The Best One Yet - 💄 “$3 for life” — Elf’s sacred makeup. Peloton’s rowing revenge. Big Tech’s M&A R&D.

Episode Date: September 21, 2022

Peloton finally launched its new rowing machine… for $3,200… because “Health & Wellness” is now “Wealth & Wellness.” Elf Beauty will never change the price of its $3 lipstick because of Costco’s $1.50 hot dog deal. And in a 2-year period, Big Tech acquired 175 companies — because you need both a farm system and free agent signings.$ELF $PTON $AAPL $AMZNFollow The Best One Yet on Instagram, Twitter, and Tiktok: @tboypodAnd now watch us on YoutubeWant a Shoutout on the pod? Fill out this formGot the Best Fact Yet? We got a form for that tooLearn more about your ad choices. Visit podcastchoices.com/adchoices Hosted on Acast. See acast.com/privacy for more information.

This is Nick. This is Jack. It's Wednesday, September 21st, and today's pod is the best one yet. The best one yet. TVO-Y, but Jack, do you remember? The 21st night of September. Love was changing the minds of pretenders. While chasing the clouds away.

To our first story. What's our first story, Jack? Peloton stock jumped because it finally launched their rowing machine, but we're focused on the press. Health and wellness is now wealth and wellness. For our second story. prices of everything are growing up, except for the price of the $3 Elf Beauty lipstick.

Elf Beauty's $3 lipstick is Costco's $1.50 cent hot dog deal. And our third and final story. In just two years, Big Tech acquired a shocking 175 companies. But the way, Jack and I see it to win championships, you need Roger Clemens and Derek Jeter. And Derek Jeter. It's all about the end. But before you hit that wonderful mix, Yetis.

I mean, what a mix, man. I love this mix. Every morning, Nick and I separately spend two hours just searching the internet looking for a story to cover for you. We call it our headline hammer. Then we do hours of research. But first, we got to come up with like the right mix for the pod. But sometimes we come across a headline and we have to read that headline twice.

Sometimes Jack and I discover a story of Shakespearean proportions. For example, Beyond Meat, Seas, COO arrested for allegedly biting a man's nose. Oh, we repeat, Beyond Meat's chief operating officer almost ate a dude's schnauz. He went full Mike Tyson on somebody. Apparently, there was like an incident at a football tailgate in Arkansas didn't end well. And according to the local Arkansas affiliate, this guy was hangary. Now, as Beyond Meat shareholders, we were kind of concerned.

And as humans, we were scared. But here's what Jack and I are thinking. There may actually be a bigger Beyond Meat issue here. Because this Beyond Meat Biter represents a vegan plant-based brand. Jack, next time he's just got to take out his frustration on a carrot. If he'd bitten the guy's shirt, that would have been fine. Good point. Because cotton is a plant. If he'd bitten the guy's watch, that would have been okay too.

Metal isn't an animal. If he'd bitten the actual football that was being played in the game, that'd be okay. Yeah, it's not a real pig skin. Well, it's leather, but whatever. So, quick reminder to all the executives happen. Early takeaway, don't bite people. Can't bite people. Especially if you work at a vegan company.

Bite a carrot, not Carol. Beyond Me is adding to their workplace handbook, don't bite people. Let's eat our three stories, baby. 13 years before this song, two boys from the Northeast met in the dorm. They had an idea to cause a cultural storm. It's the best one yet, but the best is an or not. 50%. That's a fat tip.

Tea Boy City on your at list. If you know, you know, because we're ready to go. We can't wait no more, so just start the show. For our first story, Peloton finally launches something new and exciting. Here it is a rowing machine. Peloton is cranking up the resistance on your wallet. All right, Jack, back it up. Let's go three years ago.

Where were we? Like exactly three years ago to this day. We were on a flight to New York City to cover Peloton's IPO live from the NASDAQ stock exchange. It was fantastic. I remember you had a cute top. And we interviewed the chief product office. of Peloton. And remember we had like a gotcha question, like a question we were really excited to ask him. Remember what it was? We asked, what is Peloton's next product going to be? And he said

nothing. He actually wouldn't tell us. It was a little frustrated. We were kind of hoping he would say something. He didn't disclose anything. But even back then, the rumors were that Peloton was going to launch a rowing machine. Well, three years, two Olympics and one pandemic later, Peloton has finally launched the rowing machine. Their bike launched in 2012. Their treadmill launched in 2018 and yesterday, the Peloton Road. Okay, hopefully this one doesn't kill a sex in the city character. In the meantime, can you describe this thing? How does this look, Jack?

All right, it's like the bike. It has a big screen that will yell at you like a live coxin in front of your face. And when you're not using it, you can fold it up like a Nutella crepe and it goes right in the corner of your house. Nice and compact. It barely takes up any space. It looks very sleek. Now, here's what Jack and I find fascinating about this story. Peloton says that rowing requires 86% of your muscles.

But rowing also apparently requires 86% of your wallet, Jack. This thing starts at $3,200. Are you rounding on that? What's going on, Jack? $3,200. And the first flock of these Peloton rows are going to arrive in December right before the holidays. One sec while I take out a third credit card. Low impact on your joints, high impact on your savings account. Full body workout.

Full budget blowout. Okay, this is really another testament to that trend you and I have been noticing, Jack. Health and wellness is really wealth and wealth. If you want to look fit, you're going to need a spotter, and that spotter is a personal banker. But Yetis, this product isn't supposed to be affordably priced. Exactly. It's pricey, and that's the point. That's the point.

So, Jack, what's the takeaway for our buddies over at Peloton? Peloton is copying the iPhone menu. All right, Yeties, you think of the iPhone as a premium product. Because, you know, the most expensive iPhone is $1,600. Yeah, the 14 plus max, it's a doozy. But the cheapest iPhone is a quarter of that. It is. iPhone SEs, $429. Yeah, because Apple knows it needs a range of products to reach every possible customer.

Different customers have different willingness to pay for a phone. And Apple wants all those customers. And that is exactly why Peloton is now offering an app for just $13 a month, a bike for $100 a month, and now a rower for $200 a month. Different prices for different products. Let both Apple and Peloton make a profit off every. Just like the iPhone, Peloton is using a menu to get every inch of your willingness to pay. For our second story, Elf Beauty is winning thanks to one thing, $3 lipstick.

Elf won't change their lipstick price because a sacred cow protects the profit. Let's whip out some numbers here. Jack, how is the stock market in its entirety doing this year? The S&P 500 down 19% in 2020 deuce. Jack, how are your and my portfolios doing? this year. Down more than that. Yeah, but Jack, how is Elf beauty stock doing this year? Elf stock is up 19% so far this year. We jumped in T-boy style so aggressively. We could not find another company who stocks at an all-time high. I'm not sure there's an asset whose price is at an all-time high, besides Elf Beauty. Now, we know what you're thinking. Does this have to do with the lipstick effect,

which we've talked about with you before? In a recession, people need an affordable splurge or two. You're cutting back because of inflation, so you deserve a small tree yourself. You're going to buy a nice lipstick. That's why lipstick sales are at a record high thanks to that phenomenon. Maybe it's her, maybe it's Mabelene. Actually, it's the lipstick effect. But something else is going on at Elf, the publicly traded cosmetics company that stands for eyes, lips, and face. Elf is also beating its buddies.

It's outperforming other cosmetics brands. It's topping Glossiator L'Oreal, all of them. Revlon just filed bankruptcy. They did. Elf stock is at an all-time high. So Jack and I were wondering how. How is Elf winning this war for your face? The answer seems to be stubbornness.

Elf refuses to change the price of their best-selling product, their lipstick. All right, Jack and I literally just paid double digits for a latte, and yet Elf's $3 lipstick is still $3. Same price it was 18 years ago when the company was created. We got inflation at a 40-year high. That means there's huge pressure on Elf to raise prices, and yet Elf won't raise prices of that lipstick. Part of the reason they're keeping the price stable is psychology. Okay, this is fascinating. If a small round price changes, it's more conspicuous to us consumers and we might get kind of angry.

If a $27.43% T-shirt becomes 2847, H&M, you're not going to notice that price change. You're still going to get that t-shirt and you're still going to tell people, yeah, this is my H&M T-Shap. But if a $3.5, that is a cosmic shift and you're going to text Lauren about it. You're going to call your mom if Elf does that. So Elf won't touch the price of the $3 lipstick because they're worried you might break up with them because of it. So this may not be stubbornness. This may be strategy. Jack, what's the takeaway for our buddies over at Elf?

A sacred cow protects a profit puppy. Besties, sometimes one product builds a relationship so emotional with the customer. You don't mess with it. The relationship is so sacred. It's worth to find the laws of economics to maintain it. And Jack and I are noticing that these sacred cow products, tend to be low-price-loved products. Costco's legendary dollar-and-50-cent hot dog deal.

Exactly. Arizona's iconic 99-cent tall-boy iced teacan. They protect their relationship with the customer using a sacred cow product. Which allows them to raise prices on everything else. So Elf is sticking by that $3 lipstick. It's Elf's Sacred Cow. It protects the profit puppies and it's resulting in all-time highs. Now, a word about our sponsor, Robin Hood.

You know, honestly, your salad, it says so much about you. Nick, you like to blaze your own trail at the salad bar. I'm ordering a salad. I go off menu, man, like a combo of kale and croutons that has never been made before. Me? I'm not reinventing the wheel. I like to go classic. Sweekerian thinks it's a good combo.

Jack's not going to change that. Kind of like investing strategies. Someone to build a custom portfolio of stocks, crypto, and options. Others don't want to reinvent. Just give me the most standard ETF. Whether you're tweaking your one-of-a-kind portfolio every day, or prefer a more hands-off approach, Robin Hood has the tools. If you're not investing on Robin Hood yet, to get started, go to robin hood.com slash

T-B-Boy to choose your free stock. That's robinood.com slash T-B-O-I. Limitations apply. Stocks offered by Robin Hood Financial LLC, member SIPC. Crypto offered through Robin Hood crypto. All investments involve risk. By the way, this podcast is not owned or part of Robin Hood, and we are not employees of Robin Hood. For our third and final story, over two years, the five biggest tech companies bought

Get this. 175 other companies. The result, these companies have become the New York Yankees of business. Business. Yeties, there is a reason that big tech is called big tech. Jack, take us back. In the year 2000, it wasn't called big tech. Because only one of the five biggest publicly traded companies in America was a tech company.

But let's check the scoreboard today. Jack, how many of the biggest publicly traded companies in the top five in America are tech? My market cap? Only one out of five isn't big tech. And that one is Tesla, which is pretty tech. It's basically tech. It's all tech in the stock market. Well, one way big tech got to be such big tech is that the five biggest tech companies

acquired 175 other companies. Yeties, you don't notice it because there's no news about it. But Apple does an acquisition like every single month. So a new academic paper decided to notice those acquisitions. They analyzed the 175 acquisitions by the five big tech companies from 2016 to 2017. And again, most of these deals don't get a press release. So these PhDs had to go like full Sherlock Holmes on the research.

The paper is called Mergers in the Digital Economy, written by Belgian Axel Gautier and Joe LaMesh. Now, just in case you don't have 43 hours to read this thing, Jack and I are going to whip up the early takeaway on the paper for you. There were three key reasons that these tech companies acquired other companies. Three reasons why big tech acquired all those other companies. And the first reason, Jack, what is it? It's to grow into a new product area. Yeah, like Amazon acquiring Whole Foods or like Microsoft acquiring LinkedIn.

Why do when you can buy is what they're thinking? Now, the second reason these big tech companies acquired a whole lot of companies is a lot more common. They basically treat a startup like a car. They do. They buy the startup and strip it down for their best parts and throw the rest away. Besties, if you like Face ID on your iPhone, that's a great feature. But Apple didn't create it. No, that was the key.

asset of Israel's Prime Sense, which is a startup that Apple acquired. But the third reason why all these big tech companies acquired a whole bunch of other companies is actually the most impactful. It's the competition crush. Basically, pick your biggest threat that keeps you up at night, buy that threat, and then you can start sleeping at night. That's what happened when Google was already dominating with Google Maps, but they felt a little threatened.

So they acquired Ways, the number two map out. Exactly. Now, we should point out that very few of these mergers face any antitrust scrutiny individually, even though collectively they've helped make Big Tech way even bigger tech. Which made Jack and I think of a baseball game. So, Jack, what's the takeaway for our buddies over in Big Tech? Big Tech is pulling a move straight out of the 1998 Yankees. Jack, our prime baseball years, the late 90s, early 2000s, those were the Yankee gears. Oh, they were glorious years.

Duke. Justinino Martinez. Pasada. Rubin Sierra. Who's on first? These are Hall of Fame names. But that's because the Yankees had a great farm system and signed top free agents. And you know what?

So does tech these days. The Yankees had a top farm system to develop the best young players in-house. Just like those five tech companies spent $71 billion a year on in-house research and development. The Yankees also used free agency to buy the best players out there. Just like those five tech companies. Companies bought 175 of the brightest young startups. 22 Amazon and 22 Apple? They look a lot like the 98 Yankees.

Yeah, they do, Jack. For big tech to stay big, they put on their corporate pinstripes. Jack, can you whip up the takeaways for us over there? Peloton Row is here, starting at 3200 bucks. And they're copying the iPhone menu to capture everyone's willingness to pay. Our second story is Elf Beauty. They will not change the price of the $3 lipstick. No, they won't because that sacred cow protects the profit puppy.

And our third and final story is Big Tech, acquiring 175 companies in a two-year stretch. They're doing it just like the 98 New York Yankees. Now, time for the best fact yet. This one sent in by legendary Yeti Alberto Reyes from lovely Omaha, Nebraska. Push and play. Here we go. Hello, besties. This is Alberto from Omaha, Nebraska. September 15 through October 15 is considered. Hispanic Heritage Heritage Month, enacted into law in 1988, 2022 marks 34 years for this celebration.

With 20 Hispanic countries and one territory, there's a Hispanic bestie out there to celebrate the wins. Alberto, honestly, you inspired us on this one. Nick and how we're talking before. We're going to make a T-boy shirt with the inverted exclamation point Spanish style. Yeah, we're going to stick the upside-down exclamation point before the T-boy turn it into a shirt and get this out for the next Hispanic Heritage Month. Alberto, fantastic. Best fact yet. Thank you for it.

Thank you. Yetis, you look fantastic today. And remember to grow the pod, turn to someone next to you, don't bite them, and say, H-YH-H-T-B-O-I. Leave their schnaws alone. Please. But hit their subscribe button. Have you had the best one yet?

Nick and I, we'll see you tomorrow. Can't wait. And before we go, congrats to Yeti, Taylor Webster, who's got a new eight-pound baby boy named Jack over in Boston. And congratulations to Branda and Christina Wharf for celebrating 15 years together over in Missouri. And Mandy Johnson's got a four-year wedding anniversary over in Colorado. And congrats to Angela Shoe for getting a new job up in Toronto. Meanwhile, Chris Gimler is turning 29 down in Palm Beach with some tuna burgers. Birthday greetings to the Colorado Rockies where Craig Minoff is turning 34.

Meanwhile, Terrence Brake further north is having a birthday in Billings, Montana. Happy birthday to Aaron Tucker in Houston, Texas. And William Madrid is turning 37 for the very first time also in Houston. You always remember your first 37. Oh, and Jack Truels, who's a bestie from Oslo, Norway, is heading to New York City for the very first time. He wants some advice. What do we got? Hit the high line.

Try out the city bikes. Great call. Great call. Keep going. Magnolia cupcakes. Why not? And soak up the subway. You can't go wrong with that combo.

Maybe a burger in Madison Square Park to end it. Where specifically? Shake Shack. This is Nick. Nick on stock of Shakeshack. This is Jack. I own stock of Amazon. Nick owned stock of Beyond Me.

And we both own stock of Apple, Elton, and Robin Hood. And we both own ETFs of the S&P 500. Now a word about our sponsor, Robin Hood. Okay, so Jack and I both worked in finance for a while. And we know the six-monitor Bloomberg jockey with charts, numbers, balances, and more charts. They got coffees in both hands while they're executing some complex trade on a soybean future.

Well, we're not trying to impress with our mission control trading center. Just give us an app. please. Robin Hood with its mobile first and intuitive design, it lets you trade with just a few quick taps on their app. And even if things still don't seem easy, Robin Hood has your back 24-7 with its live and robust customer support. If you're not investing on Robin Hood yet, to get started, go to robin hood.com slash T-Boy and choose your free stock. That's robin hood.com slash T-B-O-Y. Limitations apply. Robin Hood Financial LLC, member SIPC, all investments involved for us. By the way, this podcast is not owned by or part of Robin Hood, and we are not employees of Robin Hood.

You know what that was kind of like when you find out later on in Game of Thrones that Holdor is saying hold the door. It's like, Jack, it's like you planted that there in the past. Like you went into... In season two, I planted that and then we discovered it in season four.