The Best One Yet - “RZF = Resting Zoom Face” — Zoom launches hardware. Lemonade adds pet insurance. Goldman’s quiet before the storm.

Episode Date: July 16, 2020

Welcome to Big Bank earnings season, which kicked off with big words from JP Morgan’s Jamie Dimon and is ending with a Goldman Sachs stock surge. Lemonade just launched its 2nd product: Pet insurance. And behold, Zoom from Home your desk’s 2nd monitor that is the closest thing to being in the office.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 your snacks daily. It is Thursday, July 16th. Stocks, Jack. Nick, for the fourth day in a row. Uh-huh. Stocks rose. They rose up. They went up. Oh, upstate. Stocks rose. Upstate. All right. There we go. Not too shabby. So Jack and I decided to make this T.B.O.Y. The best one yet for our first story, J.P. Morgan Chase, Goldman Sachs, Citibank, and Wells Fargo. Jack, did you just whip up a buy one, get three free deal with this snack story about big bank earnings. Is that what we're looking at today? I sure did. I sure did. Our second story, Zoom is tired of just being your work husband or just being your work wife. So they're kicking things up a notch. Unveiled a second monitor for your home. That is nonstop 24-7 Zoom. It's like Cindy, I really enjoyed those two dates. We've had those first two dates. Let's come over and spend a month with my family. Cindy didn't ask for it, but Cindy's probably going to end up with one.

For our third and final story, Lemonade thinks your cute little a profit puppy is adorable, so it launched pet insurance. Snackers, we're talking about the centuries-old art of the cross-cell. Bundling, Jack, is there going to be bundling involved? Pretty sure lemonade's about to roll out like the triple play combo. We're talking bundling on bundling on bundling. But Snackers, before we get into those stories, the latest collaboration of 2020 is between PepsiCo and Diageo. Delicious. A liquor legend behind Smyranoff, Guinness, and Captain Morgan.

Classic top shelf. Now, while you were learning to, like, bake your own sourdough the last few months, these guys learned to make a plastic bottle entirely out of paper. Dunder Mifflin is not included in the story, but they're calling it the world's first plastic-free paper-based bottle. We're talking bottom to cap, cap-to-bottom, only thing in this thing is like a spruce tree. They're even launching a startup focused on this because they're so excited about bottles with just paper in the components. You buy one of these, you're going to be getting Don Julio poured out of a former oak. We're talking Sorok flowing straight out of premium cardboard.

We have talked a lot about sustainability on this podcast, including just yesterday. We covered Oatley. Oatley, delicious. $2 billion, not too shabby. I love whole milk that has a small carbon footprint. Now, there have been, though, some particularly fascinating fails when it comes to sustainability, too. We should probably mention those.

We have to talk about the paper straws. They're melting into your iced tea. They end up a mulchy, pulpy mess. Yeah. Suddenly the, like, neck falls apart. It looks like Joffrey's torso exploding in season six. It's like there's blood bursting out of the neck of this straw. It's brutal.

That's the paper straw, though. Then you've got the problem with the low flow faucets. You turn on the sink and wait for it to become hot. A month later, it's still not hot because only like a pint has flowed out of that thing. Jack, I still got shampoo in my hair from October because of these low flow things. Finally, fluorescent light bulbs, we know they use less electricity, but it also makes my bedroom feel like a surgery room. Am I lying down to go to sleep or have an appendix taken out? I have PTSD from when I had fluorescent light.

light bulbs in my bedroom. We're hoping the paper bottle becomes a lot better than everything we just described. We hope it doesn't dissolve into pulp like my homework when I was in third grade. Let's hit our three stories. You're tuned in the snacks daily. We spoke to the lawyers and we got to get something legal out the way. It's snacks about the

air 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. Right. Snacks is digestible. Business news for you.

Robberhood Financial, LLC, member Fenra slash SIPC. For our first story, unsurprisingly, the banks have managed to find some huge profits from the latest economic crisis. They're like, oh. But, yes. It's actually a profitable quiet before the real economic storm that's coming. Jack, it feels like we got to go to our old buddy, Gordon Bombay. Bay on this one. Banks fly together.

Emilio! Emilio! City Bank, Wells Fargo, and J.P. Morgan Chase, those three of the four top biggest banks of America, they all announced earnings on Monday. But of course, Goldman Sachs announced a day later what their earnings were, because Goldman Sachs just doesn't like to share the spotlight. They want their own Wall Street Journal cover article. They don't want those other banks included.

I want my own Shake Shack and my own office and our Pins Stripes. will go up and down, not down and up. Now, all four of these banks revealed similar results to investors. They had a great quarter from April to June. Turns out the multi-trillion dollar splurge by the federal government resulted in, you know, big business for the big banks. First, the big banks ranked up gigantic fees issuing bonds for corporate clients thanks to the zero percent interest rate situation that the Fed has created. Plus, the big banks ranked up huge fees thanks to the PPP loans that went out to small and medium-sized business. Add that up, and banks corporate, profits looked very good last quarter. Jack and I both worked at banks after the last financial

crisis. It didn't exactly feel like this. No. No, it didn't. It did not. It did not. But before we celebrate at France's Tavern at the tip of Manhattan, good call, Jack. Executives are very worried about the coming months. Jack, I know you wanted to say very, very and go with two varies, but I know. You rounded down. You rounded down. I actually rounded down there. We know it off and and round down on this podcast. Now, this is the last month Snackers. Our economy is going to basically have, you know, training wheels on. The executives from those big banks told investors that yesterday, the three-month delay for tax day actually ended. We all had to give taxes yesterday. And then you got to point out that on August 31st, the freeze-at-home foreclosures

and apartment evictions ends. That's going to put people in some trouble. And on August 1st, the $600 a week bonus unemployment, Congress only had that going through July 31st, so that ends August 1st. Boom, mom and dad whipped off the training wheels and are like, hey, jump into the toward a France kid, go, go, go. So J.P. Morgan Chase CEO, Jamie Diamond, he pretty much like italicize his own words yesterday to emphasize his nervousness of the coming months. Jack, I love the way you put it. He basically said, or he literally said, this is not a normal recession. The recessionary part of this you're going to see down the road. Translation, the economic pain of this recession hasn't come yet, but we're pretty sure it will in the coming months. So Jack, what's the takeaway for our

buddies over at the big American banks? Banks are low. voting up on their rainy day funds. Snackers, the big banks are required by law to be insanely responsible. They've got to be really focused. So banks basically told investors yesterday, yes, we made billions of profits last quarter, but we're putting all that money in our rainy day fund. And Snackers, the way we know they have a rainy day fund is because it's a line item described as quote unquote loan loss provisions.

That's the money they set aside to cover future losses. So four banks combined announced $30 billion in combined loan loss provision. from the last quarter. That's on top of $19 billion from the previous quarter. They see all these loans they have out to small businesses, and they just don't think they're going to get paid back. They're anticipating a lot of defaults on loans and a lot of corporate bankruptcies. So overall, with these big bank earnings, big banks had a sunny second quarter, but expect torrential downpours in Q3 and Q4. For our second story, Zoom is pulling an apple and launching hardware devices. It's the $600 substitute for actually being in your office space.

Which means Jack and I found the perfect time to just give Zoom some feedback. Get rid of that really annoying. Are you sure you want to leave the meeting button? Because we click on it. We're still waving. We're still smiling. We stop. And then we end up still being on.

Bye everybody. Blink. Blink. Blink. Jack, you're left with RZF. Resting Zoom face. My wife's been complaining about it all three-month quarantine. I have awful.

Resting Zoom face. No one has a good resting Zoom face. Now, Snackers, we're talking about Zoom that you've gotten to know intimately. and they just launched a $599 Zoom from home. Terrible name. It's like a Bloomberg terminal that's been jacked up with cameras and microphones. Jack, this thing looks like it's out of the Matrix. Like the only person who's used it is Morpheus. 27-inch screen, three wide-angle cameras built in and eight microphones.

Really? Jack, where did they stick the IMAX? Now, Zoom partnered with a random tech hardware company that Nick and I have never heard of so they could mark as this thing ASAP for the particular work-from-home moment we have right now. Morgan Freeman always plays the God character in movies. Steph Curry always shoots three-pointers. Zoom from home only does Zoom. So true. This is the rare one-trick tech pony, kind of like an iPod.

It only does Zoom. And it acts like your second monitor. You set it up on your desk, and that thing is for Zoom, and it's on Zoom all the time. That way your computer gets to not worry about Zoom and you can have like your split-crone situation on your MacBook. But Zoom doesn't care if you think it's cool or not because it's trying to win over your boss. All-in-one collaboration devices,

which is what this thing kind of feels like, they already exist. You got Facebook portal, you got Google Nest Hub, Jack, you also got Amazon Echo show really long, also all terrible names. But the pricing strategy of Zoom from home shows who Zoom is really trying to sell to. Snackers, get this, Google's,

collaboration device, it costs $90. But Zoom's price is six and a half times higher than that. Zoom hopes your office is paying for this thing for the office experience at home. We are definitely not using our lunch money on one of these Zoom from home. So, Jack, what's the takeaway for our buddies over at Zoom? Zoom from home is the closest thing to work from work, full stop. Snackers, for most of the country, work from home is just the new normal for office jobs. And not just right now for probably the next 12 months too.

While executives know it's probably unsafe to reopen your office right now, they're also bummed out that workers won't get those spontaneous in-office conversations that lead to innovation. They want you to run into the snack room at Carol. Carol just created the iPod. You complain it doesn't make phone calls. Boom, next thing you know, you talk a little bit more and you got the iPhone. That story Nick just told was based on real events, but quite dramatized. Zoom's new product, however, is the biggest tech move yet to emulate work from work from home.

This new Zoom from Home hardware is specifically a portal to your office space you used to work in. So if your whole office is one of these things, maybe it can feel like everyone's actually in the same place again. And for that, companies would definitely pay $600 per employee. For our third and final story, Lemonade's first major product launch since its IPO is its first new product ever. Pet insurance. Pet insurance, that's it. Now, Lemonade stock rose 139% on their IPO day last week. We covered how unfair that was on our July 6th podcast of Snacks Daily. We were S-U-M-O-Sumo, straight up missing out. It's the worst. The stock has barely budged in the week since, but the insurance industry goes back centuries. So we wanted to talk about it.

Yeah, Snackers. Let's bring out the history books here. Pet Insurance actually started with horses in Holland in the 1800s, which isn't exactly pet insurance, Jack and I are thinking. No, it was pretty much car insurance because you were insuring that horse from bumper to bumper. No one's like Instagramming their mayor bringing that home to hang out. Now, as a reminder, Lemonade is the insurance tech company offering lower cost renters insurance with a super easy to use app and the whole experience is pink. You got to do pink on all of this. Now, Lemonade also looks a lot at its data because it gathers data on you. And that revealed a fascinating insight in the last couple of years. When you're getting priced for renters insurance,

they ask if you have pets. And Lemonade just revealed to us that 70% of their customers do have pets but only 1% of Americans have pet insurance. That means you can draw up a beautiful Venn diagram where like the circles jack, you know, they're like, they're really far apart. Like two rings are yanking from the left and the right. You don't need a genius to decide at Lemonade we should launch pet insurance, so they just did.

Lemonade said, you know, we got this data, we still want to confirm things. Let's look at the trends out there. And the trends outside of Lemonade confirmed this opportunity. It's not just that young Americans have more pets than previous generations. they're also treating their pets like human beings.

Yeah, humanization of pets, real thing. That's why Chewy Stock is at an all-time high right now. And that's why General Mills acquired Blue Buffalo, a company that now sells of $1.7 billion in like super high-end dog food. Yeah, you're going Blue Buffalo route. You're feeding Fido like a Chilean sea bass every week. By the way, Snackers, this new lemonade pet insurance, it's only for dogs and cats.

Yes. They're not including like you're iguana. No, no, no. Scali, my old iguana, I wouldn't be involved in this. By the way, Jack and I have run out of statistics. to describe how much millennials spend on pets. I think it's now 140% of our salaries, Jack. This new product is the art of the cross-sell. Yes. They bundle you after they caught you with the anchor product. The good old-fashioned cross-sell. Get your foot in the door with that not-profitable

product and then consistently try to upsell you the customer with other more profitable products. I'm expecting an email every month from Lemonade because they know I am perfectly in the demographic that they are targeting. And that's because this pet insurance product costs $12 a month. But, Lemonade drops the price to like $10 a month if you get the home insurance from them too. It also drops to $10 if you just get renter's insurance. And I can tell you that's an incredible deal. Because Alex and I are paying $39 bucks a month for Rivers Pet Insurance. And this offers more benefits than what we have.

At this point, Jack, you're paying more for the insurance than you are for the Chilean C-Bass. Yeah, we are. I guess when you only have an app as a company like Lemonade in like no office or physical anything, you can offer pet insurance for cheaper. Another key variable here, though, is that they're willing to lose millions and millions of dollars every year. Right. Lemonade's pet insurance is priced for growth, not for profit. So, Jack, what's the takeaway for our buddies over at Lemonade? For Lemonade to achieve profitability, it needs to increase its customers' lifetime value.

Lifetime value, Snackers, insurance is reliable. It's consistent. It is monthly. It is like a Netflix subscription you're not bumming off of someone else. If you rent for life at $25 a month, that's nice for lemonade. Yeah, but $25 a month isn't that great lifetime value. Yeah, you're like a cute customer. They got to crush new, but they're not in love with you. Turns out 90% of Lemonade's users are getting insurance for the very first time in their lives. These are entry-level customers. So with Lemonade is looking at the situation, they know they must grow your lifetime value beyond just home or renter's insurance or pet insurance.

Which brings us to page 131 of their S-1 document, which they filed right before their IPO. Yes. They revealed their master long-term value plan. Snackers, this is a beautiful diagram. We will tweet this out later today. It begins with an image of single renters. You're single. It's just you. You're just doing renters insurance. No big deal. Then suddenly you're a couple and you end up getting Fido, the pet. And then you move in with that other person and then you get car insurance and then maybe you have a baby and then you get life before you know it. Lemonade is the umbrella insurance company insuring everything in your life.

Now Lemonade is not offering all these products yet, but they want to. It's like manifest destiny, but it's trying to conquer your valuables, which may include some of your land as well. Literally. Jack, can you whip up the takeaways for us over there? The big banks are notching big profits in the corona economy. They know the worst of the economic crisis is still to come. For $600, Zoom can make you feel like you're in the office. I feel like we're selling this on a street corner.

Now, a lot of execs would probably pay to get you back in the office for some of that in-office spontaneity. Deborah, that iPod should become an iPhone. Two pumps, Deborah, two pumps. Hazel nuts. For a third and final story, Lemonade started with renters insurance. Now they're moving on to pet insurance. Operation Make customers more valuable through bundling and cross-selling.

Now, time for our snack fact of the day. This one sent in by Kelly Warren in lovely state of Colorado. We don't know which town. So we're going to assume it's in soda, so pa, just outside of Denver. Serotonin is the feel good hormone. Yeah, you may feel, you know, after a run, when you're growing on the beach, like the entire time you're in Chavasana for like a good hour, you know. It's a natural chemical that helps with your mental well-being.

It helps you fight anxiety. helps you fight depression. So like based on this description, you'd think it's produced in your brain, right? Nope. You'd think it's produced in your heart, right? Is it produced in your heart? 90% of a body's serotonin is produced in the gut.

That's why gut health matters so much. I feel like gut is the dirty word for stomach, Jack. The fact that we even went there was aggressive. Nick, I come from a pro-gut family, but also, don't endorphins do the same exact thing as serotonin? These are like the cousins of endorphins. I think they all just hang out together in the gut, apparently. Before we say goodbye, happy birthday to Isaac Sermeno from Los Angeles, California.

And happy birthday to Stephen from Safety Harbor, Florida. Chris Davy from Richmond, Virginia. And last and definitely the one with the biggest back, Tucker Kramer in lovely Brattleboro, Vermont. Nick, thank you for reminding me about Tucker Kramer's birthday. Tuck, Jack's brother. Happy birthday from Brattleboro, aka the Sixthboro. It's just a little further north. Snackers, when you see your friends or chat with them or Zoom with them, ask them H.Y.

H-Y-Y-S-D. Have you had your snacks daily? We'll see you tomorrow. If you know, you know. This is Nick and Jack own shares of Amazon and I own shares of Apple, and that was Jack's gut. 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 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.