The Best One Yet - 🪳 “Papa Roach” — Rentokil’s $12B pests. Samsara’s dumb IPO. The Fed’s hydration.

Episode Date: December 16, 2021

The pest industry is living its best life, so we’re getting the biggest pest control acquisition in history. Samsara just IPO’d to make your dumb business things smart. And we think the Fed’s biggest meeting of the year means a New Year’s Resolution: no more stimulus.$TMX $RTOKY $IOTGot 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. It is Thursday, the new Friday, December 16th. Oh, bitter sweet. Second to last pod before we're off for two weeks. It is. Love actually is everywhere.

Nick watched that in a live version yesterday. They had a real orchestra. And we were watching Colin Firth making me cry all night. You Grant makes you happy. And David Beckham's got a great left foot. I got a sneaky feeling today's pod is the best one yet. David Beckham's right foot. Today's episode is better than the total agony of

love. First story, Jack, what do we got? Roaches, rats, and whatever bug that is, is that? What is you going to call? Rent to kill. Rent to kill. The pest control giant just made the biggest acquisition in pest controlling history. For our second story, the Fed is finishing 2021 with an official policy pivot. Out with the parties and with the hangover cures. For our third and final story, Samsara is the stock that jumped the most after their intelligent IPO. Yeah, because Samsara, here's what they do. They take your dumb stuff and they make. It's smart stuff. Snackers, before we hit that wonderful mix for our penultimate pie. Honestly, did not see this mix coming. I love this mix. Christmas dinner, here's what you're going to say at the table.

You're going to say it was a journey just to get here. The butter roasted noki was a journey to butter roast. Your cousin's going to be NFTing a picture of the noki because that was a journey. Snackers, the word journey, journey has taken over corporate America this year. Journey. It has become the go-to noun for Wall Street, like everywhere. According to Bloomberg reporting, the word journey, they control after it. It was mentioned over 3,000 times on earnings calls this year by CEO. Jack, looking at the stats, that's a 70% jump for the word journey since last year. Journey has gone viral over in the C-suite.

If your company isn't on a journey, are you even chief executive? CBS is closing some stores because they're on a journey. Ford is proud to transition to electric vehicles because it's on a journey. Avatar 2 and Avatar 3 still haven't debuted. viewed on Disney Plus, but it's all part of their journey. Journey, it's just ambiguous enough to be intriguing. Mysterious enough, though, to be inspiring vaguely. Delightful enough to get people to stop questioning you.

Saying journey is kind of like the modern 2021 magic trick. Yeah, because it sounds fun and it means nothing. So, Jack, what's the takeaway for the word journey? The most exciting answer and the best answer to any question you don't want to answer this holiday season. Snackers, just say it's been a journey. Let's hit our three journeys. You're tuned in the snacks daily.

We spoke to the lawyers and we got to get something legal out the way. The 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. 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. Robahood Financial, LLC, member FINRA, SIPC. for our first story. Unprecedented on this podcast. Haven't seen this since. We never done this.

Rent to Kill is a worldwide leader in pest control. And they just bought one of America's top exterminators. The pest control industry. It actually looks a lot like the pest that they're trying to control. Rent to kill. Rent. O. Kill. It's a publicly traded $13 billion British company. It's the least British thing about Britain.

We're talking about an exterminator that's like the size of lift. I know. It's the first time we've covered this industry. So Nick and I slipped into hazmat suits before this story. That's how we jumped in snack style on this. Now, first thing we're thinking here is ticker simple for a pest control company. So many options here, rat, mice, bug, kill. Yeah, if you want to get aggressive, we can go with that one, K ILO.

But they went with RTO and Rent to Kill trades over on the London Stock Exchange. Now, full disclosure, Jack and I are not in London and we have not used Renticill. So we're trying to figure out, is this Rento Kill, Rento Kill? Where does the name come from? I think it's rent and exterminator to kill the pests. Let's go with that. It's kind of both in a way because they sell devices with sensors that detect. What was that?

What was that? That was a mouse. Any kind of scurring at night, they're going to detect it for you. They also have a service called Entotherm, which is like waving a wand over a mattress and that heat treatment kills the bed bugs in your mattress as well as any eggs the bed bugs have laid. The eggs are the key. And of course, they got Gus and the branded orange rentals.

to kill van cruising around your home or business to us, squash the roaches that are an issue. Snackers, there are thousands of exterminating orange rent to kill branded vans. So all I'm thinking about is Ratatouille. Oh yeah, Ratatouet. You're going to want to hide in the pantry. I hope he's okay. But here's what Jack and I find fascinating about the pest control industry. The pest control industry is ironically a lot like the pest they're trying to control.

It's kind of small. It's unknown, but it's spread out everywhere. It is. Rent to kill. they got 1,800 local extension numbers going on, which are their local teams across the world. They have 1,800 teams that cover 90% of the world's GDP. Again, who you're going to call? Yeah.

Rent to Kill. Now, how are they pulling this off? Good old fashioned M&A. They kill maggots and ants, but they love mergers and acquisitions. M&A, rent to kill. It's a roll-up business snackers, just like Mr. Car Wash and Bolaro, both of which we talked about on this pod. Those two companies are Car Wash.

and bowling alleys. But Roach squashing is also a fragmented mom and pop industry with tons of small businesses. So here's how this goes down. Big bug rent-a-kill, they come around and they're buying up all the little exterminator mom-and-pop businesses out there into one big rent-a-kill squashing machine. They make mom-and-pop an offer. They can't refuse and they add to their corporate empire. And this is the biggest acquisition that rent-to-kill pest control has ever done.

Terminix. U.S.-based Terminics. is not a mom and pop business by any means. And that's the news. Rent to Kill is paying $6.7 billion for Memphis, Tennessee-based publicly traded exterminator terminix. It's a huge deal. And that's why it's subject to U.S. regulatory approval. It is because, Jack, this feels a lot like the number one in the industry is kind of buying the number two. It's not good for competition. Not good for cockroaches either. So Jack, what's the takeaway for our buddies over at Rentickill? Pest control enjoys not one, not two,

but three global megatrends in its favor. Boom, get this Snackers, urbanization, climate change, increasing standards of living, all that. Those are tailwinds for the entire pest control industry. The world is getting wealthier, warmer, and with way more cities. And the pest control industry loves this. Yeah, for example, the United Nations, they predict that 68% of the world is going to live in cities by the year 2050, which is up from 55% today. If you're closer and living cram next to your neighbors, that's, more concentrated trash and rats love that.

You don't have to be a mathematician for that. Now, remember when we said the warming earth was good for carriers, air conditioner business? Well, it's good for rent-to-kill as well. A warming planet actually makes it easier for pests to procreate. And rats love warm trash. I'm sorry for that imagery, but the warmer, the trash, the tastier it is to rats. And finally, over 2 billion people in China and India are rising from low income to medium income. And that part is key.

Rising standards of living means rising standards of hygiene. Which means less tolerance for termites. Which means more rent-a-kill. Who are you going to call? Rent-a-kill. For our second story, the Fed just had its biggest meeting of the entire year this week. The Fed's got a New Year's resolution they announced, and it is nursing our economic hangover. Okay, Jack, we got to travel back in time a little bit here.

Last time we covered the Fed was their Fed meeting in November, and it was a down. Jerome Powell said in November that the central bank's really fun economic stimulus scheme, which started at the beginning of the pandemic, it is going to end this coming June. That's right. The Fed is going to cut bond purchases by $15 billion a month until they're down to zero by next summer. Fund's ending. Apparently, the fund is not ending soon enough because we just got an update. The Fed is going to cut the fund twice as quickly as they said just one month ago. Easy there. All right. The stimulus fund will be over by March, not June. Oh, wait. And there's more. The Fed now plans three interest rate heights next year. It's like the hall monitor knocking on your door

and being, I hear something going on. There's more than two people in this room. You're going to have to come outside. Snackers, this looks to Nick and May like a New Year's resolution for the Fed. It wants to change its lifestyle and pivot its priorities. Here's the thing, Snackers. For the last two years, our central bank has been focused on economic gross. It's been feeding the economy plenty of money to help it get over the pandemic, but it looks like the economy might have overindulged. So the Fed woke up, looked in the mirror saying, hey, new year, new Fed. We're now focusing on fighting inflation instead, which is kind of like hydrating the economy. Because the fed's looking at the situation, they're like, hey, unemployment, it's down to 4.2%. We don't need any more economic support.

Thanks to stimulus checks and a lot of economic recovery in the past 18 months. The fun stuff. The average American's bank account is actually 50% higher the balance than it was before the pandemic, according to the New York Times. So the Fed got on the scale and got off the scale and is like, hey, we may need to do the opposite of what we were doing in 2021 when it comes to 2022. That's right. Unemployment is 4.2% and the average bank balance is up 50%. We're a good share. How about we take an economic chill pill to slow the headache of rising prices? That's right. By economic chill pill, we mean less. easy money and maybe even higher interest rates.

So, Jack, what's the takeaway for our buddies over at our central bank, the Federal Reserve? The thing about inflation, it can get a lot worse really quickly. Snackers, that's why the Fed is acting now, not later. You don't want to have to pay more for a Pop-Tart. Look at Turkey. Inflation was 6% in 2019 there, which is the same as it is in the U.S. today. So over in Turkey, people were thinking, hey, the price of TVs is rising. I'm going to buy a TV now before it gets more expensive.

in the car. Boom. That buying impulse drove inflation even higher in Turkey and inflation was 12% in 2020. So then over in Turkey, they're like, ah, maybe I should buy my second TV now because I might not be able to ever afford one again. Bam. That buying impulse boosted inflation even higher to the 21% that Turkey has right now. It spiraled out of control. Inflation. It is annoying and it can spiral out of control. That's why the Fed is acting now. It's got a New Year's resolution. third and final story, Billy Mac is going to get number one. Sam Sarah just became the first pure play internet of things stock. Haven't seen this before. Sam Sarah is going for smart factories, which is a little different than smart homes. Internet of things, buzzword of 2018 and 2019. It's a

throwback. It's not journey. We haven't talked about it in a while, but a company is finally IPOing with the ticker symbol IOT. They snagged IOT. How did they get this? How did someone not grab that ticker real estate? Sam, Scare. Six years old, founded by MIT engineering grads. It's backed by injuries in Horowitz and just IPOed for a $12 billion valuation. Now, here's what Sam Sarah is doing. They're basically, they're sticking cameras and they're sticking sensors and all the trucks, all the machines, all the factory equipment that you can imagine.

It can't imagine. Yeah. Professor Sam Sarah. Sorry. Thank you very much. My apologies. It won't happen again. Sam Sarah teaches dumb things to get smart.

Yeah, Jack and I are looking at Sam Sarah. We're like, this just isn't a. software company, this is a teacher. Internet of things. The things that Sam Sarah teaches are trucks, buses, dump trucks, industrial equipment. Yeah. So with Somera sensors, that dumb, dumb truck is now an internet-connected valedictorian truck. It's a smart truck. For example, Sam Sarah software may teach Bob's beautiful banana store a thing or two. Yeah, this is our case study for Professor Sam Sarah. Bob's bananas is an analog business that has a lot of dumb parts in the supply line. Yeah, Jack, I'm looking at the trucks, the crates, the ripening fridge. You love the

ripening fridge. But none of these are connected to the internet. None of them are that smart. But Sam Sara put sensors on it, which shows that the truck actually took a wrong route when it was leaving the banana forest. And then Jack, that video from Sam Sarah shows that that crate of bananas just sitting there. They're turning brown. So then here's what happens. Sam Sarah's software reroutes that truck. And tells the fridge to speak. up the ripen. So that the delivery driver is paying to come and pick up that crate of Bob's beautiful ripen bananas.

Somebody get me rate my professor.com. Sam Sarah just got Bob's business to get an A. This made all that dumb factory equipment actually pretty smart pretty quickly. And this makes Bob more money and gets you a more beautiful ripe banana. So still it's a relatively tiny business, Sam Sarah. They made less than a billion dollars in revenues last year and they still haven't profited. But here's the key. It's the market.

Because Sam Sarah says that over 40% of the world's economy, it's kind of a dumb economy. Everything's just happening with pen and paper. So there's a lot of room for SimSara to grow. So, Jack, what is the takeaway for our buddy, Professor Samara? A smart home would require a long and costly reeducation. Yeah, Snackers. Bob's bananas, it's crazy efficient now. What about Bob's condo?

No. Bob's condo might have one or two smart connected devices, like a ring security camera on the front and maybe a Rumba vacuum roaming or something. the upstairs. Hey, Alexa, how many smart devices do I have? Getting to a truly efficient smart home like Bob's banana business, that requires new appliances and new gadgets that are all smart. And that means replacing existing appliances with more expensive tech-enabled ones, and that's a big investment. And all the things you buy, they have to speak the same software language. So you'll have to pick Google or Amazon or Apple's ecosystem. Smart homes, they seem like

the obvious next step, but it takes a lot to make a dollar. dumb, home smart. It's going to be a journey. Jack, I feel it in my fingers. I feel it in my toes. Can you whip up the takeaways for us over there, please? Elton. Yeah. Rental Kill announced it's acquiring terminix. Publicly traded termite terminating giant. It's enjoying three megat trends right now. Unprecedented. The Fed isn't going to change their policies in June. They're going to change their policies right now. The Fed, they got a New Year's resolution. They looked in the mirror and they said, inflation can spiral out of control.

I got to do something. For our third and final story, Sam, Sarah, is the Internet of Things, but they're focused only on businesses so far. Yeah, smart homes, it's going to be a journey. Now, time for our snack fact of the day. This one tweeted in by legendary snacker, David Crozier from lovely Des Moines, Iowa. Rudolph's nose is famously red. It's cool.

It's red. But reindeer eyes, they may actually be cooler. Even cooler is reindeer antlers. Yeah, which appear to be draped in velvet. Well, you just up the snack fact with another snack fact to your own, Jack. There we go. But can we talk about these eyes? But back to the reindeer eyes.

They're not just one color. Reindeer eyes change color. Yeah, these like a mood ring. They're golden in the summer. They're blue in the winter. They completely shift to handle the completely different seasonal sunlight way up in northern Europe where I think these things are native. Yeah.

So Rudolph gets all the lover for his schnaz. But comet, dancer, prancer, blitzen, and vixen, they deserve some credit too. That's like four out of nine there. Well, Harvey Parker should do a collab. Snackers, you look fantastic today. Remember, whoever you are with today, ask them, HY, HY, YS day. And tweet at Robin and Snacks, your favorite pod story of the year. Have you had your snacks daily?

That's how we grow the pod. Nick and I'll see you tomorrow. If you know, you know. And before we go, update for our snackers, Vichal said yes. He is going to go out on a day with Snackers Chivangi. Like, keep us updated, guys. Chavagi, Ben Mois, the Commission. Love actually is everywhere.

Oh, full circle, baby. Happy birthday to Josh Britton from Seattle, Washington. And Grant Marine, turning 32 in Bermuda Run, North Carolina. Happy birthday, Alice Morrow in the Bronx. And Jacqueline Carson in San Antonio. Evan Briggs, positive vibes sending to Miami, Florida. And Matt Holland turning 31 in Mountain View. Happy 26th to Brian Kep in Williamsburg, Virginia.

And Marissa, Killer Frost Martinez, happy birthday. and last day of law school finals over at Georgetown. Congrats to Stuart Lumberg, who just got into Cornell, ever heard of it. Big Red, Eva W. Congrats on the graduation. Congrats to Veronica Trujillo, who just got a new job at Roblox. This is Jack, I own stock of Roblox. There we go.

And Lou Kessler just got promoted in his first job out of college. Happy anniversary to Ari and Sharon in Miami, Florida. This is Jack, I own stock of Amazon, Nick owned stock of Apple. Robinhood snacks, newsletters, and podcasts reflect the opinions of only the authors who are associated persons of Robin Hood Financial LLC and do not reflect the views of Robin Hood Markets, Inc, or any of its subsidiaries or affiliates. They are meant for informational purposes only and are not a recommendation to buy or sell any security, cryptocurrency, or investment strategy in any account. This is not an offer or sale of a security, not a research report, and is not intended to serve on the basis for any investment decision. Any third-party information provided therein does not reflect the views of Robin Hood Markets, Inc., Robin Hood Financial LLC, or any of their subsidiaries or affiliates.

All investments involve risk, including loss of principal and past performance, does not guarantee future results. Robin Hood Financial LLC, member FINRA, SIPC. Happy anniversary to Cincinnati Ari and Sharon. Sorry. My bad. Because that could be a first name. You know, your buddy Cincinnati Ari is from Cincinnati.

These guys are obsessed with the Bengals.