The Best One Yet - Netflix's 1st decline, Amazon’s Prime Day records, and Unicorn of the Day: Turo

Episode Date: July 18, 2019

The 2-day Amazon Prime Day just ended, so we jump into the “flywheel effect” that powers it. Netflix shares plummeted 12% and it’s blaming its lack of story-telling the last 3 months. And Turo is our unicorn of the day after an investment by Tinder-owner IAC boosted the car-sharing platform beyond a $1B valuation.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. This is snacks daily. It is Thursday, July 18th. How are we feeling about this? It's T-Boy Time. This is actually the best snacks daily we've ever done. Markets inch down a tag. I'm very excited for this snack, daily.

We have a diverse, like, complete breakfast status. This is serious oatmeal. The first one is Amazon Prime Day. It just ended, and we'll tell you the strategy behind Amazon's discount Palozo. It's all about the flywheel effect. Just start saying flywheel effect. Second story, Netflix had its worst quarter that we can remember. As far as I can tell.

shares dropped by 12%. We're blaming two reasons. We're not blaming Dustin, though. Dustin from Strangerlanders is fine. Third and final story, the unicorn of the day is Turro. It's a car share company. Not a ride share company. And it just got a $250 million investment from IAC.

We've got a big ass from our snackers at the end of this. Keep listening. We're going to ask you when we get to that story. But first, one of the greatest days of the year was. Was yesterday. I'm pretty much still celebrating this. I'm sorry we didn't notify you in advance. No.

We'll notify you post-haste. We didn't have your number. We would have texted you. and you would have visually seen it. Yesterday was World Emoji Day. Of course, I can't believe you missed that. 59 new emoji are coming to Apple really soon. We're talking, they got a Flamingo there.

Flamingo, which is also a yoga pose that I can't do. When you try to do it, people judge you. You got a hearing aid and a seeing eye dog. You also got a wheelchair. A lot of accessibility things. Where is the millennial support puppy? Ford Motor Company actually lobbied and had like a great marketing campaign. It's pretty clever.

They made a blue truck emoji and it actually got in there. Now, there also was like a botched falafel emoji that kind of It didn't work out pretty well. We also found out the winners of like the international emoji competition, who is most popular? The most popular emoji. Wait for it? All right, you ready? It's so funny we have to say this.

The smiley, blushy face with all those hearts around. We'll put this in the newsletter too. By the way, ironically, in second place, as if it knew what we're going to lose, the sad emoji with the big eye. The sad puppy eye face. Keep celebrating World Emoji Day. In the meantime, listen to these keywords. out the way. It's 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. 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. Snacks is digestible. Business news for you.

Robohood Financial, LLC, member FINRA slash SIPC. For our first story, Amazon's Prime Day, aka Prime Days, is officially over, and we've got to cover the sink because there were winners and there were losers. There are rumors that deal and review websites like wirecutter.com actually hired extra writers just to write articles about best Amazon Prime deals. We haven't verified this, but we've heard this. Now, the PR for Amazon, they put out a press release after this was...

I like their sense of humor with this. You don't expect this from Amazon. It opens up with Alexa. How was Prime Day? Clever. I like how they did that. It's very, you know, who thought of that. So Prime Day 2019 surpassed Black Friday and Cyber Monday combined.

That was the big headline. That's what they led with. Get this, 175 million items were bought on Amazon Prime Day. But get this, that's 75 million more, aka 75% more than the previous year. Yes, and the best sellers by country, that was just an entertaining walk-in. This was just fun, and I love a BuzzFeed listicle built into an Amazon press release. Again, they've got some intern there right now. We don't know who he or she is.

Top selling items in the U.S. Number one was the personal water filter straw, which you can like stick in a river and drink, and it's good drinkable water. Incredibly practical. Then you've got like 100,000 lunch boxes that for some reason, I guess everyone's eating lunch these days. I just got my fiance a chic lunchbox. And then this one made us, like, what's going on with society? People are really questioning their origins here.

Really interesting. 23 and me ancestry kits were like selling off the shelves. Now, interestingly, we saw this broken out by other countries. So in Singapore, apparently the top selling items, fresh milk and Coke zero. I think Amazon was just bragging that you can get fresh milk on Amazon. Singapore is just really thirsty. Then we saw a video game theme. In the United Kingdom, the number one video game console was PlayStation.

But in Mexico, it was Nintendo Switch. And Australia likes their video games like, I like my video games. You take it easy with a little bit of Yoshi. Mario Kart Deluxe. Boom. I'm a Bowser Donkey Kong. Interestingly, you had some other things, too, like Italy. Shocker, biggest selling item, the Ness Cafe Espresso machines.

Yeah, they were playing to cliches here. In Germany, you had practical things selling like a... Incredible. Like a steel pan and a smart light socket. Of course. Why wouldn't you? Now, that was what was sold countrywide. Also, what was really interesting was the surprise about who also benefit from Amazon's Prime Day.

The Halo effect. Exactly. Now, anybody who has an email account, which is most of us, saw that rival companies were hosting rival, like, Amazon Prime-style sales. I'm still getting emails from, you know, bonobos, J-Crew. You know how my skin likes a nice pair of khaki between it. Brooklyn and out in Dumbo. And even the dial-up situation up in Vermont, Sugarbush Ski Resort had an Amazon Prime Day. We're all screaming at you. Shocker, oh, my God, another 30% off today.

So, big retailers that have sales over a billion dollars, their sales spiked by 68% on Amazon price. And even small retailers who are a lot smaller, they saw sales jump 28% because people are just in shopping mode right now. So there's two ways you can read into this. Right. On the one hand, it's a signal that people are comparison shopping. They see something on Amazon, and then they're checking out, can I get the khakizum on this? On the other hand, you see that retailers are under pressure. They can't let Amazon take all the sales, so it's a race to the bottom. Everybody's discounting their price. This feels like a good moment for the takeaway, Jack.

So what's the takeaway for our buddies over at Amazon? The flywheel effect for Amazon is real. Legendary MBA professor James Collins described the flywheel effect as a self-reinforcing loop. Brad Stone, who wrote a book called The Everything Store about Amazon, calls the flywheel the secret sauce of Amazon. Jeff Bezos, who knows more about Amazon than Amazon knows about Jeff Bezos, said that the flywheel effect is a quote-unquote virtual cycle. All right, we've left you hanging.

Let's tell you what the flywheel is. original idea was that if Amazon could reduce prices, that would attract visitors to the website. And that would attract sellers to the website. And that would attract more visitors to the website, which would improve the whole website ecosystem. It's a virtuous circle. Now we're seeing the flywheel effect in a whole new way kicked up a notch. People have already paid $119 per year to become Prime members. So they need to justify it so they need to go on the website and splurge when they can't. So they go in and they start buying even more things on Prime. And they notice that what's the most discounted are Amazon products. Guess what? The top selling items overall. We have

haven't even told you that. We're saving the best for last. Was Amazon Alexa devices? We're talking Echo Dot, Alexa firestick, and fuse things. Anything with the word Alexa in it was selling well, and now Alexa's in their homes. And now, Flywheel chapter 100. People are going to buy more stuff on Amazon with V-commerce, voice commerce through Alexa. The chapter's been written. For our second story, Netflix just suffered the worst quarter that, like, we can remember. We were just chatting about this. The stock dip 12%. It was, I think it's more of a plummet at that point. My favorite way, though, to describe Netflix. Is this true?

Jack's been trying to push this. Yeah, I'm ready. Netflix is the movie pass, but for at home. It's like fetch. Jack's really trying to make this happen. No, when I realize that, it's kind of like, phew, why didn't movie pass just stay home? Why didn't movie pass just stay at home?

Let's get back to Netflix. All right, so the second quarter earnings report. Analysts expected 300,000 new users to sign up in the U.S. Because, you know, Netflix is growing. Turns out Netflix lost 100,000 losers. This is the first time I remember Netflix losing subscribers in any category. I went back to the board. we have on Netflix jack? I didn't see any losses like this. But the real bad news was not in the

US. It was international. Right, because that's where all the key growth is actually happening. Analysts expected 4.8 million new subscribers abroad. Guess what they got? 2.8 million. That's about half. Now, a lot of this has to maybe do with the pricing. And Netflix acknowledged this. The standard price for a Netflix account increased last quarter from $11 to $13. It's called Pricepocalypse. About 90% of people listen this are like, yeah, I mean, I knew that they're Sharing passwords. So Netflix acknowledged that it was partially the price increase, but mainly they blamed the content Slate.

Right. The second quarter for Netflix was really focused on just some interesting, not particularly exciting original content. Yeah, the original content, it just wasn't creating buzz. You got that Christina Applegate Dramedy. It's called Dead to Me. I actually just watched the trailer. It's two women who lost their husbands and they cope through laughter.

Yeah, actually looks kind of funny, but also kind of dramatic. Incredibly dark, but uplifting and kind of hits it. soul. And then you got our planet, which is like planet Earth, but on Netflix. Again, this was incredibly ambitious, super expensive Netflix, but you know, it did really well, but not incredibly well. See, it just didn't move the needle. So that was the second quarter. But Netflix said, you know, all right, that was the set. That's in the past. We're a changed person over here. And they said, we got to talk about the upcoming third quarter. So the third quarter is going to include the third series of stranger things, which is, mind people, I know that's already available. We're in the

third quarter already. Exactly. And they're like, that's going to count in the future. So like, Pay attention to a suit. Then you got another season of the Crown, which is about the current Queen of England. She's still a lot. Oh, round. Do you think she watches the show? She listens to Snacks Daily. So if she does, she can just let us know if she watches.

Finally, I got the Irishman, which is a Martin Scorsese thing, probably about the mob, but Irish? Spoiler alert, Robert De Niro and Al Pacino are in this thing. And then you got a Michael Bay thing called Six Undergris. Right. We can just spare you from watching it. Here's the punchline. And then finally, they brought their spin doctors in to talk about friends. which is the popular show that it's losing next year. Right. The CEO says, guess what? Friends is leaving,

but that means we have $80 million a year that we can spend on original content. Netflix really wants you to not care about the second quarter and really care about the third quarter. So Jack, what's the takeaway for our buddies chilling over at Netflix? I'm going to quote Ryan Howard from like Season 5 of the office. Acquiring customers is harder than retaining existing. Yeah, this is actually the subject of an office episode. So it can cost a lot more money to find new Netflix subscribers than to keep ones that are already using Netflix. In fact, a lot of analysis shows it can take up to five times more money to get a new person using your product than just keep an existing user enjoying your product. So it's spending a ton of money to acquire new customers, but it's not working. New customers are attracted to new content and new content costs a lot of money.

In the past, Netflix succeeded with Orange's the New Black, Chef Table, and House of Cards, but second quarter, not so much. For our third and final story, it's our unicorn of the day. Turrow, the Airbnb for cars, just reached over a billion dollar evaluation. You've heard of HomeShare. You've heard of ride sharing. Now, this is your car sharing. Not just any car. Sharing your car.

The one you have, the one that you've got that kind of weird smell with. Turro is the world's largest peer-to-peer car sharing company. You may have heard of Get Around, which is their main competitor, but these are the big ones. So IAC just invested $250 million into Turro. Now, this is a company that also happens to own Tinder. It's also got Handy, Vimeo. Investopedia. It's basically got a lot of startups in its portfolio.

It's like a whole bookmark list of websites. Now, what we liked here when Jack and I were looking into this was the way they described it. They said, quote, unquote, we like marketplaces. That was in the press release for the investment. It's the kind of thing your middle school teacher would just love how succinct it was. They got right to it in the thesis. So marketplaces these days are tech middlemen that make money just by providing an app and piece of mind. It's a nice little combo.

Can you give me the sales pitch, Jack Fratero? You've got a car. It's a good car. It's got the oil changed. You know, maybe you got a nickname for it, Betty. But here's the thing. You're watching all six Star Wars this weekend. You're not going any.

No, car isn't watching with you. You know what else isn't going anywhere? Your car. Sitting right there. So you can list your car on Turro, let someone else borrow it, and there you go. You can make a little money while watching episode six. Literally, studies was shown that, like, cars are sitting idle in garages 95% of the time. So here's how the business breaks down.

Turrow finds someone who needs a car. And apparently there are 10 million users who say, I actually want to use a Turrow car. Yeah, they're registered on Turrow. Then it finds someone who has a car. Because 400,000 people are, and I'm not one of these because I don't feel comfortable with this, but they're willing to share. their car with these 10 million people. 400,000 are registered on the app.

And all Toro does, it matches them. And you can kind of see the connection here with IAC's Tinder. It's a little bit Tinder-esque. I actually take it back. They don't just match them. They also provide car insurance, which is super important. Incredibly important. Because you're not going to let a stranger borrow your car without insurance.

And then you're probably wondering, because this is the key, how do they make money, just like Airbnb? They take a cut of the deal. Say like you're spending 200 bucks to borrow the car for a week. They're going to take 10% or something. 49 states get to enjoy this kind of a service. One doesn't. The Empire State, New York. They had an issue apparently with the insurance.

My big question here is why didn't Airbnb expand into car sharing? My big question here is why did they acquire Turro? Because how good would it be if you could get that house on Venice Beach in L.A. And it came with a car. It's a natural extension of business. It seems like it works too well. So, Jack, what's the takeaway for our buddies who are now unicorns over at Turrow? The same economic factors that drove Airbnb and the gig economy to thrive can also cause other sharing things to thrive.

Money's tight. Millennials have student debt. We like to buy expensive things. We also want to do fun and expensive Instagram mobile stuff. We might need extra cash and we might want to travel cheaper than a hotel. Tech has enabled these kind of things. It's enabled ride sharing. It's enabled home sharing. Now it's enabling get my car sharing. Car sharing was inevitable in our opinion. We're wondering, though, what are the next things on the sharing economy frontier? Jack and I literally spent a disturbing portion of yesterday throwing this up on the chalkboard. Now, RVs and like motorhomes and trailers, that's already available. on an app called Outdoors. We're thinking power tools have an option here because...

If you've got a chainsaw, how often are you using that chainsaw? If you have a chainsaw, what are you doing with a chainsaw? No, but seriously, lawnmowers, you can share that. Right. Grills, you're using that maybe every other weekend, maybe, but you like to talk about it every day. How about this one? Ski Parca, Ski, Goggles? Who's using the ski goggles every day?

They're lying idle 99.9% of the time. Earn that next ski ticket by, you know, sharing your ski goggles. So, Snackers, we're real curious what you think is the next sharing account. We really do. This is like one of those conversations you want to have in a car with your friends right now. We wish we're having it with you guys. Hit us up at Robin Hood Snacks. We want to hear your sharing ideas. Jack, can you whip up the takeaways over there for us? Amazon Prime Day is complete and the flywheel is spinning mass rapid. The other takeaway we didn't mention lunchboxes are apparently in.

Second story, Netflix actually lost subscribers in the United States and we learned acquiring new customers is really expensive. Ryan Howard said it the best. Third and final story, Turow, a private company got a $250 million. investment from IAC, a public company. And I'm going to go back to Jacks, my board. One other share option we didn't even think about, bowling balls. Bowling ball sharing academy. I got to mention bowling balls.

A lot of actually good names could come out of that. Now, time for our snack fact of the day. This one sent in by Skip Tramontana, who we assume is from Chicago. And is a great listener to snacks because he was connecting the dots. It's just like, what's that movie with a guy with the mathematician? Yeah, it's like a beautiful mind situation. So we've talked about Lulu Lemon, which just opened his store and Lincoln Park, Chicago. It's like an epic everything store. Right. It turns out that space they took

over used to be owned by another retail dominator. Restoration hardware. Right. Both are leading the retail back movement. Retail isn't dying. Bad retail is dying. Because they're both pushing epic stores. Great highlight by Skip. Skip, you're the Russell Crow of our Holsnacks podcast. Now, a couple other key stories to keep in mind today. The main one, Facebook survived day two of congressional testimony, and honestly, it looks like no politicians want Libra. Now, Snackers love to have you with this day. Can't wait for tomorrow. We'll talk to you tomorrow. This is Jack, and I own shares of Amazon and Lulu Lemon. 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, is not intended to serve as 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.