The Best One Yet - 🍪 “Utah’s Cookie King” — Crumbl’s cookie recipe. Lululemon’s fanny packs. Microsoft’s bigness lawsuit.

Episode Date: December 12, 2022

Utah is America’s biggest sweettooth, which is one reason it’s home to Crumbl — the fastest-growing restaurant chain in the country. Lululemon trails only Nike in apparel, because investors want to play with Profit Puppies, not run with Revenue Rabbits. And Microsoft spent $69B to play a video game, but was just told to go to its room.$LULU $MSFTFollow 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, December 12th. And today's pod, out of all the pods, out of every pod we've ever done, this is the best one yet. Tell us about the status of the Santa Stock Surge, Nick. Jack, you want to know about our reindeer rally? How's that going, man?

Not the Gundrop Bucks. Stocks just had their worst weeks since September. Despite historically booming between Thanksgiving and Christmas, we're down a bit this year. Yeah, stocks have been down. know the muffin man? The muffin man? What's our first story, Jay? Lulu Levin's best sales day in company history is thanks to the fanny pack. Don't roll with the revenue rabbit. You want to play with the profit puppy. For our second story, the fastest growing restaurant chain in America right now just does cookies.

It's crumble because it's a reliably spontaneous company. And our third and final story is Microsoft. They paid $69 billion to buy a video Game Company, Activision Blizzard. But Microsoft just got told to go to its room. No video games. Don't even think about it. Forever. You're grounded.

It's like, Dad, you know I have my phone, right? Like, I can access the internet with my phone. I can play a mobile video game. But Yetis, before we hit that fantastic mix. I love this mix. This is how you kick off the week, man. I'm flipping it open to Horters Almanac Week 143. Things were running out of because of the pandemic.

Jack and I have been keeping track for you. Right now, we're running out of slap shots. We're running out of slap shots. Yadis, we got a shortage of slap shots, the icon of ice hockey. The slap shot shortage doesn't have anything to do, by the way, with the pandemic, inflation, or even canon. But according to the National Hockey League, the slap shots are disappearing from hockey. Let's look at the numbers.

A decade ago, the average NHL hockey game had nearly eight wind-up slap shots. The most terrifying thing to be in front of since D-2. But today, the number of slap shots is half of what it was a decade ago. Get this, Jack, how many slapshots are we seeing in hockey games these days? There's only four, which is less than one per period. That is 50% fewer boomers from the Blue Line, baby. It's actually a little more than one per period. Oh, and the team with the least slap shots being shot at Jack?

The Chicago Blackhawks. They just don't slap the shot. Chicago does logistics. It doesn't do slapers. Now, the reason for the dearth of slap shots is coaching. Coach Gordon Bombay thinks the slap shot is fun, but he doesn't think it's that effect of a shot. So coaches across the league are saying sainara to the slap shot. They're saying no more to the knuckle puck.

Now, this is a bummer. It's like if the NBA ditch the alley-oop. Jack, it's like if football sack the sack. If baseball gutted the grand slam. Besties, Wayne Gretzky once said, don't skate to where the puck is. Skate to where the puck will be. Wherever it's going. It's not getting there from a slap show.

Let's reshot our three stories. Fifteen years before this song, two boys from the Northeast met in the dorm. They had an idea that caused a cultural storm. It's the best one yet, but the best is a norm. 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. For our first story, Lulu Lemon just had its best sales day in the company's history, and it's all thanks to the Fanny Pack. But the bigger story is Lulu Lemon's profit puppy compared to the Gaps Revenue Rabbit. I'm sorry, Jack. Can you check my pulse? Lulu Lemon is looking less like yoga, more like CrossFit these days. Sales in the third quarter jumped by 28% in this economy?

Not long, lean lines. We're talking a big pop-a-pump over at Lulu. Black Friday was Lulu Lemon's biggest single sales day in company history, and it's all thanks to the fanny pack. Forget the aligned leggings. People, we're talking about Lulu's The Belt Bag. That's the name of the product. Yeah, the belt bag.

How would you describe it, check? Well, Nick, you can wear it cross-body like Chewbacca does with his ammo. I like the visual. Or simply around the waist, like a fanny pack. Yeties, this is a $60 fanny pack, although they call it the belt bag. And it was the highlight of the entire Lulu Lemon earnings call, we noticed. They sold out because all millennials want their version of Richard Simmons working out, step up, step down, step up, step down, and still grab your phone.

None of us can get his hair. may as well get the fanny pack look. But fanny packs only went so far on Wall Street. Good point, Jack, because Wall Street is worried about Lulu Lemons of coming holiday sales. The forecast wasn't that good, so the stock fell by 13% on Friday. Lulu Lemon has doubled its sales in the past three years. It has doubled its profits in the past three years. So we want to know how big really is Lulu? How big has it become? Shall we do some benchmarking? Jack, let's do some benchmarking, my friend. Let's see where Lulu really stands in the apparel and fashion industry. Okay, when it comes to clothing, Jack and I jumped in T-Boy style, Lulu Lemon is actually now second only to Nike in annual sales.

Lulu does $7 billion in sales, and we found what we think is the perfect benchmark. We do. The Gap. The Gap. Jack, can we sprinkle on some more context here? Lulu Lemon does $7 billion in annual sales. The Gap does a little more than double that with $16 billion. Okay. So the Gap is selling twice as much clothing.

as Lulu Lemon putting comfort aside. Yes, but let's compare valuations, not just sales. Oh, that's where things get interesting. Lulu Lemon's market cap, its valuation is $40 billion. And Jack, what's the Gap's valuation? $5 billion. So what we're saying is that Lulu Lemon is selling half as much stuff as the gap, right? But it's worth eight times as much as the gap.

In fact, Jack and I dove in further, Lulu Lemon is doing similar sales as Ralph Lauren and Abercrombie and Fitch, but where's their valuation, man? Lulu Lemon sales are here. Its valuation is there. Because this is an audio product, Yeti's Jack's hand just went way up on that last part. Long lead lines, actually. So Jack, can you bust out that fanny pack and whip up the takeaways for us over there? Investors don't want to roll with a revenue rat.

No. They want to play with a profit puppy. Yeties, the biggest difference between Lulu Lemon and every other publicly traded apparel company out there, it's profits. Yes, the Gap sells way more hoodies and pullovers than Lulu does. The Gap does twice as much sales. But Lulu stretches comfortably into all those yoga pant profits. Lulu Lemon is making 20 times as much profit, baby. This was a shocker. The Gap only made $50 million in profits last year compared to Lulu Lemons $1 billion.

A key reason is that the Gap's deteriorating brand has lost at some pricing power. Yeah, the Gap is constantly discounting the stock. stuff they sell, while Lulu Lemon doesn't sell anything unless it's $100 or more. So besties, the reason Lulu Lemon sells less than the gap and everyone else, but is worth so much more? Investors don't want to roll with a revenue rabbit. They want to play with a profit puppy. Yeah. For our second story, the fastest growing restaurant chain in the United States of America, it's crumble cookies. Crumble. Drop the E at the end. Drop the E. Because they're not baking cookies.

They're baking some fomo. All right, Yeties, you are going to head home over the holidays, and here's the deal. You're going to be at the Christmas table, and everyone's going to want a cool piece of trivia, but you're going to have the best trivia of all. What state is number one in terms of being a sweet tooth? What is the biggest sweet tooth state in the United States? You know who took your gumdrop buttons? Talk to me, Jack.

Utah did. Utah, according to a Hershey's chocolate, very legitimate survey, the state of Utah, buys more sweets per citizen than any other state. The per capita bakeries is off the chart. Okay, Chicago does logistics. Salt Lake City does Dolce. It's not snow on the mountains. No.

It's sugar. Yeties, here's the reason why. There's a large Mormon population in Utah. And that Mormon population doesn't drink alcohol and doesn't drink coffee. So if they want to get lit, they crush a milkshake or a cupcake. They are pounding that batter. So that makes sense why Utah is home. to the fastest growing food chain in the United States.

Which happens to be crumble cookies. Crumble cookies was founded just four years ago and already has 600 locations in 47 of these United States. Get this. Each of these locations is doing at least a million dollars in cookie sales a year. The wildest part, they only sell two things, milk and cookies. Uh-huh. It's for the lactose extremely tolerant. The milk is plain, the cookies are wild. Each location is only doing takeout and delivery.

a simple, low-cost business model, people. Now, we should point out, they are suing their rival cookie chain, which is also based in Utah. It is. They allege that the rival cookie chain stole 66 of their secret recipes. They stole our recipes, Jack. Well, they're going to have trouble getting a jury because everyone's going to be like, yes, I do love these cookies. And they're going to be dismissed. Great point, Jack.

But yet here's why Jack and I were fascinated with. this story. Yes, Crumble bakes cookies, but what they really figured out to bake was FOMA. First, Crumble perfected one recipe. The classic traditional chocolate chip cookie that you think your recipe is the best of. But after that, they decided to go viral with a different cookie concept. Like the Insta Eye candy, that is the chilled pink sugar cookie. Or Jack, can I interest you in a KitKat Butterfinger Triple Nut Butter Twist cookie? Highest chocolate per citizen, it's off the charts. And yet he's, here's where the key is for Crumble Cookies.

If you want that crazy butter, finger, triple KitKat cookie, you're probably too late. If you just saw it posted on Instagram, you're probably too late to get it. Because Crumble Cookies has borrowed the business model of streetwear and sneaker brands. Crumble cookies borrowed the art of the drop. Get this. Every Sunday at 6 p.m., Crumble cookie drops six new flavors like a supreme sneaker. The timer goes off on the upper. oven and they drop those bad boys. Okay, that chocolate chip cookie, it is a permanent part of the

menu. That is true. But the wild other cookies, it's a constant weekly rotation. As a result, diners of these cookies are tuning in weekly to the cookie brand like it's an HBO show. Sundays are for HBO? No, Sundays are for crumble cookies. And the hype is real. Can you whip up some numbers for the batterjack? This chain, which is relatively small, has six million TikTok followers. Uh-huh. Triple McDonald's, the biggest chain like in the world. Sit down, stand up, and stick that in your mouth. Crumbles's got three times the TikTok followers of McDonald's.

So, Jack, what's the takeaway for our buddies over at Crumble cookies? Here's the real secret recipe. Crumble mixes surprise with consistency. Yet he's Crumbull's key advantage is that it manages to combine two conflicting concepts. It delivers surprise. As in the surprise flavors. But it's consistent. in that delivery of surprise.

You're not surprised when they drop those flavors. It's not about the flavors. This is a mind game. Consistent spontaneity is what they've created. Yeties, Jack and I have seen FOMO marketing before, but never have we seen such planned FOMO. That's the real secret recipe that has enabled Crumbles growth. Consistent spontaneity.

Consistent spontaneity. Can we get a cookie crisp? Can you say please? Now, a word about our sponsor, Robin Hood. You can do just about anything from your phone, but some industries, they've just been slow to move. The finance industry was slow to move from phone to computer and then from computer to app. Robin Hood wasn't. It's the Silicon Valley-based brokerage that's been updating app since it was born in 2015. Using the Robin Hood app for your stocks and crypto is almost as easy as downloading it.

So you can invest to your pace on your terms by downloading the Robin Hood app. If you're not investing on Robin Hood yet, to get started, go to robin hood.com slash t-boy and choose your free stock. That's Robinhood.com slash T-B-O-Y limitation supply. Stocks are 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 by or part of Robin Hood, and we are not employees of Robinhood.

For our third and final story, Microsoft was about to make its biggest acquisition ever, but it was just told, No. It was told no because we just saw the first lawsuit ever accusing a company of simply being too big. Okay, Jack. Can we, I'm going to play a little Freudian game with you. Okay. You're ready?

I don't think I'm ready, but I think it's coming anyway. Okay. When I say soup, do you drink or eat it? No, no, no, no. Actually, not that. Not that. All right. When I say Microsoft, what words come to mind?

Office. Okay. Anything else? Yep, yep, yep, that cucumber. That paper clip. That paper clip. that tells you if you got a word incorrectly spelled. It's a cute paper clip. It's maybe their most cool thing.

What about Xbox, Jack? That's right. I was always a PlayStation kid growing up. It's totally fair. Yet he's Microsoft doesn't just do all that office stuff. They also have a booming video game business. Yeah, Microsoft both powers huge enterprise servers with the cloud. Classics. And hosts a Halo video game tournament. So it wasn't totally shocking when Microsoft tried to make their biggest acquisition ever,

and it was for a video game. Microsoft announced last year, I think, that it was paying $69 billion to acquire Activision Blizzard. Activision Blizzard, the company behind Call of Duty, World of Warcraft, Candy Crush, anything that's just a video game that entertains you, they probably did it.

So it was going to have both Xbox and a bunch of Xbox. Video games, but no. No, because the Federal Trade Commission of the United States, which defends consumers from monopolies, just sued Microsoft. It's sued Microsoft. It's trying to block the deal, put the kibosh on this thing.

You can't play with your video game, Sotcha. Go to your room. Now, there are two types of acquisitions in this world, we should point out. Yes, there are. There's horizontal acquisitions and vertical acquisitions. Yeah, yeties. We've got to talk about horizontal and vertical acquisitions in T-boy style to this story. The horizontal merger, that's the one you expect. That's the classic acquisition. Classic merger. That's like if AT&T acquired Verizon. You know, two cell service competitors merging joining forces. Now, if that happened, we would want the government to come in and block that thing. Because AT&T and Verizon with no competition, they could jack up that phone bill.

I'd have to pay $1,000 a month for my phone, and I'd have no choice but to pay. But here's the interesting thing, besties. This Microsoft Activision Blizzard video game deal, it wasn't horizontal. This would have been vertical. Yeah, because Microsoft doesn't compete with Activision Blitzers. It makes an Xbox. It doesn't make Xbox game. Exactly. So like horizontal deals, those tend to get blocked by the government. Because there's a clear risk to consumers of higher prices.

But vertical deals like this one, they tend to not get blocked by the government. Vertical deals don't take a hit to competition, so there's less a threat of higher prices. Microsoft says they're going to fight this in court. They want to keep their video games. In the meantime, they're kind of grounded. They're grounded. You can't play your video games. And you can't have dessert cookies either. cookies either. So Jack, what's the takeaway for our buddies over at Microsoft? This is the first lawsuit against bigness. All right, yeties, let's pivot to a person here. Lina Kahn. She leads the Federal Trade

Commission, the FTC, which is responsible for keeping businesses competitive. She's only 33. That's it. But she became famous after writing a paper at the prestigious Yale Law School. Here was the thesis. She argued that Amazon hurts consumers. but not in the traditional way you would expect. She didn't argue that Amazon eliminates competition. She said that Amazon stifles it because it's so big. Here's the idea. Amazon and its big tech buddies, they are so big, so powerful, so sprawling.

That startups are discouraged and afraid from even trying because big tech will stomp them out, copy them or suck them. So we think Microsoft's video game drama is actually Lena Khan's first lawsuit against tech bigness. It may not win in court, but it will get Congress, Wall Street, and CEO's attention. Jack, can you whip up the takeaways for us to kick off the week?

Lulu Lemon has half the revenues of the gap, but 20 times the gap's profit. Investors don't want to roll with a revenue rabbit. They want to play with the profit puppy. For our second story, Crumble uses FOMO marketing to drop wild cookie recipes every week. But the secret recipe is consistent.

spontaneity. And our third and final story is Microsoft. It was sued to get its video game acquisition blocked. Honestly, it's the first lawsuit we've seen where the alleged crime is being too huge. Bigness to the third degree. Just really big. Just huge. Now time for the best fact yet. This one sent in by Jack and me. We decided to whip up a fact for you. Your podcast co-host here. Now, not everybody plays hockey. And confession, I can barely escape despite my like northern an upbrainer. But you make a great effort, Jack, and I've always appreciated your balance attempts. Thank you. But I do love me a good Zamboni. Yes, you do. The Zamboni, the Ice Zamboni resurfacing machine. It's actually been cleaning out rinks for 60 years. Get this. The average

Zamboni, you've got to look at the odometer on this thing. It drives 2,000 miles per year. On a single chassis, each Zamboni is covering 2,000 miles of ice with fresh water every single year. 2,000 miles divided by 365 days. Talk to us, Jack. That's five miles per day that this ice making like water machine moves. Okay, speaking of Zambonies and slap shot shortages, Jack. We're going to be a hockey game this week. We're going to be a one on Thursday, right? Not just any hockey game. We're going to be at the Garden in Madison Square Garden in New York City. Yes, we will. Toronto, Maple Leafs first in New York Rangers. Jack, I'll see you there on Thursday. The original six. It's a classic matchup. You know, I love Maple Leafs. Get ready.

for more spaghetti, man. Yiddies, you look fantastic today. And if you happen to have the best cookie recipe yet, you should leave it as a review in our Apple reviews for the podcast. How about that check? I would use your recipe if you do that. We will use that recipe if you leave it as a five-star review. I'm a butter guy.

Nick's a Crisco guy. Let's see what you got. And before we go, a happy birthday to Dan Katz, who has multiple cats himself, Dan Katz, and he's celebrating his birthday over in Brooklyn. He's the wizard of wafting. I think he's a born-again whino, isn't he? Yeah, he's popping pinos in Park Slope, baby. And happy 28th birthday to Uxhot Mishra in sunny San Francisco.

And Oliver Liu is turning 13 in Vancouver, Canada. Happy birthday to Jesse Colzo, loving the mid-20s lifestyle in Fort Worth, Texas. And a belated birthday to Yeti Seth Samuel over in Nigeria. And happy birthday to Barbora Connect. from the Czech Republic celebrating this time in Mexico. And to anyone else who's celebrating something today, make it a T-Barr. Celebrate the wins. This is Jack.

I own stock of Amazon and Nick and I both own stock of Apple, Lulu Lemon, and Robin Hood. Now a word about our sponsor, Robin Hood. Jack, rule number one about a kitchen renovation. Tell your friends about your kitchen renovation. We know the cabinets are expensive. Well, in the pandemic, a lot of companies renovated their businesses. focusing on apps and digital. Robin Hood didn't have to.

It was built digital from the start. Robin Hood's mobile first and intuitive design makes investing a little easier for every stage of your investing journey. Whether you want to trade options, ETFs, or stocks through Robin Hood Financial or buy some Bitcoin on Robin Hood Crypto, you can do all that right on the Robin Hood app.

If you're not investing on Robin Hood yet to get started, go to robin hood.com slash T-Boy and choose your free stock. That's robinood.com slash TBOI. Limitations apply. Robin Hood Financial LLC, member SIP PC. All investments involved risk. By the way, this podcast is not owned by or part of Robin Hood, and we are not employees of Robin Hood.