The Best One Yet - 🥱 “Boring Biz” — The Boring Entrepreneurship Trend. 5HourEnergy’s Monopoly. Pokemon’s $3.8B Acquisition.

Starting point is 00:00:00 This is Nick. This is Jack. Welcome back. It is Monday, March 17th. And today's pod is the best one yet. And this is a T-boy. The three top stories at the intersection of business and pop culture. Oh, stocks are shrinking.

Starting point is 00:00:14 Our portfolios are shrinking. Jack's shirt over there appears to be shrinking. What is that? A small media. It's called athletic fit, actually. I'm sure that's what they told you. Three fantastic stories for today's show. Jack, what are we got on the pod?

Starting point is 00:00:28 For our first story, five-hour energy. The tiny $3 bottle of energy just got accused of being a monopoly. So Jack and I found out how the world's smallest drink got so big. For our second story, it's Niantic. The company behind Pokemon Go just got bought by Saudi Arabia for $3.5 billion. Pikachu is cute, but he's way more powerful than you realized. And our third and final story. It's the most exciting new trend in entrepreneurship.

Starting point is 00:00:55 It's boring. It's boring. Boring businesses are so hot right now. So Jack and I will make the case why you should consider running, launching, or buying a brutally boring business. But, Yetis, before you hit that wonderful mix of stories. What? A mix of stories. Love the mix, Jack. Whip out that green top that's been buried in your top drawer of your dresser. And tossing potatoes on your Guinness oatmeal.

Starting point is 00:01:18 Because it smells like St. Patrick's Day today, Yeties. Frank from Finance is handing out homemade cabbage all morning. Carol from accounting is definitely wearing that green lip gloss today. We see you, Carol, but it is not just a lucky day for the Irish Isidjack. St. Patrick's Day is also lucky for investors. Statistically speaking, March 17th is actually one of the best performing days on all of Wall Street. We've tracked it for every year we've been running this pot. We have.

Starting point is 00:01:45 Green is for the portfolio. Get this. St. Paddy's Day is actually the eighth best performing day of the year in the stock market. It's the eighth best out of 252 annual trading days. In fact, over the last two decades, stocks have risen 80% of the time for St. Patrick. And seven of the last eight St. Patrick's days have been green on Wall Street. Oh, we're so certain to this. We even submitted our research to the Guinness Book of World Records. Which was invented by the same Irishman that invented Guinness the beer. Yeah, you know what Javy Diven says about Lucky the Leprecon, Jack?

Starting point is 00:02:19 He's not after your lucky charms. No, he just bought 50 shares of a Shamrock ETF. This isn't financial advice, by the way. No, no, no, no, it is not financial advice. We just heard it at the pub. Can't blame us. Jacklet's in our three stores. 15 years before this song,

Starting point is 00:02:34 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 a norm. 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. First, a quick word from our sponsor.

Starting point is 00:03:02 For our first story. Five hour. energy. The smallest energy drink on the market just got sued for being a huge monopoly. We'll tell you how five-hour energy got so big by staying so small. But yeties, Jack and I have been tracking the trends, and the energy drink market is the most exciting in the beverage industry, full stop. Alani New was recently acquired, ghost energy got acquired, Celsius is rocket shipping. Red Bull is still number one. We did a whole show on it on the best idea yet,

Starting point is 00:03:41 despite that insane competition coming in them from every single angle. But then there's five-hour energy, which isn't an energy drink. This two-ounce bottle is an energy shot. The way Jack and I like to think of it is, five-hour energy is like the short king of the energy industry. They're like Kevin Hut. There's a lot of energy in that small package. Yeah, they're tiny, but they're tossing up big numbers like mugsy bugs.

Starting point is 00:04:03 Now, the founder of five-hour energy actually spent 12 years in a monastery living as a monk. Yeah, his name's Manoge Bargavi. he had a revelation as a monk that somehow led him to pure capitalism. His monkhood ended and he reinvented himself as a businessman, according to the Wall Street Journal. Yeah, with a differentiated energy drink. No sugar, smaller size, same price. That was his bet. Five hour energy is one of those products that, like, has no ingredients and no calories, but somehow has a lot of taste and has a lot of like effects on your body. Apparently that sells, because what kind of numbers did five hour energy do in their first eight years, Jack? They hit a billion dollars. They hit a billion dollars

Starting point is 00:04:41 of annual sales, selling $3 bottles at 90% margins. The rare product that is used by both truck drivers and stock traders. This is not medical advice, but if you take two of them, you got 10 hours of power. Yes, you do. And five-hour energy is still privately held, made in Indiana, and owned by that same former monk. Jack, can make a full disclosure here? On Molly's and my first date, we were having so much fun. We took a five-hour energy at like 10 p.m. to keep the date going. Wild. Did you really? I don't think I could pull that off right now, but that's so out of character.

Starting point is 00:05:15 It was a good first date story. Good first date story. But yet he's here's the news. Five Hour Energy was just sued for anti-competitive moves. Basically, they've been acting like a monopoly. Jack, can you whip out the paperwork for us, please, and read the details of this illegal complaint. Here's the complaint. Five-hour Energy coordinated with convenience stores to basically control the cash register.

Starting point is 00:05:36 Yes, five-hour energy apparently got exclusive placement deals with chains like Casey's to be the only energy shot at the front of the store. The lawsuit continues to allege that five-hour energy got even more aggressive. They told the gas stations to put the competition way in the back. Like vitamin energy, one of their rival energy shots, they got buried at like the end of aisle 6 in the health and beauty section. The health and beauty section at a gas station is the opposite place a construction worker looks for his morning wake-up shot. If you're a forklift operator, You're not looking in the beauty section for your five-hour hit. Now, the lawsuit cites some numbers to back up their complaint.

Starting point is 00:06:15 The lawsuit says that five-hour energy controls 90% of the market. Pause the pot. Didn't we just say that Red Bull was the number one energy drink with 40% of the market? Yeah, Chuck, we did just say, and we've seen that Red Bull is the number one player in the energy drink market. What's going on here, man? Well, how does five-hour energy have 90% if Red Bull has 40%? Well, therein lies our takeaway. yeties, because technically five-hour energy isn't in the energy drink market. It's in a different

Starting point is 00:06:44 market. So Jack, what's the takeaway for our buddies over at five-hour energy? When you build your own playground, you can make your own rules. Yeties, look at that five-hour energy label. It actually doesn't say energy drink on it, does it? It actually says dietary supplement. Even though the name says energy and consumers think of it as an energy drink, it's actually a different category. That reflects a strategy we've talked about before with you on this pod. Category design, creating, designing your own category. Don't play in someone else's playground. Build your own playground where you can make the rules. Five hour energy could be fighting for fridge space in the back with Red Bull, Celsius, and Monster Energy drinks. Instead, it created a new space to sell their product. Literally.

Starting point is 00:07:30 At the front right next to the cash register. Now look, maybe five hour energy went too far recently, and maybe they should get sued for what they were doing. But still, their initials, success after all those years, it still proves this point. When you build your own playground, you get to make your own rules. Just try to make the rules legal. Yeah, you want to keep it legal. For our second story, Niantic, the company behind Pokemon Go just got bought by Saudi Arabia for $3.8 billion. Pokemon Go is way past its prime, but the underlying tech is just getting started. You know what, Yendies, we're just going to put it out there. Pokemon Go, greatest success of augmented reality. And we're including Applevision pros in that

Starting point is 00:08:15 assessment. Yes, we are. And Pokemon Go's origin story, we actually just discovered it during our research. It is wild. Get this. Back in 2014, Google Maps did an April Fool's joke partnering with Pokemon. It was called the Pokemon Challenge. And here's a clip from the wild trailer that they launched with on April Fool's Day. Strong World applicants who collect every single Pokemon will be invited to the Googleplex to participate in the final round of hiring. The winner will start at Google on September 1st, 2014. Basically, they put Pokemon all over your Google Maps and then encourage people in real life to go and like, find the Pokemon.

Starting point is 00:08:52 They'd find the Pokemon with their phone and like, oh, Charzar! He's right in front of the Walgreens. Go get him! I think one second, yeah, that is a jiggly puff on 14th Street Jack. Now, that April Fool's joke was such a huge hit that Google decided to spin out the group that did it into a separate company. And that company became Niantic, a real company based in the ferry building of San Francisco.

Starting point is 00:09:14 Two years later, Niantic shot for the moon with an even bigger version known as Pokemon Go. Because everyone wants to catch them all. Pokemon Go launched nine years in a partnership between Pokemon, Niantic, and Nintendo. And it's still the most successful use of augmented reality we've ever seen. The key is the augmented reality,

Starting point is 00:09:34 not virtual reality, because augmented reality is a combo of the real world and virtual reality. It's the real world with digital layers layered on top of it. To find, to capture, to slay digital Pokemon on your street, you have to use real world GPS. So augmented reality involved real people walking around the real world using their phones as the digital part. And guess what, Nick? People traveled 30 billion miles tracking down Pokemon on Pokemon Go. We did the back of the envelope math on that.

Starting point is 00:10:03 That's about 4 million physical trips. around the earth playing an augmented reality game on your phone. It had a huge, huge impact. 500 million people played in the very first year. Bringing in $8 billion in total revenue since then, Jack, could we peek a chew into more numbers, please? 8 billion in revenue for Pokemon Go is about one third as much as Snapchat has brought in in the same period, and Snapchat's considered the AR leader.

Starting point is 00:10:31 But since then, we should point out, Niantic hasn't found as much success even though 100 million humans still play this game every year. Pokemon Go is kind of their one-hit wonder, which leads to the news. Scoply, a video game company owned by Saudi Arabia's wealth fund, known as PIF, bought Niantic last week for $3.8 billion. They were basically like, I choose you, blast twice. I choose you. Now, we all know the Saudi Arabian kingdom is interested in diversifying away from just oil.

Starting point is 00:11:01 But Jack, did not know the Saudi royal family was really, into Pokemon collection. I didn't know there were Pokemon fans either, but the story is this. They're not buying Snorlax. They're buying the software. So, Jack, what's the takeaway for our buddies over at Pokemon?

Starting point is 00:11:19 It's a reminder that tech is more valuable than content. Yeties, by buying Niantic, Scopely and its Saudi owners are getting an impressive tech platform. They're using this Pokemon underlying tech to develop spatial computer. Yes. Which is a term Apple actually created with Apple Vision Pro.

Starting point is 00:11:38 Basically, they're seeing Niantics value not as the game, but in the underlying technology that makes the Pokemon game possible. They're basically going to create some kind of a headset, probably, in the future, with this Niantic technology. This is the same reason why Netflix is worth twice as much as Disney. And why Spotify is worth more than any of the three major record labels. And why Airbnb is worth more than Marriott. The tech is more valuable than the content.

Starting point is 00:12:05 Saudi Arabia, they're not playing with the snorlax over there. They're buying Pokemon goes tech. Now a quick word from our sponsor. For our third and final story, the most exciting new trend in entrepreneurship is the least exciting. It's the business of boring. The business of boring. When owning and running a boring business is actually a thrill.

Starting point is 00:12:34 Yet is the 2010s, a golden, beautiful age of startups. There was girl bosses, boy bosses. Thank God it's Monday. Hustle culture. But first, coffee, Jack. Interest rates were low. Venture capital money was high

Starting point is 00:12:48 and the rise of social media was fueling at all. Every day, as Nick and I were coming of age post-college, there was a new direct-to-consumer mattress brand advertised in the subway. Mattress, mattress, mattress. Hey, you're starting a meat-based plant, e-commerce disruptor. Here's $50 million in funding so you can take on Heinz and Amazon. In 2017, if you showed a VC a pitch deck for an e-scooter company, you'd have a billion

Starting point is 00:13:13 check before you left the building. Jack, they'd give your mom a billion dollars because why not? It's a rounding error. It was an exciting time. Everything was cutting edge. The gig economy. Web 3. Exciting startups were a thrill. This was the sexy startup era. But here's an update on all of that. The hot new entrepreneurial trend is boring industries. Boring industries. Yeties, young people are still launching startups, but not SaaS tech companies. They're launching glass companies. Yeah, like old school window glass. You can cut yourself on it. Be careful. Because the business of boring is booming right now. The boring business boom. That's what we're experiencing. According to the New York Times, young entrepreneurs are starting plumbing businesses, garage door opener businesses, custom glass

Starting point is 00:13:58 businesses. Basic but profitable businesses. Over at business schools, the most popular class we're hearing right now is entrepreneurship through acquisition. How to buy. a boring business. Meanwhile, over on YouTube, there's a surge in influencers with viral videos promoting what theme, Jack? How to launch and run a boring business. Now, Yeti's Jack and I got fascinated with what's going on here, and we noticed there are a few macro reasons behind this trend. First is the silver tsunami. Baby boomers still own 25% of America's companies, but every day, more and more of them are retiring. So millennials and Gen Z entrepreneurs are buying up those boomers boom in boring businesses.

Starting point is 00:14:37 Millennial Millie is buying Boomer Bob's regional pool installation company so that Bob can spend more time by his actual pool in Bocadelvista. Now, interestingly, it's not just the age social trend. It's also a financial funding trend. It's easier right now to get a small business loan to buy like a plumbing company than it is to raise venture capital. The small business administration, they have loans, some of which only require 5% cash down. That's pretty low. Just put together a well-thought-through business plan, and you could be

Starting point is 00:15:09 approved. In fact, we discovered there is an entire website right now, a platform for selling or buying boring businesses, like a Craigslist for laundromats, basically. It's called bizbuy-sell.com. Pretty straightforward. It's a boring business platform. So add it all up, and young entrepreneurs are pulling a Bob Vance, buying and running random refrigeration companies. Hi, I'm not Bob Vance, but I'm the new owner of Vance Refrigeration. That's perfect because I'm with Vandalay Industries and we can work together, Jack. So, Jack, one sec. All right, I'm using our T-Boy cash to acquire a laundromat.

Starting point is 00:15:45 Jack, what's the takeaway for our buddies over in the boring business boom? Entrepreneurship isn't about ideas. It's really about taking a risk. Yeties, some people feel that to be an entrepreneur, you have to have an amazing idea for a new product. the case, though. Old businesses that have been around for decades, they need an entrepreneur to be at the top of the company. You might be an MBA, see the AI future, but think to yourself, I don't know if I can compete in AI. I don't have the skills to face artificial intelligence. You might think,

Starting point is 00:16:18 I don't have an idea either that's going to get a VC excited. Well, honestly, the way Jack and I see it, that doesn't matter. You can still be an entrepreneur as long as you're willing to take a risk. You do understand how finance works. You know how taking a loan is a risk, but you've analyzed the numbers, you forecasted the financials, and you're willing to bet on yourself. The way we see it, entrepreneurship is exciting no matter how sexy or unsexy the business model. Because you're taking a risk and you're motivated by the upside.

Starting point is 00:16:47 And this boring business boom, it's a reminder of exactly that. Entrepreneurship isn't about having an idea. It's about taking a risk. Jack, could you whip up the takeaways for us to kick off the week? Five-hour energy is being sued for how it came to control 90% of the energy shop market. When you build your own playground, you get to make your own rules. For our second story, the company behind Pokemon Go is now owned by Saudi Arabia after a $3.8 billion acquisition. It's a reminder that tech is simply more valuable than content.

Starting point is 00:17:23 And our third and final story is the big trend in entrepreneurship, established mature industries. It's the boring business boom. It's the boring business boom, because entrepreneurship isn't about ideas. It's really about taking risk. But Yeties, this pod's not over yet. Here's what else you need to know today. First, Bill Simmons just got a new deal with Spotify after 2020's $250 million deal. With this promotion, he will become Spotify's head of talk shows.

Starting point is 00:17:53 And he'll continue co-hosting about like seven or eight different shows on the Ringer podcast network. Honestly, odds are he's on a microphone right now. Second, the head of the EPA just announced a new purpose that includes making it more affordable to purchase a car. That's right. Their argument is that clean air policies from past administrations have made cars more expensive, so the EPA is undoing many of them. The EPA is more focused on economic stimulus than environmental protection. And finally, Manhattan apartment rents just jump to another record high. Get this, median rent in Manhattan, $4,500. Bruckland is about $1,000 a month cheaper, by the way. But here's the wild stat. One out of three new leases in Manhattan is signed after a bidding war. Which means if you're going to view an apartment,

Starting point is 00:18:41 you've got to go with all your paperwork ready. You've got to have your guarantor set up. You probably need like a cashier's check to show that you have the money. Oh, and you got to be willing to fight. Like you got to bring two spotters with you and someone's got to like hold back other people, maybe try to steal some pens. It's a jungle out there. Good luck, Eddie's in the West village. Good luck. Now time for the best fact yet. This one sent in by Patrick O'Leary. The most popular beer being drank today is Guinness. Guinness is brewed in Ireland. But Ireland is not the most popular country for consuming Guinness. Guess who drinks more Guinness than Ireland? Nigeria. Yeah, Nigeria. The African country of Nigeria is actually the number two consumer of Guinness in the world after the

Starting point is 00:19:22 United Kingdom with Ireland in third place. There was actually a Guinness ad campaign in the 1960s based on this slogan in Nigeria. Black is beautiful. And you know what? Totally worked. It's delicious, too. Yetties, you look fantastic out there, especially if you're running a boring business over there. If you are, drop that business in the comments. We want to know what it is. Yeah, we want to see it. By the way, nothing boring about running a business, even if that business happens to be in a boring industry. I know Bob Vance listens to this show. Oh, yeah. So I expect to see Vance refrigeration in these comments. Oh, absolutely, Jack. It has to be there. Yeties, remember to draw. drop down and give us five stars a rating and review.

Starting point is 00:20:00 That helps grow of the show. Jack and I, we'll see you tomorrow. And before we go, a happy birthday to Yeti Ignacio Zaragoza down in Rockland, California. Happy second birthday to Harrison Beery in Des Moines, Iowa. No Guinness, just chocolate milk, but honestly, I'd go with the chocolate milk, too. Brown is beautiful, too. And a shout out to Lissette, a legendary bestie who I just ran into in the ferry building, Jack. She listens with her husband.

Starting point is 00:20:28 There are a couple of besties together. And if you want a shout out on the show, click the last one. links in the episode description. We got a simple Google form and you can make the show. Or go to tiboypod.com slash shoutouts and Jack and I will get your celebration on the pod. This is Jack. I own stock of Disney and Netflix and Nick and I both own stock of Airbnb. And Jack also owned stock of Amazon.

The Best One Yet - 🥱 “Boring Biz” — The Boring Entrepreneurship Trend. 5HourEnergy’s Monopoly. Pokemon’s $3.8B Acquisition.

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