The Best One Yet - 🥕 “$CART” — Instacart’s IPO surprise. SF’s cash for kindergartners. Car-workers’ 40% raise.

Episode Date: September 19, 2023

Instacart is the rare tech company IPO’ing with a profit — Because Instacart has pivoted from Silicon Valley to Madison Avenue.Twelve years ago, San Francisco gave every Kindergartner a college savings account — It’s not an investment, it’s a manifestement. And the UAW auto workers strike has 1 big demand: A 40% raise — So we did the math on whether a 40% raise is reasonable or not.$CART $F $GM $TSLASubscribe to our newsletter: tboypod.com/newsletterWant merch, a shoutout, or got TheBestFactYet? Go to: www.tboypod.comFollow The Best One Yet on Instagram, Twitter, and Tiktok: @tboypodAnd now watch us on Youtube Hosted on Acast. See acast.com/privacy for more information.

This is Nick. This is Jack. It's Tuesday, T-Boy. Tuesday, September 19th. And today's pod, it is the best one yet. What a T-Boy, Jack. You ready for my itinerary? Talk to me.

What do you got, Jack? Hit me up at B-T-V at 6 a.m. Love it. Connect in Atlanta at 924. Get the Biscop cookies. Record a T-Boy teaser for today's pod while I'm walking through the terminal. At Terminal 3. Land L-A-X six hours later.

And into my open arms, I shall be waiting. with an Uber, Jack. I shall be waiting. Put that on the T-boy corporate card, why don't you? I'm holding up a sign. It says, co-host, co-host, co-host. Oh, that'd be so awkward if I was sitting next to another co-host. Podcasting, it's a small world.

First story for today's T-boy before we hit Los Angeles. What do we got, Jack? For our first story, it's Instacart. The delivery app is finally going public today. It's IPOing with a profit. Because Instacart just moved from Silicon Valley to Madison Avenue. For our second story. for the last 12 years, San Francisco has been running a unique experiment with money and kindergartners.

If you give a baby a savings account, will they go to college or will they bite you? Or will they have a blowout? And our third and final story, we're in week two of the United Auto Workers Car Strike. So Jack and I are looking at one question and what's that question, Jack? Is it ridiculous to give 150,000 car workers a 40% raise? A 40% raise. Is that ridiculous or is it not ridiculous? We're measuring the ridiculousity.

But yet,ies, before we hit that fantastic mix. What, a mix of stories for a T-Boy Tuesday, man? By the way, if the pod's this good when we're apart, what's going to happen when we're together? We're going to have to sit down, stand up, and stay seated, Jack. Yeties, there is a new trend in corporate America Nick and I have to tell you about. Besties, there is a new office lingo we all got to know.

According to the Wall Street Journal, feedback is dead. Or specifically, the word, feedback. That's right. Apparently the new word for the word feedback is feed forward. That's right. The word feed forward has replaced the word feedback. Because the word feedback carries lots of negative baggage. Negative feedback, critical feedback. He doesn't take the feedback well feedback. And if you think about it, the word feedback is backward looking. It's about the past. Feedback. It's about why did you do that thing back then when I would not have done that thing, but you did that thing.

And nobody likes being asked why did you do that thing back then? you do that thing back then. No, it's never a good sign for the corporate report. It's like giving feedback is being a Monday morning quarterback. Nobody likes second guessing the past actions or the play actions. But feed forward, on the other hand, is like feedback, but it's more constructive. I'm liking it. I'm trying it on right now, Jack. There's some brightness. Feed forward is the future. It's forward looking. Do better next time. It's kind of like the past is scary. The future is opportunistic. So in the meantime, Yetis, Nick and I do have some feedback for the word feedback.

Well, Jack, do we have some feed forward for the word feedback? Sorry, the next time you rebrand yourself feedback, I mean feed-in-forward, rebrand yourself back to feedback. Because Jack and I are looking at the numbers here and feed-forward, it sounds a little bit ridiculous on our ridiculousometer. Yeah, we actually have some feed-forward for other corporate jargon too. What's next? Circlebacks becoming square forward? Bandwidth? It's not your bandwidth. It's your band length.

I'm sorry, Jack. I got a hard stop, but actually now I have a soft, mediocre stop. It's not constructive criticism. It's a constructive compliment? What are we doing here? Yeties, it's not personal. It's just feedback. Nick, I'm actually filling out your performance review right now. You handle feed forward very forward.

And in the spirit of looking forward, Jack, let's hit our three stories. 15 years before this song, two boys from the Northeast met in the dorm. They had an idea that caused a cultural storm. It's 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. For our first story, Instacart's stock is going public today. So Jack and I jumped in T-boy style to the IPO paperwork. And we discovered that Instacart is really more like Instagram these days. Instacart actually looks more like Instagram. But Yeti's, before we hit that story, full disclosure, Instacart has sponsored this show for this past summer. But here's the thing, Yetis.

With all sponsors, Jack and I have editorial independence, and they aren't sponsoring the show today. So we cover everyone like we would cover. anyone. And today is Instacart's IPO. Instacart. They pioneered the gig app grocery delivery 11 years ago. Instacart. It's Uber for your onions. It's Lyft for your legumes. Now yet, he's during the pandemic. That's when most of you tried Instacart for the first time. Instacart was like your, like your third roommate with your buddy Timmy. Yeah. In 2020, sales for Instacart rose by 600%. That's 7xing for those who are keeping count because germaverse people practice their social distancing. You were worried about walking into

aisle 6 and walking out with a little bit more than those legumes. So the pandemic was great for Instacart, but today, order growth has slowed to just 3% compared to last year. We repeat, Instacart's growth has gone from 600% to just 3% today. And we see that growth slowdown in the new valuation of Instacart. That's right, because Instacart raised venture capital money in 2021 at a whopping $39 billion valuation. Where are we today, Jack? Today, its growth is pretty much flat. So it's going public at a quarter that valuation, just $10 billion. But yetis, here's what Jack and I found fascinating about this story. The numbers behind Instacart reveal another layer de Instacart.

Like an onion or a parfay. Let's go with an onion. Let's go with a Milfoy. A what? A Milfoy. It's like a French page page. I have no idea. Nick's in the premium section of Instacart.

A bit of great popon, if you please. Ladies, here's what Jack and I noticed about Instacart. Instacart's not just a grocery delivery app anymore. No, Instacart is an advertising icon. You'd be shocked by this stuff. Nearly 30% of Instacart's business today comes from advertising revenue. That's right. Instacart is on pace to make nearly a billion dollars in advertising sales this year.

So while the money made on groceries is flat, the money made on ads for Instacart is booming. Yeties, Jack and I jump further into that IPO paperwork. Instacart mentioned the word delivery 171 times, but they mentioned the word advertising 249 times. Instacart is an ad agency with a logistic side hustle. Instacart is the Don Draper of delivery. Instacart is like madman for your mangoes. Because when you type in cheese hits to the Instacart app, a sponsored result from Goldfish comes up because Goldfish paid Instacart for that.

And Jack, what's the better part about that relationship? While groceries is a low-margin business, ad sales is highly profitable. And what's the best part about that business, Jack? With ad sales, Instacart can double dip. Oh, at Instacart, they are double-diving that chip straight into the hummus. They made money selling ads to goldfish, and they made money when you bought those goldfish. They made money on both sides of that interaction. And that is how Instacart made $240 million of profit so far this year.

They're a tech company IPOing with a profit. That is rare. Long term, Instacard hopes to make 11 cents for each dollar that you spend on groceries. Seven cents has a transaction fee and four cents in ad sales. And the personal shopper, she's taking seven cents too. No cents? They add up. Like an onion.

So, Jack, what's the takeaway for our buddies over at Instacar? In business, what's old is new again. Again. Again. Yet, since the pandemic, as growth has slowed, tech disruptors have turned to the oldest business model of all. Advertising. Advertising.

Silicon Valley Tech is acting a lot like Madison Avenue right now. For example, Netflix has said they would never do ads, but Netflix added ads just last year. Uber and Lyft, they're each on pace to sell a billion dollars of ads this year in order to finally make a profit. And Amazon is going to sell $40 billion worth of ads this year. That is 7% of all digital ads on earth. And now Instacart is going public with a profit thanks to their ad business. Jack, like you and I have said many times before in this. show, the disruptor eventually returns to a disrupted business model.

Because in business, what's old is new again. Again. For our second story, 12 years ago, San Francisco tried a money experiment with kids. Here it is. Give college savings accounts to every kindergartner. We just got the results of that experiment 12 years later. So we jumped in T-boy style. Kindergarten, Jack, does not feel like yesterday.

It actually feels very long ago. We didn't know a nickel from a pickle back then. You're like bartering with graham crackers. I once thought a Lorna Dune was a currency jet. But yet he's in 2011, the city of San Francisco launched the nation's first ever universal college savings program. Every single kindergartner enrolled in a San Francisco public school had a savings account auto-opened for them. Not too shabby. The parents didn't have to fill out any paperwork.

On day one when the kid arrives in the public school district, they had an account waiting for them with $50 put in by the city. We repeat, you got that Jansport backpack with the initials on, and boom, you've got $50 in a college savings account set up by the city of San Francisco. Now, this experiment was called the K-to-C program, kindergarten to college. The city known for D-C, direct-to-c consumer, did K-2-C, kindergarten to college. Yes, the savings accounts were intended to pay for college someday. We call it cash for kindergartners.

K-A-S-H, cash for kindergartners. So Jack and I got curious. curious about this study. We jumped in T-boy style and we found this really interesting part, didn't we check. The city of San Francisco didn't just give you that 50 bucks. They rewarded you with more money if you showed care for your bank account. Well, like second grade, you got a bonus if you were checking your savings account. If you, the kid, log into your account to check the balance at least once a year, then the city will add another $20 every time. Or Nick, if you download and read financial literacy materials that they posted on their website, then the city would deposit

even more money into that account. So you make money just by checking in on your money. They've basically incentivized financial habits beginning as kindergartners. And then each time the balance gets bigger, you earn a little more interest. Your family can deposit some savings. Eventually, you can convert it to a tax advantage 529 investment account. Fast forward 12 years later and boom, Yeties, we just got the results. Jack, can you whip out the whiteboard for us? year, the original kindergartners from 2011 are graduating high school and going to college. And how much money is in that account that began with just $50, Jack?

The average account has $1,422 in it. Not too shabby. That is 28 times more than the 50 bucks that they each started with. Now, Yet, he's $1,22. That's not going to pay for tuition these days. That is not going to get you far with the administration, Jack. But you can buy a couple of books, maybe a couple of backpacks, or a subscription to chat, GPT Plus. Boom, and that thing's going to write all the essays for you anyway. Now, today, this program enrolls every student, regardless of when they entered the school district, and they have $15 million in all those accounts. That's not all. This whole baby college savings idea,

it's actually caught on across the country. Thirty-eight states have emulated the program that started in San Francisco. Five million kids K through 12 have a college savings plan, even if they think a Lorna Doon cookie is a form of currency. That's a lot of pickles. I mean Nichols. So Jack, what's the takeaway for our buddies who are every kindergartner in the economy? This isn't an investment. This is a manifestment. Yeties, what this fund did was give kids cash for college. 1400 bucks, not too shabby, pretty straightforward. But the real win for these kids wasn't that cash. It was the mindset shift that came with it. Because get this, research showed that kids with any college fund are more likely to pursue college in the first place.

Nick, researchers found that any amount of money in those college funds becomes motivating for them to go to higher education. It could have been 50, could have been 1400. It could have just been $1. Just having the fund is what made the difference. When a kid holds an account statement in their hands that says college savings fund at the top, regardless of the amount, they picture themselves going to college someday. The way, Jack, and I see it, it's the mindset shift. It can be self-fulfilling. They do what it takes to get to college after that. Every month, the statement from the bank is a reminder to do. well in school and stay out of trouble. So yet, he's the 50 bucks that the city put into those

kids' accounts, that was an investment. But the change to those kids' mindsets, that makes it a manifestment. For our third and final story, the biggest strike of the year, the auto worker strike, is coming down to one number, and what's that number, Jack? The 40% pay raise they're demanding. The 40% pay raise. Is a 40% pay raise ridiculous? We jumped in T-boy style to find out. We whipped out the Ridiculous Ometer. Yetis, the year of the strike continues. Hollywood writers are in their fourth month of being on strike. Actors are in their second month of being on strike.

And automotive workers are in their first month of their strikes against Ford, General Motors, and Chrysler. Yeties, on Friday, they all stopped working at three factories. That chassis, it ain't moving. And the United Auto Workers will expand their strike to more factories if their demands aren't met. Oh, besties, if you've got a 20-23 Fordist, escape, that is a rare collectible right now. And the update on the negotiations with the carmakers, no progress. Now, Yeti's last week, Jack and I told you about the upcoming car strike.

So this week, we want to do something different. We want to focus on one number. We want to focus on the key demand from the auto workers union. The key demand is that they get paid 40% more. They want a 40% raise. A 40% raise, Jack, is that ridiculous? Does that sound ridiculous? That sounds unreasonably high for such a huge body of workers.

It's dangerously close to like a 100% pay increase, which would be like doubling your pay. The fail's a little ridiculous. The UAW wants their 150,000 unionized workers to get a 40% pay increase from all three of the Detroit big auto company. So Jack and I, we jumped in T-boy style and we did a little union math and what did we discover, Jack? If you crunch some union math, it's actually not a ridiculous demand at all. And here's why, Yeties. That 40% pay increase, it's actually spread over four years. So it's really only 10% per year they're demanding.

And in the last four years, we've had 20% inflation. So they're really only asking for a 20% pay raise over these four years. If so facto, the workers are demanding a 5% inflation-adjusted pay raise per year. So the next question then, can the carmakers afford a 5% inflation-adjusted pay raise for their workers? And when you look at that numbers, the answer is yes, overwhelmingly. In the last four years, General Motors' annual operational. operating profit has grown by 83%. And Ford's operating profit has jumped by 135%. So Ford's CEO said if they cave to the union's demands, they would go bankrupt.

But Jack and I just crunched the union math on this thing, and we're not seeing the B word in there. If the car companies did this 40% pay raise, they'd still be more profitable than they were four years ago. The ridiculousity of this request is not as ridiculous. No, it's really not. But Jack and I did find something ridiculous. So, Jack, what's the takeaway for our buddies who are everyone in the car industry? The pay raise isn't ridiculous. The rest of what they're demanding is.

Yeties, this is Nick, that is Jack. And we think a 40% pay raise would be huge. It would actually really be a fair win for the auto workers. But the auto workers want more. They want much more. Another thing the car workers want? Job guarantees. No layoffs allowed.

So if we have a crippling recession with no cars being made, The union still wants to get paid even though they're not doing work. Plus, the car workers want to work less, down to a 32-hour work week. We're all for the four-day work week, but you want a 40% raise and a four-day work week? And a no layoffs promise, plus a pension? Based on the numbers, Yeties, the pay raise the auto workers are demanding, it's not ridiculous at all. But the rest of what they're demanding kind of looks ridiculous. Jack, can you whip up the takeaways for us for T-Boy Tuesday?

Instacart is going public today and it's boasting profits thanks to their booming advertising biz. In business, what's old is new again. Again. For our second story, San Francisco College Savings Accounts for Kids gave them money and changed their mindset. Because it wasn't just an investment. It was a manifest. In our third and final story, the Auto Workers Union wants a 40% pay raise. If you do some math, that's not an unreasonable request.

What does seem unreasonable is everything else they're demanding. But Yetis, this pod's not over yet. Here's what else you need to know today. First, if you are stuck in traffic in Midtown Manhattan, you know that the 78th United Nations General Assembly kicked off in New York. The focus this year, cutting fossil fuels to slow down the warming of the planet. And finally, last week, Jack and I told you how Las Vegas was under cyber attack. This week, it's Clorox under cyber attack.

Clorox products from bleach to sanitizer are in short supply because rancers. somewhere has hijacked the company. Now, time for the best fact yet. This one sent in by Maximilian von Poulnitz from lovely Hillsborough, California. Caviar. The fancy, expensive thing you can order on the menu. The kind of stuff that's probably pretty profitable for Instacart, Jack. The average beluga caviar costs, get this, $200 per ounce.

And a key reason why this caviar cost so much? Why is it, Jack? It's not because of the eggs you're eating. it's because of the fish that laid them. Yeah, apparently it takes 10 years before a sturgeon is able to even produce the eggs that you end up eating as the caviar. So if you want to like make some caviar, it takes 10 years. It's a decade-long investment just to get the caviar from one of these little sturgeon. Yeties, you look fantastic for T-Boy Tuesday.

And if you have some feedback for us or if you have feed forward for us, we want to hear it. Just circle back by circling forward. Only constructive compliments on this show. And if there's any other jargon you think needs an update, we'll async this whole combo on Slack later. EOD. EOD, check the memo. If you know, you know.

Before we go, congratulations to the future Mr. and Mrs. Martinkoff. Alex and Mark just got engaged down in D.C. Let's see some ring picks. Congratulations to Unregular Pizza in New York City. They just opened their second location, the Unregular Bakery. And we covered their first location like four years ago, not too shabby. Yes, we did it. Happy birthday to Anthony Rottolo, who's turning 27 in Brooklyn.

And Ricky Gill just got back from his honeymoon to celebrate his birthday over in Toronto. Happy 11th birthday to Benjamin Rose, who's turning 11 in Bristow Middle School. And Josiah Baker, happy 24th birthday celebrating as one should at Denny's in Dallas. Happy birthday to Jake Daniels in New Richmond, Wisconsin. And Rich Sturham down the road in Charlotte, Verme. on, happy birthday. Great pronunciation, Nick. I stuck the landing jack.

Don't call it Charlotte. You taught me well. And happy birthday to Kate Chaucer, who's also got a new job in Saratoga Springs, New York. And Taylor Childers is flying home to upstate New York to celebrate that birthday upstate. Happy birthday to Demi in Chicago. And Parker Dunaway is turning 31 in New Orleans.

That is a win to celebrate. And to anyone else who's celebrating something today, make it a T-boy. Celebrate the wins. This is Jack. stock of Amazon, Netflix, and most of the other media and content fundals. We lost you, Jack. Sorry, gents.

It's all right. It's all right. Hit us while the wall money is made. I got time to say, yeah, Adam. This is great news because I hated how I said that line. I wasn't going to redo it. So now you guys don't even know what it sounded like. It's like, thanks to the feed for it.

No feed forward necessary. All right, here we go.