The Best One Yet - The Spirit Airline-ification of cars — Pandora’s talking ads — and the Phase I trade deal

Episode Date: December 16, 2019

V-commerce — aka “voice commerce” has new momentum after online radio Pandora tests ads that let you talk back. Car prices are starting to mimic airplane ones, forcing you to pay extra if you want anything. And stocks hit record highs last week on word the US and China actually/finally reached an agreement over phase 1 of the trade deal.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. This is snacks daily. Welcome back. It is Monday. This feels like the best one. December 16th. You kind of preempted this one, but I think you're right.

Well, stocks finished on a high last week because the trade war hit a key milestone. Critical. It's not over. No, no, no, no. The trade war is not over. This is the appetizer to the trade deal meal. But appetizers are kind of delicious. You can satisfy.

You can be enjoyed. Second story, Pandora, which is part of Sirius X-F, is testing out ads that come up mid-playlist that you can talk back to. Do you suffer from air loss? How did you know? I did know. Let's keep talking. Wow, this is weird. I'm talking to an ad. It's a freaky ad situation. And this is the next step to make V-commerce, voice commerce, happen. Third and final story. Car companies are testing out a new strategy. The spirit airline ification of cars. They're going to be charging you for the vehicle, like airlines charge you for the seat. I think you have to pay $5 for the key to the car. Are you kidding? The peanuts aren't free

anymore. Now, Snackers, before we jump into all that, we got a little game. to play with you over here. The game is name that price. It's pretty straightforward, actually. Bob Barker would be impressed by this game. It's impressed, but I like your articulation there. Now, here's the question. Here we go. How much is a stock? A single share of Apple. I mean, it's like, it's like almost $300. That is true. Multiple dinners out. It's $275, which is borderline of paycheck. Are you doing a lot of dates? Or are you getting a share of Apple stock? So Apple stock is wildly expensive, and it's basically like, you just want a can of Apple. Yeah. But they only sell Apple by. the keg, which is a lot of money.

You're staring at this cake. You're like, can I just have the can? Like, nope, only comes in the cage. Is there a spout? If I bring my own cup, can you just pour me some apple? That's the concept behind fractional shares. Yes, this is a new feature of Robin Hood, which, full disclosure, is our parent company and owns Robin Hood snacks.

Exactly. Now, the way fractional shares work is instead of buying that single share of Apple, which is $275, you could just buy a portion of that share. You can buy $1.00 of Apple. It's like a share of a share. If Apple goes up 20%, your $1 thing will go up 20%. If Apple goes down 20%, your $1 thing will go down 20%.

Now, that fractional share concept, you can now do that with the Robin Hood stock trading app. And Snackers, Jack and I are going to give away a stock to our Snackers who sign up for the app. You guys know Robin Hood. It's the commission-free trading app that created this awesome rap jingle that's about to happen. But for Snacks podcast listeners, you get a free stock if you set up an account. And this is one stock that's selected from like a whole pool of stock. So you could get like Series XM. You could get Lyft.

You could get Microsoft. Sign up at Snackspodcast. com. And once your account is set up, you'll get a free stock waiting for you to claim. Snackers, that's Snackspodcast. Dot robin hood.com to get your free stock. I just want a can.

I don't want a can. Or a fraction of the stock. 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 hair ain't food. It's air candy. They don't reflect the views of the Robin Hood 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.

Robberhood Financial, LLC, member FINRA slash SIPC. For our first story, Jackie, that's like the saratcha over there. We just got through the appetizer of the U.S.-China trade deal. Yes, but we have a whole entree, a whole dessert, the whole rest of the meal is still to go. I were wondering on this thing, what happened to the waiter? Now, if someone tells you this weekend or this coming week that the U.S.-China trade war is over, you need to grab their face and say, no, it is not over. You shake them and you tell them everything we're about to talk about.

Listen to snacks daily. We don't cover the trade deal that often because it's taken like two years to happen. Yeah, there are drip, drip, drip updates every day about the trade war, but we only give you the mega milestones. This is definitely a milestone, but the trade war is not over. Somebody should definitely check the kitchen or the freezer because the waiter might be dead. Here is what went down on Friday last week. There was a big trade war development. It caused stocks to hit record highs.

Okay, so the U.S. already had tariffs, which are basically a tax on billions of dollars of Chinese made goods. Yeah, stuff that's made in China that Americans like to buy for cheap. And get this, on Sunday, a whole new round of tariffs was about to hit Chinese goods. $156 billion. Right. Sunday, aka yesterday, there were plans for iPhones. Nike sneakers, Instapots, other stuff that consumers love putting on their Christmas wish list. It was all going to get tariffed.

And it was going to be like the most obvious tariff situation for consumers. We're not talking about like tariffs on steel and machinery and bricks. We're talking smartphones and toys, things that are actually in the stock. Right. Now these tariffs, which were scheduled to come into place yesterday, they would have made our Christmas shopping more expensive. They would have shrank the profits of U.S. companies. And they would have pushed those companies to think about sourcing from other countries besides China. Instead, we had a big development. The biggest trade deal development in a while

happened that totally changed this Sunday debacle. It's called the Phase 1 trade deal, and both China and the United States confirmed on Friday that it exists. There were a lot of words used to describe this. Here's what you really need to focus on. The U.S. canceled all those new tariffs on stuff you actually used that were supposed to hit on Sunday night. Right. So take a breath. Your Nike's and your iPhones. Apple dodged another bullet, by the way. Aggressive. Also, the U.S. is cutting another batch of tariffs that we have on Chinese goods in half from 15% to 7.5%. And then another point that was made by this trade deal discussion idea agreement kind of a thing was just that China is going to buy billions of dollars of U.S. agriculture.

Right. So U.S. is canceling some tariffs and China is going to buy a lot of soybeans. From farms. Yeah. Yeah, a lot of soybeans. But there were very few commitments on that Chinese soybean purchase thing. China's basically said that they're going to announce the details in the future. Right. So one key theme of this phase one trade deal. The things the United States promised to do were very specific and they start immediately. China's promises, on the other hand, were vague and will be announced in the future, we hope. And by the way, the U.S. still has tariffs on about half of what we import from China, which is $250 billion of stuff every year. So, Jack, what's the takeaway for our buddies who are negotiating this trade deal meal? This was just

the appetizer to the trade deal meal. We still got entrees and desserts. to go. When the waiter might be dead. The waiter might be dead. So we're calling it the phase one trade deal because it's the first phase. Right. The headline of this trade deal could have very easily just been, Sunday's new tariffs have been canceled. That could have been it. Right. The two-sidedness of this deal is kind of up for question. But phase two is coming. And phase two is like meatier, carbier, hardier.

We still got to get to phase two, the entree. Right. The biggest trade complaints about China is their requirement that U.S. companies share all of their business secrets in order to operate in China. Also, China subsidize it. It gives money to its own businesses in the country. It gives them an unfair advantage, arguably. And then it turns around and bans a lot of American companies from operating in China.

Those are the substantive issues that still haven't been touched. And that's in phase two, the entree. We just did the appetizer. For our second story, Pandora just started testing out ads that talk to you. Wow. This is the OG online radio company, Pandora. Pandora. I feel bad covering Pandora because we had some great times together.

It's like your friend from freshman year, you haven't seen them since orientation. And it's reunion. I'm like, no, I haven't talked to like six years. So what are you doing these days? I think my password for Pandora is the password I used freshman year. It probably is. Way back. But Pandora was acquired by Sirius XM satellite radio for a cool $3.5 billion a year ago.

And it just rebranded Pandora. It's all lowercase. So you know it's cool. Yeah. Also, major ad campaign in Times Square, New York City recently. It is so colorful. I'll tell you, the branding looks good. It looks like a candy store.

It's like they came back from Eat, Pray, Love. They look gorgeous. It's like they showed up the reunion. You're like, what have you been eating Pandora? Honestly, check out like Pandora.com. It's a pretty flashy. It looks like you would want your room painted the way it's painted. All right, so Pandora is testing ads that you get to respond to.

So you can have a conversation with the dude who's like, dude, you're getting Adele. Remember the dude getting out? You're like, really? Snackers, do you remember the dude? You're getting Adele guy? Dude, you get an Adele. Okay, can I get one now? Yes, you can get one now.

Yeah, so you can actually talk to the advertiser. It's kind of like choose your own adventure a little bit. So Doritos, Wendy's, Unilever, Ashley Home Stores, they've all signed on to test out this new feature. And so here's how it goes down. The beginning of the ad is going to prompt you with a yes or no question. Right, so let's say your Doritos. Doritos is going to act like maybe a Doritos sommelier right now. It's going to be like, so, did I just hear your stomach growl, Jack?

Sure did. does. Jack, are you in a sweet or savory mood? If you're asking me if I want Cool Ranch or nach cheese, it's definitely Notcho Cheese. That was a long answer, Jack, but we were going to suggest the Cool Ranch. My question, what if you say no, you didn't hear my stomach growl? Well, they're like, you're using Pandora Free, so you're going to listen to this ad no matter while. Broken, broken, broken. I'd love to see the Q-tips ad, though. Oh, my God, Q-Tips owned by Unilever, so they could theoretically be doing ads with this method. They're like, can I, can you me? And we're like, no, they're like, you need Q tips. There you go. Go to the store right now.

Now, they're not going to call you by name. It's not going to that specific. That was more for dramatic effect. No, but this type of ad that you can respond to, it's actually good for advertisers and arguably good for listeners of Pandora who have to listen to ads. Right, because advertisers want data on how the ad is doing. And your responses saying, like, yes, that means they know you're actually maybe interested. Yeah. So it's like, if 20% say yes to the question of like, do you want a Wendy's double with cheese? Wendy's is like, nice.

20% is actually pretty good, and we must be targeting the right people. And if you got your AirPods on, you got your phone in your pocket, an ad comes on and it's talking to you, you don't want to, like, now you can actually just respond by speaking to the phone you're listening to. Well, remember those Hulu ads? They're like, would you like to see Scott's Miracle Grow applied to bushes or to your lawn? And you click. You have to click. Right, you click.

Well, now you could do that here, and like, you don't have to get your phone out of your pocket. So, Jack, what's the takeaway for our buddies who we can hear all the way over at Pandora? V-commerce. has not caught on in society, but this could help. The commerce, as in voice commerce, as in speaking, e-commerce. Shopping through a voice assistant. Snackers, turns out one quarter of Americans now own a smart speaker, but hardly any use it to shop for any.

We're talking Alexa, Siri, Google Home. The last data we have shows that only 2% of Alexa owners have ever made even like a single purchase. That data was from one year ago, but that is, like, nobody's buying things on Alexa. Alexa, I'm good with the weather and we can change songs. That's it. I don't really need more out of this relationship. I have never bought something with my Alexa, but the first time I do, it might be when I see that we just grabbed the last roll of toilet paper. I might say, Alexa, I'm going to need one day shipping on this thing.

Then you're yelling. Now, it's not a trust issue that's caused this problem. It's really a behavioral issue. Right. We're just not used to, you know, V-commerce makes sense. You don't need to even write down a shopping list. But as humans, we just haven't been used to doing it. And these Pandora ads are a key step for V-commerce becoming a thing.

For our third and final story, carmakers have an unfortunate plan for cars. Do what the airlines did. That means strip the car down to the bare bones and charge fees for everything. I'm not looking forward to this thing. It's actually a catch-22 situation we got going on right now. Americans don't want small cars. They want trucks and SUVs. But car companies still have to sell small cars.

They have to smell... They have to sell small cars. They can smell them, too. It's really not a big deal. Because regulations require that the average fuel efficiency for like Ford, it has to be better than those SUVs yourself. All right. So Snackers. Here's what they did.

The car companies got out together. And they're like, all right, all right, right. Here's the plan. We've got to lower the price for the cars by making nothing standard. So you want a cup holder in your car? Sure. $100. Okay.

Bluetooth? $500. Cruise control? A thousand. Jesus. So this is all based on a quote from $4. Ford's CEO. So Nick, you mentioned earlier. They're all getting together. I remember it well. Not so sure about that. Yeah, it wasn't like a collusion thing. But we're reading into the Ford CEO's

comment. He said, we're looking at things that customers don't use at all, and he implied that they might get rid of them standard. Now, what they're doing here is reductive design. They're designing cars to include fewer things standard. If this sounds familiar, it's because you're used to it at 35,000 feet. Airline tickets used to include peanuts. Okay. Premium beverages. Remember them well? Checked bags. Love those. Room overhead to put those bags if you don't want to check. You could choose where we actually wanted to sit. Seed selection.

Smiles from flight attendants. Now you have to pay for almost all of those things extra. If car companies want to follow that same route, they could end up cutting the cost of a car by our estimates of like $2,000. Well, let's say that they cut the cost of the car by $2,000 by not including some bells and whistling. Then they could reduce the price of the car by $1,000 and take the other $1,000 of savings and make a little more profit. Well, Tesla, it turns out, is doing this already. For example, with its Model 3 car, which is their new cheaper model.

Okay, the Model 3 is a white car. Right. If you want it blue, that's an extra $1,000. Good luck. If you want it red, show off. That's an extra $2,000. If you snaggers see someone in a red Tesla, they're doing pretty well. This is a true story.

A red Tesla Model 3 cost an extra $2,000. So, Jack, what's the takeaway for our buddies who are in the car industry annoyingly mimicking the airline industry? The spirit airlinification of cars could actually be good for society. Most American householders don't have a rainy day fund. Money is tight. Right. So instead of requiring them to buy the bells and whistles that get packed into your Ford Taurus,

Ford could strip those things out and save customers potentially money. So if they don't want to pay for something, they shouldn't have to pay for that random feature that they're never going to use because it's a heated seat in the back for the second person in the middle. Right. So the result of the spirit airlinification, maybe you could save $1,000 on the cost of a car. Maybe you could take out $1,000 smaller loan and have a thousand.

less car debt for buying that car for low-income people. And if you're a car company like Ford, maybe you could sell off more of your non-suvies and make more profit. Jack, and you'll whip up the takeaway for us to start the week. A phase one trade deal between China and the U.S. has been agreed to, but that's just the appetizer. The meaty entree still has to be decided in this trade deal meal. Second story, Pandora just rebranded its logo,

rebranded its app, and rebranded its ads. Get ready for some unwanted conversations with the Dorito spokesperson in the name of V-commerce. Third and final story, cars might start stripping out features that usually come standard. You're going to have to start paying extra just like you do on the airlines. But that could be good for society. Now, Snackers, time for a snack factor today. That is so straightforward and so simple. We kind of loved what Daniel, Colin James of Vancouver, Canada came up with.

Charmingly simple snack. There it is. You ready? Should we set up? You ready? Let's do it. Go ahead. Netflix is older than the euro.

It's true. The Euro came out January 1st, 2002. Netflix, 1997. Beautiful year. Great one, Daniel. Snackers, before we go, a quick request, whatever app you're listening to this podcast, could be Spotify, could be Apple, could be wherever.

Open it up and share this podcast with your best friend. They're going to love it. We're going to love you. You don't even have to say anything. Just send it. It's a lot of love. We'll talk to 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 Ellis. 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.