The Best One Yet - “The greatest deal that never happened” — Pinterest’s rejection. Universal’s secret profit puppy. Goldman’s $1K club.

Episode Date: February 17, 2021

It’s the greatest deal of the year… that never happened: Apparently Microsoft tried (and failed) to acquire Pinterest (so we’ve got a plan for them). Goldman Sachs drops its minimum to become a client from $10M to $1K because Zillennials are its 10-year goal. And the third and final record label is about to go public.$GS $PINS $MSFT $WMGGot a SnackFact? Tweet it @RobinhoodSnacks @JackKramer @NickOfNewYorkSend us your Black History Month SnackFact here:https://docs.google.com/forms/d/1Hu00HOlQ-qb6S7Jx4CgnGOfzrA67_j_SLFqxvFKinEQ/editWant a shoutout on the pod? Fill out this form:https://forms.gle/KhUAo31xmkSdeynD9Learn 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 Wednesday, February 17th. Nick, I got a good feeling. This is a T-boy. Jack, I had a nightmare last night. Can I talk to you about this?

Was it not the best one yet? It was the DoorDash Robot Ghost Kitchen. Oh, sir. That thing, oh, the Ghost Kitchen. Yeah, the ghost kitchen. No, this is the best one. Yeah, first story, what do we got? According to people familiar with the matter,

Microsoft approached Pinterest a couple months ago about acquiring it. Yeah, we're talking the greatest deal that never happened. Since it didn't happen, we have a real. rebound acquisition to propose to Microsoft. That's the first story, Jack, what's the second story? Later this year, all three major record labels will have a publicly traded stock. Jack, I got four words for you. Fleetwood, Mac, cranberry, juice.

For our third and final story, do you want to join Club Goldman? It used to cost $10 million to get in. Now it costs $1,000. We thought we should jump in snack style. But snackers, if you're dealing with aggressive winter weather, we feel you. I'm chilly too. Yeah, apparently the Night King just bought like a condo in all. Austin, Jack. Temperatures plummeted in the south. Snow fell and gas prices surged everywhere.

As a result. Refinaries in the Gulf, they had a snow day. Oil prices already jumped. Jack, they're already up. It's not great for the economy if Texans are making igloos and not making oil. Yeah, not the best equation. So Jack and I looked at this a little further. We whipped up a little trivia to keep you company in the cold. Jack, snowy's place in America ever. Okay, I'm glad you said ever because Mount Baker, Washington in the winter of 1998, 1999. Great years. They got 1140 inches of snow. Can we do a little conversion on that, check? Yeah, that's like getting a foot of snow. Yeah. Not once. Okay. Not twice. No. 95 times in one winter. Jack, this feels kind of meta. I've got a whip up question number two. What is the snowiest state in the United States on average per day?

This is a classic trivia for me because the answer is where I am right now, the state of Vermont. Jack usually leads with this in conversations when we're in business meeting. It's an interesting conversation starter. Every square inch of the Green Mountain State Snackers, on average, gets 89 inches of snow per winter. Okay, so that's the snowy state. We already had the snowy place. Jack, can we introduce the least snowy state in the United States, please? Shocker, Hawaii.

Yeah. On average, gets 0.00 inches of snow per year. Those volcanoes are tall, but there's that lava. There's the lava. You can't forget about the lava. They're pretty warm. volcanoes. It's also the only state in the union that averages 0.00 inches of snow per year. Which leaves us with one bizarre final question. Florida is state number 49 when it comes to

snowfall. They get 0.01 inches per year. That's not a question. Here's a question. Where in the state of Florida? Where in the Sunside state? Do they get that 0.01 inches of snow per year? Space Mounted, if you know, you know. We hope all the snackers in the state of Texas stay warm and safe during this tough moment and that the power turns on soon. You're tuned in the snacks daily. We spoke to the lawyers.

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. 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. For our first story, this one's wild, the greatest deal of 2021 didn't happen. Just didn't happen. Microsoft tried to buy Pinterest but couldn't get the deal done. Now, this is wild. It's according to PFWTMs over at the Financial Times, Microsoft offered $51 billion to acquire Pinterest.

And according to PFWTMs at the Financial Times, are no longer happening between the two. Yeah, straight up promposal style rejection. Pinterest stock has quadrupled in the last year, and unlike Mark Zuckerberg, Pinterest manages to completely avoid social media controversy. Microsoft wanted to acquire Pinterest because they're doing rugs, not riots.

Yeah, the only conspiracy theory you're going to find on Pinterest, is the sconce polished or is this an unpolished brass? I mean, who knows? Somebody told me this bronze is really brass. Someone told me it was polished. But Snackers, Pinterest is worth $55 billion right now based on its stock price. And for Microsoft to acquire it, it would have had to pay even more than that. So more than $55 billion, that's pretty expensive.

This would have been the biggest deal in Microsoft history splurging $50 billion or more on Pinterest. But it didn't happen. Now, step back. Last year, Microsoft also tried to make a big acquisition of a social media company. TikTok. It seems like a trend, but that didn't happen either. Right. So Sotchan Nadella, the CEO of Microsoft, he's old for two recently on acquisitions, but he is capable of acquiring a company. That's because in 2016, Satchanadella acquired LinkedIn

from Microsoft for $26 billion, which was their biggest deal they've ever done. So we're looking at this story. Satch Nadella wants to make a splurge. Yes. He can acquire a company. Okay. He's got over 50 billion to spend. I see where you're going. So who is he going to target next? Ifso facto, we'll save that for our takeaway. But in the meantime, let's try to figure out the real reason why Microsoft would even want TikTok or Pinterest in the first place. We think Microsoft wanted a creative way to get their foot in the e-commerce market. We think it all comes down to e-commerce because both social media platforms that Microsoft wanted to buy, they're focusing more and more on really how to sell you that salmon slam and sweater. That's what they want to do. Snackers, the movement of spending from physical stores to online, increasingly in apps, is relentless. Yeah, can you share the e-commerce data that you just dug up as well? According to the Fed, Nick, e-commerce as a percentage of total spending doubled since 2016, from 8% in 2016 to 17% last year. So you got Amazon, Apple, Facebook, Google, all of them are like

clearly enjoying part of this e-commerce trend. And as Americans spend one of every $5 online, Microsoft isn't really taking part in those gains. But since neither TikTok nor Pinterest are going to end up in Microsoft's hands, we're thinking, Microsoft, just cut to the chase, just buy an e-commerce company. So, Jack, what's our takeaway and our idea for our buddies over at Microsoft? If Microsoft does indeed have e-commerce fomo, it should acquire Etsy. Okay, let's look at Microsoft's rivalry with Amazon because it's growing, and it's increasingly focused on not just the cloud, but potentially e-commerce.

Etsy is the anti-Amazon with a wide-ranging marketplace for craft goods and is living its best life. Now, we know what you're thinking. It was the top performing stock in the S&P 500 last year, so that's impressive, but that means it's also like really expensive to buy. Relatively speaking, Nick, Etsy is under $30 billion still. So it's half of what Pinterest would have cost to acquire and about the same of what LinkedIn did cost to acquire. So let's look at it from Etsy's perspective.

Etsy would be getting Microsoft's cloud services all for free, which is really expensive, and customers wouldn't even notice the difference when you're buying that crafty candelabra. Microsoft would see what people are buying online. They would get consumer trends. They would understand payments and products and all of e-commerce. Plus, then Microsoft could partner up with social media apps

and add in plug-in Etsy buy buttons to like all the social media posts. Microsoft has made a couple of moves recently that seemed to be preparing for a bigger role in e-commerce. The huge deal that didn't happen with Microsoft and Pinterest, that tells us everything we need to know about the deal that should happen. For our second story, Warner Music Group's competitor Universal Music is going public. And now both are trying to be the digital soundtrack for the app economy. Okay, that's the key, but we've got a third player here. Jack, Vendie. We've got to talk about Vendie. Seems like a typo of the Italian composer, you know, who adored spring, summer, fall, winter, the whole thing.

It's actually the French corporation that owns one of the three major record labels. Jack, I think actually if you walk into a Starbucks in order of V Vendie, they give you a 40-ounce latte. Now the news here, the Vendie is letting Universal Music leave their corporate nest and letting it IPO later this year. That's a big deal because Jack and I notice it'll mean that all three major record labels are going to have publicly available stocks. Because Warner Music Group IPOed last year and Sony music has been public with Sony for quite some many years. Now, this is a fascinating industry. So to understand how Universal makes money before it goes public, we're going to look at its competitor Warner Music. Yes, in an earnings call in February 1st, the CEO of Warner Music outlined their four buckets of revenue. Four buckets was their words.

This is how the music industry works. First way they make money, it's the physical albums, the digital downloads, the tours, the concerts, the straightforward, the classics, I would say, Jack. This is your dad's record label business. Then second, the second way they make money, traditional streaming, 10 bucks a month, you pay goes to Apple or Spotify. These record labels are getting 52% of that. The third and the fourth buckets for record labels, they're the most interesting. Social media and gaming apps is how record labels are making money these days. Let that sink in. That's how they're making money. Now let's go back in time three months, summer 2020, dude riding a skateboard to Fleetwood Mac and chugging a cranberry juice. The corporate winners of that meme summer were Ocean Spray and Fleetwood Mac.

That's right. Now Universal Music, the company that's going to be spun off and publicly traded soon, they happen to rep Fleetwood Mac. And Universal Music happened to sign a deal with TikTok so that TikTokers can use any song from Universal Music's library to enhance the posts on TikTok. At a price, because TikTok pays Universal each and every time Fleetwood Macs wonderfully listen to tunes

are listened to by a TikToker. And all three of the major labels have similar deals with the social media app so you can have music in your posts. The most interesting way, record companies, make money, social media, and gaming. So Jack, what's the takeaway for our buddies over in the record industry? Music got burned by Napster. It's not getting burned by the app revolution. All right, Snackers, here's like the dirty reality of the industry. Even if you don't pay for the music, the apps you're using, they probably are paying for the music. When you're hitting the

1970s theme Peloton ride, you need some dancing queen in the background. You just do. Well, Jack, Peloton pays the record labels for Abba. You don't. When your cousin builds a video game using Roblox, he may choose the Jonas Brothers for the background music of the first level. Jack Roblox pays the record labels for Kevin Nick and Joe's sultry voices. You don't. When you turn your epic personal ski video where you jumped off that cliff one time and caught a couple feet of air, you may choose Led Zeppelin for the background of that awesome video. Jack sounds like someone's rounding up a little bit, but Instagram pays the record labels for Jimmy Page's guitar.

You don't. Any time music is playing on an app that you're using, a record label Angel gets its wings. Yeah, and being the digital soundtrack for the entire app economy, that is music's secret profit puppy. For our third and final story, Goldman Sachs is welcoming everyone into its wealth management club. Our big question, should it pull a growth hack or a huge marketing splurge? Two options, but this story, this journey really begins 152 years ago when Goldman Sachs began offering like one-on-one advice to wealthy clients. We'll help your third house get a second boat in exchange for 1% of your money per year.

Yeah, Mr. Kramer, how is the vineyard? Is it Pino or Cabernet this year? What are you doing? Oh, Nick, we've had a fantastic harvest. Just perfect weather. I have to send some to my wife. Now, step one of having that relationship with Goldman Sachs is classically, you used to have to need $10 million in investable assets. That was the minimum. It was a wealthy only club. But after the 08 financial crisis, Goldman Sachs started. a decade-long pivot to lower income, lower wealth millennials. Yeah, this was a fascinating change.

They started by creating a separate related brand called Marcus, the first name of one of their founders, in 2016, and the focus was like on retail everyday investors, people like you and us. Now, Goldman Sachs wants to offer that core one-on-one wealthy wealth management client service, but under the Marcus brand. So they've got a brand new product that Jack and I immediately jumped into.

It's called Marcus Invest. And the key, after making this wealth management club digital and putting it in an app, they dropped the investable minimum 99.99%. Yeah, you only need $1,000 to join. That's right. You used to need $10 million to be part of the Goldman Club. Now you just need $1,000. But there's one issue.

One-on-one human advice about how to make your wealth bigger, not scalable to the masses. No, it's not. So Jack and I noticed Goldman came up with the solution. They call it automate your investing. with the Marcus Invest product. The key word in that slogan is automate. Automate, which means you don't choose what you're investing in.

Goldman Sachs does for you. Yeah, they basically simplify this. So you tell Goldman about your goals and your investing style, and then they just, boom, they invest the funds for you. Instead of thousands of things you can invest in, there are way fewer options. It's more like the menu at that restaurant in My Cousin Vinnie. I know you're thinking.

It's like which investment fund do you want? Do you want the breakfast, the lunch, or the dinner? There isn't a brunch option. but there's a breakfast of lunch and a dinner. That's it. It minimizes your options. This is called robo-advising. Betterman and Wealthfront are two fintech pioneers in the space. So, Jack, what's the takeaway for our buddies?

Down at 200 West over at Goldman. Goldman needs a growth hack or a ton of marketing dollars. Okay, so Snackers, the Marcus brand, this millennial-focused brand that Goldman is whipped up. It's only five years old. It is the entry-level bracelet before you put on the splashy Goldman Diamond Ring. Marcus started with basic banking services. is now it's moving into investing. Yeah, it's also quietly like providing the financial pipes for the Apple credit card.

That's these guys. But a mass market product, Nick, like Marcus, needs mass adoption to be successful. Which means you've got two options here. You can choose the cheap growth hack to grow or the expensive marketing splurge. Squares Cash app chose the growth hack with their popular cash tags. Venmo did the same kind of growth hack with their brunch emoji. But Goldman has a resource that those fintech startups didn't. Goldman has a whole lot of cash from a whole bunch of record profit quarters.

It makes billions of dollars of profit. So to make Marcus mass market, which is a good one. Goldman can splurge on marketing. Right now, Marcus is banking on a whole nationwide ad campaign, and that is expensive. Unless it finds a growth hack, it must continue spending huge marketing dollars on big TV ads. and you'll whip up the takeaways for us over there. Microsoft reportedly tried to acquire Pinterest and definitely tried to acquire TikTok. Yeah, very openly. Both failed. So to enter e-commerce, Microsoft should buy Etsy. For our second story, the record labels got burned in the

2000s by Napster and the internet. Yeah, not getting burned by apps using their music, though. The profit puppies. For our third and final story, Goldman Sachs doesn't just want clients who own vineyards. No, it doesn't. So it's trying to make marketing a verb, but they're going to need either a growth hack or a huge marketing splurge. Now time for our snack fact of the day. This one tweeted in by a legendary snacker, Claire Coder from lovely Columbus, Ohio. Hi, I'm Claire, founder of Aunt Flo. My snack fact that impacts 50% of people,

Mary Kenner invented an adjustable sanitary belt, which meant people with periods wouldn't need to use rags anymore. In 1956, she was able to save enough money to get her first patent. However, the company that first showed interest in her invention rejected it after learning she was African-American. Kenner never made any money off of the sanitary belt because her patent expired and became a public domain, allowing it to be manufactured freely.

Now, Snackers, in an alternate reality, without racial discrimination, we could have the Mary Kenner Corporation today. Yeah, probably a Fortune 500 company leading in sanitary and feminine products. Snackers, we got a Google form in the notes of this episode if you want to submit your audio snack fact for Black History Month. Send it our way.

Jack and I will see. See you tomorrow. If you know, you know. And before we go, huge congrats to Snackers Morgan and Hayden just got engaged in Houston, Texas. Congrats to Baker, who just got promoted in Oak Ridge, Oregon. And Alex Friedenberg just became a real estate agent down in Mountainside, New Jersey. Ricardo Cito agrees with us, we should have four-day work weeks forever in New York City. Thank you, Ricardo. Dan Murphy, happy birthday in State College, Pennsylvania.

And Paige in Oakland, California. And happy birthday, Sophia Hakeem Zidae in Jersey City. This is Jack. I own stock of Amazon and Pelton, Nick on stock of Apple and Square, and we both on stock of Spotify. 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.