The Best One Yet - “Gen T = Generation Tiktok” — Restoration Hardware doubles-down. IBM’s anti-facial tech. TikTok’s business trifecta.

Episode Date: June 10, 2020

While you’re buying online, fancy furniture retailer Restoration Hardware is tripling-down on the physical world — it’s launching hotels. IBM is actually abandoning its entire facial recognition division on worries it could become a weapon of racial oppression. And put Millennials and Gen-Z aside for a sec — we just got data on what the little kids are watching (hint, we’re calling them Gen T now).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 Wednesday, June 10th. Nick, bad hairday, huh? It's a weird hair. It's usually bad hair day. I really get a good hair day.

Jack, it's 4 p.m. Snackers, he's got two Chardonnays over there. Nick's hair's not looking good, but this pod's looking great. It's way better than what we whipped up yesterday. What do we got, Jack? First story for this T-boy is Restoration Hardware. Yes. It thinks the trend to e-commerce happening during COVID-19 is a bunch of baloney. Snackers, these guys are tripling down on physical commerce.

The fancy. furniture retailer is launching. Wait for it. Hotels. Hotels, Snackers, we've set it before. We'll say it again. Retail's not dead. Bad Retail's dead. That is track number one on the Snacks Daily Greatest Hits album. It's never gets old. Second Story, Jack. IBM didn't just post a black tile and share a nice tweet for Black Lives Matter. No, they literally abandoned one of their major growth areas. That's right. IBM is ending its entire facial recognition division, arguing that it's a tool for racial oppression. And they think modern technology can be a weapon of mass social destruction. Zuck.

Cough, cough, got our third and final story. You got the streaming wars, millennials, Gen Z, who's cord cut and what? Yeah, but all we want to know is, what are the babies watching Generation Baby? Well, we just got data on what four-year-olds to 15-year-olds are watching, whether it's Quibi or Netflix.

Turns out it's neither. We're calling this post-GenZ generation, Gen T. Gen Tick-Tock. Gen Tic. Now, Snackers, before we jump into all that, we got to talk about an interesting casualty of the Corona economy. The group selfie. You're probably not getting an epic photo with six friends at the

Grand Canyon. Not happening. Won't happen any time in the next few weeks either. Squeezing your six buddies into one iPhone six frame, it's actually a life-threatening activity. You could be threatening everyone you're with. It's dangerous, though, because when that sunset is that gorgeous, you just naturally, instinctually tell everybody to come close. I've seen it for the last decade. Nothing makes Jack happier than a nice red sunset. Fortunately, Apple is rescuing us from our deprivation of selfies. Get this Snackers, Apple fixed the lack of selfies. They just patented the synthetic group selfie, a.k.a. socially distant group selfie, aka fake views. Now one buddy can be on the lower east side, another buddy in Tampa, and your third buddy, who knows where. I'll be honest, it's Timmy and no one

knows where he is right now. Well, all three of us can send picks to one phone, and software will arrange the individual pictures into one selfie with one background. So you get to show off what you're doing together, despite being nowhere near each other right now. You get to take that selfie that you'll probably never post anywhere or look at again for the rest of your life. It's a great way to give other people 100% fake fomo from the fake photo. But one wild thing Jack and I noticed, Apple actually filed for this patent back in 2018. Nick, I think you're telling me Apple knew COVID-19 was coming. Tim, why didn't you message Fauci? This is Nick, this is Jack, this is Robert Mendevi. Let's get to our three stories. Perfect. You're tuned in the snacks daily. We spoke to the lawyers

and we got to get something legal out the way. It's snacks about the hair 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.

Right. Snacks is digestible. Business news for you. Robohood Financial, LLC, member FINRA slash SIPC. For our first story, Restoration Hardware, don't care about ecommerce. The CEO just doubled down on physical experiences instead. This is a classic Pimpio Cribb Stock Snackers. $2,000 sconces and a Shez lounge named the Chesterfield Collection.

Designed to Napa, ship to Fairfield County. Restoration Hardware shares have tripled in the past couple months as work from homers are upgrading their homes hard. You want to feel comfortable and you want to feel like you spend a lot of money at some cases. But we should point out, sales at Restoration Hardware. did not soar last quarter like they did for Wayfair. No, their stores were closed, and so sales actually dipped from last year, but we noticed something fascinating.

The furniture retailer just announced they're taking a step into hotels. Hotels, like a test drive, but you're testing out the whole living room and a rope slipper set. That's right. They're buying up homes and condos in North America and stuffing them with the latest restoration hardware collection

and then offering them as hotel experiences. Boom, you get the Aspen Ski Kondo by Restoration Hardware, decked out in Restoration Hardware, Elk Antler chairs, What could be better? Sounds horrifying, but I believe it. Exactly. Most of their stuff is like inspired by Game of Thrones, it feels like.

I actually think that was inspired by the big house on Alpine Drive and dumb and dumber. Now, if Aspen's not your thing, you could also take a cruise on the RH3. That is right. Restoration Hardware also bought a yacht that you can charter in the Caribbean or the Mediterranean, depending on your land needs. Whether you're looking for a spring break banger in the Caribbean or the con film festival hotel experience, restoration hardware has got your back. Pull up like you're from Westeros.

But wait, there's more. Next summer, Restoration Hardware is opening a hotel in London and another hotel in Paris. If the snow's bad in Deer Valley, maybe you escape to the flat and nodding hill. Nothing wrong with that, no judgments. By the way, this isn't a joke. Restoration Hardware is opening up homes and condos for ski resorts, a cruise ship, and hotels in two of the most cosmopolitan cities in the world. It's all part of their theory.

If you enjoy the ultimate physical experience of their furniture, you'll probably buy it someday. So that every day at home feels like that vacation. So Jack, what's the takeaway for our buddies over at Restoration Hardware? Contrarian bets are the only ones that bold CEOs make. Snackers, we've said it before. We'll say it again. The Restoration Hardware CEO always thought retail wasn't dead, bad retail was dead. And he still thinks that. Exhibit A is Restoration Hardware CEO's quote in an interview from 2018. He doesn't want to follow the herd. Exhibit B, a quote from 2020. it time to be defined by vision, not by a virus. Two years ago, when the whole world was pushing

more onto online retail, Restoration Hardware was emphasizing their offline experiences. This company splurged $50 million on a 90,000 square foot New York City flagship store that was like filled with different bars. Multiple bars. And be careful not to spill that Nogroni on the $12,000 endangered alpaca sofa. They're only three alive worldwide. Even when Restoration Hardware's physical first vision is more contrarian than ever, restoration hardware is doubling down. For our second story, IBM ends its facial recognition entire tech business. They think facial recognition is a weapon, not a tool. Now, Snackas, before we jump into all this, Jack knows this all the way going back to freshman year,

but I have some pretty good facial recognition skills. Nick's like, Jack, isn't that the guy who pulled your wisdom teeth? I did one of those online CIA forms run once. They didn't write back, but I scored well. facial recognition is actually a new frontier in tech with potentially huge profits to be made. You got augmented reality. You got virtual reality. You got internet of things. You got driverless cars. Facial recognition is right there as the next place for big tech to make big money. And Snackers, you notice how Facebook knows the people in your pictures before you tag them?

It actually knows the people in your pictures before you take the picture. Facial recognition is like that, like Facebook, but for police and government to know where you are all the time. Now that you say like that, Jack, doesn't sound how much different than what Facebook's doing anyway. No, Zuck's on to something, I'll tell you. Now, if we look at who the leaders are in facial recognition, they are, no shocker here, Microsoft, Amazon, and Google. You thought a startup would be in that space? Nope, they've already been acquired by one of those three.

Real thing, kind of a problem, but it's the reality. Microsoft, Amazon, and Google, they're the ones with the giant data processing pecks needed to, like, process trillions of hours of video camera footage. And IBM was right up there and was one of them, too. Until yesterday. IBM announced they will immediately end their facial recognition business of connecting faces to names. The way they described it was that like the tech is just too often used for mass surveillance, racial profiling, and violating rights and freedoms. AKA it kind of conflicts with IBM's corporate values. And then IBM said, you know what, we're going to kick things up a notch here. We're going to go a step further. They penned a letter to six senators calling on them to regulate this so far completely unregulated field.

The whole thing, it had like six parts at the top to describe the address it was going to. IBM frames this as very Star Wars. Yes, facial recognition can be used for good. Like the force or a lightsaber. But it's too easy to be used for bad. So Jack, what's the takeaway for our buddies over at IBM? Arms dealers are controversial. And guess what?

Big tech is becoming an arms dealer. You got free speech weapons. Those are used for information warfare. Russia figured that out first with the 2016 election, and now every authoritarian is doing it. doing it on social media. Yeah, it's the thing to do. Then you got video surveillance, which is used to infringe on your human rights.

China's got 170 million connected surveillance cameras to track their citizens. And then you've got facial recognition, which could be the next tool for racial profile. Police departments and law enforcement have the biggest demand for facial recognition technology. And they could be using it to eventually track down people, anyone. Algorithms are what's powering modern weapons of mass social destruction. For our third and final story, YouTube and TikTok control the hearts and minds of America's children we just found out. We're guessing most listeners are neither children nor parents with children.

Yeah, Jack and I are kind of like in between those two, so this story was enlightening for us. Apologies to the parents and kids who already know everything we're about to report in this story. All these like parents are like, yeah, we whipped up the takeaways on this three hours ago when Junior woke us up in the middle of the night. Q Studio makes an app to help parents can control their kids' internet consumption. Yeah, and they interviewed 60,000 families in the U.S., UK, and Spain, and published their annual results last week, Jack and I found it fascinating. Get this. Children aged 4 to 15 years old, now spend 85 minutes per day watching YouTube videos. And the same group of kids is spending 80 minutes a day watching TikTok, the Chinese short form

video app, which begs the question, how are they getting their hands on these phones? I don't know. And get this. During April and May, during the coronavirus, those numbers surge to 95 minutes and 99 minutes for YouTube and TikTok. We're talking over three hours a day. These kids can't even like conjugate verbs or count to 12. Yeah, that's not 95 minutes or 99 minutes. It's 95 minutes and 99 minutes each. That's like the entire time between waking up and nap time. Now, you think millennials have short attention spans? Gen T is even shorter. Yeah, that's right. Not Gen Z. We're talking the younger Gen T as in Generation TikTok.

For us millennials, we were watching Nickelodeon, ESPN, and movie reruns on TBS. TV shows for 30 minutes long, pretty simple. For the younger Gen Z, they're watching YouTube. Average YouTube video? Just 11 minutes long. Pretty simple. And for whatever comes after Gen Z, again, let's call it Gen T. Yep, they're watching TikTok. Get this, the average TikTok video is 16 seconds long. 30 minutes for millennials, 11 minutes for Gen Z, 16 seconds for Gen T.

No idea how they squeeze in like the climax and character development. but they make it happen. So Jack, what's the takeaway for our buddies over at TikTok? TikTok is winning on the trifecta of tech. We're talking growth, engagement, and profits. Jack, let's kick it off with engagement. What do we got? The average minutes spent on TikTok doubled in 2019 and is tripling so far this year. All right, Jack, number two, growth. What have we got? Usage with kids on TikTok trails only Instagram, but they're likely to pass a secret weapon, probably next year. And then the end of the trifecta, Jack. profits for TikTok, what have we got?

TikTok ain't no deadbeat Snapchat still waiting on their first ever profit, Nick. No, Snackers. Ticktack had $3 billion in pure puppy profit last year. Engagement, growth, and profits, TikTok is winning. Oh, and by the way, they don't have a stock, and they're based in China. So the only TikTok kicking it a piece of is one of those 16-second videos. Jack, can you grab that Oki Pino and whip up the takeaways for us over there? Contrain bets are the only ones bold C.E. make, and that's what restoration hardware is doing. It could fail, like Quibi, or it could succeed.

Like the iPhone. Seconds takeaway, Jack. IBM just ended its facial recognition technology program. It's simply worried its tech product could become weaponized. Third and final story, Gen T is Generation TikTok. And that Chinese company is winning the tech trifecta. Now, time for our snack fact. Senate, you know, just a few miles down the road on 101 from San Jose, California with Jamie Irvin. Jamie points out that back in 1968, the U.S. Congress passed a law that resulted in a bunch of public hearings where we figured out how the banking industry was functioning. And it turns out in those hearings, they realized that minorities and unmarried women were being refused loans because they were minorities and single women. No other reason. Virtually no reason

other than their marital status and their race. And it wasn't until 1974 with the Equal Credit Opportunities Act getting passed, that it made it illegal to actually deny access to banking or credit based on a whole bunch of things. Race, color, religion, national origin, sex, marital status, age. A whole lot of systems have been marinating in unfairness and there's still like a whole ton of progress to be made. Jamie, thank you for pointing out that great snack fact. And Allie from Brooklyn, happy birthday. Your baby bros says have a great 28th. Siblings who snack together, get along together. Yeah, it's a pretty straightforward thing. It's good. It's good. If you got a sibling who should be snacking? Yes. Text them right now,

H-Y-H-Y-Y-S-D. Have they had their snacks daily? That's actually not H-Y-H-Y-Y-S-D. No, it's true. We were doing a little editorializing there, but have you had your snacks daily? We'll see you tomorrow. Can't wait. If you know, you know. This is Jack. I own stock of Amazon. 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.