The Best One Yet - “By that math, Instagram is worth $150B” — Chipotle’s Taco Bell-ification. Instagram owns Facebook. Spotify’s acquires the Ringer

Episode Date: February 6, 2020

Turns out Spotify just made (another) acquisition in the podcast space because it’s trying to build a “gated garden.” Instagram’s numbers leaked and we finally learned how it stacks up to YouTube. And Chipotle’s sales surged 13% because its new CEO is cooking up a Taco Bell-ificiation strategy.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, February 6th. This is the best one yet. We're talking to T-B-O-Y-T-Boy. There is definitely a snack right now who is eating at Chipotle, scrolling Instagram, and listening to us on Spotify.

You're going to see why we think that. Okay, let's kick it off with Spotify. It just announced another earnings report and made another podcast acquisition. This time it's acquiring the ringer. And it all comes down to creating a gated garden. You gotta love a good alliteration here. Not a secret guard by Bruce Springsteen. No, no, no, no.

Nick and I tried singing that earlier. No, we didn't record that one. Second Story, Jack, what do we got? We got some particularly wild info about Instagram. Turns out the gram is 25% of Facebook's revenues. Also, yeah, it's owned by Facebook. Everybody should know that. Now we've got to see which is more generous.

Yeah, Instagram or YouTube. Two subsidiaries that we just learned details about. Third and final story, Jack, what do we got? Chipotle's sales growth was shockingly. drippingly deliciously. You're looking at this thing. Our faces smell like Chipotle just covering this thing. Get me some barbacoa. We're looking at the Taco Bellification strategy of Chipotle. You're going to want to puer your body after hearing this one. There was a lot of juiciness. Now snackers, it's the third day of the T-boys. Oh yeah. The annual awards for business awesome. Are we doing a gift bag for

this, by the way, Jack? What kind of a gift bag? The Oscars, they give you like a Rolex, a week on a yacht, and I think a Pilates instructor. It's pretty high-end gift bag. It's a good job. I don't think we're giving a gift bag. No, we're not doing gift bags this year. Yesterday's winner was CEO in a leaving role. Right, and that is going to our friend Adam Newman of WeWork. Although Carlos Gohn from Renault and Nissan was a close second. He couldn't listen because of the fugitive stuff, but trust us, Carlos, you're up there, man. Now, the Oscars has an award for Best Foreign Film. So we're...

Our third T-Boy Award is Best Foreign Firm. Yes, we've got Best Foreign Firm, which company, based outside the United States, has performed the most interestingly over the last year. Now, we know what you're thinking. Alibaba, the Amazon of China. Yep, they haven't done that much. They haven't done that much, so we didn't include that. What about LVMH, the luxury retailer in France?

They acquired Tiffany. That's true. But it's hard to pronounce their French name. So we didn't include that. We thought about Ferrari in Italy. It's a pretty high-end, pretty expensive car. But where's yourself drive and affordability? When is the $30,000 model coming out, Ferrari?

We didn't include Ferrari. And finally, we considered Lulu Lemon, which is based in Vancouver, Canada. And the reason we didn't choose it is, we actually. nominated that for something else this week. They were already nominated for Best Product and a Supporting Role with Men's Pants. You only get so far loose. So instead, we've decided a different set of four nominees

for Best Foreign Firm to win the T-Boy. The first nominee is A.B. InBev, the owner of Budweiser, which is based in Leuven, Belgium. For Spike Soutzers and other beverage innovations. Second one is Adidas, which is based

in probably Hoen-Schernhaus in Germany, whose stock has risen 60% in the last year and partnered with Beyonce. Yes, they did for the Ivy Parkline. Third up is Spotify, which is based in Stockholm, Sweden. Basically, nominated for all the reasons we're about to lay out when we cover them in a story today. And our fourth nominee for Best Foreign Firm is Luckin Coffee based in China.

They have tripled the number of stores and six-xed the amount of revenue. Wow, we really got a robotic co-host here. Well done. I'm just trying to be an envelope. I'm just want to be an envelope. Is that too hard? You're doing a good job. Snackers, vote for best foreign firm at Robin Hood Snacks on Twitter.

I think we've got a thousand votes two days in a row. Let's make it three. Let's hit our three stories. You're tuned in the snacks daily. We spoke to the lawyers. The snacks about to hear ain't food. It's air candy. They don't reflect the views of the Robin Hood family.

It's all informational just so. We're not recommending any securities. It's not a research report or investment advice. Not an offer or sale of a security. Snacks is digestible, business news for you. Robberhood Financial, LLC, member Fenra slash SIPC. For our first story, Spotify just acquired The Ringer, aka the ESPN of the future.

That's what Spotify calls The Ringer. But this is part of Spotify's gated garden strategy. Oh, I love that alliteration there. Now, Spotify is a mid-20s to early 30s company. Oh, God. Not talking about age here. No, what we mean there is it's key metrics consistently grow at the mid-20s to early 30 percentages year-over-year.

Free users, premium subscribers, revenues. They rose 32%, 29% and 24% in the last quarter. Mid-30s. But it's still unprofitable, just like a mid-20s and early 30s person. It's classic. Spotify's still living in its parents' basement. Let's just put it that way. Now, Spotify is losing money in part because it's invested over a half billion dollars in podcast.

CEO Daniel Eck, apparently a big bin show. shopper when it comes to the acquisition game. This guy has a serious podcast shopping problem. Doesn't wait for Black Friday. If he sees some audio that he likes, he hears it, and then he buys it. Let's talk about the podcast company Spotify has acquired in the past year. Gimlet, which is a variety of podcasts. Parcast.

Which is dozens of more true crime and like horoscope podcasts. Anchor. Which is like a DIY podcasting software. And now Spotify announced yesterday it acquired The Ringer, a media company focused on podcasts and sports news. Founded by a former ESPN guy who got kicked out of ESPN because he was too tough on the poor old NFL. He said something bad about Roger Goodell.

Also, this is another Boston sports guy. Yeah. Who's a successful sports digital media entrepreneur. Just like Bastul, something must be in the loft step there. Dave Portnoy, Bill Simmons, both had successful sales recently. Now let's talk about what fascinated Jack and I, which is the gated garden strategy, our words, not theirs, behind Spotify's acquisitions. The gated garden strategy involves showing something beautiful to everyone for free,

but eventually putting up a gate and making people show their idea. Also involves the ability to say gated garden five times fast, which both Jack and I are incapable of doing. Bill Simmons podcast, that's the key podcast of the ringer. Right. Gimlet's podcast. Currently, you can listen to all of Spotify's own podcasts and pretty much anywhere. Yeah, mostly for free. You can listen on Apple.

You can listen on Breaker. You can listen on Google Podcast. You can listen on Stitcher. Now, these podcasts are like beautiful chrysanthemums, daisies, lilacs, roses in a pretty garden in the middle of town. Jack, we were really biting off the words that are hard to pronounce today, chrysanthemumums. These podcasts are like a public good. Anyone can listen on any platform. But here's the thing, Snackers, these podcasts, they're not exclusive to Spotify yet.

Even though Spotify owns them, they're not exclusive to Spotify. But Nick and I expect a shift by Spotify to make these podcasts that. they've required, available only on Spotify. Doesn't mean that they're going to charge you for them behind a paywall. It just means you can only get them if you download the Spotify app. What we're saying is Spotify is going to build a gate around that beautiful garden that you're obsessed with with all the flowers inside. Who doesn't like a tulip? And they figure enough people have fallen in love sniffing and checking out those flowers.

Have you smelled the tulip? That they will be willing to download the Spotify app in order to keep listening. Trust us on the tulip. So, Jack, what's the takeaway for our buddies over at Spotify? Spotify could trigger a podcast war against Apple. Apple and Spotify. They are the clear number one and number two when it comes to podcasting platforms. Spotify just acquired its ESPN. By the way, that's what it referred to as the ringer. They're like, this is the ESPN of today. Spotify just acquired the ESPN. What is Apple's response? Are they going to maybe buy the athletic? Yeah. Are they going to arm themselves with some sports podcasts? Could they buy the actual ESPN? Now, just like in the video content war Everyone was like, I gotta get Seinfeld, I gotta get Seinfeld, I gotta get Seinfeld exclusively on my platform. We could be on the dawn of a podcast content war.

Some podcasts could end up just on Apple. And some podcasts could be just on Spotify. In a world where podcasts choose sides. For our second story, Jack, you take a photo of me over here? Instagram is way wealthier and a lot more selfish than its cousin YouTube. Is that Chambra? You look really nice. I like chambre because it's a jeans thing you can wear if you don't like jeans.

Doesn't feel like jeans? It kind of looks like jeans. Actually, that is june. It's faux dana. You are wearing jambre is faux dana. All right. Back to the story. Is it Instagram being more selfish or is it YouTube being more generous?

Jack and I are having that like Greek philosophical debate over here because we got some fascinating information about Instagram yesterday. On this podcast, we have debated what is the best merger and acquisition of all time. Right. We're talking like best value for your money here. Now, the number one candidate is Facebook acquiring Instagram in 2012 for $1 billion. The other option here is Google acquiring YouTube in 2006 for $1.6 billion. The third option is the Yankees acquiring Babe Ruth in 1918 for $125,000.

By the way, Babe Ruth would have loved Snacks Daily. Just want to point that out. Now, a report from Bloomberg this week confirms to us that Instagram for a billion dollars is definitely the winner. Best Acquisition. Now, Snackers, this comes to us courtesy of PFWT. According to people familiar with the matter, the best kind of people. Those ads that you encounter in your Instagram feed

for like a Casper knockoff mattress. You got to sleep on this thing. All of those ads last year for Instagram generated $20 billion of ad sales. Even the ad sales that were pitching your V-Nex sweaters, even though neither of us wants V-neck sweaters. Instagram. Know me better.

Figure it out. Take more of my data. Or Chambre. That's not my style. Or Chambreet. By the way, that $20 billion from Instagram, that is a critical number to note because it is 25, percent of Facebook's total revenue.

All right. So Facebook has his core app. It's got Oculus virtual reality headsets. Yeah, pretty much. It's got WhatsApp, like the most popular messaging thing in the world. Yeah, totally. And it's got Instagram. And Instagram is a quarter of the total revenue.

Again, Snackers, to go back to the acquisition from eight years ago, that was just for $1 billion. Instagram was purchased for just $1 billion. And now it's 25% arguably of Facebook. Facebook's worth $600 billion. So you could argue that Instagram is worth $1 billion. worth $150 billion, and it got acquired for $1 billion. And remember Snackers, Jack and I love to hammer this hone.

Facebook is an advertising company. It makes money basically just on ads. Now finally, Instagram makes $20 billion a year in ads. For comparison, the New York Times, arguably the leader in news, they made less than $2 billion, less than one-tenth of Instagram last year, and that was for both ads and monthly subscriptions. So, Jack, what's the takeaway for our buddies over at Instagram? YouTube is way more generous than Instagram. Let's throw up the old revenue scoreboard here

because it appears that Instagram's $20 billion in revenues is beating YouTube's $15 billion in revenues. But it's actually much less close than it seems. YouTube's actually further behind when you dig a little deeper. YouTube shares a big chunk of that $15 billion in ad revenue with the video YouTube stars on its platform. So Snackers, let's say Jack launches a YouTube show of him just pronouncing flower names, starting with chrysanthemum.

Called Wacko Jacko. Telling you, two of them are the best. If he gets 1,000 subscribers and at least 4,000 hours of viewing for this wonderful channel, he can start making money off of it that's shared with him from YouTube. That's right. If you hit that threshold, if you guys subscribe to Wacko Jacko Sniffs Flowers on YouTube, if I hit that threshold, YouTube will share ad revenues with me. Instead, Instagram keeps all the ad revenues for itself.

YouTube shares, Instagram keeps. For our third and final story, Jack, unwrap the tin foil off me over here. Chipotle's sales surged because of Taco Bellification. Is it chambre? Is it aluminum foil? What do you wear it? I'm just happy that it looks like denim and I don't have to feel denim. Let's get back to the Taco Bellification of Chipotle.

Snackers, we have a wild stat for you that Jack and I found fascinating. This was from Chipotle's quarterly earnings report, which came out yesterday. Same store sales. Which are sales at stores open at least a year, not the new stores where there's like a lot of excitement. Same store sales at Chipotle rose by 13.4% last quarter. That is insane. That is nuts. Can we put this into context?

Let's say the average Chipotle restaurant sold 100 burritos last year. Following it. This year, the average Chipotle sold 113.4 burritos. I mean, barinos are good, but are they 13.4 burritos better? You don't get jumps like that in the food industry. That good. You might get a little growth, but not 13% growth. Jack and I thought that.

So we jumped in snacks out. I wanted to give you guys a little bit of a comparison here. McDonald's most recent same store sales growth was 5.9%, less than half of Tripoli. Shake Shacks was just 2%. KFC, 3%. Pizza Hut was flat. They didn't even move. Taco Bell, 4%.

Target, which is just like a retail store, brick and mortar location. They're not really selling fast food? 4.5%. Seriously. Brick and mortar, physical stores to jump 13. 4%, especially in the food industry, that is awesome. We know the guac is extra and we're impressed. Now, what's driving this growth is the Taco Bellification of Chipotle.

Taco Bellification. That is using hacky Taco Bell strategies to grow fast. Let's compare Chipotle with Taco Bell. Right. One's a little bit more premium than the other. One's a little more fun than the other. Taco Bell's a little bit more like sweatpants. Late night sweatpants.

Yeah, show up as you are. Chipotle is a little bit more like khakis. Maybe you press these things. Throw on the chinos, throw a comb through the half. Chipotle's more Prince William. Taco Bell's more Prince Harry. They should run with that marketing campaign. Now, the reason behind this Taco Bellification of Chipotle is because of the new man in charge

who's been around for like a year and a half, two years. Brian Nicol is the CEO of Chipotle. He worked at Taco Bell before this. Yeah, not like in the kitchen. He was like an executive at Taco Bell. Yes, and the Taco Bellification has three key features. First is viral food. Second is freaky convenience.

And third is crazy marketing. Okay, so here's how Taco Bell did all three of those. First, when it came to viral food, Doritos, Locos tacos, part Dorito, part taco? That is a viral food. I've had one once. It was at 2 a.m. on 14th Street in New York City. I don't think you're allowed to have it before 7 p.m. Second, freaking convenience.

Late night convenience at Taco Bell is like religious. Get this, Snackers. This stat is wild. 20% of all late night fast food eaten nationally is eaten at a Taco Bell. That is incredible. And the frozen pizza industry does not like that. that staff. The third and final key to Taco Bellification is the crazy marketing. And you have a Taco Bell Hotel. You have Taco Bell Beach towels that look like the little hot sauce container. Bell t-shirts that they

did in a collaboration with urban outfits. Hit me with the takeaway. So Jack, what's the takeaway for our buddies over at Chipotle? Chippole needs to nail the third element of Taco Bellification. Okay, Chipotle's latest earnings have shown that they're hitting two of those. The first is viral food. Karnay Asada was a limited time meat at Chipotle. Yeah. Now it's coming permanent. Boom. They're looking for a supplier.

If you know of anyone, let Chipotle land. They also came out with a viral food in Caso Blanca, which is Spanish. Right. That stands for a white queso. It stands for a white case. And they're coming out with more of it. They're teasing it as their next viral food. All right.

So that was the first, like, freaky convenience is the second element of Taco Bellification. They're adding 150 Chipotle lanes, which is a great name for a drive-through lane if your restaurant is called Chipotle. Basically, these are speedy digital order pickups. digital sales at Chipotle have searched 78%. Yeah, you can order off the app. That's crazy convenient. But that brings us to the third leg of Taco Bellification, which is a crazy marketing move. Your move, Chipotle.

We're still waiting. Jack, can you whip up the takeaways for us over there? Spotify has acquired the ringer, arming themselves with sports podcasts for a potential podcast war. The gated garden. Your move, Apple. Your move. Second story, Instagram makes a quarter of Facebook's revenue. It's a lot more profitable than YouTube and more selfish.

Third and final story, Chipotle has the premium elements of Barbicella Kelly, but the hacky elements of Taco Bell Gordita Crunch. Taco Bellification. That's helped sales rise a freakish 13.4% last quarter. Now, time for our snack fact. tweeted in by Shravonda Valieri from San Jose, California. Big Sharks fan. YouTube was originally meant as a dating site named Tune In Hookup. I guess you'd like record a video of yourself, you know, being sexy. Being yourself.

This is being yourself. Being yourself. Being sexy. Snackers, Jack and I are going to unpack this one after the pod. In the meantime, if you got other snack facts, tweet them our way. Yeah, also, talk about a strategy shift. I mean, they made $5 billion in revenue's last quarter, as Chavon points out. I know what you're doing here.

Sexy videos was not the approach. I know what you're doing here. You can't erase what's on the pod. No, Snackers, vote for best foreign firm. At Robin and Snacks on Twitter. Try to be sexy when you do it. We'll see you tomorrow. Always be sexy.

This is Jack. Nick owns stock of Alibaba. I own stock of Amazon. I own stock of Spotify, too. Nick and I both own Lulu Lemon and Luckin. 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 has 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.