The Best One Yet - 🛒🐠 “Whole Foods lost my seabass” — Amazon’s Achilles Heel. The Recession’s been canceled. Starbucks’ Chinese mission.

Episode Date: August 4, 2023

Amazon just announced stellar earnings, sending the stock to a 1-year high — But Amazon’s Achilles Heel is your grocery order. Bank of America will stop saying “Recession” because the economy is far from it — But certain parts of the economy can still feel recession-ish. And Starbucks’ biggest growth market is China… which is a tea country — So Starbucks turned into a caffeine missionary, converting anyone from matcha to espresso. Our weekly TBOY quiz: go.tboypod.com $AMZN $SBUX $BAC Want merch, a shoutout, or got TheBestFactYet? Go to: www.tboypod.com Follow The Best One Yet on Instagram, Twitter, and Tiktok: @tboypod And now watch us on Youtube 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. It's Friday, the real Friday, August 4th. And today's pod is the best one yet, isn't it, Jack? Yeties, the weekend is here. You got some wins to celebrate. I know you do. Jack, you want to whip up a win for us over there, my friend?

What do we got? Today's pod the best one yet. Yes, it is. Which is better than yesterday's pod, which I freaking love. True story. That was a fantastic one. And we're issuing our second newsletter today. Ding, ding, ding.

We have a winner. News.t.teboypod.com. You can subscribe right now. Double the T-boy on the real Friday. Jack, what's our first story for today's show? Amazon announced awesome earnings yesterday, but groceries is unfinished business. Six years after buying Whole Foods, we're grading Amazon's biggest acquisition ever. For our second story, remember how everyone has been talking about a recession the past couple years?

Recession, recession, recession, Marsha, Marsha. Well, Bank of America promises they won't say recession again. Yeah, Bank of America, no more recession. Not happening. And our third and final story is Starbucks. Get this. Starbucks has built 6,000 locations in China, even though they don't drink coffee in China. Because Starbucks thinks it's a caffeine missionary. But yeties, before we hit that wonderful mix. Perfect mix to go into a weekend with. I love this mix, Jack.

We've told you before about some Airbnb listings you need to know about. For example, the Barbie Malibu Dreamhouse that's on Airbnb. That's a good one. But there's a new listing on Airbnb that's a must see. Get this. It's Gwyneth Paltrow's guest house. Gwyneth Paltrow, Goop, is getting an Airbnb. You can be Gwynny's guest in her guest house at her house in Montecito. On August 15th at 10 a.m., Gwyneth Paltrow's Airbnb listing is going live and you can book a stay.

Besties, we're talking about an Oscar-winning home. Jack, can we talk about what's inside of this thing? This place comes with a pool, a patio, and guided transidental meditation sessions. It includes water and almonds and a six-course kelp-based juice cleanse. When you arrive, you go through a restoration rakey ritual. And then you consciously uncouple from your luggage. First, you detox with a Botox. And then you relax on a sustainable ivory bidet. Don't forget the $800 hand towel made by an Amazonian shaman.

But you're gonna have to B.Y.O. Jade Egg. It's a bring your own situation. What's that smell? Is that the candles? No, Jack. That's the ayahuasca face, man. Turns out Gwyneth Paltrow isn't the only celebrity whose home is listed on Airbnb. No, she is not. Turns out you can also rent Jimmy Hendrix's home on Hawaii. Or imagine John Lennon's tree house in Los Angeles. That's bookable too.

Even Jane Austen's English cottage is available in the countryside. See? Celebrities, they're just like us. Just remember to take out the trash, clean the floor, and wash the sheets before you go. Thank you. Five-star rating. Thanks. Thanks. Gwyneth, if you can wave the seance fee, we're into it. I don't even know what a seance is.

It sounds like it smells. Jack, let's hit our three stories. 15 years before this song, two boys from the Northeast met in the dawn. 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, Amazon just announced profits more than doubled. The stock of Amazon is at a one year high. Everything was fantastic. It was looking great. They were popping champagne. But groceries is unfinished business.

Yes, it is. Yeties, Amazon's earnings just came out. This was the main earnings everyone was looking forward to yesterday. Revenue jumped by 11% in the second quarter compared to last year, which sent the stock up to 60% higher year to date. So Jack and I jumped and T-Boist out. We did a little control a effing. Amazon mentioned A. AI 13 times in their earnings report.

They mentioned growth 27 times. They mentioned AWS 52 times in their earnings. But funny thing we noticed, didn't we, Jack? They only mentioned groceries and Whole Foods one time each. Suspicious. Suspicious. Strange. Because groceries are Amazon's unfinished business.

Yety, six years ago, Amazon acquired Whole Foods for a whopping $14 billion. That was their biggest acquisition. Ever, I remember where I was. I remember where you were a Jack. I was in Detroit. You were in New York City. You went on to CBS to talk about it live. I was wrapping us. I was channeling you, Jack. I was cheering you, Nick. I was cheering you all. I kept turning to my right and being like, Jack, there's no one there. I missed. Here's what Nick said that day six years ago. Whole Foods was going to help Amazon beat Walmart in the one thing that Walmart dominated groceries. Well, what's been happening to Amazon's grocery business over the last year?

This year, Amazon had to cut hundreds of grocery jobs. They paused the opening of new grocery stores, and they lost $720 million this year just in the grocery division. So, Yetis, you want a little weekend trivia? What percentage of the entire U.S. grocery market do you think Amazon has, including Whole Foods? The answer is 4.4% according to UBS. That's it, just 4% of the whole grocery market. Walmart, they have five times that much market share. They dominate with 22% of our grocery orders.

And one reason why Amazon grocery is not living up to its potential. It's because Amazon grocery is having an identity crisis. You can buy groceries from Amazon three different ways. You can do Amazon.com or you can buy from Amazon Fresh or you can buy from Amazon's Whole Foods. And each of those three options offers different types of groceries. And here's where this gets frustrating. So, Jack, I'm on Amazon right now. If I'm ordering Skippies peanut butter, which I enjoy, a filet of Chilean sea bass, and sesame

seed bagels, I'm getting them from three different places. That's right. No single source has all the groceries that you want. Even the most Bezos-loving shopper is going to get frustrated with three different shopping cards arriving in three different boxes with three different email confirmations. Now, Yetis, Amazon is trying to fix this problem. They announced this week, they're consolidating their three grocery brands into one online shopping cart.

Somewhere out there is a Yeti who works on. like product management at Amazon on this issue and is very proud of this moment. Yes, because Amazon customers demand efficiency and one cart is more efficient than three. Yes, this new shopping cart will solve the identity crisis for Amazon's groceries, but does it solve the full problem? And where's my Chilean sea bass? I don't know, Nick. I don't have it for you, man.

No man explains me what a toe hitch is now, Jack. So Jack, what's the takeaway for our buddies over at Amazon? Even Amazon has an Achilles heel. And so far, it's groceries. Yeties, Amazon has thrown all the resources, the technology, and all the math that they can at the grocery problem. And so far, it hasn't made it work. They've tried palm scanning technology, cashierless checkout. Product identifying shopping carts.

They've got all of that. But now they're scaling some of those technological features back because some of them aren't working as well as they hope. Amazon won e-commerce with its sophisticated network of warehouses. But a head of lettuce can't be shipped in a cardboard box like all the other products can. And it looks like my Chilean sea bass is going to arrive with a little bit of a smell. Yeti six years ago, Nick boldly asked the question on CBS about Amazon's acquisition of Whole Foods. Can groceries be sold profitably online? So far, the answer seems to be no.

For our second story, Bank of America just admitted that it was wrong. It turns out the economy is not headed for a recession. We do not have a recession. No, we don't. But things can still feel recession-ish. They can still feel recession-y. Yeah, it is for two straight years. Bank of America.

America's Bank, frankly, they've been a Debbie Downer over there. Now, look, it's not their job to rah-rah cheer on the U.S. economy. It is their job to predict the future of finance. That's what they do. And their economists did the best they could. For two years now, they thought, that a recession was coming to the U.S. Yes, they did.

But on Wednesday, shocking news at a Bank of America, they just finally bailed on that bold prediction. For two years, they've been like, no, I'm telling you, recession's coming. Oh, don't worry about that day. It's coming. It's a coming. But they just caved on their recession prediction. And Jack, why are they changing their mind

about a recession coming along the pike? Because of the data. This is the exact quote, Yetis. Recent incoming data has made us reassess our prior view that a mild recession is coming in 2024. And it's not just Bank of America. References to the word recession and earnings calls are down by 70% this year. We repeat, the number of times recession gets referenced on earnings calls plummeted,

70%. Brian Moynihan will spank you if you say the word recession at Bank of America headquarters. Come at me, Brian. Come at me. Now, yet is a recession is when the economy shrinks for two quarters in a row. six straight months of economic shrinkage. Well, Jack and I are looking at the numbers, and the data shows that the opposite is happening.

The United States is on a four-quarter growth streak right now. And the most recent quarter, we grew by a respectable 2.4%. Perfect timing yeties today. We're getting the jobs report for the month of July. And it's probably going to show that we have a 3.6% unemployment rate, which is close to an all-time low. And consumer confidence just hit its highest level in two years. inflation hit its lowest level in two years. So when you look at the data, Bank of America is right

about being wrong. Our economy is simply not in a recession. Far from it. And it doesn't look like we're headed for a recession next year either. If you see someone say recession, send a Brian Moynihan's way. So Jack, what's the takeaway for our buddies over in the economy? We are not having a recession, but it can still feel recession-ish. That's the nuance, Jack and I want to point out. Well, the economy is not in a recession. Certain parts of the economy are in a recession. For example, if you bought crypto or meme stocks while they were at their peak, your portfolio is in pain. Or if you joined a tech company in 2021 to 2022, you may have gotten laid off. Or if you work in the media industry from the New York Times to Snapchat, ad sales for your company are down.

Or if you're a real estate agent in this economy, you may be struggling to. So for many, the economic pain is real. Specific industries have felt recession. E-ish. But overall, just about everyone in this economy who wants a job has one. And wages are growing faster than inflation. So even though we don't have a recession, it can still feel recession-ish. For our third and final story before the weekend, Starbucks just reported earnings. They're crushing your cold customized coffees like never before. But Starbucks China is a caffeine missionary. And that got us curious. But yet is, Jack and I did cover a coffee store. earlier this week. Didn't we, Jack? We told you about Maxwell House coffee.

Maxwell House. Yeah, Fulgers. It's in your cup. Remember the instant foamed cold latte? Instant classic. In that story, we told you that iced coffee is the order of choice 75% of the times at coffee shops. However, iced coffee's only made 7% of the time at home. And Starbucks just confirmed those numbers. Because Starbucks just told us their cold brew business is exactly 75% of sales last quarter. 120 degrees in Phoenix, you order a Frappuccino. When it's 130 degrees in Phoenix, you get a triple frappuccino. And it's not just cold beverages we're ordering. It's custom cold beverages. Yeah, good point, Jack, because pricey add-ons are bringing in, get this, a billion dollars of revenue a year for Starbucks. And the most popular modification is cold foam. It's the cold foam

foam. It's mostly air for you, mostly profit for Starbucks. But custom double-digit mocha lattes in the U.S., That's a distraction from the bigger picture. The real question, Jack and I were wondering, the real question every analyst was wondering, is what's happening at Starbucks number two market? Starbucks is number two market. China. Yeties, the Chinese coffee market is fascinating to us because it's a mix of contradictions. Starbucks has 16,000 locations in the U.S., which is more locations than McDonald's has in the U.S.

It's a lot of locations. And Starbucks has 6,000 locations over in China. That's also a lot, and it's growing faster in China. China than in the U.S. Starbucks is opening up one new coffee shop in China every nine hours. Every nine hours, a new store is opening up. They're so focused on China right now. They mention the word China 56 times on that earnings call.

Last year, they announced that Shanghai, one city, has a thousand Starbucks. There are a thousand Starbucks in Shanghai. By the time you're eating dinner tonight, they'll have added another one. And it seems to be working because sales in China surged by 46% for Starbucks. in the last year. Bessie's China economy has slowed, but its thirst has not. But Nick and I found kind of a huge issue with Starbucks's China strategy. Here's the contradiction we were talking about.

In America, the average American drinks 380 cups of coffee every year. More than a cup a day. In Japan, the average Japanese person drinks 200 cups of coffee every year. But in China, it's a lot lower. In China, the average Chinese person drinks only 12 cups of coffee. of coffee a year. 12 cups of coffee per capita in China. Jack drinks 12 cups of coffee before you can finish saying 12 cups of coffee. And a Chinese person drinks one cup a month. Yetis, China is a crazy large market for people, but a crazy small market for coffee. Honestly, what is Starbucks even doing there?

When you look at these numbers, you kind of want to question the whole launch plan. Especially when the launch includes 6,000 buildings. And they just added another location. So Jack, what's the takeaway for our buddies over at Starbucks. Starbucks thinks it's a caffeine missionary. They're trying to convert China to the religion of coffee. He's our first thought when we saw this information. In China, Starbucks must be selling tea instead of coffee. Tea is China. Yeah, like McDonald's famously adapts their menu for local tastes, Starbucks must be doing the same. But here's the shocker. That's not what's happening with Starbucks in China. In a press release last year about their China business, Starbucks did not mention tea a single time.

In fact, Starbucks says they're proud of developing a coffee culture in China over the last 20 years. Instead of adapting to local tastes by serving tea, Starbucks is trying to convert the Chinese on their caffeine. Frankly, that is an international growth strategy we have never seen before. Well, we've seen something like this and badly. Like when Italy kicked dominoes out of the country because they didn't want their American-style pizza. What is it is a pineapple on my margarita?

But Starbucks thinks it'll fare better for them over in China. Starbucks is bed in the house on converting China to the religion of coffee. Jack, can you whip up the takeaways for the Real Friday? Amazon's earnings boomed last quarter, and the stock has boomed 60% so far this year. But even Amazon has an Achilles heel, and that Achilles heel is my Chilean Cadas. It's groceries. For a second story, Bank of America reversed its prediction from a recession to no recession. Our economy is not in a recession, but for,

some, it can still feel recession-ish. And our third and final story is Starbucks. It's betting the house on China, which is its fastest growing market. There's 6,000 locations over there are caffeine missionaries. But yeties, the pod's not over yet. Here's what else you need to know today. First, A-list celebrities are siding with actors and writers who are on strike in Hollywood. Matt Damon, Leo DiCaprio, Oprah Winfrey, Merrill Streep, they each gave a million dollars to a fund that aids these strikers while they're not getting paid. Maybe that's why Gwen is doing the Airbnb. And second, former President Trump pleaded not guilty to federal charges that he conspired to block the transfer of power. He's going to have three, maybe four trials during next year's presidential campaign.

And finally, Taylor Swift gave out the biggest bonus we've ever seen in the entertainment industry. Every truck driver and crew member that's been on her with the Ares Tour is getting a $100,000 bonus. And you get a car and you get a car. get a car and you get a car. Well, no car. Just the $100,000 check. Very Oprah. Very Oprah. Now, time for the best fact yet. This one sent in by John Killen Jr. from lovely Tampa, Florida.

Push and play. This is John Killen Jr., giving you the best fact yet about Nike. Phil Knight, Sonny Vaccaro, and Michael Jordan are three legends who changed the game of sports and fashion. Nearly 40 years ago, they created Jordan's first shoe deal worth $2.5 million over five years. Yeties. This led to the birth of the iconic Air Jordan Sneaker line. Fast forward to 2022, and the Jordan brand generated a whopping $5.1 billion U.S. in revenue. Their work revolutionized the sneaker industry and paved the way for the athlete brand partnerships we see today.

MJ, he insisted on having skin in the game with that shoe. But can he open a new coffee shop every nine hours, Jack? Probably. Yeah, probably. By the way, that whole story, portrayed fabulously in the movie Air, which Nick and I both saw it, and we both loved. Yetis, you look fantastic today, and we know that you probably have some wins to celebrate. Jack, we got some wins to celebrate. You can do it this weekend?

Our top win to celebrate is the best newsletter, yeah. I'm so proud of this second core product. Yates, we're halfway through the year. You've probably got a win to celebrate. Hit us up at T-Boy pod. We want to see it. Jack and I want to know what you did. Yeti, savor that win.

Nick and I will see you Monday. Can't wait. And before we go, congratulations to legendary Yeti, Mohammed Jangair, who just got his U.S. citizenship after 25 years. Muhammad, we're pumped to have you with us. Welcome to the team, and congratulations and happy birthday to Macy Hong from London, who's celebrating on the beaches of Menorca. Happy birthday and happy four-year yet anniversary to Anna Simonovsky in New York City.

And Caitlin Poole, happy 25th birthday down in Newport Beach, California. Happy birthday to Kara Holiday in St. Louis, Missouri. And Evan Shack, happy 20. birthday down partying in Miami. Augusto Perez is celebrating a birthday today in Madison, Wisconsin. Chase, how more, celebrating the birthday in the Bay Area, not too shabby. Happy birthday to Tiffany Marquez, surfing down in San Diego. And Leslie, the founder white, happy birthday in New Orleans.

Congratulations to Mark Lowe and Lillian Jang. They met at Nike. They work at Nike. They're probably wearing Nike shoes right now, and they're getting married in Hawaii. And Gail and Steve Brockman, Happy 35th wedding anniversary. Enjoy it in Marino Valley, California. And good luck to Jackson Fippin, who's driving to CSU for that statistics Ph.D.

And Christiane Villamerin, the tri-athlete, is finally able to walk again after breaking that ankle, and now he's winning races. He's grown back stronger. And to anyone else, celebrate something today, make it a T-boy. Celebrate the wins. This is Jack. I own stock of Amazon, and Nick and I both own stock of Airbnb. And where's my Chilean sea bass?