The Best One Yet - 💄 “Dewy is the new cakey” — Estée Lauder’s hero creme. Yahoo got dumped. Fortnite’s fight club.

Episode Date: May 4, 2021

We noticed a funny thing about Estée Lauder’s cosmetics earnings: It’s not a makeup company anymore. Yahoo and AOL just got dumped by Verizon for $5B, so we’re doing a relationship autopsy. And Fortnite is taking on Apple in the App Store Fight Club. $EL $VZ $APO $AAPLGot a SnackFact? Tweet it @RobinhoodSnacks @JackKramer @NickOfNewYork Want a shoutout on the pod? Fill out this form: https://forms.gle/KhUAo31xmkSdeynD9 Got a SnackFact for the pod? We got a form for that too:https://docs.google.com/forms/d/e/1FAIpQLSe64VKtvMNDPGSncHDRF07W34cPMDO3N8Y4DpmNP_kweC58tw/viewformLearn 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 Tuesday. Tea Boy Tuesday, May the 4th. This is a special tea boy we're serving up today. The best one yet is. Mandalorian.

Mandeliorian, Mandolian. You know, you know. Jack, what's our first story today? What do we got? S. Day Lotter's latest earnings? Make it official. It's not a makeup company anymore. Big pivot.

Do we? Not cakey. For our second story, Yahoo and AOL, just got bought again because Verizon put them on the sale rack. 50% off. Jack, can you grab the Ben and Jerry's? Yahoo. just got dumped again. We got to talk about this. And we got the autopsy. For our third and final story, Fight Club episode four. Fortnite versus Apple, most important battle in app history. But

Snackers, before we hit those three stories, wonderful mix. Nick and I can tell you, millennials haven't been as into golf because it takes so long to play. Still playing from two weeks ago. Five hours for 18 whole round. I mean, it could have made like 17 avocado toast in that time, Jack. Nick, it takes an hour to get there an hour to get home, it's seven hours minimum. I just did the break-even analysis. It's 12 lattes, one round of golf. I'd take the 12 lattes over the round of golf. 18 holes is such a random number. Why does it have to be 18? I don't know, some Scottish Lord. You're thinking on the 11th hole about one thing. You're thinking about the 19th hole. I think it's 18 holes because they used to play with caddies. No one knows. Big reason, though, 18 holes is a problem. Attention spans.

They fall in from 30 minutes to 30 seconds. If the consumer had to blink, it's probably a too long customer experience. And yet, despite all of this, Jack and I noticed over the weekend, golf is still served in the same portions as 100 years ago, 18 holes. That's why there's a movement by some in the golf industry to shorten the game. Yeah, there is. And that's also why 26% of American golf courses today have a nine hole option. I know what amount of you like. I know what your Goldilocks number is, Jack. 13. I like a six whole game. I'm fine. It made us realize Snackers. Other products should change their serving size as well. Case in Baseball, baseball got too long.

It's the only team sport that doesn't have a clock. Case in point. Content. Content got too long. To watch Netflix as the Irishman, you need to take a leave of absence. There you do. Third case in point here, phones got too big. Okay, this new purple iPhone, it's cute. Adorable. But it messes with pocketability and gives you carpal tons. Snackers, for T-Boy Tuesday, here's what we want to hear from you.

What other product should change its serving size? Not food answers, not beverage answers. We want other stuff. Get at us at Robinette Snacks. We want to know what you think. T-Boy Tuesday, the best answer gets a mention in the pot. Let's enter three stories. You're tuned in the snacks daily.

We spoke to the lawyers and we got to get something legal out the way. It 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.

Right. business news for you. Robberhood Financial, LLC, member Fenra slash SIPC. For our first story, Estee Lauder, its stock just plummeted after its earnings report, Jack. This legendary New York City cosmetic company, it's not a makeup company anymore. No, not anymore. But honestly, this is the best part that when we get to jump into these cosmetics companies' earnings, you know what I'm thinking. They have a different vocabulary than the rest of business.

If you're a cosmetics company, you don't say demand. They say desire. They say customer desire was great. last quarter, which brings us to the empower and desire curve. You know, the intersection, yes, it's the harmony price. It is. That's Business School 101 top by Charlize Theron. I think that's how that works. Now, Estee Lauder is the matriarch of makeup. They own, get this, 30 different makeup brands. Oh, can I interest you in Bobby Brown? No, maybe the Mac counter. Oh, maybe more of a smash box person. They got more makeup than the capital and hunger games.

They do. Now, sales over at Estee Lauder jumped 16% last quarter to $3.9 billion. The stock though fell 8% after that. The big problem, makeup sales declined last quarter. Get this, across every single of the 30 makeup brands. Let that sink in every single brand. Lip gloss is living its worst life. Pretty sure over the last year, like everyone forgot how to do wing liner. But this highlights a crucial fact.

Yeah. The beauty industry has really transformed into a health industry because clean has replaced cakey. Because makeup sales, yeah, they fell 11% not too fun. But skincare grew through. 31% over at Estee Lauder. Skincare products now represent double the revenues of the makeup business at Estée Lauder. Ipsop facto, Estée Lauder isn't a makeup company anymore.

It's a skincare company. Just three years ago, makeup and skincare products had the same sales. Same thing. Today, skincare is double. It's a little awkward. So Jack and I jumped into the earnings support snack style. We noticed they mentioned hero products six times, which is their version of a profit puppy. It is.

It's French for profit puppy, I believe. But their number one hero product, it wasn't like the Joe Malone peony's fragrance. Not the same situation anymore. Nick, you said France twice now. You know they're based in New York City. I think this is a Ralph Lauren situation. They got a little Pietaterra pari going on. Well, their hero product, Estee Lauder, it's the advanced night repair synchronized multi-recovery complex. We repeat the name of this product. Advanced night repair synchronized multi-recovery complex. It sounds like some kind of scientific royalty. Okay, a little one-ounce tincture of this thing. goes for 75 bucks. On the black market or like in the retail store? On the legal market, Amazon.com. Also, Jack and I notice another wild thing about this company. Skin care over in China, it's being driven by dudes.

15% of eye cream sales over in China from Estee Lauder are with men. Which feels like Jack, we should give our disclosure. This is Nick. And I too use a repair syrup. This is Jack. I believe crinkle cut is good for French fries, not for the corner of your eyes. What's your situation? Because when I apply the night cream, I'm just putting it at all of it.

over my face. Nick, the stuff goes for $75 now to use it sparingly. Dab the corner of your eye and beneath the eyelids. That's it. I've been told to use my pinky finger, but I can't get on board with this. So, Jack, what's the takeaway for our buddies over at Estee Lauder? Estee Lauder doesn't sell products. They box up routines and they sell rituals. Snackers, you can see makeup as like the foundation on your face or you can see it as a daily routine. If you apply mascara in the morning, you probably apply mascara every morning. Cosmetics are a daily routine. Estee Lauder has taken that strategy and managed to make it work for skincare. The top selling product for their LaMere brand is the night bomb for every single night.

The top seller for their namesake Estee Lauder brand is the advanced night repair product we just told you about. Which literally has the routine that you use it for in the name of the product. Sure. Their core makeup business is falling. But its core strategy is also working in skincare, which is grown. Don't sell products, sell routines. Better yet, make them morning even. For our second story, after six years, Yahoo just got dumped again from another long-term relationship. Media can have a great brand, great content, but still a bad business model.

Opposites attract. It was kind of an awkward couple. You had Verizon and you had Yahoo and AOL. Verizon acquired Yahoo and AOL for $9 billion combined dollars. Nice. And today, it just got sold for half of that. We should go back to the beginning of this relationship. 2015, it's a different world. Verizon was younger. It was experimenting. It was having a lot of fun. They hooked up with Yahoo and AOL for $9 billion. And this, you know, it was kind of a family affair because Yahoo and AOL also include TechCrunch, Huffin' Post, and Gadget. Oh, it also included the 1,000 dial-up customers that AOL also has.

You ready for this? Yeah, yeah, yeah. Bing, big, big, big, big, big. But to Verizon's credit, they realized AOL and Yahoo were not there forever somewhere. So they announced Monday morning they're moving on. Yeah, I mean, don't. let a bad deal linger for a decade. If you're not going to commit long term, just end it.

It's not fair. It was the right move. And that's probably why Verizon stock is up 2% since rumors of the deal emerged on the Wall Street Journal Friday afternoon. Shareholders are basically rallying around Verizon post-breakup. You're great. You're good. You got this. You didn't need them.

Your best days are ahead of your Verizon. Plenty of media fish. Oh, by the way, AOL and Yahoo, they got acquired in this deal. And you're wondering who's the rebound relationship? Oh, yeah. It's someone in a suit who goes by a. Apollo, who's a private equity firm. Yes, not a boxing suit.

This is an Apollo creed. This is a billion-dollar private equity firm with a publicly traded stock. It is. And Apollo is very optimistic about this relationship. They really think that this has long-term potential. This is their quote, this next evolution of Yahoo will be the most thrilling one yet. You probably want to take him to like vacation like Como, like a whole thing.

Now, you're probably wondering why did Verizon do this? And it's pretty simple. Basically, Verizon is too busy with work to focus on. relationships right now. Their hands are full with 5G. Yeah, they're rolling out, you know, the next generation wireless network. It's a once-in-a-generation business opportunity. 5G is wireless internet. It's coming. It's the internet of the future, and it's for every electronic device, not just your smartphone. Jack, they literally have to go around the country over at Verizon and build 5G towers, like here and here and everywhere. Verizon doesn't exactly

have time to prove free to tech crunch on. I don't know. Plus, they're probably looking at the rival AT&T, which is engaged, all. Also, in a long-term relationship with the media company. And it's been a rocky situation. Yeah, it's been a little awkward over there. They paid $85 billion for Time Warner, the owner of HBO, back in 2016. Now, it seemed fun for a wireless company to own, you know, Game of Thrones. It was going to be a blast.

But we looked at AT&T stock, ticker symbol T, by the way. Impressive. And it's down 19% since the announcement that they're requiring Time Warner, aka Game of Thrones. So, Jack, what's the takeaway for our buddies over it, Verizon. Brand recognition gets all the attention, but it couldn't overcome a megatrend. Jack, what would every startup kill for? Brand recognition. Jack, what is Yahoo and A. Well's greatest asset? Brand recognition. Yahoo was the front page of the internet for two decades. AOL was literally the only way teens could chat pre-cell phones. J.K. Kramer 9. Now, Yahoo and AOL, they also still today have billions of

registered accounts and popular sites like Yahoo Sports and TechCrunch. Faceoff guy 22 coming at your heart over here, Jack. Despite those assets, Yahoo and AOL, they make money selling ads online. And that is its weakness. Yeah, the mega trend is that ad money is going to Facebook and Google for their super targeted ads. That money is not going to media companies. Verizon knows it. In 2018, a few years after making these acquisitions, they admitted that these assets weren't as much as they thought.

They cut the valuation of Yahoo and AOL by half voluntarily. And here's what they cited when they did that. They said it was because of increased competitive and market pressures, basically from Google and Facebook. Great brand recognition and great content from Yahoo and AOL got crushed by ad industry megatrends. For our third and final story, Apple is in the news again. This time, it's Fight Club episode four, Jack. This time the Apple fight is against Fortnite. Yes.

And it begins this week. First rule of Fight Club, Jack. What? You have to update your user preferences if you want to talk about Fight Club. You have to accept the terms and conditions of Fight Club. District, Court, Northern Conference. California, Epic Games Incorporated versus Apple Incorporated. Jack, what we got? Opening statements happened yesterday in front of a judge. This is not a jury trial.

We're talking to Robes, serious thing. This lawsuit is basically, you know, the biggest challenge to the app tax so far. Epic Games is not just suing Apple. No. They're also separately suing Google's Android as well. Trials expect to be three weeks. Honestly, the real kind of headline thing here, TMZ style, Tim Cook could take the stand. He's going to put his hand on a Bible, his right hand. Tim, Tim Cook. Now, if you are a digital company in today's economy, like Epic Games is, because they produce Fortnite, you must have an app. An app is your everything.

You got to have an app. You got to have one for iPhone, and then you have one for Android. Here's the thing, though, Apple and Google, they have monopolies on their app stores for their native devices. For the iPhones and the Android phones, they can charge whatever they want. They can't. And they do charge whatever they want. Apple and Android, they take 30% of any revenue made from apps on their phones in the

first year. and then 15% of all revenue in years after that. And this is my favorite part, Jack, because they're not bad guys over there. So if you're a small company and you're making less than a million dollars a year, they're only going to take 15% of your revenues. They're only taking 15% of your money. That's it.

Now, it's actually not limited to Apple and Android, this app tax that we like to call it. Whatever connected devices a consumer lives on, a tech company is behind the scenes taking an app tax. Yeah, Sony has PlayStation apps. They're taking a tax on that. Roku takes his taxes on the Roku apps. Amazon's got its fire TV.

They're taking taxes on that. And Microsoft does it with Xbox apps. Add all this up and what's the results? Tech giants kind of act like a landlord. They don't respond to email. They don't care if your radiator's noisy. And they demand rent each month from every app. They just care about taking money from you.

Let's say you're a startup and you launch a pregnancy tracking app and you decide to price it out $50 per user. First of all, congratulations. Second of all, the platform is actually going to take 15 bucks from that. only keep $35. Let's say you're another startup and you're launching a fitness app and you decide 30 bucks a month. That's the price we should charge. First of all, congratulations. Second of all, the platform is going to take two bucks a month on that. Yeah, you're not taking home 30. In fact, a specific example here, Match Group, which owns Tinder and like 30 other dating apps. This one is wild.

Their biggest expense last year was commissions paid to Apple for the app store. Match Group paid $500 million last year just to Apple. That is more than they paid their employee. Yeah, and that is how the App Store for Apple brought in an estimated $64 billion last year. Jack, can you sprinkle on a little context here? That is 20 times more revenue than Airbnb. Honestly, it feels like we're just making these numbers up. We're not. So, Jack, what's the takeaway for our buddies over at the Apple App Store app tax? We all think of Apple as a consumer business, but you could also think of Apple as a public utility.

All right, Snackers, picture the scene. We're in court, verse epic, Tim Cook, is expected to argue that the iPhone gave birth to like an enormous amount of economic activity. It's true. It did. And apps are wonderful. But in the 2021 economy, you require access to app stores to survive. Just like businesses in the 1951 economy required electricity to survive. So Fortnite is looking at the situation. They're like, hey, we want the ability to circumvent the app tax by using our own payment service. That's all we want. Or we bet Epic would be happy if App Store got treated like a boring old utility that Epic believes App Store is. Now, power companies like Jack mentioned earlier, those are utility. They got a monopoly in their

regions on pumping out electricity. And the thing about monopolistic utilities, they get regulated. In fact, whatever power company you pay electricity to, they have to ask their local government for the right to increase prices on electricity. They got to get permission, which is funny because tech companies, they kind of have monopolies in their regions too. The monopoly, is the device they control. Now, Epic is the leader in a movement to regulate tech companies' app stores. Forced them to get out of the way or regulate them like public utilities. Jack, can you whip up the takeaways for us?

Wait, screen name. What was the screen name again? J.K. Kramer 9. It was pretty lame. Kramer 9. Faceoff Guy 22 coming at you. Where we got, Jack. S.A. Lodder was created 75 years ago in New York City with makeup.

Today, it's more skincare than makeup, but it's still selling the daily ritual. That's the case. For a second story, Yahoo and AOLN. a messenger, they have a new owner, Apollo Global Management. Great brand recognition, great content, bad business model. For our third and final story, Fortnite is mid-trial in the case against Apple's App Store. Apple, it's a consumer business, but the App Store is kind of also like a public utility. Now, time for our snack fact of the day. This one sent in by Jack Kramer, Vermont, and

Nick Martov, New York. Saracha. It's the ketchup of the 21st century. Great on pizza, fantastic. Better on mac and cheese. We're literally putting this saracha on this. podcast right now. Nick and I only buy the OG Saracha, the one with a rooster from Hoi Fang Foods. We're not going at Trader Joe's for this stuff. We got the green cap. I was Saracha for Halloween once. We love Saracha because the founder of Saracha is a refugee living in California whose name is David Tran. Now he was ethnically Chinese but from Vietnam originally. And when the communist took over Vietnam, he was persecuted because of his Chinese ethnicity. Now this is where things get a little wild. The ship that he escaped on, it was called Hoi Fang. He eventually got to

Los Angeles and started a hot sauce company. And he named the company after the boat who was stuck on on sea for a month before Los Angeles admitted him as a refugee. And then get this. He didn't patent the word seracha that you see everywhere these days. Because David Tran wants the whole world to love that incredible flavor that is saracha hot sauce. And that's why you see tons of knockoff products of saracha at grocery stores. Even the kids these days, they're named saracha. David Tran, What a legend. Snackers, this month is Asian American and Pacific Islander appreciation month. We want your audio snack facts. Please submit them right here in this episode description. Click on the link and submit it in the form.

Nick and I just demonstrated our very best audio snack fact. We can't get any better than this. But go to the Google form in the notes of this episode, submit yours. But you can do even better than us. And before we go, happy birthday to Michelle Saldania in lovely Los Angeles. And happy birthday to Gabi Altizio in Los Angeles. And to round out this hat trick, happy birthday to Cat, two-year snacker, and her birthday over in Los Angeles. Happy birthday to Olivia D. in Raleigh, North Carolina.

And Abe down in Statesboro. And Lars Olson in Rockford, Michigan. And Jack, Marianne from Venezuela, just got into NYU. Congratulations. And Alec and Ellen are celebrating an anniversary in Palo Alto, California. Samantha Riley got engaged in Festus, Missouri. Maloney Perrick just finished their spring semester in Queens, New York, which is also where Este Latter is from. And Nick L. and the car to Singapore team just launched the...

the business in Asia. Not too shabby. Fantastic. And happy World Press Freedom Day to all the journalists snacking with us today. This is Jack. I own stock of Amazon and Airbnb. Nick own stock of Apple and Airbnb. 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, 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.