The Best One Yet - 💁‍♀️ “Airbnb can’t sit at Slack’s lunch table” — Away’s humane layoffs. The alphabet-shaped economic recovery. Airbnb/Slack’s debt drama.

Episode Date: April 9, 2020

Away Luggage is sadly laying off staff because you’re not traveling right now (and don’t need their suitcases), but the extent of benefits and way they announced it reveal a major change in HR strategy. Airbnb is raising $1B debt and Slack's raising $750M to get through the corona-conomy, but the 2 different paths reflect 2 different situations. The stock market’s recovery could look like a “V”...or a “U”...or an “L” — we’re breaking down all the options alphabetically.Learn 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. And this is Snacks Daily. It is Thursday, April 9th. Happy Thursday, everybody. This is the last podcast of the week for Snacks Daily. Oh, by the way, stocks jumped again yesterday. Markets are closed tomorrow for Good Friday,

a surprisingly religious holiday to be federally celebrated. We're back snacking and action on Monday. We'll be gone for the three-day weekend. Follow us this long weekend at T-Boy Jack for me, at Nick of New York for Nick, and we will really miss you, but we'll be back Monday, we promised. We happened to have whipped up our best snacks daily ever before the holiday. This is a grade A tea boy, our first story, Slack and Airbnb. Or is it Airbnb and Slack?

Two San Francisco-based former unicorn siblings are managing their way through the corona economy. And they kind of need a little bit of help right now. Slack just asked to borrow $700 million. Airbnb asked to borrow a billion dollars. you know, your standard IOUs. But both got very different responses from investors. For our second story, the stock market and the economy's recovery could look like a lot of different letters.

Could look like a V. Could look like a U. Or, according to Barclays Bank, could look like an L. That would be the worst case scenario. We're breaking down all the economic recovery options. And we're doing it alphabetically because that's how you're supposed to do it. For our third and final story, away luggage is a victim of the coronavirus. economy. No travel, no packing, no suitcase. Away, sadly just laid off a bunch of employees,

but we're fascinated by how they did it and what they said when they announced it. It marks a major shift in HR strategy compared to the last economic crisis. But before you hit those stories, we need to address an overlooked social cultural nugget of change that's occurred during this corona economy. We're talking about the emoji usage on your Venmo that's happening right now. There is an incredible article published on courts that we will tweet out because this is too good not to scroll through. Now, typically Snackers, in the month of March, get this, about a third of transactions, mention the term basketball in some way or another. Right. Either the word basketball or the emoji basketball in your Venmo payment when you're paying that buddy for the March Madness bracket. This is both shocking and shows the simplicity of our entire generation. It's actually an amazing thing.

Well, since March Madness, the NCAA basketball tournament has been canceled. This year, the use of the U.S.S. of the basketball emoji in the month of March plummeted by 98%. Oh, and by the way, to go along with all that, pizza and beer emojis on Venmo, their usage has also plummeted along with the basketball. The celebration emoji, like when Vermont beat Syracuse and the Sweet 16, which was incredible back in 2005, that's also down big. We're talking like the gold megaphone with confetti that randomly is like popping out of this thing. So we know you're thinking, what emoji usage has gone up in response to this bizarre, crazy corona economy we live. Well, this one just gives you a nice warm and fuzzy feeling inside. The

heart emoji up 226% from 2017 on Venmo. We all have to be there for each other. This other one does not make you feel warm and fuzzy. The face mask emoji. I don't know why people were using that in the past, but it's up 2,000% this march. So that got Jack and I thinking about what this really means when it comes to Venmo emoji, because it's much more than just the emoji. We're thinking Venmo emoji use and spikes and usage could be a leading indicator for certain corporate earnings reports. Look at the burger emoji. That thing's down today.

Check out the McDonald's earnings report tomorrow. Look at the sweatpants emoji. Netflix earnings reports could bode well for them. We're tweeting out tomorrow. The court's journalism looks fantastic on this thing. You got to check it out. Now let's get to our stories. You're tuned in the snacks daily.

We spoke to the lawyers and we got to get something legal out the way. It's snacks about the hair ain't food. It's air candy. They don't reflect the views of the robberhood family. It's all informational just so. You know, we're not. recommending any securities. Nope.

It's not a research report or investment advice. Not an offer or sale of a security. Right. Snacks is digestible. Business news for you. Robberhood Financial, LLC, member FINRA slash SIPC. For our first story, Slack is the coolest kid on Wall Street right now. Nobody wants to sit with Airbnb, though.

At the lunch table. You can't get at that luncheon. We're talking about two nearly identical deals. Two very different deals. terms. This thing felt like an NBC game show when they like run out of survivor ideas with bringing people back from the past episodes. Tune in Thursday nights, 8 o'clock Eastern and 5 o'clock Pacific. The first contestant is Slack, the inner office messaging company with an obsessive hate for your email inbox. The Corona economy is a big opportunity for Slack. They want extra money right now

to hire new salespeople to convince your company to start using Slack. They're taking out a $750 million dollar loan and only paying a minuscule interest rate of 0.5% per year. Now, Airbnb is the second contestant, the platform for running out your pad for the weekend, which looks marginally close to the pictures that were posted online. Remember, I got evicted from an Airbnb once. Yeah, I was with Jack. We had to pick them up, and he ended up hanging out my parents on the Upper East Side. Now, Airbnb has a different situation than Slack. They need money to stay alive, and they also need money to say, I'm sorry, to a bunch of super hosts who are upset.

Yeah, super hosts are angry because, you know, Airbnb refunded guests who couldn't go to Coachella or South by Southwest, but they didn't refund the Airbnb host. Right. So it's taking out a billion-dollar loan, and it's paying an incredibly expensive 10% interest per year. This thing is huge. It's also giving out coupons to investors who lend to it for 50% off Airbnb stock. This is no joke. This is straight out of a late-night infomercial. Free shipping and handling only six easy payments of $100.000. $166 million. Jack, what do we have to do to get you in this Airbnb debt right over here? By the way, Snackers, just want to point this out, Jack has watched like 36 straight hours of Game of Thrones. So he was dying to take like a Lannister, always repay your debt's angle on this.

Thank you. Slack is the Lannister family. And Airbnb in this case is Stanis Barathean, like, you're not getting any money from the Bank of Bravos. It's a beautiful thing. Now, if you're curious about what's going on here, it has to do with a risk premium. That's the extra money that's required for for taking on a bigger risk. So let's go to a relatable example. Your buddy asked to borrow money. If it's reliable Rachel asking for money, you'll gladly give her 20 bucks. But if it's your buddy, untimely Timmy, you'll only give him $20 if he agrees to pay you back $30 a way bigger number next week. Translation, untimely Timmy must pay a risk premium of $10, aka 50% interest. Reliable, Rachel, she doesn't have to do that. So Slack is perceived by investors to be very

low risk right now. And Airbnb is perceived to be very high risk. Slack is reliable, Rachel. No risk premium. Airbnb is untimely, Timmy, huge risk premium on that one. So Jack, what's the takeaway for our buddies over at Airbnb and Slack? This crisis won't end until investors start taking risks again. Snackers, our economy is made up of three key parts. You got the government, consumers, and investors. Government spending, the first part, is way up because of the $2 trillion spending bill. But let's be honest, that's not sustainable. Consumer spending is way down and hopefully that recovers when the disease is controlled. Now the third part, we're not talking about as much investing. Investing is down too, and this requires businesses and people to invest money for the future. But right now,

investors want safety. They don't want risk. And we see that in investors' willingness to lend money to Slack and their non-willingness to lend money to Airbnb. For our second story, away luggage just had to unfortunately let a bunch of people go. And the way they announced it shows how much things have changed since the last crisis in 2008. Now, Snackers, whenever we see a headline like this, whenever someone is announcing layoffs, it is devastating, it is sad, and it is painful for anyone to read or see. But we couldn't help notice from a bunch of headlines like this, it's also become a new humble brag opportunity for corporations. Let's take away luggage, which is the brandicorn we've discussed before and

basically sponsors the like flights from SFO to JFK. It's worth $1.4 billion, aka, it's worth $1.4 billion, a.k. It's a unicorn, but it has a brand that is stellar, and it's why people buy its suitcases. They make the kind of roller luggage that you take on a plane, and it makes you feel a little less horrible about being in, like, the second to last seat on the entire thing. The wheels on the suitcase are so smooth, Nick. I dance the waltz with these things every time I'm off the tarmac. No joke, Snackers. We go on a business trip. Jack puts his away suitcase in the hotel bed, and he sticks himself in the closet for the weekend.

I'm glad you mentioned that, Nick, because we haven't taken a business trip in months. Right. And that's a huge problem for away. One month ago, away was profitable. Now they've announced sales have plummeted 90% in the last month and they're unprofitable. And that led to this week's heartfelt blog post in which they announced they're laying off 10% of workers and furlowing another 50% of workers. Now, you're hearing these two terms a lot lately.

We should make a distinction. Laying off is when you're terminated, you can't go back to the job. That's it. Permanently. Like you're done. But furlowing is supposed to be temporary. It means we're not paying you anymore, but you're still going to get benefits. you're still sort of an employee here, and we plan to pay you again when business gets better.

Now, the saddest part about this blog post is when the co-founders revealed many of the people they've let go, they had personally hired and are their friends, and we get it. That is hard. But another thing that struck us, as we read this blog post, how humane the terms of these layoffs were, and just how publicized the act of laying people off has become. Jack and I have noticed that we're getting into a gray area here where these termination blog posts are turning into like a form of corporate bragging. It's almost something you're proud and you hope people see. For example, Oway put right at the top of the blog post,

all of these employees are getting eight weeks of severance pay, and they'll have their health care secured through at least the end of June. And if you're getting paid partially in OAA stock, but it doesn't vest for a while, they've moved up the vesting schedule, so you get that stock much earlier. A lot of these laid-off employees may be concerned about their stock options that are scheduled to expire. Guess what? Away is extending their expiration day.

And incredibly, support is being given to, to employees who are terminated, to navigate unemployment benefits, and Away is covering the cost of career coaching, which is incredible. Now, Away isn't the only company publicizing these HR decisions and tell them the whole world about it. No, we noticed that Salesforce, PayPal, and Morgan Stanley also have made public promises that they will not lay off people because of COVID-19. Right, so that's kind of the reverse of this OA announcement. They are not going to lay anyone off. They guarantee it, and they'll tell you right now. But just like Away, they're doing it publicly. It's part assuring employees not to worry, part PR and part recruiting tactic. Now, none of this stuff

was a thing back in the 2008 financial crisis and the brutal recession that followed. There was no concern for well-being of workers back in 08. There were ruthless layoffs, even by like pretty well-off companies that just wanted to protect their profits. And that's why there's now like an unlimited supply of stock photos showing guys walking out of bank buildings holding cardboard boxes. So Jack, what's the takeaway for our buddies? over it away. During moments of crisis, HR is the new CSR. CSR is corporate social responsibility. It's when a company spends money on socially relevant supportive opportunities. Like charitable donations or nonprofit support or a new rule that there will be no single-use plastic at any of our offices worldwide. You don't want to see it in the dining room. Now, strong CSR has become table stakes. It's a standard that consumers and employees want and expect. If your company doesn't, Doesn't have strong CSR policies that I know about.

You can't sit with us. We're not buying your stuff. Not happening. Socially responsible HR moves is the modern equivalent of CSR. For the sake of company culture and recruiting, you should embed CSR in your HR policies so that you can sit at our table with us. A little humanity never hurt anyone. Snackers, we are at our halfway point.

If you're doing the snacks challenge, time to turn around and run home. For our third and final story, the economic recovery. will have a very specific certain particular look. To understand that look, you need to know the alphabet. Now, Snackers, yesterday we talked about reopening factories. Today, let's talk about reopening the entire economy. Before we get into that, let's throw up on the chalkboard, Econ 101. The key to remember is that every dollar spent in this economy is a dollar earned by someone else.

You buy the tofu bon me sandwich. The Vietnamese restaurant pays the waitress. She takes that money and goes to a flower shop. buys an orchid, and then that flower shop has money. It's all interwoven. It's a beautiful circle of life. But on the contrary, each dollar not spent right now during the coronavirus, which is happening, is a dollar not earned by someone else. Now, those are individual examples, but when you add up all that spending and all that income, you get the big three letters GDP gross domestic product. Gross domestic product is the total size of our economy. And economists expect GDP to shrink by a lot,

as the whole economy is shut down for COVID-19. We're talking 20% to 50% potentially in just this past quarter. But when the shrinking season ends, it's kind of like when winter ends, you want the spring, you want the flowers, you want those little buds to come out of the trees. Jack, you're like a poet. I don't know what you had this morning, but I want three servings of it. When will the economic recovery begin and what will it look like? Now, we noticed an interesting report from Barclay's Bank yesterday,

and they were kind of a Debbie Downer. They predicted what they believe will be a L-Shund. shaped recovery. Now, coming from a British bank, we weren't surprised by a little bit of cynicism, highly cynical. But when you're thinking of an L-shaped recovery, literally picture the alphabet, capital letter L. When you're drawing a capital letter L, you start by going straight down. And that's what we're experiencing right now with declining stock markets and declining economic activity. And what Barclays is saying is that then the economy would stay down, aka the bottom part of the L letter. The bottom part of an L is just a line straight to the

right. No increase, no rebound, no growth. It's kind of a doomsday scenario. Basically, what Barclays is assuming is that this economic shutdown ends up becoming a huge blow to the economy that it doesn't really recover from. Part of that economy dies. Part of the companies go bankrupt and they do not make a comeback. They don't rebound. There is no fourth quarter come from behind win on this one. So Jack, what's the takeaway for our buddies who are looking at the alphabet letter shape of the economy rebound? We want a V-shaped recovery, V like for Victor Yes. But you need to understand the market alphabetical options. Snackers, you got to picture the throwback kindergarten ABC signs that we all had to learn.

I'm picturing it now, Mrs. Taft's class, above the chalkboard, you had an A for Ardvark, Zee for Zebra, and X, X, is always for X. Except there's that one kid raised their hands. They say X-ray, but we're pretty much going with Xilophone on this one. Now, we want a V-shaped recovery. Picture the letter V. You got a steep decline and then a quick recovery. That would be ideal. But another option could be a U-shaped recovery, which is kind of like a V, except it just takes a bunch of longer, which is why you have the drop, then a flattening, and then a return. Another possibility is a W-shaped recovery, which we actually had back in the 1930s. You get a big decline, then you get a small rebound, then COVID-19 makes a comeback, and then you

eventually have a permanent rebound. And then, of course, you still have that Barclays option, which would be terrible of an L-shaped decline. Now, as a reminder, we all want... a V-shaped recovery. The decline has been rapid, and we want an equally fast growth and rebound. But to get that V-shaped recovery, we're going to need a well-choreographed public health initiative along with well-corrored public economic measures. Now that you know the economic alphabet of recoveries, you can talk about this with your buddies. Jack, can you dry clean that slamming salmon sweater over there and whip up the takeaways for us, please. I am ensconced in flannel.

It's my three-day flannel routine. It's a onesie. Slack and Airbnb are both borrowing almost a billion dollars each. Airbnb is paying a huge risk premium, but we're hoping investors start taking risks again. Our second story, away luggage is sadly laying off 10% and furlowing another 50%. Humane layoffs are better than other layoffs, and they're also becoming a positive PR strategy. For our third and final story, a British bank thinks that our economy will have an L-shaped recovery, a.k.a. a steep decline, then no recovery. But Jack and I are worshipping the V-shaped recovery,

a quick decline and then a quick rebound. Remember, V is for victory. Now, time for our snack fact of the day. This one sent in by what sounds like the ultimate basketball team combo here. Megan, Maria, Marianne, and Molly, straight out of Miami. That's four, Nick. But this is also in honor of Maria. Exactly. Those four daughters' mother, whose birthday is today, happy birthday, from Miami. The family that's a litter of together and snacking together stays together. It's a wonderful thing. Now, this snack fact is about Mr. Potato Head, the famous toy, which exists since way back in the 50s. But back then, people used an actual potato. That was Mr. Potato Head's body. It was a potato. When you bought Mr. Potato Head, you would then just get sharp metal body parts that

you'd stick in that potato like pushpins in a minorly aggressive way. The potato wasn't included. and only in 1964, the year of Maria's birth, we got to reiterate, happy birthday, Maria, great lady. That is when Mr. Potato Head came with a hard plastic body that you stick the body parts into. Finally, and we can thank the 1969 Child Protection and Toy Safety Act for making that kind of beautiful thing possible. This was our last pot of the week because tomorrow's Good Friday.

We will see you on Monday. We loved potting with you today. Markets are closed tomorrow, but if you're zooming with anyone this weekend, remember to ask them HY HYSD. Have you had your snacks daily? If you know, you know. The debt securities mentioned were for illustrative purposes only and not a recommendation. The Robin Hood Snacks podcast you just heard reflects the opinions of only the hosts who are associated persons of Robin Hood Financial LLC and does not reflect the views of Robin Hood Markets, Inc. or any of its subsidiaries or affiliates. The podcast is for informational purposes

only and is not intended to serve as a recommendation to buy or sell any security and is not an offer or sale of a security. The podcast is also not a research report and is not intended to serve as the basis of any investment decision. Robin Hood Financial LLC, member FINRA, SIPC.