The Best One Yet - 🥤 “The Switzerland of soda” — Dr Pepper’s mystery strategy. Delta’s free wifi wager. Your job’s sneaky non-compete.

Episode Date: January 9, 2023

Millennials are killing soda, except for one brand: Dr Pepper. Delta just launched free high-speed wifi in the air — it’s not a perk, it’s a signal. And when you got hired, we bet you signed a Non-Compete Agreement even if you didn’t realize it — Now the FTC is trying to kill noncompetes. $KDP $DAL $YUMFollow The Best One Yet on Instagram, Twitter, and Tiktok: @tboypodAnd now watch us on YoutubeWant a Shoutout on the pod? Fill out this formGot the Best Fact Yet? We got a form for that tooLearn 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. Welcome back. It is Monday, January 9th. And today's pod, out of all the pods this year, is the best one yet. It's a T-boy, baby. There we go. I like what you do with the headphones over there, not too shabby.

You got a backup pair just in case. You got to have two headphones. That's how you do this. Yet these stocks just had their best day of the year on Friday. Okay, the Dow searched 700 points on Friday after the jobs report. Sit down, stand up, sit back down again. 203. You finally showed up.

2023 nice to meet you. Jack, what's our first story for today's pie? There is only one soda that's actually growing in the United States. What is it, Jack? And that's Dr. Pepper. Dr. Pepper, you can't define Dr. Pepper, and that's exactly the point. For our second story, when you got your job, you probably signed a non-compete and didn't even realize. Yeah, well, now your non-compete clause might get killed.

And our third and final story is Delta. They just announced a new price for in-flight. Wi-Fi. All right, how much we got a paycheck? Zero dollars. Free Wi-Fi isn't a product, it's a signal. In more than one way. Literally and figuratively. But Yetis, before we hit that wonderful mix. Just the perfect mix to kick off the week, man. I'm flipping open the page 147 Horters Almanac Week 147. Things were running at it because the pandemic, Jack and I even keeping track. This week, we're running out of reservations. Yes, restaurant reservations. You can't book them. You can't even buy in these days. We tried to go out on 3rd.

Thursday night last week. Because Thursday is the new Friday. But we got rejected at each and every restaurant. Sorry Nick and Jack were fully committed this evening. According to the Wall Street Journal, reservation requests at restaurants jumped by 75% last year. Seventy-five percent more reservations, while the number of walk-ins, that fell 9% last year. Here's what we're thinking. Post-pandemic, things have gotten a little less spontaneous, a little less casual. If you're going to go out, you want to make sure that you can actually go out. The other reason is the worker shortage. Yeah, half as many waiters, half as many tables, half as many reservations.

But get this. At St. Theo's Restaurant, New York City. St. Theo's great restaurant serves a solid linguine on Bleaker Street. Delicious. If you want a table between 6 and 9 p.m., get in line. Because get this. They have a 1,000-person wait list just for reservations. You know that little notify button on Resi?

Oh, I know that little notify button on Resi, Jack. Yeah, good luck with that. It's not going to happen. It's harder to get a spot at dinner than a spot at Harvard right now. Jack, the acceptance rates at cafes have gotten out of control, man. Now, our advice, Yetis, call the restaurant, ask for a table for two by the window, and say your name is slamming Sam. Yeah, then hope that the matri-D is a Yeti and hooks you up with a high chair. Cough twice if guac is extra.

It's always extra. Yeties, we got a shortage of restaurant reservations. So besties, pause this pod and go book a bar seat. Let's hit our three specials for this evening. Check please! I'll take the food. 15 years before this song Two boys from the Northeast met in the dorm

They had an idea to cause a cultural storm It's the best one yet But the best is a norm I don't even think they need to practice 50% That's a fat tip Tea boy city on your at list If you know you know

Because we're ready to go We can't wait no more So just start the show Start the show For our first story Millennials have stopped drinking soda It's fact Except interestingly

For one very specific brand. Dr. Pepper is thriving because Dr. Pepper's breaking the rules of marketing. Oh, Jack, to sprinkle on a little context here, can we talk about the three horsemen of the food apocalypse? The three food products that millennials have killed. Okay, yet he's here they are. Here they are. First is cereal, second is soda, and third is slices of bologna. My dad loves a bologna, butter, and lettuce sandwich. I was going to say, if Big Ted isn't using white bread, then they're something wrong in the universe, Jack. Yet these Americans under 40 just aren't eating that much cereal soda or balagna.

Get this. Over the last 20 years, soda sales in the United States have fallen a whopping 26%. But there's one exception to soda's decline, and that's Dr. Pepper. Dr. Pepper. Dr. Pepper. Dr. Pepper has grown 9% while the whole rest of the soda market has shrank. Now, we all know, Coca-Cola has led to soda industry with Pepsi in a close second. But if you look at the market share in the last year, both of those companies have lost drinkers to Dr. Pepper and its sister sodas. Dr. Pepper, 7-Up, Snapple, Sunkissed, and Schweps. Yeah, basically all of the drinks that Keenan and Kell were indulging in on Nickelodeon.

Those are all part of the $50 billion publicly traded company, Curig Dr. Pepper, which is number three in the soda category. Okay, so Jack and I jumped in T-Boy style to Dr. Pepper when we were researching this story. Jack, can we share where the... name Dr. Pepper comes from? I assume the recipe was invented by a certain Dr. Pepper. And we assumed that that recipe included one or two peppers. We were wrong.

Yeah, on both fronts. Dr. Pepper was invented in 1885 by a guy who wanted to win the blessing of a girl's dad who happened to be Mr. Dr. Pepper. He literally named the soda he created after his future father-in-law because he loved this woman. It's actually a touching love story. And then Dr. Pepper blessed the marriage that went on happily ever asked. It was Shakespearean soda.

It's a beautiful thing. Call us old-fashioned. But yet here's what Jack and I find fascinating about this story. How is Dr. Pepper stealing market share from the Titanic Tonic twins of Coca-Cola and Pepsi? A wild strategy we haven't heard of before. No, we've never seen this in our lives. Dr. Pepper is simply avoiding confrontation. Dr. Pepper competes with Coke and Pepsi by not competing with Coke and Pepsi.

Coke and Pepsi have historically split the food industry. in two. Yeah, if you're a restaurant, you've got to sign an exclusive agreement with one of them. My brother Tuck loves soda. The first question he always asked the waiter, do you sell Coke products or Pepsi products? You're a Coke institution or a Pepsi institution. And that restaurant can only sell Coke or Pepsi, not both. And what does that mean, Jack? So Coca-Cola and Pepsi basically have half of the restaurant industry each. Here is the key. Dr. Pepper doesn't position itself as a cola. So actually, they can be sold at all the restaurants. Dr. Pepper is Switzerland. That's what we're saying. It's the Swiss of the soda industry. It's a neutral party that can work with both sides of the Pepsi Coke device.

So that means by not taking on Coke and Pepsi, Dr. Pepper is beating Coke and Pepsi. Mountain Dew? Mountain Dew who? So Jack, what's the takeaway for our buddies over at Dr. Pepper? Dr. Pepper has mastered the hint of mystery. Now, Yeties, nobody can say what Dr. Pepper's flavor is. It is a certain... I see what. And that's the point. Dr. Pepper is breaking a fundamental rule that we learned in business school marketing. And that rule is that products

should be clearly describable so the customer can clearly understand the value that you're offering. But Dr. Pepper, what is it? I mean, we know it's a soda, but it's not a cola. It's not a root beer. Uh-uh.

I don't see any ground black pepper in there. I've never heard of a cocktail that you can mix Dr. Pepper in it. It's not, what is it? The flavor is a mystery. Yeah, it doesn't even have. one flavor. In fact, Dr. Pepper markets itself as 23 different flavors. I'll be honest, I have no idea what Dr. Pepper tastes like. I'll be honest, Jack, it's like the amoeba of sodas.

It just changes shapes all the time. That's why one Wall Street analyst recently described Dr. Pepper as the most differentiated trademark in all of beverage. So the way Jack and I see, Dr. Pepper's success is mastering the hint of mystery. Even if it breaks the rules of marketing. For our second story, Delta just announced it's making Wi-Fi free on almost every Delta flight starting in just a few weeks. That's not a perknik. No, it's not. That's a signal. That is a signal.

But before we jump to the story, Jack, can we talk about our buddy, Invisible Infrastructure? Forget about roads, highway, and bridges. Invisible infrastructure is 5G, Bluetooth, and Wi-Fi. And that is why Delta is making Wi-Fi free starting in February. Next month, you can zoom. Zoom at 35,000 feet for free. We're talking any device simultaneously, like you can email on your laptop, shop on your phone, and then whip up some wordle on your iPad at the same time from C-43B.

For free. For no extra cost. Oh, and here's the key that we should mention this. You do have to have a Sky Miles account. You got to be loyal to Delta if you want to surf the web for free. If you've got unobtainium status, then you can be multitasking like a maniac on Delta. But you can also have no status. Just set up an account and get it for free.

good point. Now, we know you're thinking, Yetis, yes, JetBlue has had this for years. The JetBlue fans out there, they're not happy about this story. But Delta is going to put free Wi-Fi on three times as many airplanes as JetBlue operates. And honestly, Jack and I jumped in Teaboy style to the numbers. That is quite a sacrifice. Delta is giving up quite a little revenue stream here. Now, Besties, when we're thinking about the airline industry, everyone talks about fees, Like the fee for the seats, the fee for the bags, the fee fee fee, fee, it's just a feeocracy out there. But in-flight Wi-Fi has a major fee that bothers us, and it's a major profit puppy for Delta. All right, so Jack and I whipped up the whiteboard on this thing.

Get this. If airlines charge, on average, $8 for a half hour of Wi-Fi or $16 for the entire flight. Which they do based on our flying experience, because it's a feeocracy. And if Delta sells 18 million Wi-Fi sessions per year, which they told CNN that they do, Then how much revenue is that for Delta, Jack? $200 million in annual revenue Delta makes by selling mediocre internet service in flight. Mediocre internet buffering, buffering. Jack, can we play the AOL internet song for us over here?

We've all used that airline internet. You're like working offline on your Google Doc while Carol needs you to download something from the accounting department. But yet he's Delta is voluntarily sacrificing that 200, million dollars a year they make in Wi-Fi fees. I'm sorry, Jack, one second. None of my emails sent on the flight. Zero of them. And the reason they're giving up all that free money feels like a takeaway. So Jack, what's the takeaway for our buddies over at Delta? Free Wi-Fi isn't a perk. It's a signal.

Literally and figuratively. Yeties, vacation travelers, like Flyers for vacation, they're not caring most about Wi-Fi. No, you're going to sit back, relax, and watch a movie after they turn off the seatbelt sign. Honey, they've got Godfather 1A and Godfather 2. I bet I can watch both before we land. Oh, well, I bet I can watch 38 straight episodes of modern family on the way to Orlando. The flyers who really care about in-flight Wi-Fi are the young professionals. The type A's, the business travelers.

Yeah, we're talking about the customers who optimize the two hours and 12 minutes exactly in the air in order to get down to inbox zero. Those business travelers are the most profitable ones for Delta, and the ones Delta wants the most. Exactly. But here is the paradox, Jack and I notice. Those business flyers, they could afford $10 Wi-Fi, so why make it free? Because it's not about the Wi-Fi, it's about the message that free Wi-Fi sends. That's the key.

By losing $200 million of Wi-Fi revenue, Delta is signaling to business travelers that it gets them. It's a $200 million sacrifice to signal to the business class that Delta is the airline for them. It's a $200 million billboard yelling, we're the business airline. Free Wi-Fi isn't a part. It's a signal. Now, a word about our sponsor, Robin Hood. You know, honestly, your salad, it says so much about you. Nick, you like to blaze your own trail at the salad bar.

Yeah, I'm ordering a salad. I go off menu, man, like a combo of kale and croutons that has never been made before. Me? I'm not reinventing the wheel. I like to go classic. Like, Sweakerian thinks it's a good combo. Jack's not going to change that. Kind of like investing strategies.

Someone to build a custom portfolio of stocks, crypto, and options. Others don't want to reinvent. Just give me the most standard ETF. Whether you're tweaking your one-of-a-kind portfolio every day or prefer a more hands-off approach, Robin Hood has the tools. If you're not investing on Robin Hood yet, to get started, go to robin hood.com slash T-Boy to choose your free stock. That's Robinhood.com slash TBOI.

Limitations apply. Stocks offered by Robin Hood Financial LLC, member SIPC. Crypto offered through Robin Hood Crypto. All investments involve risk. By the way, this podcast is not owned or part of Robin Hood, and we are not employees of Rabbit. For our third and final story, the non-compete. That sneaky little clause in your employment contract may get banned.

Because a non-compete clause might make sense for secrets, but it doesn't make sense for sandwiches. All right, yeah, he's kicking off the year. Maybe you want to get a raise. And there are two ways you can get a raise. One of those ways works better than the other way. The first way to get a raise is to ask your boss for a raise. Yeah, you ask your boss, Barbara.

Hey, I've been working hard, and I deserve the raise. What do I'm showing value. Good luck. We hope that works. The other way is actually the better way to get a raise. It is, it is, it is. What is that, Jack? Get a job offer somewhere else that will pay you more.

Yeah, the other best way to get a raise is to go to the job where they will actually give you a raise. Funny enough, the non-compete clause in employment contracts makes it harder to get a raise either of those two ways. Ah, the non-compete clause, a clause in your contract that means you cannot work for a. similar company for a certain amount of years. Here's the news. Last week, the FTC said that the non-compete clause should be banned because it harms all workers and suppresses wages. Now, Bessies, here's what Jack and I find fascinating about this new update.

There's a fundamental problem with the non-compete clause right now. The non-compete clause used to be about protecting company secrets. It always did. But now, it's about protecting sandwiches too. Now, fans of the non-compete clause, like your buddy who's a lawyer, maybe even our buddy Timmy, they say that you need the non-complete cause. You're going to need the non-compete clause. Because how can you train your workers on important company secrets without a non-compete class?

Because if you're Microsoft, you're not going to teach all your employees some new software without a non-compete clause. If you did, your trainee could learn everything at Microsoft and then use it all at the competitor Google. That would be a problem. But besties, there's been a strange change. with the non-compete clause over the last few years. Non-compete clauses aren't about protecting company secrets anymore. Now they're about protecting company sandwiches. Get this.

Jack, what is happening over at the Jimmy John's sandwich chain? Jimmy Johns, the chain of sub-shops, was sued in 2016 for forcing all of their deli workers to sign non-compete clauses. People making sandwiches at Jimmy Johns couldn't take a higher-paying job at Subway sandwiches because they unknowingly signed a non-compete. So a Jimmy John's worker was stuck. Yeah. They couldn't work at another deli because the non-compete clause. Right, right.

And they can't really get a raise at Jimmy Johns because Jimmy Johns knows they can't work anywhere else. Here they are, just trying to prepare a pastrami sandwich, just trying to cut a slice a gab a ghoul jack and they couldn't change change. That's how non-compete clauses keep wages down. An economist think that is taking a lot of money out of the economy. Economic studies show that banning. non-compete classes would boost worker pay in America by $300 billion in just one year.

So, Jack, what's the takeaway for our buddies who may have a non-compete in their contracts? Here's the sneakiest use of non-competes when they're not even valid. Okay, Yeties, the shadiest use of non-competes we found when they're not enforceable and yet the company uses them anyway. Half of the 50 states actually don't allow non-competes at all. Right. Because they harm competition in the worker market. And yet, companies stick them in contracts because the average worker doesn't know that those non-competes are unenforceable.

So Darlene might be working at Duncan's thinking she's not allowed to work at Starbucks because of a non-compete clause. When actually she could because that non-compete isn't enforceable in Massachusetts. That's why the FCC ban would also force companies to inform workers. Yes, you can leave and work at a competitor anytime. Now, if this ban does become official, big business. are definitely going to sue the government to try to block it. But if the non-compete ban does become law, it'll be easier for workers to get a raise. Jack, can you whip up the takeaways for us over there?

Dr. Pepper is the only soda company growing in America. Because Dr. Pepper mastered the hint of mystery. For our second story, Delta is eliminating fees for in-flight Wi-Fi starting in February. That's not a perk. That's a signal. For our third and final story, the FTC has proposed a rule to ban non-compete clauses nationwide. The shadiest non-competes are when they're not even enforceable. Now, time for the best fact yet. This one sent in by Wynn from lovely Hutto, Texas.

The United States is one of just three countries in the world that uses the imperial system for measurements. And the United States, we use feet in Fahrenheit. Everyone else uses centimeters and Celsius. But here's the interesting thing. In the Philippines, they are the only country to use both measuring systems. In the Philippines, a swimming pool, can be measured in meters for length, feet for depth. In the Philippines, you can buy a meter of cables, but a yard of linens. You can buy a gas and liters, but ice cream and gallons. In the Philippines, you can buy a liter of cola that's 34 degrees Fahrenheit.

Because the Philippines was controlled by Spain at one point and the United States another. The Philippines do both. Yeties, you'll look fantastic to start the week. And remember, if you don't have a restaurant reservation for Friday, you may want to get a restaurant reservation for Friday. Name? Slamming Sam. Tell him Slaman Sam sent you. You'll get the booth. If you know, you know. And before we go, happy 24th birthday to Yeti Michael A, who is in Antarctica with the U.S. Coast Guard right now. Thanks for your service, Michael A. And stay warm down there. Yeah, whether it's Fahrenheit or Celsius. And happy birthday to Adam Gough, turning 40 just outside of Boston. And David Arveh is doing some woodwork for his birthday in the Bay Area.

Sounds like a great birthday, David. Great birthday. Don't get a splinter. And Liam Frumpkin is only 19 years old, and he's launching his very first startup called A Hav. Edible cookie dough. Sign me up. Yeah, everyone loves cake. And Mera Chabin just got promoted to senior associate over at Hawk Ventures. Congratulations to Mickey, who's becoming a certified financial planner down in Mexico. And our buddy Dave Reed and Lissa just had a baby boy, their first baby.

Our buddy Dave and Lissa, they haven't chosen a name yet. But I'll tell you, this kid can be. build a shelf. Don't get between this kid and a hammer. Congrats, Dave and Lissa. We're pumped for you. And to anyone else who's celebrating something today, make it a T-boy. Celebrate the wins. This is Jack. Nick and I both own stock of Robin Hood.

Now, a word about our sponsor, Robin Hood. Okay, so Jack and I both worked in finance for a while. And we know the six-monitor Bloomberg jockey with charts, numbers, balances, and more charts. They got coffees in both hands while they're executing some complex trade on a soybean future. Well, we're not trying to impress with our mission control. trading center. Just give us an app, please. Robin Hood with its mobile first and intuitive design,

it lets you trade with just a few quick taps on their app. And even if things still don't seem easy, Robin Hood has your back 24-7 with its live and robust customer support. If you're not investing on Robin Hood yet, to get started, go to Robinhood.com slash T-Boy and choose your free stock. That's Robinhood.com slash T-B-O-Y. Limitations apply. Robin Hood Financial LLC, member SIPC, all investments involved for us. By the way, this podcast is not owned by or part of Robin Hood, and we are not employees of Robin Hood. Check please. I'll take the funa.