The Best One Yet - “And the winner of the Slack-quisition is...” — Citibank’s unicorn hunt. Nasdaq goes woke. Slack’s $28B trophy.

Episode Date: December 3, 2020

Forget savings accounts — Citibank’s venture capital arm deserves your attention. Nasdaq whipped up a game changing new rule that requires your board have 1 woman and 1 underrepresented minority. And now that Salesforce’s acquisition of Slack is official, we dove into the numbers Snacks-style to figure out what comes next if you own Slack or Salesforce stock.$NDAQ $C $WORK $CRMGot a SnackFact? Tweet it @RobinhoodSnacks @TBOYJack @NickOfNewYorkWant a shoutout on the pod? Fill out this form:https://forms.gle/KhUAo31xmkSdeynD9Learn 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, the new Friday, December 3rd, Jack. This pot is too good. I don't want to mess around. I want to get right to it. Jack, it's actually better than yesterday's TBOI.

The best one yet. What's our first story over there? NASDAQ is setting new rules to play on their stock exchange. Jack, one woman, one minority, or go home. For our second story, Citibank makes money on interest, overdraft fees, and those annoying ATM fees like $4.50 cents. They're the worst. But Jack, it's the side hustle of Citibank Venture Capital.

that we want to talk about. They should think about stopping the exporting and just focusing on the importing. Side hustle to full hustle. I like what you did with that. For our third and final story, the slackquisition is now official. Snackers, now we know who won and by how much and then, of course, who lost. But before we hit those three, fantastic stories. Wonderful stories, Jack.

Wonderful stories, Jack. This week has been a big week for Forbes magazine. Yeah, it is, Jack. So you got the world's richest people list. And then you got the world's richest sports franchises list, both courtesy of Forbes. The Yankees still haven't recovered from. the loss of Derek Jeter. So true, Jack. But time now, Snackers, for the Forbes 30 under 30 list, which, you know, it drives clicks. They just unveiled over at Forbes magazine, the 2020

class of 30 under 30. Jack, into the first rule of the Forbes 30 under 30 list? I don't. What is it? You got to post on LinkedIn that you're humble. That is a mandatory requirement. And guess who stole Forbes's Thunder like right away? Jack, who stole Forbes's Thunder? Spotify. Spotify just came out with their year and review list. It's called RAP 2020. of your most listened to songs and podcasts. I just learned, apparently I'm trying to become the fifth son in Mumford and Suns. Jack, you've got the beard for it. By the way, I stocked us by listening to our very own podcast for, you know, a casual 3,000 minutes this year. I'm flattered, Nick, that you stocked us. But Spotify's moment in the list spotlight only lasted like 15 minutes.

Jack, you're so right, because then Apple announced its top apps list of 2020. Congrats Disney Plus and Zoom. Surprise, surprise. Oh, and then Inc. Magazine revealed it's top 10 list of business books for 2020. Everybody's publishing lists right now because it's list season and the publishers know that you love a good list. Jack lists drive clicks, toss it on a t-shirt. Nick, do you want to see the top five reasons why someone should come up with a top 2020 lists list? Well, we already listed our three stories in a list, so why don't we just hit them right now. Let's hit it.

You're tuned in the snacks daily. We spoke to the lawyers and we got to get something legal out the way. The snacks are about to hear rain food. It's air candy. Like the views of the robberhood family. It's all informational just so you know. We're not recommending any securities. 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 Fenra slash SIPC. For our first story, the slack acquisition is finally official. If you own Slack, this is a huge win for you. If you own Salesforce, it's a huge loss for you.

Before we get into that, Mark Benioff, CEO of Salesforce, he is a prolific texter. Yeah, he is. He gets back to everyone. Not us, but... Now he owns a messaging company, Nick. A little emphasis on the ad here. There's going to be a lot of ad here. Now, on Monday Snackers, we told you this was happening. Salesforce is buying Slack. But then three wild things happened in just the last 48 hours involving those two companies. Salesforce reported their quarterly earnings. Slack also reported their quarterly earnings. And a $28 billion price tag for the deal was announced. So now that the acquisition is finally official, perfect time, Jack and I were thinking to look at what actually comes next, because no one talks about what comes next.

Seems as straightforward as buying a salad at Sweet Green. Yeah, it does. Someone gets paid, the other does the pay. But Salesforce's acquisition of Slack has some fascinating payouts in particular that we want to focus on. First, we want to announce the winner of this deal. You ready? Okay, yeah, here we've got a list going here. What do we got, Jack?

What are we got? Who's the winner? Slack. Snackers, if you own Slack stock, say that five times fast. It was at a disappointing $29 a share just last week. That's where it was hanging out. It was up just 30% this year, even though many expected that Slack was going to be a pandemic winner, like up there with Zoom.

We thought it was like Zoom sibling. Everyone thought that. That was the thing in May. It's not Zoom sibling. But now Salesforce is going to buy every single share there is of Slack, paying with both cash and Salesforce stock. So every share of Slack is going to receive $26.79 in cash. But wait, there's more.

Yep, no cash on delivery, Snackers. Plus, you're going to get 7.7% of a share of Salesforce. And Salesforce is $220 a share. So that's $17. That's not nothing that's 7.7% of a share. All right, so if you've been keeping track on your little whiteboard over there, we can add this up for you. So Slack stock owners are going to get a $44 payout for a stock

that was worth just $29 last week. Let's do a little more math for you. That's a 51% gain for anybody who owns Slack over the course of just one week. All right, so we've got to talk about the yin to the yang here.

Jack, the loser in this deal. Well, by the process of elimination, it's easy. Yeah, we're going to use that. It's going to be Salesforce. Salesforce was the loser here. Now, Nick, buying a boat is an awesome thing to do,

but it's not awesome if you pay way too much for that boat. It's pretty awkward. And Snaggers, Salesforce is basically Venmoing a total of $17 billion to Slack's millions of shareholders right now. And they're paying another $11 billion, a brand new minted Salesforce stock, which dilutes the value of all the existing Salesforce stock. We're going to the other side of our board board here, doing a little more math, and this deal results in an immediate 15% loss for people who owns Salesforce stock. So on paper, Slack

shareholders won this deal. You got a 51% gain. And Salesforce shareholders lost this You got a 15% loss. But in life, Salesforce is hoping that this deal makes it a more valuable company in the long term with the Slack integration. Even if in the short term, Wall Street doesn't agree. So, Jack, what's the takeaway for our buddies over in the Slack acquisition? Salesforce looks desperate, desperate to keep growing. Snackers, total coincidence here, but Salesforce and Slack both announced third quarter earnings just yesterday when all this was going down. Despite the pandemic, Slack's revenue growth slowed last quarter.

brutal. And it's still not making a profit. And Wall Street's not impressed that Salesforce is paying so much for an unprofitable slack. On the other side of the cloud server, Salesforce's revenue growth would have slowed in 2020 if not for a bunch of acquisitions that made the company bigger. And honestly, Jack and I checked it out. It looks like Salesforce's growth would have slowed more in 2021 if not for this slack acquisition yesterday. Mark Benioff, CEO of Salesforce, refuses to let his company's growth slow down. But that comes at a high big, huge cost. For our second story,

mattress, mattress, mattress. Citibank is not just a bank. No, it's not Jack. Nick, Citibank secretly has one of the most successful venture capital arms outside of Silicon Valley. All right, Snackers, Jack and I have been thinking this for a while, so we're just going to put this out there and say it.

Corporate venture capital arms are the sweatpants of venture capital. It used to be boring. Now everyone's doing it. Everyone's doing it. They're everywhere. In fact, corporate venture capital arms, which are just the VC arms of some company, they've invested in one quarter of all venture capital deals in the last year. For example, Kellogg, the cereal company, they have a venture capital arm. It's called 1894 because that's when the company was founded.

It's clever. And they've invested in purely Elizabeth. By the way, fantastic granola. If there's not a local granola baked like down the road, then I do get purely Elizabeth. It is delicious and crunch. It feels localish. Now, they've also invested in Beyond Meat, which is one of their. big venture capital success stories. But Citibank, the New York City Wall Street firm, they've also got some employees wearing Allbirds and Patagonia vests. Yeah, they do. They got their own corporate venture capital arm, and they've been incredibly busy, Jack and I just noticed. They make about 10 investments a year to startups, giving them about $20 million each, which is one of the fastest paces of investment you see out of any corporate venture capital arms.

And their track record is strong. They've invested in nine unicorn companies worth over a billion dollars, six of whom have exited getting Citibank a nice lucrative financial return. Yeah, so Citibank's not just planning millions of seats, they're reaping multi-million dollar harvest here. And that bountiful harvest rolls up into the parent company, Citigroup, and their quarterly earnings. All right, so Jack and I jumped in snack style, and we notice there's a really interesting strategy to Citibank's venture capital investments. And we're going to illustrate that strategy by imagining together that we're going to buy a standing desk online. Why not? You know, actually,

Full disclosure here, Jack and I record this pod standing. We are always standing. I only record the pod, though, standing, Nick. I do everything else seated because I'm not like Dwight Shrewd trying to prove a point here. Jack and I receded 22 hours of the day and then two hours we're standing on this pot. All right, so you want to buy a standing desk. You go over to Jet.com, which is now owned by Walmart. Yeah, and then you're going to check out so you use Honey, the plug in Honey,

to get a discount code so you can buy that standing desk. Then you wanted to split the standing desk because you and your roommate are both using it, so you use Squares Cash app to pay them back. then once you get that cash in your cash app, you're going to transfer it to your bank account using a service called Plaid. And then you might move that money to your betterment account so you can, you know, invest again. But all those companies we just mentioned in that transaction chain, they all were investments by City's venture capital. And each of those represent juicy, profitable returns because City invested early in all of those booming companies. And some of them

IPOed, some of them have been acquired. Ironically, one of those companies they invested in Square is now nearly as valuable as Citigroup itself. Just eight years after Citigroup's investment. So, Jack, what's the takeaway for our buddies over at City? Doesn't matter what kind of investor you are. Invest in the things you know. Snackers, City's venture capital arm didn't just invest in all those startups because, you know, they were just related to finance.

Get this, two-thirds of the companies that City has invested in. They are vendors of Citibank, like DocuSign, for example, a company city has invested in. And is using on a daily basis. Citibank works with companies before investing them. It uses the products, and so it knew the products. It dated basically before it popped the investment question. This strategy works for corporate venture capital, non-corporate venture capital, even regular old buddies like you and May, regular investors. You can invest in what you know best, which may be just what you've used the most. For our third and final story, the NASDAQ Stock Exchange wants way more diversity on corporate boards, ASAP.

So they're trying to force companies to do so or else they can pack up all their stock and go home. Pretty much the deal here. Now, Snackers, here's the funny thing about NASDAQ. It's a publicly traded company in the business of trading publicly traded stocks. Ticker symbol NDAC, they're listed on their own NASDAQ stock exchange. Jack, ticker symbol should be M-E-T-A.

Not a good call. They also manage the famous NASDAQ composite index, which tracks the stock prices of a bunch of tech companies. But then NASDAQ just came out yesterday. and said, you know what? Companies are too white and they're two male. So they proposed a new rule to the SEC. All right, so here's where it gets creative.

You've got to have at least one woman on your board of directors and one person who identifies as either an underrepresented minority or LGBTQ plus. And if you don't, you must explain why, which is awkward. But the NASDAQ is actually going to make you publicly explain why. Very, very strange letter to put on paper. And then they're going to give you like one or two or three years to change your ways and comply with the new rule. If you don't, you get delicit from the NASDAQ, and then you go to the New York Stock Exchange, which is going to feel awkward for the New York Stock Exchange. We wonder if

the New York Stock Exchange is going to pass a similar rule if this comes into action. All right, so, Jack, I'm going to just throw out some ideas here. You ready? Food critic, pro hockey player, PFWTM board member. We're talking hashtag job goals, because board members, Nick, they can get paid like a few hundred thousand dollars per year to attend like 10 meetings. You even have to fly to these things. You could just zoom. Two years ago, you could have zoomed into these meetings. Here's the thing, though, about board of directors in America's corporations. They are overwhelmingly white and overwhelmingly male. So Jack and I jumped in Snack style, and of the top 3,500 publicly traded companies, only 20% of the board members are female. And only 10% of those board members are non-white. So NASDAQ then cites like two dozen other studies that are showing better diversity, leading to better financial results on top of all that.

One specific example, Boston Consulting Group did a study last year, showing that diverse management teams have 19% better innovation than non-diverse management teams. All right. So add that all up, and we know what you're thinking. So what's like the current situation with all of NASDAQ's companies right now? According to NASDAQ's review, which they announced yesterday with this new proposed rule, three quarters of the companies listed on NASDAQ would fail if the rule was in effect today. That's right. If three quarters of the companies on NASDAQ don't make this change, if this becomes a rule, they would technically have to delist from NASDAQ. Now it's up to the SEC to decide

if this rule is okay before it becomes re-house. So Jack, what's the takeaway for our buddies over at NASDAQ? Big corporations have become de facto lawmakers in America. All right, Snackers, pop on over to Germany. Any board with over three people on it must have at least one woman. That's the law. And California passed a similar law for companies based in California at the state level. But nationwide here in the U.S., Congress hasn't done anything like this. But NASDAQ has to the power as the gatekeeper to stock markets. They're like a bouncer who can check your ID before letting you into the stock market. Yeah, and then if you don't get in on NASDAQ stock market, the only other bar in town is the New York Stock Exchange. You're kind of stuck.

Yeah, it's pretty much two major stock markets. So if NASDAQ thinks companies should have more diversity on their boards, it can require that, oh, and it can make that happen. That's kind of the role of Congress, because it sounds like a legislative policy kind of thing, but Congress hasn't done anything. All right, so when we look at a little bigger picture here, Apple's taken stance with online privacy, Amazon's taking some stance with sustainability, and now NASDAQ has taken stance with diversity. We're seeing companies that are big enough to act as gatekeepers. They're setting de facto laws in America.

Jack, can you whip up the takeaways for us over there? Salesforce just got the company at Wanda Get. But it came at a big cost in Wall Street. Judge that decision negatively by 15%. For our second story, Citibank does banking and venture capital. They invest in what they know and what they use and it's working for. For our third and foul story, NASDAQ is taking leadership in the fight to diversify corporate America. Big corporate gatekeepers, they're right in their own laws.

Now, time for our snack fact of the day. This one sent in by Angela Shen in lovely Vancouver, Canada, and Bradley Freeman from Fantastic Los Angeles. When you're auditioning for a show, Nick, someone might tell you before you're audition, break a leg. Yeah, we've all heard break a leg. They've said break a leg. You've been saying this for years, and it's disconcerting. It's awkward, but you say it. There's a reason, though. They are hoping that you end up getting in the cast.

Let it sink in. It took us a minute. The cast. One word, two meanings. That's called a hominem. Perfect. It's like the takeaway to this snack back. Fantastic.

Snackers, you guys look fantastic today. Jack, I love the Chambrae. Do I look fantastic? You look fantastic, too. Snackers, ask your buddies, H. Y, H. Y is dead. Have you had your snacks daily? Nick and I'll see you tomorrow. Can't wait.

If you know, you know. And before we go, Snackers, big happy birthday to Julia Agostenucci over. in Rome. And happy birthday to Back to Jolla Agamov in Tashkent, Uzbekistan, and to Alex Ellison in Shreveport, Louisiana, and Corey Ireland in Indiana, Pennsylvania. And happy birthday to Meredith Hare in Atlanta. And to Jared in San Diego. And Claire Higgins in Bend, Oregon. And Aporva Adipali in Hyderabad, India. And thank you, thanks to David and Molly just had their anniversary in Irvine, California. And congrats to Michael Kelman and Erica Diddy Combs,

who just got engaged in California. This is Jack, nickel and stock of Square and Apple. and we both own stock of Beyond Me. 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. Financial LLC, member FINRA, SIPC.