. It was really for any type of entrepreneur. And it was, it's organized the chapters generally by the type of challenges, but opportunities you're going to be able to take advantage of as you go through building that company. So it starts with you just need to have other co-founders. I mean, that's something that the data is very clear. We got a bunch of data from Professor Ed Roberts at MIT who studied this. Having two to four co-founders is important in any business, by the way. You think about how you're going to build that business. We talk about, look, if you're going to raise venture capital for high growth, that's one path, but certainly cash flow.

just getting businesses that are cash flow businesses, getting businesses that you're going to fund for a while and then sell to an acquire, those are totally acceptable means and goals for entrepreneurs today. And we talk about all those in the book as well. Sales is one of those that's a little bit trickier because sales is really, in this case, focused on business to business sales. So I do admit that. But we again put some caveats in there saying, look, if you're consumer or you're selling a retail might be a little bit different, but there's still some tips and tricks you can have in here. The other thing that I think is very important, just kind of closing out on the last question you asked me about, you know, not everyone has the advantage of these networks

is one of the things is all the profits from the book. I'm actually giving to two organizations, build, which is a national one, and the Hidden Genius Project, which is here in Oakland in my backyard, both groups use entrepreneurship and leadership skills to help black kids and kids from underrepresented minorities and communities stay in school using some of those entrepreneurship and leadership skills and hopefully become entrepreneurs down the road. So it's also about making sure that we're sharing the information, but we're contributing as best as we can, frankly, to the communities in the world in which we live. So one of the stories that I love in the book, and again, you know, thinking about, thinking about entrepreneurialism, you know, and as you said,

what we generally hear about today are the huge success. or the huge blowups. And huge blowups generally start out as some form of a huge success. But most of them, even amongst people who end up being successful, there are missteps along the way. And one of my favorite stories that's in this book, and I thought maybe, you know, you could help recount it was the Stuart Butterfield story with the business. Yeah. Yeah. that he started. Tiny spec. Tiny spec. Yeah, totally. Yes. The real death of tiny spec was the chapter. Yeah, I mean, that's a great point, right? So those are called pivots. I think that's very important. Look, one thing that I really tried to do in the book is I went and found a lot of very successful entrepreneurs, but I told them up front, this was not going to be some glory stories.

I think a lot of problems, frankly, with the entrepreneurial literature that's out there today is it glorifies and lionizes one person's life. Here's the life of Bill man. Here's how he went through it. Let's ask you questions about your life, Bill. And, you know, one of the great examples I love to use is Steve Madden. Steve Madden's shoes. I love Steve Madden. Shoes are very comfortable. Turns out, Steve Madden went to federal penitentiary for three years for trafficking in illicit substances before.

he started the shoe company. So now if I'm an entrepreneur and I'm listening to that interview, you know, what's the message there? It's probably not the right one. So what I said, number one, number two, if you look at this from the outside, like you said, a lot of times it's like, oh, look how amazing these companies are. They were destined for greatness. Okay. Meta was destined for great. Amazon was destined for greatness. That's not true. Okay. Many times these companies could have died. And so bringing that back and kind of opening that up is very important. So I went to all these entrepreneurs that I said, you've been very successful congratulations, but I want you to come and tell the story where it didn't go right.

And that's what we're going to try and clarify and illuminate for everyone. And when actually Todd, my co-founder read the book, he said, well, there's all sorts of stories in here and they're all true. I said, well, that's the point, Todd. It's like, things didn't always go amazingly for us. And but you have to, you have to open up the kimono. So the example that you bring up is Stuart Butterfield, you know, fantastic professional and even better person, candidly. I've gotten to know him a little bit. A very successful founder, CEO, a company called Slack. They sold to Salesforce.com, May 12, 18 months ago for, I think, $27 billion. You can keep me honest. I don't remember the exact number. But he was an entrepreneur before. He had a photo

company that he sold to Yahoo, and it went fine. And then he started a second company, which was called Tiny Speck, and it was a gaming company. And it wasn't going very well. Now, it turns out incidentally, as part of the internal tools at the company, what they'd done is they'd built a messaging system, which became Slack, that they were using themselves just to communicate. And it was better than what was out there today. And so, you know, they were going to wind the company down and Tiny Speck was kind of running out of runway. Stuart went and talked to a few of his investors. Mark Andreessen and Ben Horowitz were two of them, incidentally, that I know about, but I know there were others as well. And he said, hey, this is what's going on. Tiny Speck's not going to work. But I have an idea for what I'm going to do and how I'm going to take this internal tool and I want to just kind of see if there's something there. And they're like, yeah, sure, you know what? Keep the funds that we've given you. Roll them into this new thing and see how it works. Lo and behold, that thing took off.

It became Slack, which is now the standard in enterprise messaging that I use in all my organizations, incidentally every single day. They've got a great mobile app and all the rest of it. But that's a good example of, you know, in that case, a business pivot. Look, at much smaller scale, we had to do a pivot in our business at Octa. We started focused on small and medium businesses. It almost cost us our lives in 2011. The company almost went bankrupt until we pivoted and started focusing on much larger organizations

that actually had a serious identity management problem. And then, you know, things took off from there. So these are very real situations. They happen in all companies, at least once, if not multiple times. And again, I think just opening up that process and demystifying it for entrepreneurs, hopefully makes them feel like what they're going through every day, hard work, things aren't going the way you want, you can't hire who you want. You're not selling the software.

or the products you want. You're not building the way you want. These things happen to everyone. And that's okay. And that's part of the process. And it's human and you're going to be all right. Somebody has an idea. What is your best next step advice?

What are they going to learn from this book that gets them from what they think is a good idea to be an up and running? The first thing is go talk to people about it, like number one. So not just to find co-founders, which is important. important as a sole founder. The odds are really stacked against you because there's just too much up and downs. You need co-founder, which is great, but just share the idea with a lot of people. That's counterintuitive, isn't it?

It's counterintuitive. But here's why. People are like, oh, I don't want to share my idea. You're going to take it. Always one of them. Yeah. I'm like, first of all, okay, first of all, I'm going to assume that you have done so much work and know so much about this, that you sharing your idea with me, if immediately I can take it

and roll with it means you haven't done that much work on it. Number one. Number two, it would mean there's no sustainable competitive differentiators and barriers to entry in your business, which is also like a big problem. So you should share that idea as quickly and as broadly with as many smart people as you can. You might find someone who wants to work on it with you. You might find someone who wants to finance it. You might find someone who knows a customer. You might find someone who's going to give you a bunch of feedback on it. So whatever you're doing, you know, write it down, think it through, research it, study it, but go out and talk to other people and get that feedback because nothing amazing was ever built in some ivory tower by one person

without anyone ever talking to anyone else. It just doesn't happen. You can pick up a copy of zero to IPO wherever you find books. Up next, Maria Gallagher and Jason Moza returned with a couple of stocks on their radar. You're listening to Motley Fool money. As always, people in 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 yourself stocks based solely on what you hear. Welcome back to Motley Fool Money, Chris Hill here once again with Jason Moser and Maria Gallagher.

Airbnb has been seeing more people booking longer trips. So in response, the company just introduced a new feature on its platform to enable people to divide longer stays between two different homes. CEO Brian Chesky calls it the biggest change to Airbnb in a decade. Maria, I think shareholders want to know if this is going to lead to more business. Well, I'm personally, as a user, very excited. So this new features, it's called split stay. So once you book a trip for a week or longer, it divides it between two different homes. And if anyone's booked in Airbnb for multiple days, the amount of times I have to go back and

forth and make sure I'm not missing a day if I'm going away for like 10 or 11 days or multiple different places, guests are now going to see about 40% more listings when searching for longer stays. And this is continuing the trend that we're seeing with Airbnb, as more people are staying for longer as people are living and working remotely, nearly half of the nights booked for this last quarter were for stays of a week or longer. One in five nights is booked are about a month or longer. Stays of 28 days or more are making up about 21% of bookings. So I think that this is a really smart feature to add. And I think that it will really help people who are saying,

okay, I'm just going to do a week or two in each place and really plan out a vacation pretty far in advance. All right. Let's get to the stocks on our radar. Our man behind the glass, Dan Boy, it's going to hit you with a question. Jason Moser, you're up first. What are you looking at this week. Yeah, keeping my eye on the Home Depot, ticker is HD. They've got earnings on Tuesday, May 17th before the market opens. Honestly, this is really one of the best Omnachannel retailers out there, it feels like. I mean, they're just, they're getting the consumer wherever the consumer wants. And I think that's really important for retailers these days. We'll pay attention to the ticket size. We'll pay attention to transactions. Actually, last quarter saw a little gross

margin compression. It's going to be worth paying attention to their take, I think, on inflation and supply chains here this quarter and how that sort of sets up for the rest of the year. I'll just conclude with this. Chris, Dan, Maria, I opened a position in Home Depot myself this week, finally added it to my retirement portfolio, a part of that dividend dynasty I've told you about before, Chris. Excited to be a shareholder. Dan, question about Home Depot? I don't know about you all, but I live in a pretty high residential density area. And going to Home Depot because of that is like just the worst thing on the planet. I hate it.

I can't stay. I mean, you go on the weekend, weekday, rather, it's full of contractors. You go on the weekend and you can't even get in the parking lot. Like, what is going on here, Home Depot? Hey, listen, I mean, it is a massive market, right? We've got a huge, huge inventory of houses out there and they're all old. They all need fixing up. Dan. So everybody's out there trying to, you know, that's the beauty of this model. Rain or shine,

winter, summer, you know, there's always something they're selling for you. That sounds like a good situation for shareholders if Home Depot is that busy. Maria Gallagher, what are you looking at this week? So continuing the trend, I'm going to be looking more at Airbnb. So at the end of April, they had 30% more nights booked for the summer than the same time in 2019. Last quarter, they had gross nights booked up 32%. They're up above pre-pandemic levels in most of their most cases. I also really like it from a sustainability lens. So guest spending in the communities that Airbnb supports has supported over 300,000 jobs, and Airbnb itself had collected and remitted more than $4 billion in tourism taxes to local governments around the world.

So I think it's a really interesting company from multiple different lenses, both as an investor and a user. So that's what I'm going to be spending more time on. Dan, question about Airbnb. Sure, Chris. Maria, Airbnb seems like it's everywhere these days in just about every city, just about all over the world. where you want to go. Where's the next stop for Maria Gallagher? Wow, thank you so much for asking.

I'm currently booking a trip to London in the fall. And then I'm thinking of another European city, but I am taking suggestions for a city that I can get to easily from London that will be very fun for a couple of days to travel on my own. Damn, what do you want to add to your watch list? Oh, wow. That's, I mean, this is a tough one because I, as much as I hate going to Home Depot, you have to go there.

And Airbnb is such a great service. So I really am torn here. But because I'm taking a break from mowing the lawn to record this program with you all, I think I have to go Home Depot. All right. Fair enough. Thanks for being here. That's going to do it for this week's Motley Full Money Radio show.

Shows Mixed by Dan Boyd. I'm Chris Hill. Thanks for listening. We'll see you next time.