The Best One Yet - Revolve’s Instagram/fashion IPO, JetBlack concierge takes on Amazon Prime, and Germany’s Aldi fires up the US grocery wars

Episode Date: June 10, 2019

The pioneer of social media influencer marketing, Revolve shares surged to become the 2nd best public offering stock performance of 2019 so far. JetBlack is the text-based online concierge club that just revealed key numbers as it takes on Amazon Prime (it’s a Walmart company). And Germany’s chain Aldi opens up shop outside of Walmart’s headquarters as it adds a new front to the epic US grocery wars.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 Monday, June 10th. And Jack, what do we think about this? We got the best one yet for you. Straight up TBOY. What happened to markets last week? Speaking of best one yet, the Dow had its best week in six weeks. It almost jumped by 5%. Very nice, Dow. Very nice. The trade war that Trump started with Mexico ended abruptly on Friday. And if it hadn't ended, we heard that the Fed chairman said he's got markets back. Right. He will lower interest rates, most likely, if need be. Now, Wonderful mix of stories. Jack and I wrote a couple weddings didn't stop us over the weekend. This is the New England special. This pod was recorded live from Vermont and Nantucket, Max. We got a great mix, Jack. What are we kicking off with?

Revolve. The first purely influencer-powered fashion company that has no ads, no slogans, just insta posts. And its stock just doubled on Friday's IPO day. Second story is the startup Jet Black. It's the online shopping concierge that's explicitly targeting busy city parents. We're going to give you the first. background on how it's an Amazon Prime killer. By the way, a little bit of a tease in there, and you'll see why. Third and final story, this one's closed to home for me. German supermarket chain Aldi. Just attacked. The heart of U.S. retail, Walmart HQ. We've got one word for you in your business model. Frugal. That was a frugal tease as well. So, Jack, you know what time of year it is

right now? I do. It's not the start of summer quite yet, but it is the heart of intern season. Exactly. What does that mean? What's going on now? Every neighborhood bar around you has probably confiscated a lot of fake ideas lately. Now, Jack and I are fully aware of this. So we thought we'd jump into internships a little more. We notice it's not just cool startups that have cool internships. Get this. Mattress firm, which I thought was bankrupt. Apparently not. It is hired a bunch of snooze turns, which are snoozing interns that just have to work 30 hours a week, napping, snacking, watching Netflix and like reporting back to them how beds should best Netflix. and chill. Keeping up with the theme of like taking the word intern and modifying it for your brand, Days In is paying $10,000 to Sun Turns, interns who will go around, stay at their hotels, and basically just enjoy the hotels and report back. And tell all your friends about how awesome the days and hotels are. Now, if you want something a little more conventional, you could go to Facebook,

which is paying you their old fashion way, $8,000 per month, not too shabby. Truth of that is the highest paying internship of the mall. And maybe that be. Pizza Mall. 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. Robahood Financial, LLC, member Fembra, SIPC.

For our first story, Revolve pioneered social media influencer marketing and adjust IPO. price nearly doubled on Friday. It's IPO. We're talking about the second best IPO the year. By the way, Jack, highlight for me was looking at the Instagram page where they have a photo of someone from the company at the New York Stock Exchange and then a photo of a half-naked person trying to sell me a halter top. Yeah, it's kind of a non-sequitur, but only on IPO day. Jack, can you hit me with the Revolve pitch? All right, revolves like, look, nobody's watching TV.

If you want to connect with Gen Z and millennials, do not put ads in magazines. Everybody is scrolling Instagram. We are the only company that fully appreciates that. That's what Revolve does. So Revolve is an e-commerce company, but it's basically purely baked into your social media game. It's got 20 of its own brands. It sells influencers fashion brands. They even mention the word influencer in their IPO filing paperwork 79 times. Yeah, this is a fashion company. They have 20 of their own brands. They do make clothing, but they also hook 3,500 social media influencers up with money in exchange for wearing their stuff and posting strategically with the great hashtags. Now, what we got to talk about here is the hashtag revolve around the world trip,

which is one of the hundreds of events that they put on for their influencers, like throughout the year. Jack, can you talk me through the schedule for the Turks and Kakos? Revolve around the world? We got our hands on this itinerary, and we have serious fomo already. Okay, first, kick things off Saturday morning with a blush-themed brunch. How else are you going to kick them? Now we got a two yacht afternoon because one yacht is never enough.

Finish things off with a beautifully symmetrical yoga shot. Like, this is just Insta Gold. Jack, if I hadn't watched this whole Instagram story, I don't know how I would have ended up with some Carolina jeans, a brook shirt, an LPA crop pants, and a love weave top. That is all the stuff that you found peppered among this Instagram campaign, those amazing brands, all owned by Revolve, sold by Revolve, made profits by Revolve. Now, hashtag revolve around the world, Turks and Kekos, it's like a fire festival marketing video, except you got to just stay home and double tap your screen.

Right. You don't get taken advantage of and left for nothing in the middle of the world. So, Jack, the real secret here, because jumping in snack style, Jack and I were curious how this company really, really works. There is a real secret here. Yeah, so we generally get Instagrammer, influencer advertising, but we don't get trend forecasting algorithm that belongs to revolve until. now. That algorithm, it's basically what's driven this company, not to be like any other tech company. It's driven it to a $31 million in profit. Let's be clear. Revolve is not some Gen Z, like, deadbeat company that's not making any profits and just loves Instagram. It is profitable. So the algorithm that's driven these profits, it tracks what's getting clicked on Instagram.

It tracks what people are buying on social media. And then it detects patterns. And it, like, labels these fashion styles, categorizes them into 60 different attributes, and knows exactly what their clothing factory should produce to make money. Shambre tops are out, Lily Prince are in, it knows that like the back of its hand. Now, there is a goal here revolve, and that were goals, this concept of constant newness. They're able to pump out a thousand styles of new clothes a week because the algorithm knows exactly what you want. So let's be clear.

This is fast fashion. They turn around in like a number of weeks with a new brand and get them into influencer, marketing campaigns. And due to that algorithm, like, they barely ever miss. They're always on target with their brands and it's just hitting. That means that they can sell, and this is a wild stat, they can sell 79% of their clothes at full price. And that means they're not discounting them. And if they're not discounting them, it means that they don't have anything that you don't want. That's how you make $31 million in profits. So Jack, what's the takeaway for our buddies based in L.A. over Revolve? That algorithm is its greatest strength and it's its greatest weakness. The company expects Instagram

continue to be the home for fashion discovery. That's what the co-CEO thinks. But you know what? It doesn't own Instagram and Instagram can do whatever it wants. So if Instagram changes that algorithm, revolves in trouble. Great example, Jack and I were thinking of here is Zinga, the mobile video game company. They were dependent on Facebook. Facebook changed their algorithm and suddenly the Farmville game is it being used as much? Or how about every online publisher that was relying on Facebook for traffic? And then it all got cut off with one click by Zuck. Now Revolve has adapted before. Used to use its influencers from, like, blogs, and now it's moved it over to social media. But still, that strength is also a great weakness.

And Instapocalypse could hit this company. For our second story, Aldi is the ultra-discount grocery store. That is having a moment in the United States of America. Frugality, actually, Nick, is having a moment in U.S. grocery stores. Ironically, frugality is living its best life, Jack. Can you give me... Actually, can you hit me with the pitch over here from Aldi. Aldi thinks that grocery shopping should not be fun.

So it's going to make it highly unpleasant to save you money. It's pretty much doing to grocery stores what Spirit Airlines did to airlines. Now, before we jump into this business model, Jack, I mean, as a history major here, I love a good combination of dates and stories. What can you tell me about Aldi? All right. It was founded by German brothers post-W. Deuce in 1946.

Exactly what the Germans are known for. Very fresh high-quality food. Well, actually, Germans are known for brotherly companies getting broken up because of some dispute. So Aldi actually separated into Aldi North covering the north of Germany and Aldi South covering the south. Now Aldi is a private company. So the shares aren't available on the market, but it's about to become the number three largest grocer in the United States behind Walmart and Kroger. Aldi's been huge in Germany for a while, big in Europe for a while, and now it's in the U.S. officially opening a store in Bentonville, Arkansas, which is where Walmart was founded and Walmart

HQ still is today. Exactly. Now, snack style, Jack and I jump. into this retail experience because Aldi we've discovered is the most German retail experience possible out there. First kind of principle here, no laziness. Nick, I literally jumped into Isle 3 at Brattleboro, Vermont, Aldi, which is my hometown. Get this, you have to bag your own groceries. You have to pay for your own grocery bags. You also have to unbox your own, like, stuff from the shelves. They don't even, like, unbox them for you. You got to earn that muslin, neck. This is not a great sales fish. Number two principle, by the way, is that everyone, everyone, and we mean everyone, is held accountable. Okay, you want a shopping cart? You better

give me a deposit. You literally insert a quarter into its shopping cart in order to unlock it, and you don't get the quarter back until you responsibly return it to its place. Everything has its place. All right. Third principle here is no fluffy brands, which is in a direct assault on like the snacks. Jack and I feed each other's self. with like through the podcast. Yeah, you're not going to find a maple walnut organic kind bar at Aldi. 90% of the stuff there is private label, which is basically just cheap Aldi brands. Like the best brand for, you know, beans is called like fresh beans.

So they don't spend any money on commercials, branding, or design. Trying to refresh yourself with a Pamplemoose LaCroix, you're not going to get it. You're going to get a Bellev sparkling water at Aldi. It looks like a knockoff of LaCroix. So fifth key principle here is that, speaking of which, there is no selection at your Aldi's. Yeah, you get 1.4,000 total items at the typical Aldi store. That compares to 100,000 items at Walmart.

You want like a variety of beans, not happening. You're getting just the one beans. You want a variety of wine, not happening. You're getting the Zinfandel and you're going to like it. And then what is the result here, Jack, when you add up all these principles? This is the only attractive part of Aldi's like value proposition. You are going to get the lowest prices in the market. This entire store, Nick and Brattleboro, it could probably be run by, like,

like three no-nonsense efficient workers. All wearing the same apron. So, Jack, what's the takeaway for our buddies over at Aldi? The grocery wars are real, and they are on every front. Okay, on one front number one, physical brick and mortar stores, Aldi's expanding hard in the U.S. with, like, it's got 1,800 stores already, and it's adding 700 more.

Only Walmart and Kroger are bigger. And then online, naturally, you've got the one-day shipping wars with Target, Walmart, and Amazon, each offering some sort of one-day shipping. Jack, let me take you to the third, front over here, Omni Channel, which is like online and offline combined, they're merging online and physical stores with like curbside pickup at pretty much every retailer from like Target to Walmart. Yeah, Walmart actually just said they're going to deliver straight to your fridge. Not to mention drones anybody. It's coming soon from both Google and Amazon.

Groceries are, we're going to say this. And this is a snacks bold claim. Groceries are the most exciting sector in business today. And Aldi is the new player you need to know. For our third and final story is our startup of the day with an asterisk. Jet Black is the new concierge service that's taking on Amazon. Nick literally tried to sign up for this thing. So you're on the wait list, Nick. Tell us the pitch from the company of what this thing is. Jack, I'm not going to recreate the wheel on this thing.

I'm snagging this directly plagiarized from the company website. Jet Black is a members-only personal shopping and concierge service that combines the convenience of e-commerce with the customized attention of a personal assistant. That was a little long-winded and wonky, actually. So we're going to tell you this is like having your own Anne Hathaway from Devil Wears Prada, okay? You could bark at Jet Black and tell them to buy something for you and deliver it fast. The goal is to make shopping ridiculously easy. And I'd love to tell you about the experience, except I'm still on the wait list, even though it's been a few days that I've been signed up for this thing. So Jet Black costs $50 a month.

And for that, you get a personal concierge who you can text anytime, whenever you need anything, they'll deliver it super fast with recyclable bags. They'll gift wrap things. they'll even come to your door if you want to return something so you don't even have to go to the post office. You whip out your phone, your father-in-law's coming over for their birthday, you text Jet Black and you say, hey, I'd like to get him a pair of AirPods, and can you put a bow on it? Now, when you join this thing, Jet Black wants to get to know you. So you have the option of inviting someone into your home from Jet Black. They'll check out your pantry.

They'll check out your fridge, and they'll start to understand what your shopping habits are. Jack and I would show off like, you know, our cold oatmeal game, and they're going to say, all right, are you more of an almond breeze almond milk person or more of a Caliphia almond milk person? Or do you go with the Aldi's condensed milk for 92 cents per can? Unshockingly, since this has been rolled out in New York, the vast majority of its users happen to be New York City moms. Yeah. And the goal is to expand to like all millennial families. Like you just recently had a baby. You're used to Amazon Prime. You're used to Instacart. You're digital first and you want a little extra help. Now, the company launched last year and the reason we're jumping into this now is because

big numbers were just dumped out that tell us a lot about what's actually happening with Jet Black. It just told us that two-thirds of Jet Black customers so far engage at least once per week. That is really good. And they're buying like over 10 items per week. And they spend a rent-worthy $1,500 per month on stuff by texting the little Jet Black app. This is pretty insane. Now here's the kicker we didn't tell you yet. Jet Black is Walmart. Walmart started Jet Black. Walmart. Walmart owns Jet Black. We told you about Walmart's secretive incubator before. We're talking about store number eight where they like build out companies. Yeah, they build out companies. They sign up entrepreneurs and say, hey, why don't you come in and help make Walmart a better company by building innovative and techy things. Now, fun fact, Rent the Runway co-founder Jenny Fleiss technically was a co-founder of Jet Black, but this is a company that was grown out of Walmart. Yeah, Walmart's done a great job hiding Walmart from the branding of Jet Black, but this is Walmart's concierge shopping service, and I'm sure they're planning to expand it.

So, Jack, what's the takeaway for our buddies over at JetBlack? This is Walmart's Amazon Prime Killer. Now, a Walmart exec called Jet Black, their quote-unquote first product to unwind you from Prime. Yeah, Amazon, you all know. Amazon is about prices. You get free shipping. You get the lowest prices. Now, Walmart is focusing on superior services.

So great example here. Walmart's also invested in like a self-driving van startup we found out last week. They're testing delivery to fridge services to get right inside your home. They're all about services, and they could be doing that through JetBlack. Walmart is trying to outprime prime by out-servicing it with perks like JetBlack. Jack, can you whip up the takeaways for me to start the week? Revolve won its IPO on Friday and aims to win fashion with a 100% Instagram strategy. We're talking about like a fire festful-ish kind of look, but without the sad cheese sandwiches.

And then Aldi is the spirit airlines of groceries, and it's escalating the ground war game in the U.S. for groceries. Basically, this company has like three grocery store aisles. It's got food, it's got drink, and it's got leave. It's got leave. Jet Black is Walmart's personal concierge service. And it's the key way Walmart is going to outprime Amazon Prime by like getting some fancy services up in there.

Now, time for our snack fact of the day. Jack, what we got going on TV right now? Well, Friday, the Women's World Cup started in France. And I want to point out that the 2015 Women's World War. World Cup where the USA beat Japan had 25.4 million TV viewers in the U.S. Just as some context here, that is the most viewed soccer game ever in the United States, and pretty much by far. It crushes the men's record, which was 18.7 million when the USA played Portugal in the

men's world coming. Here is your plan for Tuesday night. The women take on Thailand to kick things off. We'll be watching. Snackers, thanks for snacking today. If you haven't rated us yet on the iTunes or the podcast store, make your move. Go right down, scroll a little bit, and then just click five. And we will be back with you tomorrow.

Can't wait. 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 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.