The Best One Yet - 🩲 “Who wears short shorts?” — Chubbies’ frat IPO. Southwest’s hangover. Nobel’s burger-flipping prize.

Episode Date: October 12, 2021

The artist behind Chubbies’ shorts is going public, but it’s really a fraternity. Southwest Airlines just canceled so many weekend flights that its stock dropped (and the mysteries began). And the Nobel Prize for economics just tested an ancient theory: Would a $15 minimum wage make McDonald’s lay off their burger crew?$DTC $LUVGot a SnackFact? Tweet it @RobinhoodSnacks @JackKramer @NickOfNewYorkWant a shoutout on the pod? Fill out this form:https://forms.gle/KhUAo31xmkSdeynD9Got a SnackFact for the pod? We got a form for that too:https://docs.google.com/forms/d/e/1FAIpQLSe64VKtvMNDPGSncHDRF07W34cPMDO3N8Y4DpmNP_kweC58tw/viewformLearn 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 Tuesday, Tea Boy Tuesday, October 12th. Today's pod. The best one yet. This is a TBIOI. Honestly, so much better than our last pods.

Jack, first story. For our first story, Southwest Airline canceled so many flights this weekend. It's stock got canceled. Yeah, but this isn't just a business story. This is a mystery. Second story is Solo, which we think is short for Solo Cup,

because the company is behind shubby shorts and they just filed for a billion dollar IP. It's a pure play weekend stock. Because Saturdays are for the toys. For our third and final story, the Nobel Prize in Economics, tested an ancient econ theory that we've all been tied. Yeah, would a $15 minimum wage make McDonald's lay off its burger crew? That's a huge question, actually.

Existential question. Is that going to happen? We're going to wait 10 minutes before we tell you the answer. Some guy got the ultimate nerd trophy for answering that question. You got to love that phone call like 2 a.m. Really love this mix of stories today. Before we hit them, please, Pringles. Yes.

You know the chips? I used to put them upside down on top of each other to look like a daffy duck. I had my first Pringle's chip in like five years. This past weekend and honestly brought me back. It was an interesting feeling. It's one of the most powerful technological advancements ever to happen to the potato. It is. Jack and I got curious. We jumped in snack style. Get this snackers.

It took $70 million in research and development. True story to create the first Pringle chip. I'm actually most fascinated by the powder. Yes. Every chip is so much powder. I think that's the number one ingredient. It's like a chip makeup. But what about the shape?

It's very unique. It is very unique. Technically, according to geometrists worldwide, this is a hyperbolic paraboloid. That's what a Pringle is. Actually, it's a truncated hyperbolic parabolo. You always got my back. I appreciate that.

Thank you, Jack. What we're trying to say here is that Pringles are the SpaceX of Spuds. Okay. And the flavor you just had? I don't remember, Jack, because you can't keep track in these Pringles flavors. I once had a barbecue chicken pizza pringle. It's a maneuver.

Snackers, there are over 100 flavors of Pringles out there. Honestly, you can't keep track of these things. Coolest part, though, about Pringle's business, isn't the chip at all. It's the creator, the founder of the Pringles chip. It ain't the business. Get this. The founder. Frederick Bauer was so into Pringles that he's buried in a can of Pringle.

Also, why did he call it Pringles? His name's not Pringle? I'm shocked by that. Maybe it's a middle name thing. In the meantime, the ashes of the Pringles inventor are currently living their best life in a 12-inch tin, 12 feet underground. So this brings us to our T-Boy Tuesday question of the day. Yes, it does, Jack.

How many Pringles fit into one of those iconic tubes of Pringles? Now, to sprinkle a little context here, a tube of Pringles is 11.8 inches long. That's the only hit we're going to give you. How many truncated, paraboloid hyperbolic pringles fit into that tube? The answer, Snackers, is that the end of this podcast? The prize for getting it right? Nothing. Let's in our three stories.

You're tuned in the snacks daily. We spoke to the lawyers and we got to get something legal out the way. The 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. We're not recommending any securities. It's not a research report or investment advice.

Not an offer or sale of a security. Snacks is digestible. Business news for you. Robohood Financial, LLC, member Fenra slash SIPC. For our first story, Southwest Airlines just had a weekend from hell. False. Their passengers had a weekend from hell. And so did their shareholders because the stock's down 5%.

Southwest is a small fish in a big pond, or is it a big fish in a small pond in this case, Jack? I think it's a big pond. Because it's the world's largest low-cost carrier, kind of like the biggest microbrewery situation. Southwest makes the other airlines look bad because they're giving you for free what Delta, United, and American charge of 200 bucks for. And Southwest loves doing that, except Southwest hated life this past weekend. 2000 Southwest flights were canceled since Saturday, which is 30% of all their scheduled flights. We're talking 30% of all the Southwest flight schedule, got the red paint splashed up on the airline screens. Not delayed.

No. Cancel. That means almost a third of passengers took off their shoes at TSA and pulled their laptops out of their bags and put each one in a separate bin for no reason. I already took my belt off. It only is two ounces. I don't want to go back there again. Now, horrible timing for Southwest to cancel 2,000 flights because travel is back in the U.S. It is.

Domestic flights in the U.S. are back up to 90% of pre-pandemic levels. And the timing of this Southwest NAFU is suspect. It was because many people out there were speculating maybe this had to do with the pilots of Southwest decided to suddenly go on strike without telling anyone. Right. maybe the pilots were protesting Southwest's recently announced company-wide COVID vaccine mandate. Okay, so this suddenly turned from a corporate drama into a corporate mystery. Then Southwest and the Southwest Pilots Union said, no, nothing to do with that.

None of our pilots were on strike. Yeah, this has nothing to do with the vaccine. Instead, Southwest blamed, get this, air traffic control and bad weather for canceling 2,000 flights. Feels like a totally reasonable explanation. we shut the book on this? Here's the thing. The weather was nice last weekend. It was fantastic, like everywhere. Hurricane what? And the FAA was like, uh, our air traffic controllers did a great job. Just ask the other airlines. So we did check the other airlines. We did. American canceled just

2% of their flights. Two percent is definitely less than 30% of flights canceled. And high school dropout Spirit Airlines. They also canceled just 2% of their flight. Full disclosure, uh, I took two flights this weekend, SFO to LAX, and both got an early. But then Nick and I realized this isn't Southwest's weekend of hell. It isn't. It's actually been a year of hell. Yeah. To sprinkle all the context here, Snackers, Jack and I dove back in like three months.

Turns out that Southwest has had unexpected tardiness going back to like June. The Wall Street Journal reported that a third of Southwest flights this summer were late. That's worse than other major airlines and very uncharacteristic of use. usually punctual Southwest. So this mystery goes back all the way to at least June. So Jack, what's the takeaway for our buddies over at Southwest? We cracked the case. Southwest is hung over from their bailout binge. Snackers, back in the depths of the pandemic, airlines got bailed out. They got bailed out twice. They got $50 billion from the United States government. Not too shabby. The airline spent a lot of that money keeping their workers getting paid, which was good. And they

bought loads of Purole for their terminals, their gates, and their planes. Jack, Southwest, on the other hand, they went on the offense while everyone else is playing defense. Did the opposite. They decided they were going to add 18 new destinations to the Southwest repertoire. Southwest leaders saw the pandemic as an opportunity. And they spent a ton of money to expand their airline instead of just like fortifying themselves for a long haul. So we're thinking it's pretty clear now. Southwest stretched itself too thin. Too many flights. Not enough crew. So other airlines, lines went home early after the bailout and went to sleep. Southwest stayed out late and

decided to get a few more rounds of drinks. This weekend for Southwest wasn't a one-off vaccine protesting. No, no, no. This was Southwest being hung over from its bailout binge. For our second story, solo brands just filed to IPO your weekend. That's what they're doing. The ironic thing about solo brands, yeah, they don't go at solo. No. Solo brands, Jack, should we just like come out and say this? It's a peer play frat stock. It's a fraternity house in a stock. Their target, and these are their words, backyard heroes. That's who they want buying their product. That's what they've been doing. So like, this isn't just one company. Solo brands is basically four dudes who are living together in a three bedroom apartment in Austin.

All right. So there's four brands they operate under. One is Sola, the namesake brand. Right. They make fire pits. You may have seen them. Then you got chubbies. Yeah. So if you're 18 to 34 and have. have a drawer just for pennies, this company has definitely served you an Instagram ad. It's khaki shorts or bathing suits that show off a lot of thought. It's true. I can't pull it off. But who else they got, Jack? Isle, which is paddleboards. And then Oru, which is kayaks. Which are like paddle boards, but you're in them.

You're in them. You're not on them. So Solo Brands has acquired those four brands over time. And they have two conditions for joining this corporate fraternity. If you want to join the Solo Brands house, first, First, you got to be a profitable startup. And then second, you got to fit in with the rest of the solo brands house when it comes to your products. Right. Because solo brands only sells to one type of customer.

Think about it. Board shorts, boards. There you go. Paddles. Uh-huh. You know, a fire pit for the backyard so you can have some cold ones with your buddies. So what we're saying is that solo brands isn't a branded house. It is a house of all these different brands.

And these four brands combined have four and a half million social media followers. Now, here's what Jack and I find fascinating about Sig Sig, Sig, F, I'm sorry, about solo brands. Solo brands is more passionate about their business model than any company we've ever seen. Yesterday, they filed their S-1, which is the paperwork you need to do to become a publicly traded stock. We did Command F and we counted 504 mentions of the word direct. As in direct consumer, I'm sorry, Jack, were those mentions or were they chanting direct down the hallways? Well, Bro was taken as a ticker symbol, so they chose DTC. They did.

A direct consumer company and their ticker symbol on Wall Street is going to be DTC. 92% of their sales are direct to consumer through their own websites. And that is key because then they know the data on you. So like they know you bought party shorts from them. So maybe they'll start pushing you a party fire pit to go with those shorts. Problem with D2C though, direct to consumer startups that have gone public through an IPO are not doing well on public stock market. Can we pull out the whiteboard here? How are our buddies over at Casper doing? Casper mattress down 60% since their IPO.

How about the honest company, another DTC company? Down 50%. How about Warby Parker? They just went public. They had a good IPO, but the stock is down since then. Okay, so here's the situation. We got another direct consumer company going public. It's called Solo Brands. What's going to happen with these guys? Sir, can I have the takeaway?

Sir. So, Jack, get down on your knees and please recite the takeaways for our buddies over at Solo Brands. There's no eye and team, but there should be a DTC. Here is how we think solo brands may be different from all the other direct-to-consumer companies. It's not just one direct-to-consumer brand. It is a direct-to-consumer platform. Exactly. Solo brands built out a whole infrastructure to sell multiple brands online so they share the cost together.

That part is key. For example, they have a 72,000 square foot warehouse in the Netherlands. That's not just for the fire pit business. it's also for the shorts and also the paddleboards and also the kayaks. So this whole like fraternity of brands can share one costly resource with multiple products. That's their opportunity. It's almost like they all chipped in money to buy one big thing they could all drink out of, which is a lower cost for everyone.

And all those other direct consumer startups we mentioned, none of them are profitable. Solo is profitable and the revenues grew 132% last year. So Jack and I can't pull off these shorts, but we do think Solo could represent the next evolution in direct-to-consumer startups. Be a direct-to-consumer platform, not just one direct-to-consumer brand. Ironically, be a team, not solo. For our third and final story, we just got the Nobel Prizes for Economics awarded yesterday. One of them tested an ancient economic theory that Nick and I have learned about minimum wage loss.

Now, Jack, I think our mothers-in-law have said that you never want to get phone calls after 2 a.m. it's not a good thing. But this was a good phone call to get. Cal Berkeley professor, David Card, was at home. He thought it was a prank phone call. He says, Oh, my God. It was the Nobel Academy of Sciences.

A humble brag. If you're getting a call at 2 a.m. from Sweden, we know who's calling you. So Professor Card was at Cal Berkeley, and he wanted to test a huge economic theory that has spanned generations. Here's the theory. And Jack and I learned this microeconomics freshman year. Remember, well, you were two seats to my right. Do higher minimum wage laws?

kill jobs. Or was it one, it was like three seats to the right, but it was a lovely class. You always had that left-handed desk. You know, I know that I'm not knowing that was where? I hate that I got stuck with that desk every time. Now, do higher minimum wage laws kill jobs? The economic theory is unequivocal on this one. Yes. Economic theory has always said that higher minimum wage laws mean we're going to get fewer jobs. Picture your go-to McDonald's spot. Let's say the burger cook gets paid $10 an hour. Now, if Ronald has to pay that worker $12 instead of $10, that work, that worker, could get laid off because the owner can't afford to keep them cooking anymore.

That's the theory. Because Ronald McDonald is not a UNICEF clown. He's a corporate clown. Yeah, he is. You've seen that makeup. But Professor Card found a way to test that theory about higher minimum wage laws, killing jobs without treating people like guinea pigs. Exactly.

And basically what he did here is he whipped up Google Maps and he pointed his finger and found a place. It's called a natural experiment. And he found it in New Jersey and Pennsylvania. in the 90s. We're talking the Mid-Atlantis finest, the left bicep and the right bicep of the Delaware River, Jack. In 1992, the state of New Jersey increased their minimum wage by 19%. But Pennsylvania, right across the river, they didn't change theirs at all. And that part is key. So then Professor Card looked at one group, one group in particular, fast food restaurants where minimum wage

matters. And he looked at fast food restaurants right on the border between New Jersey and Pennsylvania where the only difference was one was across the state line and the other wasn't. So if the existing economic theory we all learned was true, then you might see a catchier and kitchen staff get laid off in New Jersey. Because they were worth $10 an hour, but the boss doesn't think they're worth the 12. He has to pay them now. At the same time, though, you wouldn't see layoffs with Pennsylvania fast food workers across the river. Because the minimum wage didn't change. Yeah. So Jack, can you whip up the results for us over there? Yeah. There were no extra layoffs in New Jersey.

Jersey for three years following the new minimum wage law. There was no noticeable difference between the New Jersey workers and the Pennsylvania workers whipping up the KFC who were just separated by a river. So the conclusion from those results is that the minimum wage theory we all learned when we were three deaths next from each other isn't necessarily right. Right. It's not necessarily true. That an increase in the minimum wage reduces the number of total job. Now, a possible explanation for this is that like the higher cost of paying a burger flip or more money. money, just get baked into the higher price. And the big Mac, you're about to stick in your face.

Right. Consumers bear the higher price. Or maybe the restaurant just makes a little less profit, but he still needs those workers. He's not going to lay him off. If so facto add all this up. And Professor Card gets to add the word laureate to his 14-page resume. Must be nice. It's the most beautiful of all the corporate titles, Laureate.

Because no one really even knows what it means. And he gets five million Swedish croners wired to his bank account from the Nobel committee. Which I'm looking up right now, Jack, that's about half a million dollars for the professor. By the way, Alan Kruger was the co-author of Professor Card's work who sadly passed away. So, Jack, what's the takeaway for our buddies over in the entire laws of economics? Here's the most breakthrough part of his study. It's easy to understand.

Snaggers last week, just last week, Jack and I were telling you that you're more likely to watch a TikTok video than a reported press release so companies should do TikTok press releases. It's the same with economic papers. You're not diving into an academic journal, Snackers. But the natural experiment that happened in New Jersey and Pennsylvania, it was so simple. You look at one law changing and you see how the two sides react. It's so simple. Jack and I even whipped it up into a two-minute Snapchat story on Snapchat right now. Simplicity is crucial because the easier it is to understand an economic theory, the more likely it is people will believe that economic theory. And the more likely people are to believe it, then the more likely it could be to get political support. The real prize here isn't just what Professor Card showed.

It's how he told the story. Simply. Jack, can you whip up the takeaways for us over there? Southwest had a brutal week. It was actually a brutal year. Yeah, Southwest binged on the bailout expansion. Now it kind of looks hungover. Solo brands filed to IPO.

Should be in the next six weeks or so that the stock trades will give you a heads out. Ironically, not solo. It is a team of direct-to-consumer brands. And the theory of minimum wage increases killing jobs doesn't necessarily happen in real life. Professor Card showed it and he told the story simply. That was the cape. So do we on Snapchat check it out at Robin and Snacks on Snapchat. We really did make a Snapchat video on it.

Now, time for our snack fact of the day. This one is whipped up by Jack and me as the answer to the aforementioned introduction. Pringles question, Jack. Remember, the only hint is that a tube of Pringles is 11.8 inches long. how many Pringles fit in there. Now, I'm guessing fifth. Oh, wait. Price is right rules?

Price is right rules. It's always prices of right rules. We got to do this. In that case, I'll go with $1, Bob. There we go. We're going to round up on this one. Actually, do you have another number of mine? 50 Pringles.

That's my guess. So how many Pringles are in a tube of Pringles? It's 100 Pringles. Sounds like they did round up. Pringles are an art and a science. That's your snacks, daily. Do us a favor and give us 100 Pringles. I mean, five stars on Apple and Spotify podcast.

We'll take 100 Pringles. Not the sour cream, maybe the white chocolate. We just found out that's a real flame. Snackers, Nick and I'll see you tomorrow. Can't wait. And before we go, happy birthday to Isha Gandhi from Surat, India. And Jordan Hermanson in Sioux Falls, South Dakota. And to Snacker, Bjorn Anderson in Vancouver, Washington, south of the border.

Happy 26 to Jane Gibbons in New York, New York. Oh, and Jack, did you hear that Christopher Williams just passed his real estate exam down in Niceville, Florida? Real name? I did hear that Vanessa Joy celebrating six months in private practice in Brooklyn. And how about Jack's Nana turning 90 down in? I'm going to assume Florida, Jack. Round that down to 50, man. She always sent me care packages when we're in college together. Do you remember what was always in there? There was some kind of a candy of some kind.

Reese's puffs cereal. Every care package. And only Nana would know how many Reese's puffs were in each box of cereal. It's 100. Happy birthday, Nana. Snackers, we'll see you tomorrow. Can't wait. and podcasts reflect the opinions of only the authors who are associated persons of Robin Hood Financial LLC and do not reflect the views of Robin Hood Markets Inc or any of its subsidiaries or affiliates. They are meant for informational purposes only and are not a recommendation to buy or sell any security, cryptocurrency, or investment strategy in any account. This is not an offer or sale of a security, not a research report, and is not intended to serve as the basis for any investment decision. Any third-party information,

provided therein does not reflect the views of Robintoe Markets Inc. Robinto Financial LLC or any of their subsidiaries or affiliates. All investments involve risk, including loss of principle and past performance, does not guarantee future results. Robin Hood Financial LLC, member FINRA SIPC. Hurricane what?