The Best One Yet - Away suitcases becomes a “Brand-icorn,” Amazon’s airport and food delivery moves, and John Deere = Trade War

Episode Date: May 20, 2019

Amazon made 2 major moves into delivery and shipping by investing in Deliveroo and breaking ground on its own 100-plane airport. Luggage startup Away hit a $1.4B valuation to become our “Brand-icorn of the Day.” And John Deere drops 8% because it’s become a near-perfect illustration of the trade war drama (and Mother Nature).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 Monday. May 20th. And actually, good timing for this one, right? T-B-O-Y. The best one yet. By far. Rough week for markets last week. Let's talk about the three big tariff things that happened. Can you hit me with this? First, ending of tariffs with Mexico and Canada. That's a good thing. Then you had the delaying of tariffs on European and Japanese cars. And then you had a serious increase with China, which is looking very much Cold War-ish at this point. Add that all up and stocks dipped last week. matter all weekend long, Jack and I jumped in. We have three wonderful stories for you guys. Amazon made two huge announcements last week, and let's just say Uber, UPS, and FedEx are all terrified of them. Basically, a $1 trillion company is launching an Air Force and a ground army, so yeah, they're pretty concerned. Be afraid. Yeah, be very afraid. Second story is away luggage. You've all seen these at TSA. It raised $100 million. It's worth $1.4 billion now,

and it's officially, what is it, Nick? Our brandicorn of the day. You go. By the way, here's the key. Away isn't about suitcases. Third and final story is John Deere, the old school tractor company, fell 8% because farmers are buying less John Deere. We're talking like half a billion dollars less of John Deer tractors. That's a serious with a B. Now, we've got one big thing before we jump into all that, right, Jack? Spotify just announced it's Car Thing. Best name ever for a new tech product. Why aren't more people doing this? It's called a car thing. Capital C, capital T, car. Car. thing. This is a voice-controlled virtual assistant for cars. Yeah, it's like a Siri, but for Spotify, and it works in your car. Basically, you stick this in your car when you're commuting, and it's almost like you have a friend with you right there. Yeah, you have a buddy who can handle the dial. You know, the person sitting in shotgun is always responsible for the dial. Huge, huge responsibility there. Now you can just say like, hey, Spotify, this is Jack. I've had a bad day. Please play Adele live at Royal Albert Hall. And then Nick is like, hey, this is Nick. Please play snacks daily because this is

what I do. And then the Spotify car thing is like, why are you introducing yourself to me? I'll just play the music. Okay, I'll play it. A couple details about this product. It plugs into your old school cigarette lighter thing slash electric charger. Right, from the 90s. And it's only being tested currently by people that Spotify select. So it's going to like DM you and say, do you want to try out this beta version car music thing? So this is like a Charlie and the chocolate factory situation. Someone's getting a gold ticket here that's going to upgrade their commuting game. I've already tweeted Spotify asked to be one of those people. Big move. Now, old, original, old school snackers know we kind of predicted this thing, what, like five, six, eight, ten months ago? Last summer, one of our first

market snacks daily podcasts ever, we connected the dots Sherlock's home style and predicted that Spotify was making a car thing just like this. Now, they had leaked some things about it, but we noticed they had like a job posting for someone working on hardware, put it all together in the back end. Boom, car thing shows up. on our doors like a year later. Snackers knew about it first, now the whole world knows about it. So before we hit the rest of our three stories, listen to these keywords. You're tuned into snacks daily.

We spoke to the lawyers. It snacks about to hear 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. 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. Financial LLC. Member Fenbara slash SIPC. For our first story, Amazon just made two big moves to dominate the two keys of shipping. The first one is Deliveroo. Great name.

It's actually an Uber Eats competitor that delivers food from restaurant to your door based in UK and Europe. And guess what? Amazon just led a big investment. And then number two is that it broke round on its Air Force base, aka Camp Jeff. Yeah. Not officially called Camp Jeff. True. That's our suggestion.

I like it. That disclosure jack. Now, let's jump into number one first, okay? Number one is that everyone wants a piece of delivery, the UK delivery company, and Amazon just got involved seriously. Yeah. It just led the most recent investment round, which was like $600 million worth of new cash for that company.

And guess what? Uber stock fell on Friday, probably because Amazon is now ipso facto a competitor of it. Ipsop facto, witsero, Ractro, right up there. It's getting involved with, essentially, it's countering Uber. reads. And then this is what Jack and I thought was fascinating about Deliveru, is that it has a key differentiator, a physical store. It has a physical restaurant in Hong Kong currently. It's planning its second one in Singapore. And we looked at pictures of these places. It's like a fast casual restaurant. Totally. This is like if seamless suddenly opened up a fast casual restaurant in the

Flatiron District that was like the Chipotle for falafels. Now, we don't totally get it because Deliveroo is a food delivery company. But this is just proof that the company is am. ambitious. This isn't just another seamless or just another grubhub or door to dash. They have like aspirations to be brick and mortar, kind of like Amazon does. Very true. And they've got $1.5 billion in investment so

far. Now, there is a little bit of irony here. You want to lay this one down, Jack? Amazon launched Amazon restaurants a little while ago, and they shut it down last year. So they tried to do something like Deliveroo. They failed. So now they're investing in the company that's actually doing what they wanted to do. Boom.

Okay. So that's what Amazon's doing with like small local delivery with delivery in Europe. But what about number two? Number two. Jeff Bezos, CEO of Amazon, grabbed the giant golden scissors and did a groundbreaking ceremony in Cincinnati, Ohio for its worldwide cargo hub. Now, this thing is big. It's like an Air Force base on steroids with the capacity to carry like a hundred planes as if they're going to war with e-commerce land. Now, I said Cincinnati, Ohio, but it's really Hebrew in Kentucky. City. Which is right on the other side of the Ohio River. Very true. Key distinction there. Now, Jack, we've talked about this a lot personally, but Hebron, Kentucky has like a place in your heart, right? Every day I come home from work,

I unlock the door, and I check to see, is there something waiting for me? And guess what? About half the time, I got a package from Amazon, and if you look at the little return label, it says Hebron, Kentucky. Beautiful. One of Amazon's biggest distribution hubs. And it shows you how like a little town like Hebron, Kentucky is actually probably an intimate part of everyone's life who's listening to this podcast. So Jack, what's the takeaway for our buddies over at Amazon who are like getting obsessed with shipping and delivery? It's finally happening. Amazon is taking over its own shipping. Now, we just covered the two keys of shipping here that Amazon's getting intimately involved in. Number one, we're talking short distance, aka last mile delivery. And then number

two, that like long haul, long distance fancy airplane delivery shipping. There you go. Delivery plus shipping equals package from distribution center to your face. Oh my God. Amazon is owning it now. And this is FedEx and UPS and Uber Eats's worst fear. Now Jack and I over the last couple years, we dive into these analyst reports. And we've noticed the theme that when it comes to shipping, FedEx and UPS, they benefit from e-commerce, aka Amazon. But there was always a big butt in every one of those reports. Yeah, Amazon has fed them tons of delivery business over the years. But if Amazon ever decides to do its own shipping, that's a huge concern for these shipping companies. So much cardboard.

Now, what's coming next? We're thinking like a few, maybe some HR moves, Jack? If I'm the top logistics person at UPS, I am pumped about this news. Oh, yeah. And I'm going to get the premium version of LinkedIn because recruiters are going to hit me up and they're going to say, I love what you've done at UPS. Great resume. Whatever UPS is paying you, Amazon will pay you double. We want to endorse you for shipping skills. Snackers, full disclosure. This is Jack. I own Amazon shares. For our second story,

away luggage just raised $100 million and hit a hefty $1.4 billion with a B valuation. Pro tip, if you're getting an away suitcase, get the bigger carryout. You don't want the regular one. You want the bigger one. We're talking like this is the candy version of luggage. This is the kind of luggage

where you would take this out of the overhead compartment and eat off of it. The inside of the suitcase I own has like one million thread count, like beautiful linens. If you've been on a flight from JFK to San Francisco, by the way, there is like a TSA regulation that requires travelers under the age of 36 to own one of these things. They pull you out a line. They're like, sir, you look like you're 28 years old.

How come you don't have an away luggage? You're like, why are you? It's highly suspicious that you don't have a way luggage. Please come to the back room with us. Now, the co-founders are Steph Corey, legendary Brown Bear, and Jen Rubio, who are both former Warby Parker alumni. They used to work at Warby. And at Warby Parker is where they learned how to cut out the middleman and deliver physical goods direct to consumer through an awesome website and some physical stores. And some aggressive social media, right?

Right. A thousand influencers are all over Instagram. Now, they've sold like a hefty number. They've sold one million suitcases thus far. Yeah. And Snackers, open up your Instagram or your Facebook right now. Chances are there isn't a way ad waiting in your newsfeed. Just sitting there.

Now, the fundraise this past week that happened, had some wild news. attached to it, which included something, like, let's get this down, okay? So Jen Rubio, one of the co-founders, had been dating Stuart Butterfield. I feel like I'm telling like a high school story here. Stating Stewart Butterfield, who's the CEO and founder of Slack. And what happened post-fundraising announcement? Jack, I am so glad you asked. Stuart Butterfield, the Slack co-founder, who's preparing for like their company to go public soon, tweeted at Jen a marriage proposal. It said, let's make this a double whammy. Will you marry me, Now, I want to know from the ladies out there, is that romantic? I'm not sure. Well, we both

missed that opportunity because we went a slightly different route. Now, here is the key. Away is actually an amazing lesson in long-term thinking. It had a tough start. It started with two other tech companies, tech slash luggage companies doing the same thing as a way. So we were talking three luggage startups. The year, it's like 2015, 2016. And what was the theme, Jack, of these startups? Battery packs in your luggage so you could charge your phone anytime. That was the appeal. Now, then something kind of funky happened. The TSA banned lithium ion batteries on planes because they could like ignite and start a fire. Yeah, it was kind of an issue.

So Away happened to have this long-term thinking baked in that perfectly prepared them. What was the first key? It was pretty fortuitous, but they had batteries that you could remove from the suitcase. So if you check your suitcase, you can remove the battery and you're good to go. The second key is that Away's co-founders realize that luggage isn't a technology. Luggage should be a fashion lifestyle choice. So they called themselves a travel company, not a luggage company. And a quote from the founder, from the beginning, everything is related to making a travel experience

better. Then they launched a magazine called Here, which was all about travel. This was the seller for me, the 10-year guarantee because those little swively wheels at the bottom of your suitcase, I need a 10-year guarantee because those things break right away. I hate a dongaly wheel on that. And then the other key, their fundraise, they have seven stores already. They're now going to expand to 50 stores all focused on. travel beyond just suitcases. So they're going like Casper here. They're not just online with the

website. They're building physical stores. So Jack, what's the takeaway for our buddies over to way? We're calling this a new breed of unicorns. They're called brandicorns. Exactly. Now, we all have heard of unicorns, which is a private tech company with a over $1 billion evaluation. That's the definition. But there's a bunch of other companies that should be included in the club, even though they're not just tech companies. They're actually physical companies. And in the last few months, these physical companies, these brandicorans become brandicorants because they've reached over $1 billion valuations. Who we talking about here? Albirds, Glossier, Casper, rent the runway, and then Harry's just a week ago sold for $1.4 billion. They've got some tech prowess for sure,

but these companies are brand and physical goods first. For our third and final story, Jack, toss on some striped overalls. John Deere's stock just dropped 8%. And it illustrates every aspect you need to know about the trade war. Now, as a New York City, born and Bray's kid, I didn't see my first John Deere tractor to, like, surr up, like, puberty age. Nick, I pity you because the smell of fresh manure is a wonderful thing. Also, John Deere, not only did he invent the plow, but he's also a Middlebury College educated man in born in Vermont. You could kind of tell. You could, like, sense his presence on campus jack freshman year. I could. I felt it every single day. Channeled the plow. Now, what actually happened with John

Deere's stock going on here? Wall Street whipped out the pitchforks and sold it down 8% because the earn earnings on Friday of John Deere were just awful. Now, we've got to lay a little blame here on Mother Nature because a combination of like bad harvest, some Midwest floods, that's going to affect some sales for farmers. Farmers are the customers of John Deer. And for five straight quarters, John Deere has missed its earnings estimates. And then the CFO laid out this quote in the earnings, which we heard this and we were like, oh, this is a tough one.

This is a tough one. He said further trade progress between the U.S. and China is becoming increasingly important. There's no silver lining to that quote. No. So everything in the trade war that's happening is bad for John Deere. So you've got farmers on the one hand. Because China is buying fewer soybeans with the trade war going on. American farmers are saying, you know what?

We're going to have to buy less John Deere products. About how much less more? We're going to have to pass on 464 million worth of tractors from John Deere last quarter. That's what John Deer is expecting. And then what's going on with steel? Steel, the U.S. has tariffs imposed on all foreign steel. And like, John Deere's like, what the hell? I build my tractors out of steel.

This is going to cost me more. America runs on Dunkin. John Deere runs on steel. And then the third thing is exports. Deer sells tractors abroad. And those sales are falling because of retaliatory tariffs against USA-made stuff. So, Jack, what's the takeaway for our buddies who are riding along over at John Deere? Quick reminder to our snackers, actually.

There are no winners in the trade war. Now, the goal, the core goal, the crux, like the base. The C thesis, the hypothesis, everything going into tariffs is one thing. Buy less Chinese goods. That's the goal. Right. And the only potential winner of this trade war with China is like U.S.-based manufacturing companies that might benefit from us buying less from China.

That's like John Deere. But when you step back and look at John Deere's stock, it is off 15% since the trade war really started around January 2018. Look, China is a huge problem and they're breaking like economic rules, which stinks. but Econ 101. I'm an econ grad from Middlebury College. Tariffs, everybody loses. They're a bad idea. Jack, can you whip up the takeaways for us? Sure. Amazon is making big moves to insource, not outsource, insource its own shipping.

Deliveru, please open up one of your like real physical restaurants in the United States. We want to check this thing out so we can cover it more. Preferably in San Francisco. Let's make that happen. Let's make it happen. Second, away has just become a brandicorn, a new word, which means a non-tech unicle. This isn't fetch. thing is going to happen. Brandicorin is happening.

Third and final story, Deer and Co. That's the official name of the John Deere Tractor Company. It's a reminder that there are no winners in the trade war. Jack, I'd be confident enough to toss that as a tattoo in my arm. No trade war winners. Now, time for a snack fact of the day, right? Yeah, hit us up. Okay, here you go, guys. All right. Philadelphia, the Rome on the mighty Skullkill River was the first capital of the United States, but it also had the first U.S. stock exchange. And there's a third part to the same. And there's a third part to the story. Also, this snack fact of the day is brought to you by Jack Kramer. Third part of the story, Philadelphia had the first business school founded in 1881. It's called the Wharton School

at University of Pennsylvania and Snackers. If you're wondering why this Snags Daily was a little more tea boy than the rest. Yep. It's thanks to Nick Martell, who just graduated from Wharton University with an MBA. Jack, congrats Nicholas. I got the regalia gear still hanging up in the closet. I put it away nicely. I'm still figuring out if I screwed up the hat thing with like the flipping of the thing after you walk down with the diploma. It's very confusing on graduation day. Nick, congrats. This is a big accomplishment. And awesome work. Thank you to all the incredible warden professors and students who have been big fans of snacks from the very beginning. All right, snackers. Thank you for potting with us today. We will be back with you tomorrow as always. Jack,

I like that plan. Can't wait. 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 Robinhood 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.