The Best One Yet - “Eaze is cannabis’ bubblish-moment” — Intel stock reaches 2000 levels. The man who coined “disruption.” Eaze pot delivery has problems.

Episode Date: January 27, 2020

The “Seamless of Weed” is Eaze, but it’s having problems growing. Intel’s stock hit its highest point since the first internet boom, so we’re looking at chips on chips on chips.  And Clay Christensen passed away, but his word “disruption” is living on aggressively.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, January 27th. This is the best one yet. Nick, we've got three great stories. One we've ever done what we got first. Let's start it off with ease, which is the seamless for weed,

a.k.a. weed deliveries so you can get it anonymously. Some people call it the Uber for weed. We're going a little step further. It's had some major startup problems, according to TechCrush. And they've got a new pivot. They're calling it, touch the plant. Sounds inappropriate. Probably call the authorities on this one.

Second story, Intel. You know, da- dun-dun-dun-dun. Intel is our comeback of the day. The stock at its highest level since the last century. It's all about chips. Chips are different. You got computer chips. You got mobile chips.

You got spicy chips. You got vinegar chips. You got barbecue chips. You got salt and vinegar. A lot of chips out there. Third and final story. The man who coined the term disruption in 1995. The name is Clayton Christensen.

Clayton Christensen just passed away. So we're looking into the innovator's dilemma. Disrupt or defend or come up with another alliteration which begins with a D. It's critical. You've got to have one of those. But before you get into that, we are in the United Kingdom. No joke. We haven't seen the sun since we left California. They weren't kidding about the clouds here.

We are subjects of the queen, and we are in the Robin Hood, UK office. I have a great view of the clouds, and we have some first impressions about the UK. Did these scones have bacon on them? That's just a question we had to ask. Now, Nick and I went to a Millwall football game. They took a tough loss on the pitch, losing the match 2-0. Now, the keeper looked blimey good in this one, Jack. I want to point out one out.

But he's not worth three quits. No, that's so true. We've said it a thousand times. Second story, 3.8% alcohol beer at the stadium. Did not expect to see that. I think that might be a crowd control mechanism. The other surprise is midway through Jack Shepard's Pie, which may or may not have had beefish material in it. We had to figure out that there's actually a lot of vegan options everywhere.

There is vegan support, Vignauary signs all over the place. They're very pro-vegan and full disclosure. It is day 27 of Viganduary. I may have had a few accidental slip-ups. Jack was licking. the plane seat on the way here for any bit of protein he could get. But this last UK observation is business-ish. True.

There is touchless credit card access, even in the tube, the underground, the subway of London. We popped on this thing. We just put our credit card on top of the machine. Boom, Jack and I were in there in a jiffy. You don't have to swipe your credit card. You don't have to insert the chip. You just need to hold the plastic credit card close to a sensor, and it led us in. No joke.

This is Harry Potter Magic. So Jack and I jumped in snack style on platform. from nine and three quarters to figure out what was going on. I'd never seen this before. It turns out 65% of people in the UK have a credit card that you can contactless pay for things, just like with your Apple phone. In the U.S., it's only 5% of our cards. We're living in the Flintstones era with chips and magnets.

We're behind. We should get ahead. It's easier to pay. Jack, let's froth the milk. Is that a thing here? And let's hit our three stories. You're tuned in the snacks daily. We spoke to the lawyers and we got to get something legal out the way.

The snacks are about to hear rain 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. Snacks is digestible.

Business news for you. Robberhood Financial, LLC, member FINRA slash SIPC. For our first story, pot delivery startup Ease is reportedly in like some serious financial trouble out of the West Coast. And Ease's troubles reflect greater issues with the pot. economy. Now, the people out there like to refer to this as the Uber for pot. Because they're delivering cannabis products two year old. Jack and I like to call this the seamless for pot because we just think it's more accurate. It is more accurate because ease is just the

middleman and they don't actually work for the cannabis producers. Now, they've done like five million pot deliveries for 600,000 customers pretty much just in California. The average delivery is $85, which is a huge number. And we can tell you from experience, it's free delivery if you're spending over 50 and you're only paying a $1 trust and safety fee. Great name, by the way, trust and safety. Trust and safety. I don't know. You don't ask questions about it. Meanwhile, we order a gyro from postmates. They're hitting this with like a service fee, a delivery fee, a cook fee, a make fee, a walk free, and a handoff fee. That's four-fifths of the order. Right. Your $20 pad tie becomes like $42. Yeah. With ease, like $100 order becomes $120. Yeah, they should probably team up,

by the way. That seems like a good partnership. Now, they've pivoted to a funny little promotion here. They have special menus for special events. Right. Like this new movie that's coming out, it's called The Gentleman. They've come out with like a pot product menu that you can enjoy while you're watching the movie. So if you want to smoke like one person, you can order the Kemdog pre-roll loud pack. And if you just want to smoke like another, you can get the Camino Berry roll pack. Right, which apparently has like a citrus scent because, you know, apparently pot is the new wine, but not really, let's be honest.

So Ease is getting creative, but they're also laying off tons of people. They're running out of cash. and they can't even pay their bills. Apparently they needed so much money that they had to get like a quick emergency funding round just to keep the lights on over at ease. Now, typically when a company is in trouble, they can ask a bank for a short-term loan.

Right. But cannabis companies can't because cannabis is still illegal on the federal level. Yeah. All banks have to follow federal laws. You remember even if it's legalized in Vermont or California? Jack, remember those like need cash fast ads when we were like growing up that you see on TV?

Yeah. They can't do that. Oh, they can't. They can't do that. Okay. It's a shame. Now, the solution here for ease is they are pivoting to a new strategy called... This is wild.

Touching the plant. It is an insane name. What they're referring to is they literally want to get in the business of making and selling their own pot practice. They want to be in cannabis production, not just being the middleman who picks up cannabis from a cannabis distributor and then brings it to somebody's door for a small phone. They want to get in the game here. They don't want to be coaching on the sidelines.

And they're acquiring a company in Canada that just happens to be bankrupt. So I assume it's a low. cost acquisition. Which is perfect, like we mentioned before, they don't have a lot of cash over at ease. So, Jack, what's the takeaway for our buddies over at ease? We've looked at this, and we think cannabis is kind of looking like a bubble, and that bubble is deflating, maybe even popping right now. Jack, can I lay on you some of the biggest four publicly traded cannabis stocks right now? Yes. Aurora. Its stock is down 72%. Canopy growth is down 56%. TILRA is down 76%. And Medmen is off almost 90%.

Meanwhile, when it comes to private companies, we're talking startups, Ease was one of the largest at a nearly $400 million valuation. And they're struggling. Nick and I have reported on Snacks Daily that public companies are down because pot demand in Canada and the United States is lower than expected. It didn't really meet all the hype. Now, we're not calling this a bubble that burst like the dot-com bubble or the housing market bubble or that old tulip bubble like the 1600s in Holland.

That was wild. Because we do see an underline. and growing cannabis business is still there. But it's smaller and slower than expected. For our second story, Jack, did you hear that? Dun-da-da-da-da-da-ton. Intel and time. We don't know where you are.

Apparently you're in the computer. Intel stock hit its highest level since the dot-com bubble. It just crushed last quarter's earnings. Jack and I jumped in. Now here's a reminder, Snackers. The late 90s.com bubble was irrational insanity by investors for anything that included. Dotcom. The internet had like just happened.

Vice World had just come out. Investors went crazy. 1998, 1999, 2000. Internet stocks rose fast. People were getting rich. Really fast. Everyone else bought those internet stocks because they wanted to get rich. And the stocks grew higher and higher and higher. Reminds us of a little something that happened between 2017 and 2018. The crypto insanity. Pretty much. Bitcoin was $20,000 after being like $200. Slow down a bit. Full disclosure. I own Bitcoin. I own a single Bitcoin. It owns one Bitcoin. We've named him Ben. Jack. I check in on him every now and then. He hasn't done much lately. The plural of Bitcoin is Bitcoin.

Ben is just lazy. Now, that bubble caused tech stocks on average in the late 90s to go like five times higher. Eventually it burst and all the stocks came back. But guess you got to go along for the ride and enjoy this thing? Intel. Intel is high. Intel was the OG computer chip company. And guess what computer chips are made?

I'm going to borrow vowel, Jack, call a friend and go with Silicon. They're made of Silicon. It's a beautiful thing. You get it? Silicon Valley. Now, back then at Intel's peak, it was like early 2000, Int was trading at $73 a share. And finally, 20 years later, it's not quite there. But it's at $68, which by coincidence is 68% higher since June.

Now, Snackers, Jack and I saw that it hit this level. We wanted to get to know Intel a little more. Intel come outside. Intel makes one product. Yeah, but it sells that one product in three different ways. This is like that one random crepe place near you where they sell a crepe and you can just get it with butter or sugar or Nutella. Which is not like my cousin Vinny where that one restaurant sells breakfast, lunch or dinner. And when you go somewhere else, you'll notice all the crepe places in the world, they only make crepes with butter or sugar or Nutella.

All right. So Intel's top division is computer chips for PCs, personal computing. This is like the brains of the tech gadgets that actually do the computing. Right. And the chips for PCs, that's by far its biggest division. and they're in all the laptops and desktop pieces. That's where you get the, dun, dun, dun, dun, don't.

Right. Second is chips for data centers. Right. All those files do you save on ICloud or Google Drive? Photos, photos. They're sitting somewhere on some humming hot piece of hardware in a basement. Those are servers, and they're operating on Intel chips. And then finally, they're making money on chips for self-driving cars and the Internet of things.

Like when your fridge talks to your phone to tell your car to go to the radio and pick up some new food. They're not making much money. That's their tiniest division. It's adorable. In theory, that's the one that's going to be, you know, in 10 years a big deal. So, Jack, what's the takeaway for our buddies over at Intel? Intel could be so much bigger and better than it is, but it missed mobile completely. Snackers, none of those three crape-like divisions we mentioned are smartphones or gaming consoles.

There's no PlayStation 4, no Xbox love for Intel chips. No, if you're curious about what chips are powering phones and PS4s, you got to look at Qualcomm, AMD, or Navidia, which are big rivals to, But Intel could be in those products. They just kind of miss their opportunity. Yeah. Turns out many tech pioneers like Windows and Intel ignored or denied the smartphone revolution that was happening before our pockets. Intel used to be one of the most valuable companies in the world. Now it's like a quarter of Apple. For our third and final story, the man who invented disruption sadly just passed away. His name's Clayton Christensen. He was 67. He was a Harvard Business School professor. and disruption was pretty much the word of the decade for business.

Now, he has an MBA book that's required at all business school. If you are getting your MBA like Jack and I worry, you wake up in the middle of the night in between term papers with a, we're surrounded by new entrants. They have lower customer acquisition cost than we do. This class was basically defense against the new entrance. Now, it all goes back to his book as an HBS professor called The Innovators Dilemma from 1997. Steve Jobs has a must-read,

list and this was on it. Jack, can you whip up the old chalkboard and write the innovator's dilemma on there for us here? You got two options. Defend your business model from disruptors. That's a good option to have. Basically stay the same. You want that option maybe? Or innovate, thereby essentially disrupting yourself before the disruptors have a chance. This all sounds highly uncomfortable that you have to pick a side of this. Let's talk about disruption though. We're going to break this down like Wikipedia, Miriam Webster style. We got a little biography on disruption. Overall, disruption is when a small company with fewer resources successfully challenges a bigger company. And there are three stages of disruption.

All right. So the first one is you're the older company. You're focused on small improvements to your business. Maybe you're having a little feature here, a feature there. But you don't really care about fundamentally changing your business. You don't fundamentally rethink the business. And you don't exactly listen to customers because you have a product that's been working and it's been working for years. You're just going to take them for granted.

That older company, by the way, is called an incumbent. Now, then a newer company, which we would call a new entrant, rethinks that product, changes the price, makes it lower, and then starts gaining a foothold with the older company's customers. Especially the ones that the older company was ignoring. Then the third and key stage here is the new entrant. That newer startup company gets bigger and starts adding new features and new products. That's when they take the incumbent's core customers, and eventually the incumbent could go bankrupt. Disruption complete.

Disruption complete. Those are the three stages. Now, the funny thing about disruption is that it's not just sexy tech startups that can disrupt like Airbnb or Uber. Toyota, one of our favorite anti-Muda companies, Muda being the Japanese word for waste. Yes. They disrupted Detroit through assembling cars more efficiently than Detroit. And that was like 50 years ago. And disruption can also fail.

Like disruption isn't enough. It's a great way to start a company, not necessarily a way to sustain and grow. Case in point. one that Jack and I love is movie pass, completely disrupted the model for who's going to the movies and how. They did that by offering $10 a month for unlimited access to movie theaters. It certainly disrupted, but then it failed and it went bankrupt. Yeah, the company doesn't really exist anymore. But the business model for movies has changed.

So Jack, what's the takeaway for our buddies in disruption like Clay? Companies can disrupt themselves, but not all are brave enough to. Few are able to step up to the softball challenge of disrupting themselves. Our favorite example is Netflix. It was dominating a DVD mail distribution service. They used to send out DVDs to people by man. That was Netflix. I think my parents are still doing that, actually.

Then in 2009, they launched streaming video, completely disrupting their DVD business. No more than they knew they had to do that or someone else was. Someone got to retire from licking envelopes, which is key. But our buddies over Intel were not brave enough to disrupt themselves. No, they're an example of just not stepping up to the play. and forgetting to the PC market and think that smartphones might take over, so they missed the mobile phone revolution. Clay's thoughts disrupted business, so we want to leave our snackers with a meaningful Clay Christensen

quote. Decide what you stand for, and then stand for it all the time. Jack, can you whip up the takeaways for us to start the week, please? Ease was basically the seamless delivery company for cannabis. They delivered their product to your door incognita. That wasn't working, and that kind of reflects a bigger weakness in the cannabis industry. Intel stock is back close to its record high, which it hit in Y2K. It's taken 20 years to get back there because it kind of missed the whole mobile gaming, you know, revolutions. Clayton

Christensen, rest in peace, he coined the term disruption in business with the book, The Innovators Dilemma. Snackers, disrupt your own business or you wait for someone else to disrupt you. Now, time for our snack fact of the day. We kick things off on one side of the pond. we're going to paddle back over to the other side for some U.S. snack facts. This is our own snack fact. This is from Nick and Jack currently in London, England. The 49ers, the-guilty-charged. The football team that used to be in San Francisco, but now is in Santa Clara, California. We should make that distinction.

It's going to the Super Bowl, and they're treating every single member of the staff to travel, hotels, and tickets to the game in Miami. It's not just football operations. Even the interns are going. I love this move. It's empowering the entire staff. and next year they're going to work better for the company. Yeah, also, best practice.

Get an internship with the San Francisco 49ers, apparently. Good tip. Snackers love starting the week with you. We miss you guys. Why don't you guys tweet some snack facts at Robin Hood Snacks? Go ahead and throw a hashtag T-Bull in there. The Robin Hood Snacks podcast you just heard reflects the opinions of only the host 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. is 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.