The Best One Yet - LIVE interview from Livongo’s IPO, Apple’s “referee” problem, and the $26B T-Mobile/Sprint deal’s big step

Episode Date: July 29, 2019

We were live from the floor of Nasdaq’s opening bell ceremony at Livongo IPO’s — so we sat down to interview the president of the digital health service company. We also covered a WSJ report that Apple may be giving unfair preference to its apps in the App Store (so we run our first “snax-periment”). And the T-Mobile/Sprint deal to create a new telecom giant got a major approval from the DOJ worth diving into.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 we are at NASDAQ. And that's the Livango IPO. We are at NASDAQ, the New York City Times Square-based stock exchange. Founded in 1971, basically because the computer was founded. It's a nice go incident. Unlike the New York Stock Exchange where you have really burly guys handing tickets to buy and sell things.

This is super technical, no trading floor. Highly electronic, no helmet needed when you're on the floor of NASDA. But Livongo is about to begin trading in a bit. They just launched the opening bell, and it's kind of wild to be here. You're tuned in the snacks daily. We spoke to the lawyers and we've got to get something legal out the way. The snacks are 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. You know, we're not recommending any securities. Nope. It's not a research report or investment advice. Not an offer or sale about security. Right. Snacks is digestible.

Business news for you. Robberhood Financial, LLC, member FINRA slash SIPC. So for our first story, this is not our typical snack story because we're actually with the company. We're sitting down with Dr. Schneider of Lavongo, the digital health company that just IPOed on NASDAQ last week. It's been a hugely exciting IPO. First of all, because Lavongo is helping people with chronic illness. and I just learned today that 147 million Americans have chronic illnesses. Jack and I were actually on site for this IPO, which is a wild experience in and of itself. It kind of feels like a

Disney ride, kind of meets a movie situation. But before we talk anymore, let's give the microphone to the president of Lubongo, Dr. Schneider. So I'd love if you could put on your sales hat and tell our audience what the company does and how it's helping customers. Sure. Thank you. Thanks for having me here. This is really fun to get to be with you. So Lavango's mission is empowering people with chronic conditions to live better and healthier lives. As you stated, 147 million Americans have a chronic condition today. We know that 40% of those with one chronic condition have a second chronic condition. And the health care ecosystem was not designed to take care of those of us living with a chronic condition because in chronic condition management, you need to be making

educated decisions multiple times every day. Should I eat a bagel? Should I have salmon? Should I drink juice? should I have water? Should I sleep for eight hours or six hours? Right? And the healthcare ecosystem's done really great at acute management of healthcare. So if you have a heart attack, there's no better place. And right here in New York City to get taken care of, right? Or broken arm.

Really great at that. But because those of us with chronic conditions manage our condition outside 99.99,99, 99% of the time, we need to have a new system. So what we've designed and what we've built is a set of systems. solutions that sit across diabetes, hypertension, weight management, and behavioral health, that leverage an engine that we call AI AI-AI engine to derive highly personalized, actionable, and timely messages directly back to the member. Now, we've actually seen the device.

It's a very neat looking device. Great case study forward is like for diabetes, where you're actually going to take a small amount of blood, be able to stick that strip in the device, and it's going to broadcast it with kind of customized data about you in real time. right in your pocket, works together with your phone, right? We also noticed in the S-1, because we always jump into the S-1, the filing paperwork to get to know the company better, it was really interesting to hear the founder talk about his own personal story with actually starting the company, right?

That's right. With his son. That's right. You want me to talk about Glenn story? I'm happy to do that. So Glenn had a son, Sam, who was diagnosed when he was eight with type one diabetes. And I have type one diabetes, so I understand this from a patient standpoint as well. But when you're given that diagnosis, you start to understand how hard the health care system has made it to manage that condition.

Things such as your doctor may say check your blood glucose seven times a day, but your insurance company will only reimburse you for four times a day. So then you're left without strips and the inability to do anything about it. Yeah, I remember check your blood sugar level. Check it often. We all know that commercial. That's right. We talked about the sales pitch. We talked about this kind of upside of the company.

Always got to talk about what are kind of the downsets. side risks. Good example here is the fact that revenues for the company for Livongo have doubled over the last year. Losses have also doubled. What kind of is the reason behind that? Yeah, it's a great question. So we have had tremendous market traction. And a large reason for that is because of the value proposition we're driving for our clients. Members love us. Our net promoter score is positive 64. We have documented clinical outcomes across our four conditions and we're driving a very strong financial return on investment. So we've actually had great growth, which is the first and great revenue growth, and we've made concomitant investments right back into the member experience

with that. So we're committed to making sure that we're able to deliver on a whole person platform what our member needs. So being able to give them what they need for each of their chronic conditions as a whole package. And so we continue to invest in R&D. Wonderful. And those chronic conditions are conditions that are with you for a long time, not something you can just take a pill and it goes away, right? That's right. By definition, chronic condition is something you get a diagnosis, and you may even be able to go off your medication, but you still have that condition. You still need to pay attention, and you still need to manage. So far, we've read about diabetes and hypertension, hypertension being high blood pressure, correct?

That's right. Can you tell us about some other opportunities to expand for Lavango? Sure. So we launched the company with diabetes, and the company really launched market traction mid-2015, was founded the end of 2014, so we really enabled the sales team to start to sell in 2015. We built a hypertension solution directly for those members of people with diabetes who also have hypertension and for other people who have hypertension. We launched that at the end of last year.

Midway through last year, we acquired a company for weight management and diabetes prevention. And the beginning of this year, we acquired a company for behavioral health management. There are a number of other chronic conditions that we'll enter, and there's two ways to think about that, the pain point for our member and the pain point for our client. Our clients are asking us to go into other chronic conditions because we've been so successful in driving and delivering those outcomes in the condition solutions that we have in the market today. Healthcare is incredibly complex. Right there. We joke, there's alligators and this viscous solution in the middle and they go by names, such as benefit consultants or PBMs or payers, right?

And it's really working within that ecosystem and understanding how we can align incentives and drive value in the, ecosystem. And we've done that because we have a lot of healthcare experience and a lot of fortitude. And so that is, I think, a really strong competitive mode for us. Any interview that uses Alligators as an analogy works for me. That was a great interview. Dr. Schneider, thank you so much. Congratulations for a great Livango IPO to you and your colleagues. Big, big day. Congrats. Thank you very much. All right, Snackers, we're going to time travel a little bit. All right, we're back in this studio. We're recording the next day after the Livango IPO. It feels so long ago. And yet it was so long ago.

No, the NASDAQ was so exciting. It was great. It's just you and me here. Thrilling. I know. It feels different. But there's an exciting story. Not as many lights. Second story we're going to cover you for you guys today. The Sprint T-Mobile merger just got a major approval by the Department of Justice, aka DOJ. Now, beep, beep, let's back you up. Take me. T-Mobile announced a merger with Sprint for $26 billion, which would create a third major wireless company beside AT&T and Verizon. Right. Those are number one and number two. And the Justice Department just signed off, which is a huge hurdle that it cleared. Like, the finish line is right there.

You may have been hurrying out this thing for the last few months. It was kind of a drip, drip, drip, drip. Is this going to happen? Is it not going to happen? This is going to create a giant telecon company. And the federal government's interested because this could mean that only like three wireless big companies exist. And that's a threat to competition. Now, this has been getting a lot of support, of course, from Team Mobile CEO, John Laguerre,

who loves wearing not a pink shirt. I just saw on Twitter. He describes it as a magenta shirt. It's true. is usually with like a black leather jacket of some kind? That's his style. He proudly announced this approval. So the FCC is supporting it.

The DOJ is supporting it. The only thing in the way still is at least 10 of our 50 states plus Washington, D.C., which are suing against it. Now, the reason these two companies wanted to merge and create from the third and fourth largest telecom companies, the third largest, is because they want to build out a 5G network together. Yeah. They also probably want to make more profits.

Exactly. But that's what they told everyone. They want to build a 5G super internet connection for everyone so you can download anything, internet of things, insert buzzword. Now, there's one caveat to the approval that the DOJ gives. This is like an asterisk, some lawyer stuck in there. They said, we will give a blessing to this marriage, but you have to sell off Boost Mobile. This was literally a situation with like, raise your hand, if anyone objects to this marriage

and some lawyer in the back is like, I got one right here. Fine print. The fine print is they have to sell Boost Mobile because they kind of want there still to be a fourth big wireless competitor. Boost Mobile is part of Team Mobile. and they have to spin off this company because otherwise the thought is they'll be like a little too powerful. So DISH is acquiring it for $5 billion.

Dish will now be the fourth wireless company in America. Now, if you're wondering, we've seen this kind of thing before where the government says basically, if you're going to merge together, you're going to be so big, you need to let go of one of your babies. Right, we need to make sure there's still something like competition in the market. We saw this with the biggest beer merger of all time. When A.B. Mbev merged for $104 billion with SAB Miller.

SAB Miller had to sell off. its ownership of a lot of the Miller Cores brands. Right. So like Miller, Genuine Draft. Miller, so on and so forth. The other one famously is Disney

and it's $71 billion acquisition of Fox. Yeah, they said you guys can merge, but you can't have both like ABC and ESPN, which are sports and Fox and all Fox's sports channels. So they actually spun off and sold Fox Sports as well as, yes, the Yankees channel.

So one more thing. Please. Dish is kind of the bottom shelf of wireless. It's prepaid only. So it's when you go in and you pay like $100 worth of wireless, it's not paying monthly. Exactly. So Jack, what's the takeaway? And I know this is a two-parter for our buddies at T-Mobile and Sprint.

Okay, the PR pitch for this merger is that creating a big rival will benefit consumers. The reality for this merger is that consolidating companies can end up hurting consumers. We've seen this happen. Again. Exhibit A is the airline industry. Straight from the tarmac. There used to be a bunch of airlines. There was one in New York called New York Airlines and like the Airways. 80s.

Real thing. Just like five years ago, there was U.S. Airways, but that got acquired by American. Now there's four major airlines. Parents. Prices go up when consolidation happens. Everyone's parents dragged them on a Northwest Airlines. So a monopoly is when there's only one company.

This isn't a monopoly. This is a duop. No. No, it's not. It's a triopoly. We're running, I ran out of Latin words. We have AT&T, Verizon, and now T-Mobile Splash Sprint, which are gigantic with like 100 million customers each.

And then you got boost as number four, but it's pretty much a triopoly. And when that happens, there's less competition, so there could be some agreement on prices that aren't perfect for consumers. Think about it. CEOs could get in a room and they'll be like, hey. Hey, Jeff. Who wants to raise prices by $10 a month? Don't say anything, but if you do, just wink. Jeff's not saying a word. Our third and final story is a wild one that kind of hits close to everyone's ears here.

Apple's App Store referees have apparently been totally unfair. It seems that Apple is gaming the App Store to benefit itself. Particularly with podcasts. Now, this is according to a thick report by the Wall Street Journal. Spend the weekend in that thing. But it's not just the Wall Street Journal. You can test this out too, and you will in just a minute. So the iPhone, if you got one, it controls the App Store where $50 billion is spent annually.

Now, $50 billion annually, that's the GDP of two Vermont's. Okay? A lot of spending. Now, according to the Wall Street Journal's analysis, Apple's own apps rank number one in the App Store 60% of the time. We're talking something like Apple Maps. If you type in, no, just the word maps. Just put in maps. Apple Maps will come up first. All right. This second one is wild too. Okay. When Apple has an app that it makes money off, it doesn't make like revenues off Apple Maps. Right, but other ones it does on Apple Music. Very true. And if it is a money generating app for

Apple, it shows up number one, 95% of the time. Like if you search for music and you see Apple Music, it's going to be at the very top. Now, you can try this out for yourself. This is an original We're about to do a snack experiment. We've never done this before live. Grab your iPhone. And if you don't have an iPhone, ask somebody else. Grab your friend. Go to the app store and type in the word podcasts. Do it right now. Now give you a sec. Yeah. Go ahead. Do this. Number one will be Apple Podcasts. And that actually makes sense because Apple is the biggest podcast app out there. But one thing you're going to notice is that there are no ratings, Nick. In fact, it says no ratings next to the app. According to the Wall Street Journal,

though, people aren't too happy with the Apple Podcast app. Apparently, It was rated 1.7 before those ratings. And Apple, like, disappeared. Was embarrassed, it seems, and decided that they want to get rid of the ratings because they don't want to put as number one a 1.7 rated app. Second part of this snack experiment, tell the person who's iPhone you're borrowing. Apologies, I need this for 20 more seconds. I need you to scroll. And as you're scrolling, count how many items you go down until you get to Spotify.

And then when you get to Spotify, notice that Spotify has 7.3 million ratings, 4.8 stars. Those are great staff. Stunning. Now, on my iPhone when I did this, Spotify came up the number 20 app when you search for podcasts. Now, we know what you're thinking. Jack and Nick, you guys both have Spotify downloaded. Maybe it's skew because of that. We both have accounts.

So, turns out Jack and I were researching this over a couple of pokey bowls. We turned to our left and asked the woman next to us if she has Spotify. She did not have Spotify. She did have an iPhone. So we tested this with her. Now, on her app when she searched for podcasts, Spotify came up number 10. Interesting. These are both bogus.

We wiped the wasabi off our faces and we're in shock. Here's the thing. Spotify is the number two market share in podcasts. It has like 10 to 15% of all podcast listeners. So Apple knows it's been catching up. And it has great ratings. So it looks like Apple is suppressing its competitor. So Jack, what's the takeaway for our buddies over at Apple? Washington, D.C. has never been more committed to regulating or breaking up big tech.

And this is a big reason why. Apple, Amazon, Facebook, Google, they are loved by consumers. the government just thinks more and more that they're too big for their own good. Last week, the Justice Department opened up brand new investigations into tech companies, which could go on for years. They could result in fines or it's just going to mess with their growth. Either. It could even result in getting them broken up.

Either way, it's not good for big tech, and this is a great reason why. Jack, can you whip up the takeaways for us to start the week? Levongo, great interview with the president. It's trying to be a friendly health coach that lives in your pocket. 147 million people with chronic illness could use some help. T-Mobile and Sprint just got merger approval by the DOJ with one big condition. It sells Boost Mobile. We hope this strengthens 5G, but we also hope it doesn't mess with prices.

Now, according to the Wall Street Journal, Apple has been skewing App Store results in its favor. We just want some fair referees out there, some fair guys. Now, time for a snack fact of the day. This one sent in by Mauricio Issa in El Paso, Texas. Very nice. Maricio, listening hard to our last podcast on Hershey's. We also just had a snacker who went to U-TEP. I've seen a theme here.

Maricio. We love this. H. B. Reese, the founder of Reese's. Turns out he was a former dairy farmer and shipping foreman for Mr. Hershey. Not bad. Turns out he left his job, decided to start a candy company, called it Reese's. Named it after himself. The company was acquired in 1956 after he passed away.

Okay. Wild theme here. All it takes is two ingredients. Reesies and Hershey's, peanut butter and chocolate. Snackers, we love being with you to start the week. We'll be back with you tomorrow. Can't wait. The Robin Hood Snacks podcast you just heard,

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, is not intended to serve as a recommendation to buy or sell any security, and is not an offer of 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. The guest speaker is neither an employee nor affiliated with Robin Hood Markets, Inc., and its subsidiaries. The opinions expressed by the guest speaker are solely her own and do not necessarily

reflect those of Robin Hood Markets, Inc. and its subsidiaries. Robin Hood Financial LLC, member FINRA SIPC.