The Best One Yet - Peloton’s IPO, Fitbit launches a health subscription, and Amazon Ring partners with police

Episode Date: August 29, 2019

Peloton’s IPO — we literally printed off the IPO filing documents, got on a Peloton, and discovered that Peloton wants to be a religion. Fitbit’s taking on Apple by launching its own subscription service. And Amazon had already acquired the doorbell company Ring, but now it’s got an interesting partnership with police departments nationwide.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 this is Snacks Daily. It is Thursday, August 29th. Jack, what's going on? We're bringing the best one yet. This is the best one, TBOY, best snacks we've ever done. Markets just jumped.

Markets jumped. It's one of those days where the writers of those articles, they don't know why markets jumped. They're like oil. Oil prices. Yeah, let's just say oil. Now, three wonderful stories, Jack, we have got a mix here. What do we got?

We're kicking it off with one of the biggest IPOs remaining in 2019. Peloton. This company is part Netflix, part Apple, part Casper mattresses. We're going to break down this Franken Company by jumping into the S1 document. We dove in Snacksdown. We got a great story about it. What's number two? Fitbits enemy number one is Apple.

But it's taking a lesson from that arch rival by launching a subscription service. Jack, I got one question. We'll answer it later. So let's keep it rhetorical. Have we hit subscription saturation? Third and final story. Amazon Ring is becoming the new neighborhood watch. This is the Internet of Things, and we've got a story about the police seeing everything on your front tour.

But first, Postmates, which is like an Uber Eats and DoorDash competitor, you know, food delivery. They have a new ad campaign called The Receit. Right. They've got that adorable label with like a Peter Pan-like character. Right now, they're telling you through The Receit what celebs are ordering on Postmates. So John Legend is trying to be as cool as his wife, Chrissy Teagan. So he's showing off the 657 delivery orders he's made from Postmates since 2015. We're talking John Legend, the man behind Love Me Now, the man who serenaded us with all of me, its song gets me every time.

It's a clever marketing scheme. You know, the fact that we're talking about it on Snacks Daily, this is exactly what Postmates wanted, but we think you'll find this interesting. Right, we were curious because we noticed that Mr. Legend has ordered 657 times for a total of 3,000 items delivered to his doorstep since 2015. Couple highlights. A $700 order from Nobu Sushi in Tribeca. Which is defensible because, like, it's about,

You know, that's like four rolls of tuna there. I went to Nobu once. Let's just say I was underdressed. Let's just say you don't go full khaki in that situation. Now, he also has ordered 25 bottles of A1 steak sauce, which highlights an interesting thing about these delivery apps. You can also get, like, grocery stuff. Right. So, Jack, what's your go-to order?

My go-to order is a bucket of freshly cooked popcorn from a movie theater with extra butter. They could deliver that stuff to your door. Inspired by our story yesterday, I'm sticking with peanut butter. I'm going with the skippies, I'm going creamy, I'm going the reduced fat because it's sweeter, and then I'm putting it in the fridge so it tastes like fudge every day. Let's hear our three stories. You're tuned in to snacks daily. We spoke to the lawyers and we got to get something legal out the way.

It 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. Nope. 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. Rob her financial, LLC, member Fenra slash SIPC. For our first story, Peloton, the Spin Company, it just filed paperwork to IPO, and we noticed something interesting. It sounds a lot more like a religion than it does a company. Full disclosure, Nick is still Schwitzen, because he was on a Peloton this morning.

Jack, I can't feel my right hammy. I actually jumped into the snack style. I printed out the S-1, the critical filing docs. Jack, you can confirm that? I can. You got to put that picture on the ground. Then I got onto a Peloton bike. I went with my favorite instructor, Allie Love, who's a legend, did the intervals and arms

ride, and then I got up in third's position, and I just read through the entire S-1 to prepare for this podcast. Yeah, also, LifeHack, Ali Love has her, like, epic playlist available on Spotify. Also, LifeHack, go into third's position. Don't get out of third's position. I stay up there, and I don't care. I'm not seated the entire ride. I'm going to do the rest of this pod in first position, sitting down.

We've got to tell the Snackers what Peloton describes itself as. Please, Jack, can you enlighten us? The largest interactive fitness platform in the world. Jack, can you also enlighten us from first position what Peloton really is, not how they describe it? A company that sells really expensive spinning bikes with a little iPad built in so you can stream spin classes from the comfort of your own home. We're talking you're spending a cool $2,000 to get a Peloton bike or a $4,000 treadmill, and you're dropping $39 on the monthly subscription just to access the classes. It's like a Netflix for sweating.

So, by the way, they're losing money just like a tech company, as you can imagine. And by the way, their instructors are quite beautiful. They look like they're pulled from the pantheon of Greek gods. Jack, I just took a one-hour booty booster ride, taught by Athena. Now, the founder's story, Jack, I think you've always wanted to share this. So it's founded, I believe, by a husband and wife, and they loved going to spin classes together. But the husband was such a procrastinator.

He would only sign up for, like, the night before the class, and they were always sold out. He thought to himself. I should have a spin bike that I can have in my home, in my apartment. and take classes without having to sign it. Fun fact jack, that is the circle of life of all spin classes. You do spin class because you're stressed, but you're stressed because it's so hard to sign up for a spin class.

All right, a theme we noticed in the S-1, which is the filing document every company must issue if you're preparing to IPO because potential investors need to know all about you before investing. Companies pretending that they're actually religions, not companies when they want to IPO. We made fun of WeWorks IPO last week because it was so lofty, their mission statement the way they described themselves. Need office space for my startup, I do. That's right.

It was Yoda. Now, Peloton, in its opening paragraph, decides to take that a step further. How does Peloton frame its life? Peloton sells happiness. That is the bold claim that Peloton said, and that was pointed out by Drew Brucker on LinkedIn. Thank you for hitting us up. We noticed it, too.

It's like the opening line, and it's crazy. But so is the way that Peloton decides to, you know, describe the rest of their business. They described themselves as part media company, part software, company, part apparel company, part logistics company, part experience company, part retail company, part design company, apparently, because the bikes are pretty. We ran out of other things to say there, but there is another thing that did surprise us when we got into the numbers, and that was loyalty. They mentioned the word loyalty 17 times in the S-1. That's always a fun, Control F, to search. Now, they've also got 1.4 million members, and we've got an interesting stat about them.

Any company with recurring revenues, like a subscription service, like Peloton, investors are interested in the churn rate. The churn rate is how many subscribers ditch the service and cancel their subscription. Jack, can you share with us what that churn rate was for our buddies over at Peloton? For Peloton, it's 0.65%. That means from one month to the next, 99.35% of the Pelotanistas stick with the crew. And that's probably because you just realized, hey, I splurged to cool $2,400 for a single bike. Exactly. Pelotanistas do not understand the economic principle of sunk cost. So, Jack, what is the takeaway for our buddies over at Peloton based in New York? The main risk wasn't mentioned in the S-1.

The main risk is the F word. Fad. Right, Bowflex. Your mom's Nordic track when you go downstairs. These fitness trend products, they tend to be fads. I still remember the Chuck Norris commercials, like getting huge on a Bowflex. Jack, I'll pay any amount of money to see Chuck Norris hitting a Peloton. Can an exclusive an elite product, which is wildly expensive like Peloton, can it actually go mainstream?

or is this just a flash in the pan? Or if your Peloton, you're saying, hey, we're not a spin company. We're actually a software, apparel, logistics, experience, retail design, and media company. Nick, if I become a working dad, I think I could get a Peloton because I'm not ready for a dad-bod. For our second story, Jack, you thinking we should keep this health focused? Please. Jack, check my pulse. Fitbit is launching a subscription service.

Fitbit. Based in San Francisco, we got one big problem with Fitbit's fitness trackers. Yes, we do, Jack. It's the pod thing. Yeah, they don't measure increased cardio activity based on podcast recordings. You have no idea, people, what's going on in this studio. Jack is sweating down his left forehead vein and his biceps are thriving. True story, after each story, I take off my mic and like my headphones and I almost spike them

gronk style. I'm so pumped. By the way, thriving is a combination of thriving and throbbing. Fitbit had a big event where they announced a bunch of new features for their fitness trackers. Now, the highlight for us was Fitbit Premium. That is a subscription service you pay monthly, and it launches this month. And basically it shows us that Fitbit, you know, it wants to be a one-stop shop for all things fitness needs.

So content, tracking, data, and customization. But this is also a must for fitness business model because it needs recurring revenue instead of just a one-time, like, $200 fitness tracker sale. Plus, interestingly, they're saying that this Fitbit premium in the future could work on other hardware. So you could have an Apple Watch, but you've got a fitness premium app that's doing all the fun stuff for you. We're not going to read too deep into that little nugget of information, but it sounds like Fitbit has a plan B in case people just want Apple watches. At least it could still make money off software.

That's the plan B. So what you're probably wondering right now is what is this $10 a month splurge for Fitbit premium actually bring me? Well, the tracker is recording all of your physical activity, but this is about quantifying it, analyzing it, and then giving you like coaching tips and nudges on how to get Weller. So Fitbit's premium is basically filled with AI, artificial intelligence suggestions that are, let's say your fitness trackers telling you what's going on right now. Fitbit premium will tell you what you should do in an aggressive kind of a coachy way. Exactly. So once you get a Fitbit, it'll tell you that you walked 500 steps today and climbed 13 stories. But if you get Fitbit's premium subscription service, you're also going to hear, hey, why did you only walk 500 steps?

You're going to feel guilty. And then it's going to say, why don't you go for a 10 and walk outside, come back and do a meditation app. What are you doing with your life? It's like having a coach right there on your wrist. I wish it would tell you it seems based on your wrist activity that you've looked at Instagram a lot and it could give you a little zap to stop looking at Instagram. That's, I think, the direction they're kind of heading it. In the meantime, they've got nine guided health programs included in Fitbit Premium that are

basically customized for what's wrong with your fitness life so you can get a well. So you can sign up for like a class like healthy habits or get me more Z's or habits for successful sleep. Now Jack and I went back and forth in this. I think the names are a little too literal, and I think they're incredibly uninspiring. I think they're straightforward and to point, and I'm fine with it. Don't be so negative name. Jack, I want you to run with that straightforward theme. It's what I love about you. What are the takeaways for our buddies over at Fitbit? Subscription saturation. At some point, we're going to get there. In the meantime, Fitbit's pulling the exact same move as Apple. It wants to get recurring revenues from the hardware that it sold you a single time. Yeah, so Apple already sold you a thousand dollar iPhone. But now they want to, want to make more money off iCloud storage monthly, Apple News Plus monthly, Apple Music, monthly, etc., etc. Now, you're hearing this story and we know it's going through your mind. Wait a second, I've got some other streaming subscriptions going on. I'm paying for Netflix and paying for Hulu and I'm paying for Spotify every month. And you've got maybe a bunch of boxes that arrive at your doorstep every month like Harry's Razors, Lola Tampons, Blue Apron Food. Or maybe you've been one of

the innovators who said, you know what, instead of paying for each individual Lyft or Uber, I'm going to sign up for their subscription service and pay once a month for Uber and Lyft. And then you need to pay monthly to keep track of your subscription services. Just kidding. But Snackers, this is a megatrend like when will we hit oversaturation of subscription? And we're calling that point subscription saturation. For our third and final story, Amazon Ring has become a surveillance tool for police departments. Snackers, this story is about security cameras. But if you can't afford a security camera, we've got a life hack for you. Just install a fake one.

And if you can't find a fake one, because those are hard to find, just put up a beware of dog sign. They're actually only like $12 on Amazon. But if you want another life hacky solution, just put a note on the counter when you leave that says, hey, boys, the food is waiting for you in the oven when you return from CrossFit. And then you can take that a step further and put some huge weights with the CrossFit logo next to the note. All of these things will scare the burglars. But the key here is the story with Amazon. And we've got to point out that Ring is the company that was acquired by Amazon in 2018 for a cool $800 million.

$1. Ring is a doorbell that you latch next to your front door, and it doubles as a security camera. And the feed of that camera is accessible on your smartphone anytime. Basically, this thing is going to notify you when someone's there, which is great for dads who just love setting up this kind of thing. And then are constantly like, who's there? Yeah, but you get a lot of false alarms with dears walking by or the plow guy during snowstorms. Deers are sneaky, and they'll take packages. But the news here came from Washington Post, which pointed out that over 400 police departments in the United States have partnered interestingly with Amazon's new ring product. Yes, police departments in Essex Junction, Vermont,

Rochester, Minnesota, whole bunch of other towns can access people's ring video cameras. Now, you're probably going to panic on this because that's the first thing we did. Can the police see your ring video feed? Well, not entirely, only if you actually let them. Yes, there is an app called Neighbors. It's also owned by Amazon. It's connected to Ring. And with neighbors, you can get a notification that says like suspected robbery in your area, the police want access to your video feed to see if they can catch that robber. You can actually obsess over this and look at the live feed to help the police like search for bad guys in this situation or deer that have been stealing packages. But again, the police only get access if you give your consent. Now the pitch for

Amazon is that this makes your home safer. It makes the neighborhood safer and it helps the police catch all those bad guys and deer. It all sounds very good. It's a very good value proposition for Amazon. Plus, it'll get rid of all that stoop package theft that goes down in the suburbs. But Jack, what's the takeaway for our buddies over at Amazon who have been whipping around with this ring? The loser here is privacy for all the other people in the neighborhood who now have video cameras pointed at them. Basically, this is Amazon private surveillance. And it's a great product potentially for customers, but it's a product that could also easily be abused as a tech product. You might have residents who start snitching on each other or reporting like certain people as

suspicious when they're actually just playing hopscotch. Or the government could pass a law that's basically requiring cameras to be turned over to them. All of these things are like scary abuse situations where this could go terribly wrong. Interestingly, there's nothing in the Bill of Rights about this particular type of privacy. And it seems with tech, like every new innovation, there's often a cost to our privacy. And we're noticing privacy really tends to be the loser. Snackers, this is Jack, full disclosure. I own stock in Amazon.

Jack, can you whip up those takeaways for everyone over here? Peloton is getting ready to IPO and it is a hybrid breed of tech, hardware, media, and sweat. And if there's anything we learned from writing a Peloton while reading about Peloton, it's that it wants to be a religion. Fitbit is offering up a monthly subscription for people who want their 10,000 steps analyzed by artificial intelligence for health tips. But here's the big question. When will we hit peak subscription saturation? Third and final story, Amazon Ring has become a tool for police forces nationwide. And privacy has become an issue for every single tech.

product we ever see. Well, well said. Now, time for a snack fact of the day. This one's pretty special because it was sent in by Ishaun Parique from Potomac, Maryland, love Potomac, Maryland, great crab cakes. Jack, this isn't just from any snacker. He's been listening since day one, and he's actually joining Robin Hood as a new employee in like two weeks. Okay. The origin of the pretzel is unclear. We think it's European. We think it's from monks. But there is actually a painting in the 12th century showing some guy with a pretzel on the table. So we know there was snacking on a, in the 1100s. So basically we couldn't figure out what the actual origin is. So we decided to focus on the U.S. history instead. In 1861, Julius Sturgis, great name, founded the first

commercial pretzel bakery in the town of Latsitz in Lancaster County, Pennsylvania. And to this day, Pennsylvania has embraced the pretzel. 80% of all U.S. pretzels are made in the Keystone State. I think it's pronounced Latites, not Lazzis. I think it's pronounced Pennsylvania. Snackers, loved having it with us. We've got one more this week, and we can't wait to join for it. Talk to you tomorrow. 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, 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 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.