The Best One Yet - Cannabis co-CEO fired by beer board, Walmart’s Jet.com drama, and Lee Iacocca changed cars forever

Episode Date: July 8, 2019

Canopy Growth is the world’s largest cannabis company and it suddenly fired its co-CEO — but it looks like Corona owner Constellation Brands was all over this one. A Recode report revealed major drama within Walmart as its ecommerce arm led by Marc Lore clashes with classic brick-and-mortar Walmartians. And our “Icon of the Week” Lee Iacocca changed the auto industry forever, so we’re looking at his legacy as he passed away.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, July 8th. We're bringing the best one yet to Snacks Nation. This is actually the best snacks we've ever done. And it happened on a weekend. While markets touched record highs, we had a short week thanks to Independence Day. We had like three and a half days last week. You got that extra vacation. You got the half day, the day off. Whole confusing thing. All we know is you weren't working. But now it's Monday and we got three beautiful stories. We're kicking it off with a report that Walmart is having a culture clash with Jet.com, the e-commerce, public. startup it acquired to take on Amazon. This is New School Mark Lour versus old school Wall Martians. I like that nickname. Second story, co-CEO of Cannabis Giant Canopy Growth got suddenly fired

on Wednesday and it's an awkward situation. Awkward because it reveals a big fight between alcohol and weed. This is about canopy and Corona owner Constellation Brands. And then third and final, Jack, we got a special one here. The icon of the week is Lee Ayacocca. He was

legendary leader in the automotive industry and he just passed away last week. Rolls off the tongue. We're looking at the legacy of a man who realized that the auto industry can drive an entire economy. But before we jump into all that good stuff, we're coming at you live from the past at four days ago. Yeah, we're actually coming at you from six hours apart as well. Ooh, and an ocean and like a continent. Throw one of those in there, Jack. We got Middlebury College, Jack Kramer, based in Vermont, and you got Nick Martell out in the Pacific in Hawaii. Jack, I just jumped into the Pacific Ocean snack style. No, we had to make this pot happen.

So we're doing this actually from Thursday. So we're coming at you Monday, but this was recorded. Full disclosure on Thursday. And Nick, I got to admit, I just walked by our freshman year dorm room where we met in 2007. Talk to me. Is the way protein stains still there? I recall I had seasons three and four of Seinfeld on DVD, and you had Seinfeld-themed bedsheets. I'm pretty sure it was VHS, but let's just pretend.

to his DVD. Thank you, Middlebury College. Nick, you ready to hit the stories? I would love to listen to these keywords and then let's jump in. 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 to hear 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. The financial LLC member FINRA slash SIPC. For our first story, there is some fascinating drama going on at Walmart.

It's Mark Lour versus everybody at Walmart. Can you imagine if people at Walmart wore that t-shirt, Mark Lour versus everybody? Can Walmart people just start calling themselves Walmartians already? Yeah, so let's set the stage. Mark Lour is like Jeff Bezos's little brother, but they don't love each other. No, they hate each other. Mark Lour founded Diapers.com back in the day, and he sold that to Amazon and got rich.

Then he started Jet.com, and he sold that to Walmart and got even richer in 2016. The old double exit, not too shabby. Now, he's now the head of e-commerce at Walmart, and he's getting like a ton of credit there for like a lot of innovation going on at Walmart. We've talked on this pod a couple times about store number eight, which is the innovation incubator hub for Walmart. I like how Mark Lour describes it. He says it's bringing together entrepreneurs and capital to, quote, unquote,

change the course of retail in five to ten. years. And Walmart has been acquiring a bunch of companies because Mark Lorre has been whispering in the ear of the CEO. They acquired things like bonobos. They have been investing in technology. They've been thinking big about how to beat Amazon in like a five to ten year battle. And then suddenly last week, while we're here in Hawaii in Vermont, there's a recode report that comes out saying that most of the company shockingly opposes all these cool things that Mark Lorr is doing. Now, I read through the entire 3,000 word report on recode on the plane on the way to VT with a layover through Detroit. Now, the biggest stat that we found is that Walmart's e-commerce division in its entirety

loses $1 billion for Walmart every year. That's a huge number. And when you're Mark Clor, who's been leading the e-commerce divisions, aka what he says is the future of Walmart, you're realizing now that change is kind of maybe about to happen. So here's the major contrast. Walmart is like, they are religious about making good, clean profits. And the old guard at Walmart is annoyed because the physical stores make $7 billion of profit every year. And Mark Lorr and his e-commerce guys are losing a billion each year. Jack, the Walmart faithful are double annoyed because Mark Lorre is bragging about these

startups he's incubating, such as Jet Black, the like concierge e-commerce service that we talked about the other week on six. There are some people at Walmart who said that's not the Walmart way. You're supposed to be humble. Stop talking to the media about all your successes. It's not the Walmart way. Classic Arkansas. Now there's new pressure on lore.

According to the report, he's going to be under pressure to cut costs, stop losing money, and start thinking about profits. That means no more acquisitions, no more scalingjet.com, no more delivery don't futuristic kind of crazy delivery stuff. There is even pressure to kill Mark Lorr's beloved child store number eight, the incubator, because it's being viewed by many at Walmart as a, waste of money that will never actually scale. So, Jack, what's the takeaway for our buddy Mark lore and Walmart? Walmart may actually give up on its quest to beating Amazon. Now, the old

guard at Walmart, the Walmartians, they think that they may never actually match Amazon. And when you look at the numbers, it actually looks like that may be the case. Yeah. Even though Walmart's e-commerce sales have been growing like 40% per year, Walmart only has 5% of the online shopping market in the U.S. versus Amazon's 38%. Instead, the old guard at Walmart, they're thinking about beating Amazon on one specific area, groceries. It is convinced that Walmart's giant network of superstores across America is a big advantage that Amazon can't touch. Now, here is the wild stat about that. 90% of the U.S. population is within 15 miles of a Walmart, and Walmart loves reminding us about it. That sounds like a grocery delivery solution, and Amazon would kill for that.

For our second story, this one's a wild one. Canopy Growth just fired its co-CEO, and this thing has got Corona's fingerprints all over at Lyme included. Cannabis and hockey. That's what Canada does. Preach it. Now, canopy began in an abandoned chocolate factory north of the border, and now it is the biggest cannabis company in the world.

I'm pretty sure that's how all cannabis companies start. Last week, co-CEO Bruce Linton, great name, told the world he had been fired. Now, we checked out Canopy Growth's press release, and they said that he stepped down. But then on Wednesday, Bruce Linton went on to CNBC and he said, I was straight up terminated. Like, that's not how it went down. Next job. Tell us how you reacted to adversary in a previous job. Well, I was fired and had to go on live TV and lie about it.

Kind of a confusing situation. No, it looks like, though, Constellation Brands, which owns Corona and a lot of other boozes, was behind this whole firing. What's fascinating about this story is that there's a battle going on between canopy and constellation over really interesting strategic visions. Now, we need to provide context because we're talking about two different companies here. One of them is the liquor giant Constellation brands. That name is annoying because none of its products are called Constellation, but it owns Madello, the beer company, Robert Mandevi Wines, High West Whiskey, and Corona. And they've got a little extra cash on the side of that liquor cabinet, so they invested

$4 billion to get 37% of canopy growth last year with a vision of like a, this like euphoric, CBD-infused drink future. Now, Canopy, on the other hand, has been talking the last year about medicinal marijuana, because that drug is a lot easier in markets where recreational cannabis use hasn't been legalized yet. Exactly. You want to go to the markets that are okay with the medical marijuana, not necessarily the recreational marijuana quite yet.

And that strategy is at odds with Constellation, which just wants to focus on CBD and getting that stuff into its drinks. So, Jack, what's the takeaway for our buddies over a... Canopy and Constellation. Always remember that the board can fire the CEO. We're always talking about the CEO. The CEO, he or she is boss, and they answer to one thing, the board. So let's take a look at Canopy's Board.

We checked out Canopies Board. There are six people on the board. Three of them are executives at Constellation Brands, the alcohol company. Interesting. Very interesting. So they have half of the board seats, even though they only own 37% of the shares. And then there's more. One more board member is also on the board of Constellation.

So effectively, they have four out of the six board seats of Canopy. Also not a bad job because when you're a board member, you're pretty much just getting paid to look at the financials and drive. Oh, yeah. It's a cush job. You're getting like 200 or 300k a year plus stock for very well catered meetings once a month. Extremely lucrative side hustle. Now, in case you're wondering what the Constellation team is thinking of what's going on at Canopy and the competing visions, just look at what the CEO of Constellation said last week. He said, and I quote, we are not pleased with Canopies recently reported year-end

earnings results. Constellation owns 37% of canopy, so that means it's getting 37% of those losses. And 37% of this strategy that it's not happy with. So it wanted to change, and it fired the co-CEO. For our third and final story, we're celebrating the life of Lee Ayacocca, the only person to lead two car companies, and it just passed away at 94. Those two car companies are Ford and General Motors, When he led that, they were like the head honcho biggest companies in America. We're also talking about the best name we've literally ever said on snacks daily. Ayacocca rolls off the tongue. Ayacocca does.

He's the son of an Italian-American immigrant. But, Nick, he's like, imagine today if a CEO led both Amazon and Apple at some point. That was basically Lee Ayacocca. Now, our favorite description of Mr. Ayacocca is that he was, quote, unquote, the Winston Churchill of American business. So let's walk through the bio. All right. He was the president of Ford Motor Company in the 70s. Then he was the CEO of Chrysler in the 1980s. Then at Chrysler, he acquired American Motors,

which owned Jeep, might have heard of it. And so Chrysler and Jeep became one company. So that's the resume. But let's talk about the legacy here, because there is one quote that we think it's next just perfectly sums up his legacy. Well, he's so confident. He said, if you can find a better car, go ahead. Buy it. I dare you. Now, if you want an example of one of these better cars, let's talk about the American muscle car that he basically helped create the whole concept. Ford. Well, Lamborghini and Ferrari were tearing up racetracks in Italy. Mercedes and BMW were flying in Deutschland, so he invented the Ford Mustang at Ford Motor Company. Then he stepped up and you know, decided to save Chrysler. It was dying of competition from the influx of new cars from Japan,

like Honda and Toyota. Yeah, so he actually invented American classic, the minivan. We're talking captain seats in the middle seat, big full bench in the back, TV installed behind the front monitors. Mom's yelling already. She already pulled over. 1983 unveiled the minivan, much like Steve Jobs or the iPod, and this is actually crucial. He convinced government regulators to treat a minivan like a truck, which is the only way they could pass fuel emission standards. Then he decided to, you know, make his personality a key part of the brand, and he just stuck himself in every possible Chrysler commercial. Right, it wasn't the cars that was the focus. It was Lee Ayacocca. Great preview for what we have today, or a Tommy Boy

throwback, the Zelensky Motor Tint. Yeah, he was pretty much Zelensky Motors. the American man for the American people made by the American people brake pads. Now, the only kind of interesting inconsistency we found here was how he dealt with government rules. Right. He was vehemently opposed to the government when it intervened with things like requirements for seatbelts and cars or fuel economy standards for cars. But he embraced the government support when it came for needing a bailout. For example, actually putting in an entire newspaper ad signed by himself asking for a bailout. Yeah, it was like the bailout before the bailout back in 1979 when they saved Chrysler. So Jack, what's the takeaway for our buddy, Mr. Iacocca?

Car companies matter. Forget about stock price, forget about market cap, forget about PE ratio or like any of the technicality. The impact of car companies on society is gigantic. We're talking big jobs, national identity, pride politics. It's all interwoven into every vehicle. Yes. When you sign up to be an automotive CEO, you are signing up for all of that. It's a lot of responsibility. And we just lost a man who really got that. Jack, can you whip up the takeaways for us to start the week? Old school Walmarters, aka Walmartians, are fed up that e-commerce is getting all the credit, but none of the blame. The innovation era at Walmart that we've been watching, it may be at stake right now. Canopy Growth's co-CEO is out because the board wants more focus on CBD beverages.

One fact reveals all this. You got to look at who's on the board, and the board is basically constantly. All right. Third and final story. Former chief of Chrysler and Ford Motor Companies, Lee Ayacocca just passed away at 94 years. Jack, if you can find a better car, buy it. I'm going to leave it at that. All right. We got our snack fact of the day comes from all your buddies at Snapchat, who did this whole research report about friendship. Saudi Arabia has the highest number of, quote, unquote best friends with a total of 6.6. That's a lot of best friends 6.6. Now, the lowest is the United Kingdom who has 2.6 best friends on average.

And then the United States is in the middle with besties at a cool 3.1. We are the three best friends that anyone can have. Love having you guys to start the week with us. How about we do this tomorrow? We'll see you again on Tuesday morning. 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 Robin Hood Markets, Inc.

or any of its subsidiaries or affiliates. The podcast is for informational purposes only, 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.