The Best One Yet - 👟 “Fallbirds $1 stock” — Allbirds’ DTC downfall. Lunchables lead crisis. JP Morgan’s credit card signal.

Episode Date: April 15, 2024

✅ Vote for TBOY to win the “Best Business Podcast” Webby Award: https://vote.webbyawards.com/PublicVoting#/2024/podcasts/shows/businessAllbirds just got Wall Street’s worst warning: “Get your stock price above $1 or get delisted from Nasdaq” — So we’re looking at the great de-horning of our generation’s favorite unicorns.JPMorgan’s earnings report is our window into your wallet — And that signal shows why 2024 will have higher interest rates, for a longer time than we hoped.And Lunchables, the $2B lunch brand, is on the federally-subsidized public school lunch menu — But Consumer Reports says it should be off the menu, so we remind Lunchables of the “The 3 A’s of Crisis Management.”Plus, a dog toy company just launched an airline dogs and their pawrents called “Bark Air” — $6K for NYC-to-LA? Bark twice if you’ve got a better name for this doggy airline carrier.$KHC $JPM $BIRDSubscribe to the best newsletter yet: 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. Welcome back. It is Monday, April 15th. And today's pod is the best one yet. It's a T-boy. The top three pop business news stories you need to know today. All right, Jack, let's just say it, Yiddies.

Pay your taxes. Pay your taxes. You got to pay your taxes. Today's the deadline, right? April 15th. Pause the pod. Pay your taxes. And then call your mother.

Everyone should call your mother. Pay your taxes and then call your mother. You know what, Nick? This is financial advice. There we go. But Jack, we have got a fantastic show today. Three stories for today's pod. What do we got on the T-Boy, man?

For our first story, it's Lunchables. Consumer Reports wants lunchables off the menu of the National School Lunch Program. So Jack and I jumped in T-boy style to the $2 billion business of the lunchebole. For our second story, J.P. Morgan Chase. They just kicked off Big Bank earning season on Friday. And no one tells us more about the economy than America's biggest bank. It's a window into your wallet. And our third and final story is Allbirds.

The stock has fallen so low that the stock exchange might delist Allbirds. Allbirds is now Fallbirds, and this may be the final chapter of the unicorn dehorning. But Yeties, before we hit that wonderful mix of stories. I mean, coming in hot from the weekend, baby. Yeties, on Friday, I flew to Florida to drop the kids off with the grandparents so that I could spend a week in California working with Nick. What was the toughest piece of luggage of all when you're on those flights, man? It wasn't my three-year-old toddler.

It wasn't my one-year-old newborn. It was my dog. River the Super Mutt flew commercial right there with us. I don't blame you for stressing because that doggy stresses out on the plane, doesn't she? I mean, she's cooped up in a bag. For like six hours, the delays could make it eight hours. It really stresses me out. Don't even get me going on the way in.

Get on the scale. Get off the scale. If she's over 20 pounds, can I not go on the flight with my family? Like, what are we going to do? Get this yet is. The newest airline in America is actually. for dogs. That's right. Bark, the dog company known for the Bark Box dog subscription, just launched an animal airline. It turns out they partnered with a private plane company to launch,

get this, Bark Air. It's a bark branded private jet service for dogs and their parents. Ten seats on the plane for humans, ten dog beds on the plane for your border collie. The entire flight is emotional support passengers. Oh, so good boy, who's a good boy. And you don't have to squeeze your dog into the bag and then fit it under the seat for this airline. And you don't have to be weight-shamed into being under 20 pounds either, Jack. Dogs are free to walk around the cabin as long as they're on a leash. Well, Jack, we should sprinkle on some context here. This isn't just P-U-P-P-Y puppy.

Yeah, this is pretty pricey to pamper your pooch. Because a one-way New York to L.A. flight on Bark Air is $6,000 for the puppy and the parence. A one-way New York to London flight on Bark Air is $8,000. And no, they don't have a direct flight to the fire hydrant they peed on a few years ago. But instead of peanuts, they're giving out peanut butter jack. And instead of Biscoff, they're giving out kibbling bits. Excuse me, flight attendant. I'll take the bloody Mary, but if you could put it in a bowl, that would be great.

See, this all sounds wonderful, albeit expensive. There's one problem Nick and I see, and that's the name. Because Bark Air, it's just not a great name. It's a little too on the nose. See, Addies, what would you name a private jet for puppies? What would you name this thing? Maybe Doggy Delta? How about that, Jack?

I love flying Frenchie? Jack, what about Lassie Lufthansa? Wait, is Air Bud available? I think that absolutely works. Besties comment at T-Boy Pot on Instagram. We want to know. What's the best name for a dog-only airline? I'm sorry, flight attendant.

She just smelled my butt. Actually, flight attendant, she just humped my leg. Yeah, he's called the call button. And Jack and I will hit our three stories. 15 years before this song, two boys from the Northeast met in the dorm. They had an idea to cause a cultural storm. It's the best one yet, but they need to practice.

50% that's a fat tip. P-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. Start the show. First, a quick word from our sponsor. Our first story, Lunchables, has turned into the power player of the food industry, but Lunchables just got bitten.

Lunchables needs to eat a plate of crisis management. All right, Jack, I'm whipping out the whiteboard plate here. Here we go. Airheads, Sour Patch Kids, and Lunchables, what is coming into your head? What kind of word association? Dunkeroo's, fruit by the foot, and Capri-San. Those are the things that I got packed for elementary school. Lunchables, the portable meal on a tray owned by Kraft Heinz, the publicly traded food giant.

Lunchables is basically the food pyramid of processed food. I mean, jump in T-boy style to a lunchable. You got a cute little cracker. You got a salami slice that looks like a poker chick. And then you got like cheese that's brighter than the sun jack. All you have to do is pull lunchebles tray out of the fridge, peel it off. and lunch is served. No utensils necessary. No napkins necessary. Jack, you grew up with three brothers and I guarantee that in each of your GI tracks is like a fragment of baloney from eighth grade.

You know it, man. Dude, I need a cleansing. You're right. It's like a baloney sandwich. Well, yet he's here's the shocker, Jack and I discover. Jack, what are the numbers behind lunchebles? Lunchable sells $2 billion of product a year. That's a lot. Sprinkle on some context, please, Jack. That's the same revenue as Wendy's, as Papa Johns, Zillow and has Robin Hood. Oh, and on top of that, Lunchables is one-tenth. Oh, often 10% of Kraft Hines total sales. Lunchables is a food giant.

And Lunchables was actually born the same year as Nick and me, 1988. You're the Dragon Lunchables. And it was interestingly born as the perfect product of a focus group. It actually was literally the product of a focus group with suburban moms. It was designed for suburban moms. But first, Kraft Hines asked these suburban moms two questions. And those questions were, one, What is the biggest challenge raising kids?

And two, what is the hardest part of your day? And those women answered that time is the biggest challenge and that luncheastern is the hardest part of the day. The solution became lunchebles. It gave parents a perfectly instantaneous, convenient thing to give their kids when they had no time. But Yeties, here's the business drama going on with this $2 billion a year behemoth. Last year, Yeties, luncheys lunchebles got placed onto the public school menus of American schools.

That's right. The National School Lunch Program is a federally subsidized school lunch program. program reaching 30 million mouths. Kraft Heinz probably lobbied to get in there and they're thrilled that they got in there because there's a lot of benefits of being in the National School Lunch Program. In fact, in a recent earnings call, Kraft Heinz called this school lunch program free marketing for the Lunchables brand. Because not only do they make money selling food to the program, but they're marketing to

those 30 million kids who are eating luncheables. We've told you about the window of loyalty. Those 30 million kids are more likely to become lifetime customers if they're eating lunchables in the eighth grade. But here's the problem. This week, consumer reports asked that lunchebles be removed from the national school luncheon lunch program. Consumer reports called lunchebles unhealthy. They said they've got way too much sodium. And then here was the surprise. They also called luncheables unsafe. It's not just that the food in a lunchebles is processed. The turkey luncheables and the cheddar luncheables had 74% and 69% of the California maximum

permissible lead levels. Lead, that does not sound tasty. And she said, Jack, what was Kraft Heinz's response to this new news? They stood by the product. They said they were proud of the product, and they said, what's the problem? Both of those products you just mentioned, they passed the strict safety standards we have. And they said lead can occur naturally in any kind of process. And they said it's under 100%. It's permissible.

What's the issue here? Meanwhile, consumer reports to start a petition to get lunchebles off the National School lunch program and Kraft Heinz stock fell 2%. So, Jack, what's the takeaway for our $2 billion buddies over? Lunchables. There's three rules of crisis management and Kraft Hines didn't do any of them. Yeah, it is. Jack and I have learned that when companies face a PR crisis, there are three steps that you got to do.

Write them down, throw these up on the whiteboard. Acknowledge, splurge, and then forgive. Okay. And then actually, if you want to memorize these as like three A's, the triple A's, apologize, act, and then absolve. Okay. Because that works. I think it works.

Should we start over the takeaway with triple A? Let's roll with it. Let's roll with it. You got it, Jack. All right. First, you need to apologize. You need to apologize that you made a mistake and take ownership for it. Okay.

And then you need to act. You need to spend money and commit resources to write the wrong. You need to overcorrect on the wrong. But then you need to absolve because you've apologized. You've acted. Now it's time to forgive yourself. It's time to move on. Well, funny thing, Kraft Hines, they kind of skipped straight to number three.

They just, like, forgave themselves. That was it. Craft Hines must think this isn't a PR issue. Like, they didn't pass the lead limit. They think this is a blip. It'll all fly over. They didn't apologize and they didn't really act. They just forgave themselves.

But if they're wrong, this PR crisis can spiral into something even more. So yet he's never forget the three rules of crisis management. Kraft Heinz, they didn't digest any of them. For our second story, J.P. Morgan Chase is the ultimate window into your wallet and they just announced earnings. If you want to know what's happening in the economy, ask J.P. Morgan. And we just did. JPM, the $550 billion with the B bank, that is about a hundred list. J.P. Morgan Chase, it's both the biggest investment bank in the country and the biggest retail

bank in the country. That's the interesting thing because J.P. Morgan is the number one bank for branches with 5,000 branches and they're the number one bank for IPO deals in the first quarter of 2024. So they touch both Wall Street and Main Street more than any other bank. Jamie Diamond, he is the bard of the banks, isn't he, Jack? What's a bard? It's a Jamie Diamond.

He's like the Gandalf of the guarantors, Jack. I think what my buddy Nick's trying to say is Jamie Diamond is the only big bank CEO still in his position from the 2008 financial crisis. Yet he's to understand the United States economy, Jack and I like to follow J.P. Morgan's earnings. In the first three months of this year, J.P. Morgan made $13 billion in profit.

Not too shabby. But J.P. Morgan's stock fell 5% on Friday because of J.P. Morgan's financial forecast. And that led to the worst day for the stock market since January. But Jack, what exactly was the problem inside J.P. Morgan's earnings that we learned on Friday? J.P. Morgan is a window into your wallet, and your wallet's looking a little not so good right now. The besties analysts would like to see your Venmo feed and understand those emoji, but they would rather see your J.P. Morgan credit card charges on that sapphire plastic. And according to J.P. Morgan's numbers on Friday, consumers have been rhaps. racking up spending on their credit cards.

Card spending is actually up 8% because you've been dropping a lot in those cute tops. You've got to treat yourself. Now, that could be good. Consumer spending is good for the economy. But here's the problem. Loans on those credit cards, like balances that you carry month to month and pay interest on, those rose by 13% last quarter. What Jack and I are saying here is that you're putting more on the card,

which is great for the economy, but you're paying off less of that card, which is not a great sign for the economy. It means you're racking up debt. In fact, just last week, the Fed confirmed it. They said credit card delinquencies just hit their highest point in 12 years. All of this suggests that consumers have run out of their pandemic savings and are going into the red with their credit card spending. Again, great. You bought that cute top. You look fantastic, but now you're paying 21% interest on your credit card. You look good, but you don't feel good.

It's not as cute, although I do love your outfit, Jack. So, Jack, what's the takeaway for our buddies over at J.P. Morgan Chase? The Goldilocks situation for this economy could be over. Now, Yetis, for the last few months, the economy has been in this kind of Goldilocks situation. You know, it's like not too hot, but like not too cold. It's just right. Every month we've been creating a lot of jobs. Every month's spending has been going up.

And yet somehow, inflation has been coming down. No economy's ever shut down inflation without economic pain until this one. It looked like Goldilocks. But last week, we got the inflation report for March. And it came in at three and a half percent. That's the second straight month of inflation rising. Yeah, inflation, it stopped falling, and it's begun slowly rising again, which is annoying. That's the opposite of what we all want.

And that means that the Fed is probably going to keep interest rates up. And that could end our fun Goldilocks situation. Last week, we all learned that we probably have another year of high interest rates before they can come down. And the way, Jack and I see it, that's the frustrating takeaway from JP Morgan's numbers. High interest rates are going to stay with us even longer. And that means the Goldilocks situation could be over. Now a quick word from our sponsor. For our third and final story, after six straight quarters of sales shrinkage,

Allbirds is on the brink of stock market deal listing. Which means the great direct-to-consumer dehorning is now complete. Jack, let's go back to our apartment in the East Village, 2015. That is when Allbirds was founded. Allbirds's trajectory was very bird-like. It was, it was. The revenues were taken off like an osprey for a few years. By the time they went public in 2021, the city seal of San Francisco was basically the Albert's logo.

Couldn't raise venture capital money if you didn't walk into that room with a pair of allbirds wool runners on your feet. You've seen these shoes. They're made of sustainable wool. They were deemed by Time Magazine the most comfortable shoe in the world. You feel like a floating millennium. They feel fantastic. Barack Obama was seen wearing these shoes in 2020. The loungers, I love the loungers. I wear them around our neighborhood, Jack. Well, Alberts hit their peak valuation in December of 2021. On the day that they went public, the stock jumped by 90. percent. Yeti's Albers was worth $4 billion two and a half years ago. But what is Albers worth today, Jack? It's dropped 98% in the stock market. And here's the news. Albirds was just warned last week that its stock price is so low, it could get kicked out of the NASDAQ stock exchange.

It has six months to bring their stock price above $1 share for 10 straight days. If they can't pull that off, they face delisting. Now, Yeties, we know what you're thinking here. Why is Albers a company? that's been so successful, why is it stock price down a whopping 98%? Because the past couple of years, Albert's has switched from a growth company to a shrinking company. Remember what Jack and I've told you, investors focus on the future, not the past. Wall Street's really like a, what have you done for me lately, kind of a guy. Lately, Auburts sales have fallen five straight quarters in a row. That's bad. And they're expected to fall a sixth, seventh, and eighth straight quarter. But that is worse. Why are sales falling? Well, we've said before there's three

industries most vulnerable to fads. They're food, fitness, and fashion. In five years after the New York Times called Allbirds, the uniform of Silicon Valley, the Wall Street Journal just announced that tech bros are moving on to other fashions. Looks like all bird's shoes were a fad. That's why the company just announced a new CEO and a transformation plan just a month ago. Guess what that transformation plan included? What do they include, Jack? Less direct to consumer, more third party wholesale. We're talking fewer Albird's stores, more Albert sold in other stores.

Picture aisle 6 over at Nordstrom. Allbirds are going to be right there on your left. You can't miss it. We predict the next time you walk into a target, there's going to be an Albert's display next to the Casper mattress display. Two former direct-to-consumer companies very much indirect to consumer through Target.

My dad will probably be loading up on him, though, Jack. He's got the orange, the yellow. We kind of trade laces. I think that's part of the problem. So Jack, what's the takeaway for our buddies over at Allbirds? The great direct-to-consumer dehorning is now complete. Yeties, Jack and I grew up seeing these ads on Instagram for beautifully branded products, alternative products to the ones that our parents, you know, grew up with.

We called these companies brandicorns. They're unicorn $1 billion private startups who have gorgeous brands that we can't resist on Instagram. We're talking Casper mattresses, all-bird shoes, rent the runway fashion, those were the brandicorns. Here was the business model. Cut out the middleman to lower the price and improve the quality while still turning a profit. And here's why that business model broke. If you don't use a middleman, that means you need your own stores and you need a lot of ads on social media to convert sales. And both of those things got very, very expensive. And that is why Casper mattress has gone private. Rent the runway stock is down 90%. And all birds is now close to deal with it. Now, we should

put out, there are some survivors like Harry's Razors, Glacier, the makeup company, away, the suitcase company. They're all surviving and we hope they thrive. But the most valuable direct-to-consumer brand left is Warby Parker and they're worth just one and a half billion dollars now. The direct-to-consumer unicorns, they're no longer mythical creatures. They've officially lost their horns. Jack, can you and your traveling Puffy River whip up the takeaways for us over that? Consumer reports called on lunchables to be removed from the National School Lunch Program. So far, Kraft-Heinz has ignored the three A's of crisis management. Apologize, act, and then absolve.

For our second story, J.P. Morgan Chase's earnings show that Americans are going into credit card debt to keep spending. With inflation rising again, the Goldilocks economy could sadly be ending. And our third and final story is Allbirds. They face stock market delisting because their sales are shrinking and looks like they're a fad. It looks like the DTC unicorns have been dehorned. But yeties, this pod's not over yet. Here's what else you need to know today. First, IPO news.

Finally, StubHub is planning to go public this summer. They've been working with Goldman Sachs on the IPO. The ticketing service is valued at $16.5 billion. And they want to IPO during concert season. But like we said, what Stubhubhub should do is partner with Taylor Swift to take on ticket master's monopoly. And second, Humane finally launched their long-awaited AI. pin. A little piece of technology

you clipped to your shirt that's supposed to replace your smartphone. Jack and I said this should eliminate phone guilt. That's what the excitement is about this humane AI pin. But the reviews haven't been fantastic. According to the verge, this pin doesn't work half the time. Maybe version two will be better. That's optimistic.

Thank you, Jack. And finally, remember when Jack and I told you about California's new $20 minimum wage for the fast food industry? McDonald's has a new plan to boost profits. Bagels. In California, McDonald's, is brought back the McBagel so you can indulge on a bagel or McDonald's

in San Francisco. When I was a kid, I had bagels at McDonald's. This isn't that new. But we should point out, bagels are challenging to cook. Because don't you boil that dough and then bake that dough? Doesn't have the New York concentration of minerals, Jack. Then it doesn't taste the same.

New York's got special water. I don't know how they're getting that tap water over to San Diego, Jack. These are some salty bagels, actually. Saltwater bagels. They're making me thirsty. Now, time for best fact yet this one whipped up by Jack and me because again, you have to pay your taxes today. Hey, hopefully you're getting a tax refund though. That's the motivation to get this done. But you can't procrastinate on Uncle Sam. So Jack and I found the best fact yet about taxes to make

your filing a little more fun today. We found the oldest tax in recorded human history. Because people have been paying taxes for literally millennia. The first known tax paid was in Mesopotamia in the Middle East 5,000 years ago. In the year 2,500 BC, there were stone tablets discovered that showed tax payments made to local governments. And they wrote them down in these etched stones. Impressive record keeping for 2,500 BC. There, you can't erase that, Jack. You know, you had to pay your taxes back then in three ways.

You could pay it with livestock, with food you harvested, or with labor to the king and queen. And if you get audited, you need to find all those stone tablet receipts that you spent so much time chisling. I've been feeling in ancient Mesopotamia, you don't want to get audited. You're not innocent until proven guilty. No, no, no, no. Yeties, you look fantastic to kick off the week. Remember, let us know at T-BoyPod, what should be the name of a puppy airline. Lassie left Hansa.

I like that. And then call the IRS and tell them H-Y-H-T-B-O-I. Have you had the best one yet? That's how we grow the pod. Really, that is how we grow the pod. We love your word and mouth. Nick and I will see you tomorrow. Can't wait.

And before we go, a happy Patriots Day to all our boss. Bostonians just outside Boston. It's one of the great regional holidays in this world. The Red Sox play before noon, and they run the Boston Marathon. Speaking of which, Yeti, Steve Ropeppy, is running the Boston Marathon, which makes him one of just 16,000 humans in history to run all of the six world major marathon. That's incredible. And he's only one out of 130 people to do it before turn it 30 years old.

Steve, are you available? And congratulations. Congratulations to legendary Yeti, Nisha, who just dropped a new record caught in a rhythm, and Jack and I are jumping in T-boy style to it all week long. Congratulations to Warren Gillenwater, who's celebrating a retirement in Glenn Ellen, Illinois. And Galey Alt is survive in her first tax season over in Denver, Colorado. Congratulations to Stefan Hoffman, who just got a new job at Clyde & Co. Corey and Chris are super pumped.

And Shannon Smariga has got a new job selling soulless beer in Frederick, Maryland. Heard a taste fantastic. And a huge shout out to the Twine Ripper Matt Dwyer from Strong Island, New York. Upper left all the time. And Henry and Arth, their twins from San Francisco down the street are turning one-year-old. Kyle and Hillary are super pumped and they're looking fantastic. Happy first birthday to Aidan Paxewe in San Francisco. Annabelle and Moose are thriving as young parents right now.

And Rachel Lee has got a birthday and a new baby in Cambridge, Mass. Just outside, Boston. And happy birthday to Nyadi Ajmira, who's turning 25 in Mumbai, India. and is in the middle of an ab workout right. This is Jack. Nick and I both own stock of Apple, Robin Hood, and Zillow.