The Best One Yet - 📕 “Hedge Fund University” — Harvard’s $2B battle. Coachella’s Pay-Now-Party-Later. Netflix’s Dr. Evil plan.

Starting point is 00:00:00 This is Nick. This is Jack. It's Wednesday, Saviche Wednesday, April 16th. And today's pod is the best one yet. This is a T-boy. The top three pop business news stories you need to know today. Okay, so Jack, what are stocks doing right now? What did stocks do yesterday? They fell a tad. We're in kind of like a calm period right now. Honestly, if we're in a calm period, I'm getting scared. I don't know what that means, man. But Jack, three stories for today's show. What do we got on the T-boy? For our first story, the biggest story of the week isn't tariffs of the trade war. It's $2 billion at Harvard University. Harvard is losing $2.2 billion bucks of federal funding, so we looked into the economics of endowments. For our second story, it's Coachella. It's still the biggest music festival in America, and we're in the middle of it right now. But the headliner this year isn't Sabrina Carpenter. The headliner of Coachella is the 60% of attendees who are on payment plans. We call it pay now, party later. And our third and final story. Some analysts, on Wall Street think they've found the most recession-proof stock of all.

Starting point is 00:01:04 Netflix. Netflix. So we need to talk about Netflix's new Dr. Evil Goal. One trillion dollars. You're just listening to his Jack's doing the pinky thing. But yet is, before we hit that wonderful mix of stories. Whoa, what a mix of stories today. Love the mix, Jack. We're not astrology people, but we do believe there is a black hole on planet Earth. And that black hole is in the back seat of an Uber taxi.

Starting point is 00:01:29 Because the only time we tend to lose things is when we're unbuckling our seatbelt in the back seat of an Uber. Is it just us or does your phone always manage to escape your pocket in the back of an Uber Prius? Well, here's the news. Uber just published their annual list of everything left behind in Uber's last year.

Starting point is 00:01:46 Basically, Uber's lost and found index, so we jumped into the numbers. And it's really fun, frankly. Like one passenger left a sewing machine in the back seat of an Uber last year. Jack, I can one up you. One passenger left a plunger. Another left a urinal.

Starting point is 00:01:58 A third left a left a chainsaw. Did you say urinal? Like a porcelain urinal? It wasn't plugged into anything. It wasn't being used. But yeah, it was a urinal physically. Make in three cases, passengers left behind live turtles in the car. Another passenger left their divorce papers. Another passenger left taxidermy. Our favorite, though, is a Viking-era drinking horn. I'm surprised the driver reported that one. I would have just snagged that and not told anybody. That's a keeper jack. But Yetis, we got even more curious and we wanted to know what U.S. City is actually the most forgetful.

Starting point is 00:02:31 According to Uber's data, Chicago is the third most forgetful city. Jack, it makes sense. Your mind is distracted by the Bears. The second most forgetful city is Miami. You're in a bathing suit all day, so you just don't have any pockets. And the first, most forgetful city, according to Uber's data, is New York City. Even Aaron Judge left his torpedo bat in the back of an Uber.

Starting point is 00:02:51 But strangely, Uber also told us the most forgetful date of the year. And it's randomly October 20th, 26th. Apparently, for some reason, the data does not make clear the most forgetful day in America is October 26th. If you have any idea why, let us know in the comments. But in the meantime, don't forget to mark your calendar about the most forgetful

Starting point is 00:03:11 day on the calendar, October 26th. Okay, I'm putting in my calendar. October Saturday's like, don't forget something that day. I already forgot. Jack, don't leave that blunder in the back of your Uber X. Let's in our three stories. Fifteen years before this song, two boys from the Northeast met in the dawn. They had an idea to cause a cultural storm.

Starting point is 00:03:28 It's the best one yet. but the best is an on 50% that's a fat tip. Tea 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. For our first story, the biggest business story right now,

Starting point is 00:04:03 and it actually isn't tariffs or the trade war. It's Harvard University. Harvard's $2.2 billion in lost federal funding puts a spotlight on their huge endowment. So Jack and I jumped in Tee. boy style to the economics of university endowments. Now, Yetis, some of the top brands in our economy aren't Netflix, Coca-Cola, or Disney. It's America's elite universities.

Starting point is 00:04:29 Well put, Jack, and right now they're all in a political battle against President Trump. To rid America's universities of what he calls woke ideology, Trump is threatening to cut their federal funding. Over Colombia, President Trump made nine demands of the university. Colombia mostly did what Trump said to preserve their $400 million in federal funding. But Jack, on the other hand, a couple ivies up north, what was happening over at Harvard? Harvard faced a similar threat from President Trump, but they rejected his demands, saying this. The university will not surrender its independence or relinquish its constitutional rights. So on Monday, the Trump administration froze $2.2 billion that Harvard had received in federal funding.

Starting point is 00:05:08 And then on Tuesday, the Trump administration moved to try to revoke Harvard's tax exemptions. status. Is this legal or is this a violation of Harvard's First Amendment rights? Courts will decide. The courts will decide, but in the meantime, on this show, Jack and I like to follow the money. And we were curious. Yeah. Where is all this federal funding going? Okay, everyone's talking about billions of dollars going to all these schools every year. We're like, what are these billions of dollars exactly? Brown gets $500 million from Uncle Sam. Northwestern gets $800 million. Cornell gets a billion. And yet their lacrosse team didn't win the Ivy's this year. But, Harvard currently has $9 billion in federal contracts and multi-year grants with the government.

Starting point is 00:05:49 That's more than two lifts. So we looked into it. Some of that money is coming from the National Institute of Health for medical research on Alzheimer's, for research on infectious diseases, and for genetics research. Okay, other parts of that money are coming from the Defense Department for research on robotics, on energy, on artificial intelligence. Now, we should point out federal funding of university research is historically a huge. source of America's innovation. Yeah, Jack and I did a takeaway once about how like Uncle Sam is the original and reason Horwitz. Right, because countless breakthrough technologies that have changed the world occurred first on college campuses, thanks to federal funding footing the bill. Professor Jack,

Starting point is 00:06:28 could you whip out the whiteboard and please list some of these incredible technological advances? How about the internet? Ever heard of it? Big thing. GPS, lithium ion batteries, even the nuclear bomb. All of them originally started with funding from the government for academic institutions. Now, on an annual basis, Harvard gets a little under $700 million in federal money. So we know what you must be thinking, Basties, surely! With Harvard's $50 billion endowment, an endowment worth more than the company of Volkswagen. Harvard can afford this cut in funding. It's not just Harvard, and not just the Ivy League's either.

Starting point is 00:07:05 Over 100 colleges and universities in America have endowments over a billion dollars. Another way to think about the university system is that our biggest colleges are actually hedge funds that use education as their marketing arm. That's kind of a cynical way to look at it, but you could look at it that way. Financially, you can look at it that way. Well, here's what universities do with those endowments. Spoiler, they don't spend them. So, Jack, what's the takeaway for all our buddies in education? You don't spend the endowment.

Starting point is 00:07:32 You only spend the returns. Now, yet he's many, you were probably thinking, yeah, Harvard, they got the smallest violin in the world. world right now. 50 billion dollars is an endowment, why would they need taxpayer money? But the point of an endowment isn't to spend it. It's only to spend the returns. The point of the endowment is to not spend the endowment. Seriously, that's the point. Let's say conservatively that Harvard's endowment makes 5% in returns a year because that endowment is invested in stocks and bonds which grow every year. Those 5% returns, that's the part that Harvard actually spends. But they do not spend the principal, the $50 billion in

Starting point is 00:08:10 endowment. And that 5% return on a $50 billion endowment, Jack, you do the math for us please over there? We're talking $2.5 billion a year that goes to the university's budget thanks to the endowment. Two and a half billion dollars in returns just from the endowment. Jack and I crunched the numbers on it. Technically, that is more than enough to cover the tuition of all undergrads and grads at Harvard every year. Now, if you spent the $50 billion principal part, then every year the endowment would get smaller and smaller, and eventually it would become zero. But instead, the universities use just the returns of the endowment to subsidize tuition, pay financial aid, pay the professors, do the operating costs.

Starting point is 00:08:49 Turns out most students at Harvard pay way less than what it actually costs the university to educate them, because the endowment pays the difference. So to update what we said before, a university is basically a hedge fund that subsidizes education. So when you think about Harvard's battle with President Trump, and you think about the endowment, here's the important clarifier. You don't spend the endowment, you only spend the returns.

Starting point is 00:09:16 For our second story, we are right in the middle of Coachella, the nation's largest music festival. But Coachella attendees aren't paying in cash or card or buy now, pay later either. No, no, no, no. They're on payment plans. It's a third way to pay.

Starting point is 00:09:32 And we'll break it down. But Jack, let's look at the history. books here. 2018, you had Beyonce. Last year you had Sabrina Carpenter. Okay, who he got on stage this year over at Coachella? Lady Gaga. Hello, Cool J. And randomly, the whole cast of White Lotus appears to be there. If Patrick Schwarzenegger hands you a lorza, Pam, watch out. You don't want to take that thing. Even Bernie Sanders is like the political headliner this year. Apparently Bernie is a Briggs Sabrina Carpenter espresso fan. Who knew? Coachella, the 32-year-old music

Starting point is 00:10:04 Fest just outside LA. And this year's Coachella, it's set a record. It's the hottest Coachella ever. Literally. Like literally. Literally. The temperature hit 102 at one point last weekend. The makeup was melting off your face over at Coachella. But from a business perspective, it's not the hottest Coachella. Because once again, tickets are not sold out. But with 200,000 attendees, it's still the largest music festival in America, according to Billboard. And here's what Jack and I found so fascinating. The headliner of Coachella this year isn't a musical act. It's actually a payment method. Because get this, 60% of Coachella tickets were purchased with payment plans.

Starting point is 00:10:44 We should sprinkle on some context here. Jack, payment plans are not buy now, pay later. But they are the secret way that music festivals are becoming attainable to Gen Z. Jack and I call this concept pay now party later, and we're seeing it even beyond Coachella. We'll explain how it works in a second, but Nick, it's not just Coachella. Lollapalooza, Electric Daisy Carnival,

Starting point is 00:11:05 all the major music festivals are selling a majority of tickets using payment plans. And here is how it works. We'll break it down for you. You pay 41 bucks up front to reserve your ticket at Coachella. But that General Emissions ticket this year

Starting point is 00:11:19 is $600 for a three-day Coachella weekend. That's why every two weeks, until Coachella, you're paying $100 to pay down your balance. Now, here's the key about the way this works. Coachella is taking zero risk with offering a payment plan. Because you must pay in full before they'll let you into the event. In fact, if you miss a payment, Coachella sells your ticket to someone else,

Starting point is 00:11:42 so they're kind of double-dipping with this payment plan. If you're halfway through your payments and then you can't pay anymore, Coachella keeps your money and makes money by selling your ticket to somebody else. But we should point out, if you don't end up paying for the rest of your ticket, you don't totally lose your money either. Because the amount you've paid already is credited to a ticket. next year. So add it all up and, unlike Buy Now Pay Later, with the payment plan, you don't totally get the thing until you paid in full for that thing. You reserve now, but you don't buy it until

Starting point is 00:12:12 you've made the final payment. In other words, a payment plan for Coachella is pay now, party later. It's yet another form of alternative payments. So Jack, what's the takeaway for all our buddies looking for new ways to pay? Payment plans are back because our economy has gone from low low to high, Yeties, from the year 2000 to 2020, we lived in the low, low economy, as in low interest, low inflation. Prices were low and borrowing costs were low. You could take risks, buy stuff, launch a startup, all with basically free money. And that low, low combo was perfect for the credit card industry. You know, you could put your Coachella tickets on your MX platinum card because the tickets were cheaper and you paid very little interest. But since the pandemic, we've lived in a high-high economy. There's both high inflation and high interest rates.

Starting point is 00:13:03 Coachella tickets have doubled in price from 2015. They're up 50% from 2020, and it's harder to pay back because of the high interest rates. That combo is bad when it comes to credit cards. There's more repercussions if you default. And that is why a majority music festival attendees are now saying yes to the payment plan. And why even more are using Buy Now Pay Later to order a burrito through food delivery. But it's really all the same thing. Stretch consumers are finding creative financing to be able to be able to.

Starting point is 00:13:30 to afford things today. Buy now, pay later, and payment plans. It's all because the economy has gone from low, low, to high high. Now a quick word from our sponsor. For our third and final story, Netflix is already worth more

Starting point is 00:13:49 than Disney, Peacock, HBO Max, and Fox combined. So Netflix's new goal, no big deal, hit a trillion-dollar market cap. One trillion dollars. Now, besties, funny things Jack and I have noticed, every story in business these days opens with a recession warning. You didn't get your hair dyed? That means there's a 3% more chance likelihood of a recession. Recession warnings are everywhere, but Netflix just clicked skip intro.

Starting point is 00:14:21 They've seen enough Black Mirror episodes to not be worried about trade war headlines. That's where last week, Jack and I told you why Netflix may be recession proof, because Netflix is in the category of frugal finance. 20 bucks a month for a Netflix subscription is cheap entertainment in comparison to going out to dinner or going out to a concert. So Jack and I expected Netflix to be confident despite the recession warnings. And then we heard this. Netflix just set an internal goal to become a $1 trillion company. Okay, we repeat, according to Wall Street Journal reporting, the CEO of Netflix told staff,

Starting point is 00:14:57 the plan is to double revenue and triple profits by 2030. But he also told them this. the company to have a stock market value of a dollar symbol, the number one, and then 12 zeros. Translation, $1 trillion. It's why we call it the Dr. Evil goal. So, Jack, what is the implication of Netflix's huge ambitious new goal? They must believe they're still in their adolescence. Yeah. After 28 years, they think they're still a growth company. And we should point out, Netflix has three recent growth drivers which have been pumping up the stock. They've limited password sharing, they've raised prices, and they've started an advertising business. But looking forward,

Starting point is 00:15:40 we noticed Netflix has one new growth driver. Stamp their passport. Stamp that business model passport in other countries. Specifically, they want to penetrate two untapped countries that have good broadband internet access and love streaming just like everyone else. India and Brazil. Netflix, they're one-half Silicon Valley, one-half Hollywood students. and they've got a playbook on expanding in new international markets. So their goal for the next five years is do what they've already done in the United States, Germany, France, and South Korea, but for India and Brazil. They want to stamp that passport. What's it going to look like, Jack?

Starting point is 00:16:14 They're going to have to film some local shows and local movies, then dub the rest of their programming into the local language, and then launch in that country at a price that's affordable to that market. Spoiler, we're calling it now. The next Squid Game is going to be a steak-eating competition at a Churisgaria in Rio de Janeiro, where everyone's wearing Brazilian thonged bikinis. Red paddle, you're dead. Green paddle, you live.

Starting point is 00:16:39 That's how it works in Brazilian steakhouse. I think that is exactly how worst. Well, footjack. So, Vessie, that is how Netflix plants double revenue and triple profits by the year 2030. Stamp their passport in two countries that represent nearly two billion people who've never logged in to Netflix. But, Jack, I got to pause the pod for a second. back to that one trillion dollar goal. That is very specific. That is very financial. And that is very

Starting point is 00:17:04 un-netflix. So Jack, what's the takeaway for our buddies over Netflix? With each new era, you need a new North Star. Now, yeah, it is few know this, but Jack and I are astrologists. And the North Star actually does change every 26,000 years based on the Earth's axis. So, with each new era, there is literally a new North Star. with star. And we think the same applies to companies. Now, when Netflix was founded, it was in the move fast and break things era of tech. So their goal back in, say, 2005, here's what Reed Hastings said. They had to win a ferocious head-to-head battle with Blockbuster Video. Then Netflix launched original content, taking one foot out of tech and stepping one foot into showbiz. Their new goal in 2011

Starting point is 00:17:49 was to win the prestige awards, like the Emmys and the Oscars, to earn the respect of Hollywood. Well, now Netflix has put Blockbuster out of business, and they've already won 200 Emmys and 26 Oscars. They've accomplished both goals. They're in a new era. They're Wall Street era. And the goal now is to join the magnificent seven club of elite stocks worth a trillion dollars. Because to keep employees and investors motivated, you can't have these like vague, broad goals like striving for gross. You know, what does that mean? Simply growth isn't enough. You must have a symbolically meaningful goalpost that suits the stage of life the company's in. Jack, could you whip up the takeaways for us for Saviche Wednesday?

Starting point is 00:18:32 Harvard is being punished by President Trump for refusing his demanded changes to the university. But what about Harvard's $50 billion endowment? Well, you don't spend the endowment, you spend only the returns of the endowment. For our second story, Coachella's financial headliner is payment plans. 60% of the attendees were on payment plans. Because our economy used to be low, low interest, low inflation. But now we're high high. high interest, high inflation. And finally, Netflix, with its recession-proof swagger,

Starting point is 00:19:03 is targeting a $1 trillion dollar Dr. Evil stock market valuation. Because with each new era, you need a new North Star. But Yeties, this pod's not over yet. Here's what else you need to know today. First, trade war almanac Day 15. How tariffs have been messing with our economy. Jack and I have been keeping track for you from the tariff trenches. China's latest escalation, there does buying U.S.-made Boeing airplanes. Bigger escalation from China, they're no longer selling us rare earth metals. That last one is huge,

Starting point is 00:19:35 and we're probably going to cover it in tomorrow's pod. Spoiler and second! Zuck testified in his court case yesterday, and he admitted something surprising, juicy stuff here. In 2018, Zuckerberg must have known that an antitrust lawsuit like this was coming, so he thought about preempting the courts. Yeah, he actually considered splitting off Instagram

Starting point is 00:19:54 years ago to get ahead of all these monopoly courts. things. But he didn't, so he's on trial today. Oh, another juicy detail? Apparently, Zuck had a crazy idea a few years ago to wipe everyone's friends clean and you had to start from scratch. So, like, your news feed wouldn't have anything in it. You'd have to, like, start over selecting your friends. We'd lose all of our, uh, all of our picks from the dorm room, Jack. That would have been like Y2K. And finally, Trader Joe's $3 canvas tote bags are back in stock. Actually, I'm sorry, they're gone. They're out of stock. And they're gone. Yeah. We covered last year how Trader Joe's most popular product can't be eaten because their most popular product is a 12-inch tote bag.

Starting point is 00:20:35 The man, though, was so high they're already selling for $1,000 on the secondary market like eBay. Now, time for the best fact yet. This one whipped up by Michaela having a fantastic time down at Coachell. It turns out the hate against Ticketmaster goes back 32 years. That's right. It didn't begin with Taylor Swift. Pearl Jam hated Ticketmasters control the ticketing business. so they put together a concert at a venue that Ticketmaster did not control.

Starting point is 00:21:02 Back in 1993, it was a polo field in the desert in the Coachella Valley. So Coachella's roots are rebellion against Ticketmaster spearheaded by Pearl Jam. Back in 93, and to this day, neither Ticketmaster nor its parent live nation have any involvement with the Coachella Festival, the biggest music fest in America. Yeties, you look fantastic today. Jack, you look great, but just don't forget that Viking horn cup. Have you seen it? I can't find it. Do you know where it went? I can't believe the Uber driver reported that missing instead of just taking it. Yeah, I'd like to report a urinal that I left in the back seat. I don't know. I just forgot to bring it out with me. Besties, mark your calendars for October 26. That's apparently the most forgetful day of the year. But if you forget, we'll forgive you. But don't forget to drop down and give us five stars, because

Starting point is 00:21:56 five-star ratings and reviews, that helps us grow the show. And Nick and I, we'll see it tomorrow. Won't forget, see you there, Jim. And before we go, a happy birthday to Yeti, Mary McCall, celebrating a big one with her fam over in San Francisco. Happy 34th birthday to Daniel Baker in Asheville, South Carolina, celebrating with a spa day. That's the spa.

Starting point is 00:22:21 And a happy wear your pajamas to the office day, to all those who celebrate you look fantastic. Which, as you can see, is not Nick and me, unfortunately. Well, you can't see me from the bottom down, Jack. Let's just round up on that one. And finally, we dare you to tag us where you're listening to T-Boy and tag us on Instagram. Tag us at T-boy Pod. Jack and I will show you where we're listening to today's episode.

Starting point is 00:22:41 And then you can show us where you're listening to today's episode. We'll give you a shout out on the show. And finally, to anyone else who's celebrating something today, make it a T-boy. Celebrate the wins. This is Jack. I own stock of Netflix and Disney and Nick and I both own stock of Spotify.

The Best One Yet - 📕 “Hedge Fund University” — Harvard’s $2B battle. Coachella’s Pay-Now-Party-Later. Netflix’s Dr. Evil plan.

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