The Best One Yet - “Garmin finds you when iPhone can’t” — Alphabet kills an “Other Bet.” Toast hits $4.9B. Garmin’s GPS pop.

Episode Date: February 20, 2020

We’ve got a new era over at Google on word that its parent, Alphabet, has put its wind energy bet to sleep. Our “Unicorn of the Day” is Toast, which hit a $4.9B valuation as it tries to do everything at restaurants, but we’re focused on its SaaB (“software as a bank” — just made it up). And Garmin stock jumps 7% because it’s going places where your iPhone and Apple Watch can’t.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 Thursday, February 20th. First of all, happy National Love Your Pet Day, everybody. Nick, who are you loving today? Fido, I feel like I should go with Fido. I always had Scali Whaley, the Aquana, great guy.

Scaly Wally Wally was a great guy. I'm going with Bo, Pekaboo, and Bruno. All of them, rest in peace. I don't currently have a bet. And they're all going to be happy because today's Snacks Daily is way better than yesterday's Snacks Daily. Jack, first story. This is the best one yet. If your smartphone loses service, Garmin's GPS will save you.

Shocker, Snackers, Garmin's GPS still exists. And its profits are at a record high. Do they still do those suction cups? Remember the suction cups? They were huge, huge suction cups. They still exist. They're a collector's item. Our second story is the unicorn of the day, toast.

It just hit a $4.9 billion dollar valuation trying to do everything software related to a restaurant. It's like an obsessive sous chef. very aggressive. Basically, your fingers are covered in sauce. You shouldn't be handling the tech. Jack, third and final story. Wonderful one. What we got? Google's parent company, Alphabet, just killed something big and exciting. It's called McConaughey. Not to be confused with McConaughey happens a lot. No, no, no, no. Now, that was one of the other bets at Alphabet, and it could have changed the world. Instead, the world has changed Google. But before you get into that, February has turned out to be a rough month, despite Valentine's Day. Snackers,

businesses are still in business, but some other businesses are no longer in business. Pier one imports just declared bankruptcy last week. The big question, who's going to get to keep the like 50% off signs that are like huge? They're like human-sized. The one rule of peer one imports, everything is always 50% off. Second thing we noticed, Boy Scouts, they just filed for bankruptcy. I feel like they missed an opportunity for a new revenue stream in the form of cookies. It seems like that was a proven opportunity they could have jumped on board with, brand extension. Another big fail here is romp him, which really caused quite a stir with our buddy Timmy and all of Timmy's buddies. Timmy was, he was into the romper for guys. Now it's going to be living in a vintage store. It's no longer a company.

No, skies out, thighs out for romp him, and that's done for it. And then finally, HQ trivia just shut down last week. This was the viral trivia app that gave away cash prizes. And I think in February 2018, where we're at your bachelor party, Nick, in Utah. Remember it well. Two million people logged in for trivia live on HQ. We've heard of daily active users. That is like a minute active users. It's insane.

Sadly, HQ trivia is done. It was a feature, not a company. Even though it was worth $100 million. If you worked at any of those company snackers, you can become a Phoenix rising from the ashes in March. Remember, it's National Pet Day and Phoenix are the best pets. If a job interviewer asks you how you handled a challenge at work, you all have very good answers.

This is your opportunity to bounce back from that adverse. Let's hit our three stories. You're tuned in to snacks daily. We spoke to the lawyers and we got to get something legal out the way. The snacks about to hear ain't food. It's air candy. They don't reflect the views of the robberhood 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. Snacks is digestible. news for you. Rob her financial LLC member Fenbra slash SIPC. For our first story, Garmin Stock just hit a 12-year high. Because it knows where you are, even when your phone doesn't. Ticker symbol, huge missed opportunity here, G-R-M-N, really boring. That was brutal. They're in the business of GPS. They obviously should have done GPS or

F-I-N-D-F-I-N-D. Technically Gap has GPS, which makes us wonder Gap, what are you up to? What are your next plans after denim? Gap does have GPS. I like that. Now, here's what Jack and I found was wild. This company was founded by two guys, Gary and Min, and they're really into their names. Hence, the name of the company, Garmin.

Gar-man, pop. Gar-man-pop. Gar-Gar-Man. Garm-P-Gar-M-M-N. Now, Gary and Min got together, got creative over in a loth, Kansas. Although they're legally domiciled the company now in Switzerland. Because they like skiing and they like not paying taxes. I think an accountant and a couple lawyers got a big bonus for that.

It's a powerful combination. Their first product, by the way, the old ProNab GPS from the 1990s costing you a cool $2,500. That's right. $2,500 for a GPS feature that you expect to be in everything today for free. First customer, the United States Army, not too shabby. Not too shabby, but today, the stock just hit a 12-year high on news that the profit almost doubled in the fourth quarter to $361 million. Now, Snackers, here's the thing about Garmin.

It's no Vanilla Ice one-hit wonder. They have got a bunch of divisions beyond GPS. What do they got yet? Sadly, a couple of those divisions are slowly being killed by the iPhone. Right. The first is Fitness Tracker's smartwatches. This division kind of slowly getting killed. It's a surprisingly resilient division, considering the iPhone can do

pretty much everything that Garmin watches can do. Plus, Apple has a smart watch. Pretty tough competition. Second division, we've got automotive, which kind of already has been killed. This is when they basically plant a GPS within the infotainment thing in your car. It was awkward. Or have those famously bulky GPS devices you put on the dashboard. You'd be staring at this thing.

It looked like a map of Mordor because Saab should never been in the business of making GPS. No, car companies should not be doing GPS. all you need is a USB cord so you can plug into Apple CarPlay and Android Connect. Boom, and that brings us to what Jack and I found fascinating, where Garmin's winning, because that is where iPhones don't work. Think about the outdoors. If you're camping in Yosemite, is your iPhone working? When you're outdoors, you're using GPS for like skiing, you can use it for like distance

tracking golf for like finding your adorable schnauzer who ran away. That's right. If you're not sure to use a seven iron or an eight iron, you can use Garmin's GPS tracker. Now, their other GPS tracker works well in the marine world because there's no cell service when you're like 50 miles into the Pacific Ocean. You're really not. That's why Garbin makes a boat GPS and an autopilot for boats. Basically, a navigation GPS thing that can also turn the rudder.

It's like Elon Musk took over the whole thing and is running the show here. By the way, is it called a boat or a vessel? I think it's a vessel if you're not allowed to have fun on the boat. These are first world problems we're dealing with right now. Now, aviation is the third area where we're starting to see some, like, love from Garmin. It's taken off. No cell service on a plane. Nick, put your phone in airplane mode because it's not working when you're up in the skies. Can we use this moment to vent about how bad airplane Wi-Fi is and please fix this Ed Bastion over at Delta?

We should probably be appreciative of airplane Wi-Fi because we're 30,000 feet up and we can connect it. But here's the thing with airplane GPS. It's kind of critical in the cockpit. So Garmin sells GPS to, like, Boeing and Airbus. They also sell an autopilot feature. Finally, they sell a feature called collision avoidance. Which sounds pretty critical. Jerry, throw in the collision avoidance. These guys are good guys.

Now, an iPhone can't save you when you're 35,000 feet up. It can't save you when you're 30,000 leagues under the sea. Or 35,000 miles from the nearest Starbucks. But Garmin can. iPhone can't. Garmin can. So, Jack, what's the takeaway for our buddies over at Garmin? Don't underestimate barriers to entry.

Snackers. Garmin is focusing on marine and aviation because it's way tougher for competitors to enter those areas. Think about GPS for a vessel or GPS for a plane. It's highly technical. So true. You need a bunch of safety certifications. All one. Then you got the responsibility to avoid collision on an airplane and the 340 souls on board. Oh, by the way, after you apply for that first safety certification, you got to wait three months for your second and the third because you got to have at least like six of these things. I would not recommend as a startup business venture, GPS for AirPers. And that's why Garmin is able to make 74 cents of profit on every dollar of sales in its aviation and marine divisions.

That is a fat profit margin. 74% it's incredible. Where there isn't much competition, you can name your price, and there isn't much competition when there are barriers to entry. Garman, Pop, Garman. For our second store, Unicorn of the Day, Jack, jam or butter? Butter. Vegan butter. Talk in Toast, the startup that just raised $400 million to hit a $4.9 billion evaluation check. Can we please round up? Give those guys a 20% tip and round up to five and change.

Everyone knows you want to hit that $5 billion number. It just looks sexier. Toast was founded in 2013 by a couple of Boston-based entrepreneurs who were obsessed with restaurants. Now, we've heard a lot from our Boston snackers. Apparently everyone in Boston isn't just drinking and eating Dunkin. They also go to flour to get like egg muffin. and then they also go to like Myers and Chang to get Chinese food. A lot of DeAngelo's fans in Eastern Mass, if I understand.

When it comes to Toast, their revenues have doubled in the last year, but like that's the only financial information they've shared with us. And Toast's software that it sells restaurants, it's kind of like a restaurant kitchen. You don't see it, but it runs the show behind the scenes. Snackers, you have no idea, but you have seen, touched, used, and been satiated by Toast before. You guys got to see the hand motions Jack is doing right now. It's like he's getting really personal with a loaf of bread over here.

So let's lay this out. Jack walks into a blue bottle coffee shop with me. Jack, are you ordering the turmeric latte or the macha latte? Nick, I've told you once. I've told you a thousand times. I'm not a fancy boy. I just need a drip coffee. All right, Snacker.

So Jack gets out of his comfort zone for once and gets a turmeric latte with me. goes up after ordering and sticks his credit card in an adorably stealthy-looking iPad that's actually a toast machine. That little piece of hardware is manufactured by toast and takes care of the payment processing, so I just got my $9.00-lotte that Nick is making me pay $9. Jack then realizes this is actually a $12 latte and he gets a little upset at me. But then he waits a few minutes and Toast sends him a text saying, hey, that latte, it's ready. That's right. Toast has technology that can recognize the phone number, link to my credit card, and send me updates. Probably send me a receipt, too.

All right, so Jack's a little friarist about this situation. He splurge on a latte. He's pretty hungry. He goes to a restaurant next door, orders a sit-down meal. Toast touches him again there. Boom. At the end of the meal, instead of getting that little black credit card book, sticking my credit card in there, trying to wave down the waiter.

Doing the motion. The waiter brings the book to the back, swipes my credit card, brings the book back. Toast actually has a solution. They got that little piece of hardware and can swipe their credit card right at the the table. Right, they've got like a mobile option. But then Jack's like, hey, my co-host on the podcast, Nick, was kind of onto something with these turmeric lattes. So he goes back to the coffee shop and orders 12 more. All right, let's say Nick has converted me into a latte nista. My 13th one is free because Toast has loyalty software that recognizes a frequent flyer. So then Jack's so impressed with the latte art,

and that's because the barista is really into it. And she is getting her paychecks from Toast. But wait, there's more. Toast is working on a product to reduce employee turnover by giving them an app they can download to check their schedule and figure out what shifts they're working. Toast is basically way too aggressive and it's touching everything in the restaurant, but it kind of reminds us of another company doing a similar thing in a different industry. What Shopify did for e-commerce, Toast is doing for restaurants. Basically, Toast is focusing on the confusing dirty tech backend so the business can focus on making delicious popovers. We all love popovers, which are basically a muffin schooler cousins. So, Jack, what's the takeaway for our buddies over at Toast?

Toast is also S-A-A-A-B-Sab software-as-a-B-B-Sab software-as-a-B-B-Safthewrower as-B. Snackers, you've heard of SaaS, Software-as-A-Service, which is basically software providing services to companies. But software as a bank, that's a new thing Toast is focusing on. Toast can offer loans to the restaurants it works with through an entity called Toast Capital. And it has a unique advantage over regular banks. If you're a bank, all you see is like the restaurant's basic financial statements. What money's coming in, what money's coming out.

But if you're toast, you can see every single transaction that's happening at the restaurant, analyze those numbers, and figure out a better loan. You can see the turmeric supplies. You can see the employee turnover rate. You can see what the most profitable products are because you're embedded in everything. And maybe you recognize this restaurant's doing really well, and you can offer a better interest rate than a normal bank. So Toast rival Square is already doing this kind of thing, software as a bank.

And Toast would love to follow Square's path to an IPO. Right, because Square is a publicly traded company. Toast, it's still private. For our third and final story, Alphabet just killed Makani. This is the first other bet to be killed since the Google co-founder stepped down. Now, two things we think about when we're thinking oceans here. They're windy and they're deep. Windy is good for offshore wind turbines. Deepwater, not so good. Not so good. How do they even build those

platforms in oceans that wind turbines stand on? It seems like one of those things you need like a Michael Bay movie to build. Or you could just hire Aquaman. Or enter Makani. This is kites with wind turbines attached to them, which catch wind, turn the wind into electricity, and send that electricity down a wire to a buoy. Now, this buoy is like a very special buoy, and I assume you don't want to touch this buoy. No, no. But that's what McCona did. It generated electricity on the ocean. Born in 2006, married Google in 2013, sadly perished in 2020. Alphabet just announced it's shutting down McCannie because of, and I quote, the commercial was too risky and too long term.

Now, here is the thing about Google Snackers. We've said it before and we'll say it again. This is an ad sales company. They're really good at ad sales, but they'd rather be doing something else. They're kind of like that one buddy we all have who's a lawyer, let's call him Mike, but he keeps going to improv between court hearings because he's tired of doing the lawyer thing. I'm just not sure of laws for me. I'm tired of these billable hours.

I want to be doing like, did you ever notice kind of jokes on stage. Look at Google. 85% of its $40 billion in revenue last quarter came from ad sales. But it uses those ad sales profits to fuel moonshot bets and crazy ideas that they hope will make the world better and then we'll make them more money.

That's the improv it's doing on the side. But now that co-founders Larry and Sergey have stepped down from Alphabet, it's unclear if those other bets will survive. So, Jack, what's the takeaway for our buddies over at Google? Other bets are Google's future insurance. Snackers, other business. bets have included one major success, and that's Waymo. Waymo is the self-driving car company of Google

that has graduated from the Moonshot factory and is now worth an estimated $100 billion. But the rest of those other bets, they actually lost $4.8 billion last year, aka one-third of a lift, which makes some shareholders kind of angry. We're thinking, though, that other bets is really super long-term research and development for Google. There could be some other profit puppies hidden in there. Right. So other bets is like a really expensive $4.8 billion a year future insurance. If something shockingly happens to hurt Google's core main bet ad sales, then other bets could step in and save the day. But Google's new leaders might not be on board with the other bets. Jack, and you'll whip up the takeaways force over there. Garmin's Marine Aviation and

outdoor businesses has the stock at a 12 year high. It's focusing on places where your iPhone can't save you thanks to barriers to entry. Toast is sprinkling tech efficiency all over the restaurant industry. It's the Shopify for restaurants with an eye on an eventual IPO. Third and final story, Alphabet just put down one of its other bets, McConey, because it wasn't making money. Other bets are passion projects, and Google's new leadership, not that passion about these things. May not have the passion. Snackers, time for our snack fact of the day.

This one's sent in from Andrew Quellen in Torrance, California. He pointed out something to right to our wrong from yesterday's snacks. Yeah, yesterday I mentioned a key frugal strategy of ordering the second cheapest wine on the menu because nobody wants to order the cheapest wine. Spoiler alert here. Really fun going out to dinner with Jack, everyone. Well, Andrew points out that they actually are onto me. They're onto my little scheme here.

So restaurants jack up the price of the second cheapest bottle because they know guys like me will order it. Andrew, this is a key reason why today's snacks daily is so much better than yesterday's snacks daily. Snackers, go with the cheapest or the third cheapest, not the second cheapest. Snackers, remember, it's National Pet Appreciation Day. Jack and I want to see your profit puppies. Tweet us at Nick of New York and at T-Boy Jack. It's actually National Love Your Pet Day, and we also would love to see your profit puppy on Insta, our handles at Robin Hood Snacks.

In the meantime, we'll start prepping for tomorrow's podcast. Have a fantastic day. 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 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.