The Best One Yet - 📖 “70% Rule of Excellence” — Reading’s business ROI. Vital Farms’ egg-troversy. Instagram’s Big Tobacco suit. +Pokémon’s AI test

Starting point is 00:00:00 This is Nick. This is Jack. It's Wednesday, so VJ Wednesday, January 28th. And today's pod is the best one yet. This is a T-boy. The top three pop business news stories you need to know today. Yeah, it is for those of you watching on YouTube, do not worry. It looks like Jack is being swallowed by a Montclair Patagonia puffer vest. But he's alive and he's surviving. You okay with you there, Jack? Here's the predicament. I had an economic conference yesterday. And I wanted to like show that I used to work in finance. But I also wanted to signal that, like, I'm going skiing after this. How did it turn out? I think going with three vests at the same time was a bold move, and I like bold moves, Jack. Three stories for today's, T-Boy, what do we got on the pod? For our first story, it's Vital Farms.

Starting point is 00:00:47 The cage-free egg brand is one of the largest egg producers in America. But this stock is down 5% on a potential scandal. Or scramble? Let's go with scandal, because its egg yolks are too orange. For our second story, the best. biggest social media court case in history began yesterday. Yes, it did. YouTube and meta are getting sued big time.

Starting point is 00:01:07 This is Instagram's big tobacco moment. And our third and final story. The most innovative business ideas in history came from reading one single sentence. Besties, we need to tell you about how being 70th percentile at three things can make you 99th percentile at one thing. I'm very intrigued. Do the math. We'll give you a pause. One second.

Starting point is 00:01:27 But yet is, before you, that wonderful mix is start. I mean, what a mix of stories. No one else is doing that mix, Jack. All right, this week, we discovered the wild new way that the tech industry is measuring their artificial intelligence. Because the ultimate test of AI potential is actually playing Pokemon. Get this, Nintendo's classic Pokemon game is the surprise standardized benchmark test of large language models. That's right, Silicon Valley literally test how smart their chat bots are by their ability to catch them all. How fast can chat GPT get that charzar?

Starting point is 00:02:00 How fast can Claude grab a chatter pie? How fast can Sam Altman steal my squirrel? Hey, Sam, just get it back, bro. We didn't do this train. Now, here's the context. Nintendo launched Pokemon in 1996 as a game of complex mazes and puzzles. Well, Jack, it turns out the biggest challenge for an artificial intelligence is... Complex mazes and puzzles.

Starting point is 00:02:20 It's the perfect test. In fact, OpenAI employees have a live stream of their latest model of ChatGPT, trying to win Pokemon. How about Google, where their CEO bragged? last year that Gemini hit a whole new level in Pokemon. So far, no AI has ever won Pokemon. True story, no one's beat him. So it's funny.

Starting point is 00:02:38 Like in the 1950s, the Turing test measured computer's ability to imitate with the imitation game. And then, Jack, we measured if a computer could play chess, win Jeopardy, or past the bar exam. But now we're measuring computers with a different game, Pokemon. And besties, it turns out the only technology more

Starting point is 00:02:54 powerful than AI is a bobosaur. I'm going to take off one of my vests before the first story. He's drowning. Somebody helped out my co-host. That's in our three story. Fifteen years before this song, two boys from the Northeast met in the dorm. They had an idea to cause a cultural storm.

Starting point is 00:03:11 It's the best one yet, but the best is a norm. Jack Nick, that's it. I don't even think they need to practice. 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. Start the show.

Starting point is 00:03:31 First, a quick word from our sponsor. For our first story, Vital Farms, the publicly traded co-op of Farmers Market eggs is getting cracked like an omelette on TikTok right now. And if true, the allegations sound bad. They do. But are they true? Hmm, we got curious. Yeties, we got a fratotta fiasco here. The only company trying to increase the price of eggs right now, not decrease them, it's Vital Farms.

Starting point is 00:04:05 Here's the business. Farmers Market eggs, but scaled nationwide under one. We're talking 600 farms providing the supply of eggs to Vital Farms. And Vital Farms provides the one brand to unify them all in grocery stores across the country. Basties, this business model, it's actually pretty common in agriculture, isn't it, Jack? Welch's grapes, ocean spray cranberries, sunkissed. They're all basically co-ops of farms that sit under one brand. But Jack, how would you describe the Vital Farms Egg brand, if you will? It makes it sound like the chickens laying the eggs live in some kind of millennial utopia.

Starting point is 00:04:37 I don't read a line from an earnings report. No, not on the earnings report. On the egg cart. It says happy hens, conscious capitalism, and 108 square feet per hen. I mean, can you sprinkle on some context, please? That's more square footage than in New York City apartment. Scan the QR code, Jack. You can see the chickens doing arts and crafts, I believe.

Starting point is 00:04:55 You want to get on the wait list of that chicken kindergarten. You're not going to believe this hen is a sculptor. Besties, call it the uncaged egg club, because this pasture-raised egg company is doing 3% market share of the egg industry. in this country. And it's actually publicly traded. Vital Farms IPOed in 2020. And the stock was trading at double the IPO price. It was a pure play protein stock until a recent controversy fried the stock. Get this. The scramble started on social media. Did it not, Jack? A TikTok journalist tossed some huge allegations at Vital Farms. Basically, this TikToker, who says he's all

Starting point is 00:05:30 about helping people find local food, says Vital Farms, they got a little bit too corporate. In a seven-part TikTok takedown. This guy cites a study done last year by Michigan State University that found unusually high fatty acid levels in Vital Farms' eggs. And that TikToker says that's because Vital Farms feeds their chickens cheap, quote-unquote, corn and soy subsidized by the U.S. government. He also says that Vital Farms feeds their chickens turmeric, the spice, to make the yolk and the eggs orange instead of yellow. Which is actually, if true, a very strategic marketing move. Is it not, Jack. The orange yolk, if you've ever seen one, it somehow signals wholesomeness and like, wow, this must be a high-quality egg. I mean, full disclosure, I'm willing to pay more for an orange

Starting point is 00:06:15 yolk jack any day of the week. The orange premium. So that's why they're doing it. But the other reason they're doing it is that you can follow the money to the chicken coop. Vital Farm's biggest institutional investors are profit hungry since that IPO. BlackRock, Vanguard, Amazon, Vital Farms' institutional shareholders eat margin for breakfast. Although, from studying companies for years, we can tell you that Black Rock and Vanguard are the biggest shareholders at pretty much every publicly traded company. Now, Basties at first, Vital Farms responded with their primal instincts. They left a comment on this TikTokers video, calling him a BS influencer. But then Vital Farms took 10 deep breaths and wrote a blog post and FAQ combating the influencer's claims instead.

Starting point is 00:06:59 But still, the allegations of greenwashing have had a dent on sales. Now, Vital Farm stock is down 46% from its all-time high because the bad press could poach their Q1 sales. It's 50 shades of orange. So Jack, what's the takeaway for our buddies over at Vital Farms' eggs? Companies face three kinds of police, but only one of them has to prove it in court. Yeties. The FTC, they're the sheriff of our marketplace. If companies lie in their marketing, their job is to catch them.

Starting point is 00:07:27 But it's not just the Federal Trade Commission. There's also Wall Street. Short-selling hedge funds often get ahead of the government in identifying corporate wrongdoing. Those short sellers put out press releases saying the company is lying and that's why we're selling the stock, so it drops. But now we're seeing a third type of corporate police force,

Starting point is 00:07:43 online influencers. You see, Wall Street often sells a stock based on a short seller's allegation, even if that allegation is totally unproven. And consumers do the same when we'd see a takedown of a company on social media. All the time. Conspiracy is the most alluring content on your feed

Starting point is 00:07:59 you want to believe it's true even if there's no evidence. Only the FTC. has to prove allegations in court, but Wall Streeters and online content creators, they don't. Still, we're going to point this out. Many experts, including the authors of this smoking gun study about the eggs, still say that Vital Farms' eggs are the highest quality in the grocery store. But that's not an interesting headline, so it obviously got way less attention. The reality for corporations, they face three police in the marketplace, but only one of them

Starting point is 00:08:25 has to prove it in court. For our second story, Instagram and YouTube are defending themselves in the biggest court case in social media history. But we've seen this story before with tobacco. This is Instagram's black lung moment. Yetis, big tech. They're kicking off earning seasons this week. Big day on Wall Street for these guys. But everyone's eyes are already on a courthouse in Los Angeles because a woman known by the initials KGM, a 19 year old, sued TikTok, Snapchat, Instagram, Facebook, and YouTube. And yeah, KGM's claims on all those companies? While she was a minor, the social media apps compulsively addicted her to her feeds, leading to anxiety, depression, and suicidal thoughts.

Starting point is 00:09:10 And besties, with 3,000 similar lawsuits in the pipeline, this one sets a huge precedent. Mark Zuckerberg's likely to testify in defensive meta because the verdict could change social media forever. And here is the key of the allegation, besties. These apps were designed to addict. The infinite scroll, the auto-playing of videos, the push notifications.

Starting point is 00:09:32 These are described by experts as dark pattern design. Or to quote Tupac Shakur, I didn't choose the feed life. The feed life chose me. The lawsuit says the company should be held responsible for the harmful impacts of addiction, especially against kids if they're found to have made those addictive on purpose. But yet he's here is what Jack and I find fascinating about this story. History doesn't repeat itself. It rhymes.

Starting point is 00:09:56 And Instagram rhymes with cigarettes. This court case is like big tobacco from the 1990s, but substitute Joe Camel for the Infinite Scroll. Our explanation, we see it as the algorithm is a digital nicotine. You got addicted to cigarettes, you get addicted to swipes. Chemically speaking, the impact of a little Instagram bidge does look like smoking. That's right, it does, Jack, because both nicotine and an algorithm push your brain to release dopamine. Basically, you get a digital hit. And the feel-good sensation of dopamine, that's the driver of the feeling.

Starting point is 00:10:29 of addiction. It forces you to grab another cigarette, more cocaine, more gambling, all the addictive things. And it reinforces what doctors call a quote-unquote drug-seeking behavior to get another hit, another hit, and another hit. And we're expecting to see some really embarrassing internal documentation for meta as this case proceeds. Jack, call a plumber because we already got some leaks. What did we already hear about? Employees referred to their app as a drug and to employees of Instagram as drug pushers. Jack and I went to business school and law school, but we can tell you that does not sound good. And that may be why Snap and TikTok settled right at the 11th hour outside of court,

Starting point is 00:11:06 because they don't want their embarrassing details to get out in the public. But Jack, I got to ask, what are Instagram and YouTube saying in defense of themselves in this big tobaccoy case? Exactly what you'd expect Zuckerberg to say that mental health is complex and correlation of using Instagram and being depressed is not causation. And they pointed out they build protection tools. They'll shame you if you're still liking picks after two hours on the the app. But as anyone knows, unless you have the impulse control of the toddler who passed the

Starting point is 00:11:33 marshmallow test, it is really hard to stop using Instagram unless you throw your phone into the nearest lake. I'm sorry, Jack, did you say something? I was distracted. Is it time for the takeaway? Yeah, it is. Okay, yeah, yet he's time for the takeaway. Jack, what's the takeaway for our buddies in the biggest court cases in social media history? Instagram is having its black lung moment. Yeties, in the mid-1990s, 35% of high schoolers smoke cigarettes. Today, it's under 10%. Because the big court cases of the 90s against big tobacco framed cigarettes as a public health issue affecting our minors. So the key to this case isn't that kids use too much social media, it's that the engineers designed them to addict just like the cigarette companies did.

Starting point is 00:12:19 Intentional design plus awareness of harm plus a profit motive equals legal liability. That's the equation. For tobacco, regulations led to age-gating and wild warnings like pictures of black lungs on cigarette gardens. This case could have a similar impact to warn people about the harms of social media or even make illegal addictive design elements like The Endless Scroll. Because the breakthrough for both of these phenomena is reframing the issue as a public health crisis. Apparently Zuckerberg's The Marlboro Man, because this could be Instagram's Black Lung Moment. Now a quick word from our sponsor. For our third and final story, reading is the secret superpower of business success. And we found five great businesses that were born from one thing read by one person.

Starting point is 00:13:12 And being 70th percentile in three things will make you incredibly successful in one thing. That's the 70, 70, 70 percent rule. We'll get to it. But first, besties, one out of four of you have not read a single book. in the last year. We've got the details. We've got the stats. We're not gnarcing on you to your English teacher right now. No, we're not judging. But wait till you're the end of the story. Because we've told you before the wild stat about Warren Buffett. He claims to read 500 pages a day. Not just novels and biographies, by the way. Warren Buffett's 500 pages a day include

Starting point is 00:13:45 newspapers, reports, work stuff, all that good stuff. Before this man punches out, the world's best investor-ready, Moby Dickworth of text every day. So the reason, besties, Warren Buffett's Berkshire Hathaway stock is up 6 million percent in 60 years, and yes, that's a real number? It's that reading is like compound interest for your brain. But besties, the real ROI on binge reading. It's not about everything you read. It's about one thing you read. Because Warren Buffett actually read Barron's magazine for 50 years.

Starting point is 00:14:14 It's magazine about investing. But he only found one investing opportunity that he acted on. But here's the key. That one idea led to an investment that made a $400 to $500 million dollar profit. So, as Warren said, I have made a $400 to $500 million profit from reading Barron's for 50 years and following just one idea. It's a single line win. Basically, a single needle in a haystack of reading was a breakthrough for Warren Buffett worth half a billion bucks. And it turns out many of the greatest innovations in business started because a founder read one line that he or she

Starting point is 00:14:50 couldn't stop thinking about. And Jack and I read about this concept in the newsletter by Trunk Finn. which we happen to be fans of. So, like, for example, Jack, tell us about Trader Joe's. Joe Colom read a statistic in Scientific and American Magazine about the rise in college degrees, so he created a grocery store

Starting point is 00:15:06 for the quote-unquote, over-educated, underpaid. Jeff Bezos read in a magazine that the internet was growing at 2,300% per year, so he quit his job and started something called Amazon. Why did Sarah Blakely

Starting point is 00:15:19 name her shapewear business Spanx? Well, she read in a book that consumers like the sound of K like Coca-Cola, Kodak, or Spanx. Phil Knight was lying around reading a newspaper about Japanese trading companies being flushed with cash in the 1960s, so he reached out to one of them

Starting point is 00:15:35 and funded his struggling startup, Nike. And what led to Bill Gates' passion for the personal computer? Well, he read a line in popular mechanics that stopped him in his tracks. And those are his words. And you know what, besties? Jack and I have the same approach to storytelling. That's how we build every story of this podcast, right, Jack?

Starting point is 00:15:54 We'll read a whole earnings or performance. or an entire article and turn one line that we couldn't stop thinking about into the entire story. So Jack, what's the takeaway for our buddies over in business? Reading is how you unlock the 70, 70, 70 percent role of success. Look, Yetis, reading won't make you the greatest expert in one topic, but it will make you knowledgeable. Reading a book on, say, the hotel industry, it's not going to put you in the 99th percentile of hotels, but it will put you in the 70th percentile.

Starting point is 00:16:24 And Trung's insight from this, it's that it's better to be 70th percentile at many things than 99th percentile at one thing. To know more than 70 percent of people about one thing doesn't take that much time. You could do it just by reading one book. Good point. But knowing more than 99 percent of people, that's going to require years of study. And if you stack up the skills in which you're at 70th percentile, then together that is powerful. For instance, the best comic book illustrator of all time, he was 70th percentile at humor, 70th percent out writing 70th percentile at drawing.

Starting point is 00:16:56 And the overlap of three 70th percentiles makes you a 99 percenter, but in a fraction of the time. It's like the saying Jack of all trades, master of none, but often better than a master of one. That's the full quote. Bestie's reading, it gets us to 70 percent expertise fast, and 70 percent in three skills, that is a talent stack. Jack, could you whip up the takeaways force for Saviche Wednesday? Vital farm stock is getting yoked on allegations made by a TikToker. There are three kinds of corporate police yetis, but only one of them must have to prove it in court.

Starting point is 00:17:29 For our second story, meta and YouTube are in what could be a landmark court case that will likely take months to finish. It's about digital nicotine. The jury, it could hand Instagram its first black long moment. And our third and final story is that the best business minds read a lot. The ROI on binge reading. Because one big idea can come from just one thing that you read. And 70% in three different skills is one heck of a talent stack. But besties, this pod's not over yet. Here's what else you need to know today.

Starting point is 00:17:59 First, India announced the mother of all trade deals with the European Union. It's the number two and number four largest economies in the world that includes two billion people. Basically, one out of four of us. By our math, that is the biggest trade deal in human history. And it's a sign of increased cooperation abroad, while the U.S. hasn't secured trade deals with either of those two. And second, speaking of abroad, Jack, one American movie made more money. money in China than all others combined last year. And who was it? Zootopia 2. Yep, Disney's Zootopia sequel hit $1.7 billion at the global box office, highest animated movie take home ever thanks to China.

Starting point is 00:18:37 Now, China has like stopped watching American movies, but Zootopia 2's the exception. And there's a cultural reason that explains it. This is interesting. You see, the Chinese empathize with the main character in Zootopia, the bunny, who goes from living in the country to making it in the big city. That's the dream of like a billion Chinese people. And the antagonist in Zootopia is a snake, and last year happened to be the year of the snake. So Disney, don't bank on Zootopia 3 being a success. Unless there's a rat as the antagonist.

Starting point is 00:19:08 And finally, yesterday we did a story on Graza, the $150 million olive oil brand that put olive oil in a shampoo bottle. Well, Heinz ketchup just said, hold my beer. They launched the first ever keg of ketchup. That's right, Heinz created a keg of ketchup. That's right, Heinz created a keg of ketchup, aka the keg's up. It's a Super Bowl marketing move one and a half weeks before the bowl. It's also part of a broader trend in food and beverages.

Starting point is 00:19:31 To win the wars on the shelves, it's all about the package. Time for the best fact yet. This one, whipped up by Jack and I, because we got a cool update for you. Well, the Winter Olympics beginning just 10 days, and Team USA just announced the final roster. So we dove in T-boy style, and we got some takeaways. Jack, youngest Team USA athlete? Who is it? Winterberger, free skiing, 15 years old. Oldest athlete who we got? Rich Rahonin, the curler is 54 and still on Team USA. Team USA also features four sets of siblings on the squad,

Starting point is 00:20:04 including the kichucks of Team USA Isaki. But Jack, the state with the most per capita representation, who is it? Vermont. Only three, but that's pretty good for a population of only seven. It's like half the state and Jack knows all three of them. Oh, but the school with the most on Team USA overall, who is it? University of Minnesota. Opening ceremonies next Friday, February 6th, if you know, you know. By the way, for seven Americans, this is their fifth Olympics, including 41-year-old Lindsey Vaughn.

Starting point is 00:20:35 Yeah, it is, you look fantastic for Civece Wednesday. Jack, well, I lost you under the vest. Dude, I'm drowning. I'm drowning in my best. All right. Besties, go enjoy whipping open a few chapters of great expectations tonight, and you'll probably come home with a profit tomorrow. I think that's the day.

Starting point is 00:20:54 And then share that story with someone who you love today. H-YH-TVO-I, Nick and I. We'll see you tomorrow. Happy birthday to Legendary Yeti, Sam Jensen, celebrating all the way over in Utah. Happy 21st birthday to Ivan Jimenez in the University of Massachusetts and Amherst. I think he's got one of those Heinz ketchup kegs, Jack. And Gabby Payne has turned 18 years old down in Orlando.

Starting point is 00:21:22 Happy birthday. Happy birthday to Valerie in Rockford, Michigan. And Trent Wiscoe is turning big. 50 years old in Greenbush, Minnesota. Happy birthday to Jake Jordan, celebrating in his garage in Atlanta. And David Salpy, happy birthday, even though still nobody knows where you're from.

Starting point is 00:21:36 And to anyone else, celebrating something today, making a T-boy. Celebrate the wins. This is Jack. I own stock of Amazon, Berkshire Hathaway and Disney, and Nick own stock of Lulu Lemon.

The Best One Yet - 📖 “70% Rule of Excellence” — Reading’s business ROI. Vital Farms’ egg-troversy. Instagram’s Big Tobacco suit. +Pokémon’s AI test

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