The Best One Yet - 🍼 “It’s all about Diapers” — Honest Co’s baby IPO. Bezos’ final shareholder letter. Big bank cocktails.

Episode Date: April 19, 2021

Jessica Alba’s side-hustle from Hollywood is to take her Honest Company public, but it all comes down to diaper (cakes). Jeff Bezos released his very last shareholder letter — He believes consumers, not AMZN stoke owners, benefit the most from Amazon. And after all the big banks reported earnings, we noticed 1 theme: They’re pouring pregame cocktails for the Roaring 20’s.$HNST $AMZN $GS $JPM $MSGot a SnackFact? Tweet it @RobinhoodSnacks @JackKramer @NickOfNewYorkWant a shoutout on the pod? Fill out this form:https://forms.gle/KhUAo31xmkSdeynD9Got a SnackFact for the pod? We got a form for that too:https://docs.google.com/forms/d/e/1FAIpQLSe64VKtvMNDPGSncHDRF07W34cPMDO3N8Y4DpmNP_kweC58tw/viewformLearn 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. Welcome back. It is Monday, April 19th, Jack. Wow. The Dow just hit a record 34,000 points for the first time ever. Jack, you get a record high, Ashibu Inu and our best podcast yet, TBOI, the best one yet.

For our first story, Jessica Alba is side hustling from her Hollywood actressing to take the honest company public on stock markets. Jack, this IPO has got one thing and one thing only. Here it is a diaper cake. real thing. For our second story, Jeff Bezos sent his very last shareholder letter as Amazon CEO before he steps down later this year. All right, so here's what he said. Amazon makes you younger by 74 hours a year. Let that sink in. It's true. He did the math for our third and final story. All the big banks reported fantastic earnings last week. Congratulations. And here's the theme. They're starting to pour cocktails for the roaring 20s economy. But before we hit that wonderful mix,

of stories today, Jack, Wilder Gray. This guy just got minted like an NFT on April 9th. NFTs are instant and digital. Childbirth is 30 hours long and extremely physical. Jack's new baby boy, his mom calls Wilder Gray a little spring roll adorable. Also, Jack, you've been referring to him as a hot pocket I've noticed lately. Indeed. Snackers, about one week ago, it was tears and giddy laughter at the same time for me as my wife Alex brought our baby boy into this world. His name is Wilder Gray. Now, this was an absolutely beautiful thing, but it also was unprecedented because Snackers, we got ourselves the first ever IBO, initial baby offering. No, we were going to do us back, Nick. Alex and I were thinking about it. But Goldman Sachs didn't have any dolas available.

Yeah, so instead, I just jumped into the baby's S-1-I-B-O paperwork, Jack, controlled at this thing, and the first thing, the very first thing I noticed, Bassinet, the word Bassanette mentioned Zero times. Can you explain? Nick, you've been giving me a hard time about the bassinet. We finally did erect it, but it turned out like, Wilder hates it. He'd much rather sleep in anything about this basset. All right, so that was one issue. Second, I noticed in the risks session for this IBO, it says that this baby is too adorable for regulators. That's the risk here. It's dangerous. Insane cuteness, all seven pounds and three ounces. Yeah. The SEC is like, you must file this form. I actually watched the Mandalorian during.

the first week of babyhood. Good. The child, baby Yoda, very similar language as my baby. That makes sense. Now, we have the risks. We check the bassinet. Third and final, we got the projections here. Projections are that his weight will pop 100% on the first day of trading.

Actually, his weight dipped in the first week, which is totally normal. Like eight nurses told me. So totally normal. So the double double is going to take a couple years. But then finally, Jack, the business model for this brand new baby boy, it's pretty straightforward. Direct to consumer D to C. Nick, everything this.

baby produces, ends up directly on this consumer all over my clothes, all over my rugs, all over everything. That's perfect. Wilder, welcome to the world. Jack, welcome back to the microphone. Alex, welcome to motherhood. You are thriving in your first week as a mom. And snackers, welcome back to your digestible daily pod.

Let's hit our three stories. This is a T-boy. You're tuned in the snacks daily. We spoke to the lawyers and we got to get something legal out the way. The snacks you're about to hear, rain food. 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. Right. Snacks is digestible. Business news for you. Robberhood Financial, LLC, member FINRA SIPC.

For our first story, last week was all about the banks and we noticed an interesting theme. They're all pouring cocktails to kick off the roaring 20s economy. Okay, so here's the deal, Snackers. While this pod was off finance, like the whole finance industry, it was flying last week.

Coinbase went public at $100 billion. All the big banks announced fantastic earnings. Not too shabby. Let's get into some specifics here. Jack Goldman Sachs, you know, casual record quarter. Revenue's doubled because they arranged all those spacks you've been hearing about hitting Wall Street. Yeah, meanwhile, Jack, down the street, you got J.P. Morgan Chase.

How about another record quarter? I had to fact check this. It was right. Profits Quintuple. Excuse me? Up 400% up five times more than the year before. No one even knows what word comes after quintuple. Oh, wait, we got a third one here, Jack. Ready? Morgan Stanley Stanley Morgan brought in $105 billion of new wealth management money to take a 1% management fee off. It must be a lot of fun taking that, Morgan. Now, that's what got like the attention of everyone trading last week. But the real story, Jack and I think here is that those banks were. released their loan loss provisions. We last mentioned loan loss provisions the first quarter of last

year when the pandemic was just beginning. J.P. Morgan Chase put aside $6.8 billion to prepare for clients who they expected would default on their loans because of the pandemic. Now, first of all, loan loss provisions, Jack, worst term ever. They're like 50 syllables in that thing. Basically, we're thinking, if the economy breaks, this is the piggy bank that has, you know, $6.8 billion a cash in it to save you from bankruptcy. It's a rainy day fund. But the news, last week, J.P. Morgan Chase released just about all of it. They broke open that piggy bank. It took the $6.8 billion. They took the life alert and they smashed it. And they didn't do it to cover defaulted loans from clients. They didn't do it to make sure they avoid bankruptcy because the economy is going back.

Here's the wild thing. Here's why they did it. They basically did it to like pregame and set up a party that's for the whole economy. They want to have a lot of fun with the money. The bank business was great last quarter. But the records happened because they pocketed the rainy day money. They took the $6.8 billion. They set aside last year and they said, we don't need this set aside. We're going to be fine. We're going to recognize them this quarter as profits in Q1, 2021. Basically, you got David Solomon.

He put on his dancing shoes, stock the freezer with ice, and made a party playlist for all of us to come over. You get a loan loss provision. And you get one. So, Jack, what's the takeaway for our buddies who are all of us consumers? The big banks just signaled that a huge economic party is coming. Snackers banks, they have got the pulse of the. economy. They got the real-time data on the money that's pumping through economic veins left and right every single minute. And all of America's big banks just said, basically, they're billions of

dollars less concerned about how the economy will be in the next year. Yeah, I mean, case and point here, Jack, retail sales last month. This was wild while you were doing baby care. They jumped 11% last month. And this isn't just spending. This is revenge spending. You're buying four pairs of high heels to make up for the six you haven't worn in the whole past year. Classic revenge spend. And Jack. Oh, by the way, the Fed, the Fed is keeping interest rates low, so you'll borrow more, and then you'll spend even more on revenge spending. You've been born at home the past year? Throw a fifth pair of heels on the Sapphire card. Oh, and the government, the government's about spent, you know, trillions of dollars on infrastructure the next couple of years.

It's probably going to lead to a new shopping center. Okay. Throw on a six pair of heels, Nick. Why not? That one detail about loan loss provisions in those bank earnings actually was a leading Indicator. Banks think the economy is already pre-gaming for a roaring 20s. And revenge spending. For our second story, Jeff Bezos just wrote his last ever final letter to Amazon shareholders as CEO. This is his opening statement in the trial of Amazon's legacy. Bold words, you deliver that like a John Grisham title, Jack. That was intense. Now, this goes back to 1997. Jeff Bezos, same amount of hair as he has today, actually, wrote his very first letter to Amazon shareholders.

Congrats. Yep. And last Thursday, still bold. But now he wears a vest packed with like unicorn feathers. And he's jacked. He wrote his last ever Amazon shareholder letter as CEO. Very rare to get the Canada Goose unicorn feather vest, by the way. Now, Jeff is transitioning this year from CEO of Amazon, which he's been since 1997, responsible for the day-to-day operations to chairman of the board of Amazon. So in the future, he's basically going to write the performance reviews for the new CEO who's replacing him. Andy Jass, you're still developing. I'm looking for more growth next quarter.

Just a little more. Now, he's not happy right now about all the negativity surrounding Amazon. So Jeff's looking back on his life. It's kind of an eat, pray, love situation. If you Google Amazon right now, Nick, you might find a headline like, Workers of Amazon forced to pee in bottles to meet their ridiculous production quotas.

So in this letter, Jack and I noticed that he's basically trying to redefine the entire Amazon narrative. And he's basically hoping. hoping the editors at Wikipedia are responsible for his Wikipedia page are listening. Now, here's what Jack and I found the most fascinating. Jeff Bezos created a list of like what groups benefited the most from Amazon calculated in dollars from Amazon's existence in 2020. That's right. And the first stakeholder that Jeff pointed out was Amazon stock shareholders. Yeah. They benefited $21.3 billion in 2020 thanks to Amazon. And he calculated that by Amazon's

profits. Yeah, very simple, very straightforward. And then he calculated business. businesses got about $25 billion in value. That's the estimated profits made by the 1.9 million small and medium businesses that sell products to you and me on Amazon.com. Also very simple. And then he calculated employees. They got about $91 billion in value. That one is very simple. You asked the account, how much did we pay Amazon's 1.3 million workers last year? Oh, $91 billion. That's the value to Amazon employees in 2020. Okay. So this very last one, this one's not a simple, Because it involves us. Consumers got about $126 billion in value. He claims more than anyone else. Now, Jeff says that that $126 billion in value for Amazon consumers, that is just in terms of the time saved by buying things on Amazon instead of running over to like Kmart.

Yeah, he whipped on his calculator. Basically, he's decided Amazon killed errands and that gave you value. We're going to tell you about the math here. Jeff conservatively estimates that the average, transaction on Amazon takes about 15 minutes after you've researched, typed in your credit card information, and selected the shipping. All right. So then for the average consumer, that's like 75 hours of time you're saving every year by using Amazon, again, according to Jeff. Instead of going to the store. Right. And Jeff says that your time conservatively is worth $10 an hour. Okay. And then if you add in the cost of Amazon Prime, which is like $150 a year, and you multiply that by the millions of Prime members. Jack Ipsophacto, that's a lot.

$126 billion of value for consumers on Amazon.com. That was in 2020. And again, that was just in terms of time saved. Yeah. It doesn't include the lower prices you might have got on in Amazon or the shoulder you didn't sprain because you didn't have to carry that heavy bag from Kmart. Didn't mention the value destruction that occurred in 2022, though. True. Yeah. Jeff said nothing about the physical mom and pop shops that can't compete with Amazon and had to go out of business. Yeah. Or the formerly bustling mainstream. that have become ghost towns in the meantime. Feel like that needed more than an asterisk. So, Jack, what's the takeaway for our buddies over at Jeff Bezos' palace?

Amazon won a generation of future spending from a country worth of customers last year. Okay, Snackers, keep this in mind. Jeff said that the biggest winner of Amazon in 2020 was consumers like you and us, but we think it was actually shareholders. The real benefit for shareholders wasn't the profits Amazon made last year. No, it was the stock price jumping. And in total, Amazon stock grew in value by $710 billion last year. $710 billion.

And that's because Jeff also announced that the number of prime members on Amazon increased by 50 million last year to 200 million worldwide. Let me sprinkle on some context. Please, Jack. 200 million Amazon prime members is about equal to the number of American adults. And they're not just prime members now. They could be prime members for the rest of their lives. E-commerce is here to stay. Amazon is both an unstoppable force and an immovable object.

So we're thinking shareholders benefited the most from Amazon in 2020 because they won a generation of spending from an entire country's worth of customers. For our third and final story, Jessica Alba's startup, the honest company just filed to IPO. It's going to be a stock soon, but everything honest starts with diapers. I mean, Jack, to kick this off, you know what we got to do. Can you IMD be me on Jessica Alba right now? Jessica Alba, Fantastic Four. You almost forgot Sin City, Nick, but she was the star in Sin City.

Yeah, because that movie scares me. And she was also in that movie with that comedian. What's his name? You sound like my mom describing a movie. A Penguin movie with a comedian. Some snack will tweet it on us. Fun fact, she was in Nickelodeon secret world of Alex Mac. Really?

Yes, she was. But then in 2011, she started The Honest Company, Direct-to-Consor, Personal Household Goods. Baby, beauty, home. Those are the three tabs at the top of the website. Picture like Winif Paltrow's goop, but more window cleaner, less CBD serum designed by an astronomer. And they're all about cleaning greens. They're like, we're not using the harsh chemicals you remember from science class on the fourth row of the periodic table. Funny thing you should mention that, Jack. 2016, Wall Street Journal hired some scientists, and they confirmed that they did contain some sodium life roll sulfate. Yeah, that's not how it pronounced it. But that's the scary thing that they'd be.

pledged not to have in their products. Yeah, and that lawsuit, it actually delayed the IPO like five years. Five years ago, honest company. Why does it be it so honest? Jessica, you laid that up for us. Now, 2020, revenues jumped 28% to $300 million. They're looking at like a $2 billion valuation at this IPO. We jumped in the S-1 paperwork. They mentioned the word passion 20 times. Okay. Community 43 times. But they only mentioned profit nine times, Jack. Because they don't have profit yet. They don't have a profit. But Snackers, this company, They're selling everything at the honest company, from laundry detergent to wrinkle cream. But there's one statistic that Jack and I were totally shocked by.

46% of first-time customers at honest company, they include diapers in their shopping cart. True story. So nearly half of the honest company's customers begin their journey with honest company by buying a diaper. I wish this was a paid ad from the honest company. It's not. No, it's not. But I do have honest company diapers on my baby Wilder right now. We're going through like eight of them a debt.

Then Jack and I were like, okay, so they're really into the diapers probably at this company. We dove in further snack style. Get this. They got something called the $99 diaper cake. This looks like a wedding cake with like three layers. But instead of frosting and like cake batter, it's just diapers. And it's like wrapped in the plastic wrap like a bouquet of flowers would be. I mean, honestly, a huge regret here, Jack.

I mean, this is how you become the queen of the baby shower. You bring the diaper cake. Nick sent me a four pack of sip of sunshine to congratulate. me for having a baby, you should have sent the diaper cake. I probably should have sent the diaper cake. But the reason we think diapers are so important here is because the second purchase is what's key. 90% of second purchases include non-diper products. And remember, half included diaper products. So you're starting with the diaper, but then you buy something else. So, Jack, what's the takeaway for our buddies over at the honest company? First, the anchor product, then the cross sell. Snackers, page 22 of that IPO paperwork.

diapers aren't just a product. They say they're a strategic business acquisition tool. Snackers, new moms and dads, they're obsessed with their baby's health, and they want the same diapers that Jessica Alba used on her babies. The diapers are the anchor product. Maybe it leads to a diaper subscription, but the diaper also fuel sales of all the other products. Suddenly, these new moms and dads, they're thinking anything that can touch my baby's skin, it better be an honest product. Jack, you may not be enjoying that soup of sunshine beer, but I have a feeling you're going for the wipes. the diaper cream, the shampoo, and of course, the bubble bath. Let's just say we spent like $400 on our first honest order.

It's aggressive. So just to reiterate here, Snackers, nearly 50% of their customers bought diapers, and then nearly 100% bought something else. It doesn't even matter if your anchor product is profitable. No, what matters is if your anchor product leads to the cross-sell. Jack, can you whip up the takeaways for the first time in a week for us? The big banks are so confident in the economy. So confident.

They just snagged back those brandy day funds they set aside. I think of the economy is already pregame in the Roaring 20s. What would you like in the Nogroni, sir? For a second story, Amazon's Jeff Bezos believes consumers benefit the most from Amazon. She held his benefit, too, because they've secured an entire generation's future spending. For our third and final story, honest company's ticker symbol, it could be fib. Yeah. In the meantime, diapers are the anchor product.

Everything else that touches the baby is the cross-sell. Now, time for our snack fact of the day. this one sent in by a legendary snacker, Serenie Sankar in lovely Boston, Massachusetts. Fritos, the legendary chip company, corn chips are owned by PepsiCo today. Great baby food. Was actually born, though, this product during the Great Depression. Charles Elmer Doolin. Great name.

Bought a fried corn chip recipe for $100 back in the 1930s. All right, Jack, then he started pumping these out literally in his mom's kitchen for years. Mom, dad, and brother, that was the board of directors way back in the 30s. And then they were acquired by Pepsi 30 years later when they were doing, you know, a hundred million dollars in sales a year. A hundred dollar recipe? Yeah. They came a hundred million in annual sales. It's a beautiful thing.

Snackers, we missed you. Jack, I missed you. Nick? Yeah. I am so thankful for you manning the ship at Robin at Snacks and waiting out for this pod. This has been a fantastic comeback. This was the best one yet. And before we go, Jack, Snacker Chihiro just moved to Sydney.

VJ, congrats for graduating with your MBA in Toronto. And Freddie Jake Miller got the new job in Ohio. Happy birthday, Carl Barana in Sicily. And Francisco Chavez in Quito, Ecuador. And Apurav in Chandragar, India. And Harper Fully in Seattle. And Avery MacArthur, happy birthday in Atlanta. And a Caitlin A-Coyne just outside of Boston.

Happy birthday Ryan in Norfolk, Virginia. And Robert Gray just turned 33 in Brooklyn. And Bianca Cruz in Washington, D.C. And Mitch Brooks, also in D.C. Happy birthday to Sophia V. Helone in Hopewell, Junction, New York. and Cheryl Lee in Durham, North Carolina. And Paul Riley in New Albany, Indiana. And Gracie and Houston.

And Kevin Lovell in Chicago. And happy birthday to Wilder. One week and three days as of today. This is Jack. I own stock of Amazon. 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 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.