The Best One Yet - “Step on the scale! Step off the scale.” — Ford Motor’s “reopening.” MakeSpace’s anti-gig-ness. Our 7-question test of the Retail-pocalypse.

Episode Date: May 22, 2020

Walk on in to the Ford Factory! Actually, don’t — it just closed down right after reopening because a worker tested positive, making it a metaphor for our economic reopening. MakeSpace snagged $55M of VC funding to try to *not* be “the Uber for storage.” And we just finished the biggest week of retail earnings, so we whipped up a 7-question test to determine if companies are winning or losing in the corona-conomy.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 Friday, May 22nd. Nick, do you feel that? It feels like a three-day weekend company. It's a beautiful thing. What are you doing, by the way?

Absolutely nothing. Snackers at Snacks Daily, we take off federal holidays when the markets are closed, so we'll see you again on Tuesday. In the meantime, we decided to send you off with our best episode we've ever done. This is the best one yet classic T-boy. T-B-O-Y. Welcome to Ford Motor. company, the factory is reopened. Actually, it's closed. We reopened again. And we just closed it again.

Step up to the scale, Jimmy. Get off the scale, Jimmy. Ford's reopening and abrupt closures of their factories are the reality of the back-to-business in the corona economy. For our second story, latest Silicon Valley darling is storage units. MakeSpace just raised $55 million to make a four-by-10 storage unit a sexy Silicon Valley business. It's all about delivery and pickup of your extra stuff. Third and final story, Jack? We've got enough earnings reports to reach a verdict on how retail companies are doing in the corona economy. And we're open up the letter and the winner is aggressively mixed. We're looking at the thrivers, survivors, and no longer aliveers. And the seven question test that Jack and I decided determines your coronavirus fate. Before we get to those

T-boy story snackers, we got to warn you about zombie accounts. It feels like we should have done this at the beginning of the podcast, but we're going to warn you now. Yeah, I don't think those two minutes, anybody got zombie killed. It's a noun. It's zombie accounts when you're subscribed to a service, and then you forgot you were subscribed to that service. It's kind of subscription amnesia. If I was a PhD, that's what I would call it. By the way, gym memberships thrive on zombie accounts. You've been paying $1.89 a month at Equinox. You haven't gone to Equinox since 2014. You're walking the door. They're like, please don't come here anymore. We actually prefer to when you weren't here. Also, raise your hand if you have a membership to both Com and Headspace.

These subscription companies bill you monthly while your login remains lifeless. Now, the worst is when they bill you annually, because then you need to wait until next year to remember to cancel your subscription. And they always pick a random date. It's like, oh, October 8th, we're going to go with that $115 bucks. Now, shockingly, Snackers, Netflix, which benefits from zombie accounts, wants to end zombie accounts. Your soul gets crushed when you got a zombie account, but the company's balance sheet loves it.

Netflix's new initiative they announced this week, they will cancel your subscription for you. If you have not logged into your Netflix account in the whole year. We repeat Netflix's new initiative, saving you from wasting money on a Netflix subscription. Context here, Netflix only has a few hundred thousand zombie accounts existing in the wild. We're talking like a half of one percent of their 182 million strong Netflix nation. But still, Nick, I'm thinking this is a little too nice for a corporation to be treating me. They did way too much of a favor.

Feels like we got to start sending them Hallmark cards. Add them to the list of annual holiday cards. Like, this is so generous of Netflix for looking after us. Reid, we know you're listening. Are you more of a dark chocolate guy or a milk chocolate guy? Now, if you're a Netflix shareholder, how do you feel about this move to save you money, a.k.a. kill your revenues. We know what you're thinking if you're a shareholder.

Do less Netflix. Do less Netflix. Do less. We're going to hit our three stories. You're tuned in the snacks daily. We spoke to the lawyers and we got to get something. out the way. The snacks about the hair 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. Right. Snacks is digestible. Business news for you. Robohood Financial, LLC, member FINRA slash SIPC.

For our first story, Ford Motor Company has had, get this, three emergency plant closures in the past week. And it shows the essential problem of reopening while COVID-19 is still here. All right. So you got your fire alarm, your smoke alarm, your lightning alarm, and that annoying buzzer that goes off when you accidentally walk out of Jay Crew with a pair of khakis with a thing attached to it. Which has a 90% false positive rate, by the way. Everyone in the store is like, what are you doing? What are you doing? What's he doing with the khakis? Well, Snackers, we need a COVID-19 alarm because it's been going off in Detroit.

It's been going off hard. Ford, GM, Chrysler. They all reopened their plants on Monday. Let's just say it's not going well so far this week for Ford. No, it is not. On Tuesday, the plant manager in Chicago, learned two workers tested positive while he's trying to put the like carburetors on the chassis. Then the next day, the same thing happened at Ford's Dearborn Michigan plant, which is producing their profit puppies, the Ford F-150s. All we're trying to do is throw a monkey wrench on an F-150 over here, and we got to shut down the place. In two days, Ford had three COVID emergencies with infected workers in the plant. And get this, every time one of those things happened, all the workers had to go home immediately ASAP. They literally get text messages from Ford that say, if you're here, please go home

immediately. If you're not here yet, don't come back until further notice. Oh, and by the way, once you get home, you then get a call saying you've been really kind of close to this person, you're going to have to take a 14-day self-quarantine before you come back to work. And then Ford brings in the big sponges and cleans this whole thing like crazy. Full disinfection of the entire plant with like a fire hose. I was trying to convince Jack that there's such a thing as a hose pump as a hose pump. There's got to be a hose pump. It sounds like a bigger version of a fire hose. So then in all three of these instances, Ford reopened to the plants after they had deep cleaned this whole thing. And it's happened three times in just the first week of reopening. A.K.A. Get on the scale. Get off the

scale. Step off the scale, Jimmy. Now here's the thing about. the Snackers. Jack and I are looking at the situation. Happened once, happened twice, happened three times. That makes a hat trick. Doesn't feel sustainable. That's why we're asking for spiritual guidance here. What would Lear do? Preach Jack. Lear is the car seat company that published an 80-page program on how factories can safely get back to work. Comfy car seats, but let's be honest, this is what's been getting them in the news for like more than ever in the past three decades. They've been mentioned on this podcast like four times, the only four times. Full disclosure, we don't own shares of Lear. I don't even know that's possible.

Page 17 of Lear Corp's COVID-19 factory reopening Bible. If active employee is tested as positive, this triggers code COVID. When an employee test positive, Lear suggests deep cleaning and disinfection protocol. That's exactly what Ford did. Or you can shut down the plan for 72 hours and just let the germs die. Okay, so those are the only two options if someone gets infected. It's happened three times at Ford. Seems this new normal is incredibly inefficient operation.

with frequent emergency shutdowns. Ironically, Ford has been incredibly efficient about handling these inefficient situations. Henry Ford is turning over in his Model T. So, Jack, what's the takeaway for our buddies over at Ford? Reopening isn't really reopening, as long as we still have a COVID-19 epidemic, which we still do. Snackers, we're going to have to readjust our expectations

of what the word reopening means. Ford said this week, the safety of our workforce is our top priority, and we believe them. Yeah, they're making everything. Everyone wear masks, they're washing their hands, they're keeping the distances. Even the Ford Fiestas are getting like some kind of an antibody bath probably. I would love an antibody bath wash. Don't know if that's a real thing. Before you can come into the factory, they're making workers

voluntarily fill out a survey that they don't have a dry cough, and they're taking their temperature to make sure they don't have a fever. Kind of feels like Homeland Security once you get back to JFK after doing like a triple part trip. But unless you can be 100% certain that no workers and no customers have COVID-19, then more infections are bound to happen. And it's not just going to happen at Ford factories. Picture Disney World. Somebody test positive after Splash Mountain. They're shut in the whole park down. Adventureland, Magic Kingdom, Epcot, it's all getting shut. Even if you're next in line for Splash Mountain, if you get a text that says somebody got infected, you're going to leave. Here's what reopening means now. Open up new COVID infections. Code COVID, shut down, reopen.

That's how reopening looks as long as COVID-19 is still here. Until we get a Vax. scene or can really flatten the curve, which we can. Snackers, you're going to hear some barking from Samson, a giant schnauzer from Jacksonville Beach, Florida. He's a great snacker, profit puppy, and it means you're halfway through your Snacks Challenge runs. Snackers who barked together. For our second story, make space just raised $55 million to fix your over-pipification of the home. Storage units for a crazy COVID world. Oh, which brings us to what Jack and I think are the four worst words in the English language. I'm moving this out of there. Oh, really? I'm away. I'm sorry. Everything, everything's okay. Yeah, I can't help you. Oh, didn't I tell you? I twisted my ankle last week. I'm in crutches.

Left arm totally cut off. Can't use this thing forever. MakeSpace is a classic Silicon Valleyification of an old, unsexy fragmented industry. You got one in ten Americans right now paying for a storage unit somewhere. Shockingly high number. One out of ten, ten percent? They're also like six history channel shows based on like opening up storage units. Nick, is that something you add to your Tinder profile? I have a big storage unit. Or yet, I've been on the show where they opened up someone's storage unit. Now, the companies you've heard of in storage, public spaces, U-Haul, Manhattan Mini, but there's also a company called Clutter, backed by SoftBank, the giant Japanese VC. That is the big rival to make space, which is doing things a little

differently because it wants your stuff, but it doesn't want you ever visiting it. It offers on-demand pickup and drop-off of your stuff. when you need it for a monthly fee. That's right. They show up to your door to take your things. And if you get the big unit, you're looking like, you know, casual $200 a month. Or you can get a tiny unit for just your bike and skis for like $50 a month. You've got to think of this thing like an extension of your closet.

However, small catchier, you can't access to 24-7. Right. If you need to pick up something that's in storage, you ask in the app and then they show up like the next day. And the reason for that asterisk, Jack and I notice, is because of a key thing about costs and the company's business model. It delivers your bike or your skis to your high-rent neighborhood, but it's going to store them in the middle of nowhere where costs are ridiculously low. Now, Snackers, here's what Jack and I found fascinating about this story. Kind of feels like a bad time for storage companies.

That's because it kind of feels like a bad time to be moving during this crisis. Oh, and if you were going to buy a home, home sales dropped 18% in April. But shockingly, it's actually the opposite for MakeSpace. Sales are 30% higher than forecasts, and it just managed to raise a big money round. during the pandemic. And that's because Jack and our calling this guy, a secondary winner of the home hype, Nesta Palusa, Pimp My Crib, Megatrend. Newton's fourth law. When something goes in, something must go out. Our favorite law comes after the third, before the fifth. I read that in a Dan Brown book. Now, if you bought a new standing desk to set up a home podcast studio like Nick

and I did, you got to move your love seat somewhere else into storage. If your lease ends June 1st, but New York City is closed, what's you going to do, Jack? Who you're going to? going to call? Throw your one-bedroom East Village apartment into storage, save some cash, live with your parents, and then rent again when the crisis is over. And then here's been the shocker for MakeSpace in the coronavirus economy. Businesses are starting to use its product too. Think about it. Victoria's Secret is closing 250 stores right now. You don't want to throw away all that inventory of push-up bras. No, you got to put the push-up braw somewhere, so you call up MakeSpace. Who you're going to call? MakeSpace. And that brings us to the final surprise about MakeSpace. It was

given a cloak of essentiality during the coronavirus. It didn't have to close throughout the whole crisis. So Jack, what's the takeaway for our buddies over at MakeSpace? We're seeing the rise of non-Gig startups. You're looking at this thing, MakeSpace, like, okay, it's based in Silicon Valley, it's got an app,

got to be gig-style Uber for storage. Nope, it is not independent contractors who are snagging and dropping off your stuff. They're all full-time workers. A gig model, like Uber's, can scale fast and minimize costs because they're not paying full-timers every But it's hard to enforce safety.

Politicians tend to hate it. True. And independent contractors actually doing the work, they're often like discrenelled and not happy. And that's why MakeSpace just got a $55 million anti-gig check. Who you're going to call? For our third and final story, we just finished a big week of retail earnings. Some are thriving.

Some are just surviving. Yeah. And some are no longer alive. Sounds like a 60s song. Earning season has themes most of the weeks of earning season. You got car companies reporting earnings, then you got banks another week, then cannabis this week, and then tech that week. The theme for this past week of earnings reports, do you have aisles and mince waiting for you at the register tempting you for those Kit Katz? If you do, ding, ding, ding, congratulations. You just won.

You get to report earnings this week as a big box retailer store. So our question as we read these retail earnings reports, how are brick and mortars companies handling the corona economy? Answer, not nearly as black and white as situations you thought in this corona economy. There is a wide spectrum of various shades of gray. You're going to have to readjust what you thought about the retail apocalypse. So department stores and clothing retailers, they were hit the hardest. They're barely surviving. They're barely surviving.

Victoria's Secret is going to close 250 North American stores and sales plummeted 37%. Macy's sales dropped 45%. And T.J. Max sales dropped 52%. And they're lucky because their buddies are not. no longer surviving. Pier 1, Neiman Marcus, Jay Crewe, and J.C. Penny, they've all declared bankruptcy. All non-essential, all closed most of March and April. Which brings us to the other side of this spectrum, thriving. You have Walmart, Lowe's, Costco, and Amazon. They're loving the lack of competition from the non-essentials being closed. We've talked about those guys already, so let's get

to the middle, where you get some surprising exceptions. This is the juicy stuff. This was fascinating. Best Buy, they're in that, like, gray middle area. Best Buy sales fell only 6% last quarter, and they still turned to profit despite having all of their stores shut down. A bigger TV is essential in the Corona economy, and Best Buy's online curbside game is strong to quite strong. Any 14-day quarantine should come included with surround sound speakers. And while you're staring at that screen, you may as well be in some Lulu Lemon whose stores were shut too. And despite their stores being shut, they got lucky that people are looking for work leisure wear pajamas that they can also use on Zoom. And it turns out Lulu's

sales were already 30% online before this whole quarantine thing even happened. So it was kind of lucky that they were ready for this moment. So Jack, what's the takeaway from this broad spectrum of retail in the coronavirus? Retail fortunes right now come down to six questions. Snackers, Jack and I whipped up a six question checklist here that every retailer was affected has answered differently. If you answered yes to one of these next six questions, you're a survivor. If you didn't, you're no longer alive. You're a no longer alive. Question one, do you carry groceries? Question two, do you sell TVs or lumber for home improvement?

Question three, have you invested in curbside pickup? Question four, are you fluent in e-commerce and or delivery? Question five, are you wearing the cloak of essentiality? Question six, this is a zinger. Is your company called Zoom? Jack and I had a blast with that question six. And then the magical seventh question, did you just get lucky? Yeah, always got to have a bonus question.

Otherwise, it's not really a good fun question thing. If you answered yes to one of those, you're surviving. If you answered no, you'd no longer alive. And if you answered yes to all of them, you're probably Amazon or Walmart. Jack, can you whip up the takeaways for us before the long weekend? Ford Motor Company had three code COVIDs in just its first three days of reopening. Reopening needs an asterisk as long as we still have an epidemic. MakeSpace is like Uber, but for your extra stuff.

Except it's not like Uber when MakeSpace makes space on its payroll for full-time non-gig workers. Third and final story, retail companies' fortunes come down to some important questions. Groceries, essentiality, delivery, e-commerce, and luck. We got six questions. It's our questionnaire. We should probably just use that questionnaire. Nick, before we hit the snack fact of the day, can I warm you up? Please.

Bam, bomb, bomb, bomb, bomb, bomb, bomb. That's it. I'm done. Okay. That's the signal of a snack fact today sending from a UMIS grad, Kylie Hoff. The big house is North America's largest stadium at the University of Michigan in Ann Arbor, Michigan. Honestly, what kind of stuff is this thing eating? because the stadium grows like every year.

In 1927, it had 72,000 seats, which when adjusted for inflation is even bigger today. Today, it's like 107,601 seats. Now, the record was a 2013 matchup against Notre Dame when they squeezed 115,000 butts into that stadium. Are you seen 814? I'm seeing A-15. Are you aging? Nick actually visited me while I was at grad school.

We watched Michigan beat Indiana. in the snow, and Nick still has the frostbite to show for it. Pro tip, don't go to Detroit in November and wear sandals. By the way, since 1975, they have a streak of every game with 100,000 fans or more. We're talking hockey stick growth over here. And by the way, happy birthday to Kylie's dad, Matt, who is actually a bigger snacker than Kylie is. 54 years old today for Matt. We're talking the family that snacks together.

Well, the family at snacks goes a great family. Snackers, have a T-boy of a Memorial Day weekend and ask your buddies if you see them, H-Y-H-Y-Y-S-D. Yelled from six feet away. Have you had your snacks daily? Reminder, we'll be back on Tuesday. I can't wait. If you know, you know. This is Nick and both Jack and I own shares of Lulu Lemon and Jack owned shares of Amazon. 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.