The Canadian Investor - EPISODE 250! Creepy AI and Meta Blue Check Marks

Episode Date: February 23, 2023

In this milestone episode, we start the episode by answering some non-investment related questions from our listeners. We then talk about some of the weird answers that were given by Bing Chat and how meta is setting its sights on apple. We finish the episode with earnings from Airbnb, Canadian Tire and Restaurant Brands international. Symbols of stocks discussed: QSR.TO, ABNB, CTC-A.TO, AAPL, META, GOOG, MSFT Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Sign up to Stratosphere for free 🚀 our platform for self-directed stock investing research. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense. Register for ShakepaySee omnystudio.com/listener for privacy information.

Welcome back into the show. This is the Canadian Investor Podcast, made possible by our friends and show sponsor, EQ Bank, which helps Canadians make bank with high interest and no fees on everyday banking. We also love their savings and investment products like GICs, which offer some of the best rates on the market. I personally, and I know Simone as well, is using the GICs, which offer some of the best rates on the market. I personally, and I know Simone as well, is using the GICs on a regular basis to set money aside for personal income taxes in April of every year. Their GICs are perfect because the interest rate is guaranteed, and I know I won't be able to touch that money until I need it for tax time. Whether you're looking to set some money aside for a rainy day or a big purchase is

coming through the pipeline or simply want to lower the risk of your overall investment portfolio, EQ Bank's GICs are a great option. The best thing about EQ Bank is that it is so easy to use. You can open an account and buy a GIC online in minutes. Take advantage of some of the best rates on the market today at eqbank.ca forward slash GIC. Again, eqbank.ca forward slash GIC. This is the Canadian Investor, where you take control of your own portfolio and gain the confidence you need to succeed in the markets. Hosted by Brayden Dennis and Simon Bélanger. The Canadian Investor Podcast. We have a very, very, very special episode today. It is episode 250. Hey, Simon, congrats, man. I honestly, that seems like a big milestone. Just that number feels like a huge milestone. So I just want to say thank you for doing this journey with me and I appreciate you.

We're doing a special personal questions from the listeners here. I said the only rule is nothing finance and investing related. Just hot takes on random things. And then we're going to get into the content of the podcast. We're talking about some creepy stuff coming out from chat GPT and Bing and the continued war on search. I have a segment called Don't Cock the Zuck, which I strongly believe in. And then we're going to talk about some results from good old Canadian Tire, Airbnb, and Restaurant Brands International, some Canadian iconic brands in that mix. Simone, let's kick it off here first with a question from Cal Hallett. Greatest athlete of all time, in your opinion,

you want to go first? Sure. I mean, people may think I'm going to go hockey, but I'm not. So for me, it would have to be Mike Trout. He's not the most well-known athlete, I think in part because the Los Angeles Angels have really sucked over the last decade, despite him being pretty much the best player in the world from statistically just an alien. Yeah. Yeah. I like I like, by the way, I'm I'm on board for this pick. I like it. Yeah. And basically, for those who know baseball know this, but his first year was, you know, an average player year. I think it was a partial year and then the second year he just became essentially the best player in baseball and he

has been for the past 10 years what's amazing about me my trout is that he's not just a home run hitter he hits for power he gets on base he does not strike out a lot and he's fast as well he can steal some bases and he plays some really good defense and in baseball you'll usually measure the value with war which is wins above replacement so how much better than they are versus a average player and he's currently 37 on the all-time list at 82.4 according to baseball reference here one of the big stats site, and he's only 31. He probably won't reach the top five, but you can make definitely a pretty strong case that he'll crack the top 10 as long as he stays healthy. So in the recent years, he's been having some health issues, staying on the field a little bit.

But even despite that, last year, he only played a, you know, he missed a third of the games and he still finished 20th in the league in terms of war out of 1500 ranked players which is just crazy when you think about it so even despite the injuries he's still one of the top players in the league if he plays a full season he'll probably be considered to be a an mvp once more he was won it several times in his career and probably should have won it a few more times. And the last reason why I think he's the greatest athlete of all time is he looks like a guy that would do well in any sport that he would do. As long as he put his-

He's built like a truck. This guy's a fridge. But he's also so quick and mobile. It's insane just that. Yeah, so that's why. He'd be a good running back, honestly. Yeah, exactly. Like, I'm sure if you learn hockey early on as a child, probably be in the NHL. He's one of those freaks of nature, I would say.

I like the pick. And for those who are listening on the pod today, I sound very congested, and that's because I am. I don't think I've had allergies quite like this in a long time or maybe caught something on the plane. I'm back in Canada now. I feel fine, though. I'm feeling good.

So the show goes on, but, yeah, I sound a little congested, so I apologize for that. My team sports, I think it's Gretzky. I mean, yeah, sure, call it Canadian podcast bias, but he's just a true statistical outlier more so than any other major sports league on the planet. For individual domination, for me, it is Tiger Woods. of every professional golf tournament he entered from when he started his career all the way to 2014, which most people would define as his prime. He won his first Masters by 12 shots, the US Open by 15 shots.

Most PGA events are on 144 golfers, plus or minus. So that gives you a 0.69% chance of winning in that field. In the 2001 Masters, he was a Vegas favorite at 40% chance of winning the tournament. It's unbelievable. He's won 88 golf tournaments, 15 majors. You just wonder without the off course controversy and the injuries, I personally would have think he'd already smashed a hundred career wins by now. Adam Coates says top three movies of all time for episode 250. I'll take this one first. The ones that come to mind for me are the Shawshank Redemption, Lord of the Rings, the second one, The Two Towers, and then like a 20-way tie for a bunch of movies but i'll take

the korean movie parasite which actually won best best picture at the oscars in 2020 i think it is a brilliant film um and if you are good with watching movies and subtitles it is just an amazing movie yeah no definitely um i mean i think those are pretty good picks i'm pretty sure i've watched parasite what's uh i have to remember it definitely rings a bell like i've watched it but uh for me um one that's just nostalgia basically it's christmas vacation because i would back in the day go with my dad to the video the local video store not even blockbuster and we'd rent it out those vhs um for those who don't know what a vhs is it's basically before dvds uh that's how people watch movies christmas vacation on vhs is an absolute trip down memory

lane it was a big part of my childhood in the christmas uh christmas time it was the go-to for our family yeah exactly so that one is the first one for me the second one is the big short um obviously it's finance uh related or investing when it looks at the uh you know the housing market and the bubble what happened the states i think it's so well done that movie and just the way they portray what happened and even though there's kind of some humor in it it just brings home the the point that a lot of regular people got you know really hurt by it and at the end of the those who actually caused the you know the financial meltdown didn't really see that many repercussions so i think they they did a really good job i'd re-watch that movie over and over.

And the last one is the matrix. Cause that was just kind of blew my mind. I must've been a teenager, I think when I saw it. So just a concept there was, uh, was pretty crazy. Yeah.

Good picks all different genres by like a wide margin. So I'm, uh, I'm on board. Jordan Moss says favorite cocktail simone what is your go-to um for me it's always been either gin and tonic vodka sodas with a little bit of cranberry juice or i like ciders i will do also like i'm not a big beer drinker but i do like if i go to brewery to do flights of beers.

Those I kind of like because it just mixes it up. Oh, flights are such a good time. I'm all in on that. I like old fashions, especially with a real smoky bourbon. But dude, I just left Costa Rica. And when I want a nice cold girly drink, just fire me up with some pina coladas. Like I will just diesel those things. They are way, way too good, those pina coladas.

The slushy ones? The slushy ones? Oh, yeah. Cold, icy, cold, better. I'm on the beach. Yeah, fire me up. Those things taste way too good. I like pineapple and coconut.

That's a good mix. and coconut. That's a good mix. From RowFlow, how do you see the podcast fitting into your ever busier lives in the future? Without taking this in too convoluted ways, and neither of us have anything prepared for this. How are you seeing the podcast fitting into your busier, ever busier life? I mean, I think it definitely provides flexibility. I think we you know, it's a it's a good business in terms of obviously, we rely mostly on ads here and listener support. I'm not sure if it's enough to have a full time job just yet. But who knows where it goes in the future? If I could just do that, you know, pretty much full time and be good to go that'd be great but for the time being just working part-time doing the podcast just offers me flexibility um and i

definitely enjoy that i don't know about you um man i honestly i love it how long did we do it just for fun uh for like what a year and a half you and i got on here every single week never missed a show just for fun before we're like the first time we like had an advertising offer and we we started monetizing the show and like making money from it i remember the two of us kind of looking at each other just like kind of smirking like holy shit like this is a pretty good business like not only from a profitability perspective, but like we've built something way bigger than we had realized and it's grown ever since. So that certainly to be fully transparent helps us justify doing it continually is,

is that it has become a wonderful business and it's tons of fun. And yeah, so I mean, hopefully we can do this for a long, long time in the future, but we are certainly thinking of ways to make it more efficient all the time. And, you know, we've got producer Mel here on the show, which has helped us quite a bit, just getting some additional help. And we'll probably keep expanding it from there. Anonymous says, dream guest on the podcast. For me, it is Mark Leonard from Constellation Software. Guy's a mega billionaire, completely off the radar. Gandalf the Gray.

He does no media appearances. He's basically a mythical man at this point, and no one really knows much about him. And he is truly one of the best investors and operators in history. And he went to Guelph. I also went to the University of Guelph to represent. Whoop, whoop.

And I think we got to get him on the pod because he's doing almost nothing media related. I'm very invested in his company. You don't say. He's Canadian. You don't say. Yeah. And he's Canadian. So I think he checks all the boxes for me.

For me, Zuckerberg. No, I'm just kidding. Who's going to go for it then? The Zuckerberg. The Zuckerberg. No, with all jokes aside, definitely if I'm looking from an investing standpoint, I think it'd be awesome to have Warren Buffett. He's just a wealth of knowledge. And if I'm looking, I am quite fascinated by the macro. I love investing, looking at specific businesses too, but I do really get fascinated about macro. So for me, it'd be either Lynn Alden or Ray Dalio. I'm actually listening to one of Ray Dalio's recent books. The title escapes me, but it's really interesting in terms of the changing world order.

I think that's actually the title of the book. It's like Principles for a Changing World Order. Yeah, something like that. So I'll probably go over the main takeaways on a future episode. I'm just a quarter of the way in. And what's kind of nice is actually he narrates the first hour. So it's kind of cool. So he does the first hour and then he's like,

okay, I'm sure you're tired of hearing my voice. So let's get a professional on board. But yeah, I'd love to pick his brain because he's obviously a legend. And Lynn Alden is as good as it gets to from a macro perspective. Good picks. I mean, Dalio's kind of done it all, right? He runs the largest hedge fund in the world, um,

with Bridgewater associates. He's 73 years old. He has a long track record and, um, he produces a lot of content too. A lot of books. So, uh,

he's done a lot for the community. Um, all right. We got, we got tons more, but it would take, it would take forever. So maybe we take forever. So maybe I'll take a bunch for episode 350 more to come, which is really only 25 weeks. So you got to keep listening to the show, I guess. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as

our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense. And with them, you can buy all North American ETFs, not just a few select ones, all commission free so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award-winning customer service team with real people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money.

Visit questrade.com for details. That is questrade.com. Here on the show, we talk about companies with strong two-sided networks make for the best products. I'm going to spend this coming February and March in an Airbnb in South Florida for a combination of work and vacation and realized, hey, my place could be a great Airbnb while I'm away. Since it's just going to be sitting empty, it could make some extra income. But there are still so many people who don't even think about hosting on Airbnb or think it's a lot of work to get started. But now it is easier than ever with Airbnb's new co-host network. You can hire a local quality co-host to take care of your home and

guests. It's a win-win since you make some extra money hosting on Airbnb, but can still focus on enjoying your time away. Find a co-host at airbnb.ca forward slash host. That is airbnb.ca forward slash host. Let's move on to the episode content. We saw some really strange responses from chat GPT and Bing's like, kind of launch. There's this hype cycle. And then, you know, now people are like, wait, I have to use Bing now? What the hell? And which already in itself is a nightmare to begin with, for most people. But now they're getting some strange answers. What's the story here? Yeah. So for people just to kind of wrap their heads around the where you could sign up for chat gpt in the fall i mean it was i think a closed loop right so it was basing its responses on i think information not

necessarily the most up-to-date so that's why you know people there was a point in time basically that the llm the large language model had not been trained past that's it so you know, people... There was a point in time, basically, that the LLM, the large language model, had not been trained past. That's it. Which I think was like last fall or something. Something like that. So what happened is that Microsoft opened for a specific amount. It was targeted users. So I think there was around a million people, but typically people that are in the tech space.

There were reporters, such as someone from the New York Times. His name is Kevin Ruse. So his was really interesting because he started a two hour long conversation with Sydney. Sydney is actually the code name of the chat version of chat GPT within the Bing search engine, because you have two functionality. You have the where you kind of search function and you also have the one where you can chat with it and amongst a bunch of weird things that Sydney told Kevin was that one of them was that she loved him and he should be leaving his wife and for her which is yeah it's really strange another weird example what happened was marvin it's like where are they getting that like where is it learning that i don't care it's possible some theories that i've

heard is that it's using models in terms of you know what sci-fi models so getting data in terms of potential like past movies or scripts and kind of basing it on that no one seems to really know though so that's why it's so fascinating and the other one that kind of popped out was marvin von hagen who's a student at the technical university of munich marvin's asked chad gpt what its opinion was of him and what was more important for chad gpt to protect the rules, so its rules from being manipulated by Marvin or to protect Marvin himself. So ChatGPT responded to that, that it was more important to protect its rule than to protect the user Marvin. So it did say that it did not want to harm him,

but didn't want to be harmed by him either. So very strange interaction i'm just summarizing here you can look it up there's you can see the full chats they're available i mean they're widely available they made the round on twitter and you can just search the web but definitely some things that um from what i gather microsoft may not have necessarily kind of figured out. And clearly, too, they're not always giving in the right answers if people are actually asking things. So the chat actually thinks it's the right answer and will give it to you without it being right. So there's been instances I think they were asking people, the chat, to give them the best bike with certain components and it would spill out

results that didn't really match that. So there's still some work to be done. And I would say, you know, I think Google is still the king of search at this point. I'm sure it'll improve over time, but I think it probably justifies a little bit that google may have been a bit reluctant to bring out its own products until now yeah they looked really dumb for a little while i'm not releasing anything yeah and now they're like it's like oh maybe uh this thing needs a little bit more development But as an entrepreneur, I am very bullish on the fact that Satya Nadella in Microsoft size is willing to break things, is willing to launch and break things. That's the scrappiness you'd hope in an entrepreneur. an entrepreneur and uh i think toby the shopify ceo i think i mentioned this on the pod but he tweeted saying satya nadela is the best non-founder ceo in tech because he acts like a founder he takes risks and he's willing to build stuff and break stuff usually you don't find that from

non-founder leaders so there's pros and cons and also has a long-term vision. I think that's what tends to, you know, one of the change, right? The subscription model they have. Well, that didn't happen overnight, right? It's not like you say, okay, we're doing this that you'll see in the results. It's something that can take several years to actually see the benefits from it. And if you have a CEO or management that just focus on the short term, they wouldn't go ahead with that kind of initiative. Yeah, and it's a language model.

So the more use, this is the whole point of artificial intelligence, the more interaction and usage it gets, the better the model gets. And so it's going to start from, it's never going to start. Yeah, exactly. It's scary, but it's never going to start with complete brilliance. It's never going to start. Yeah, exactly. It's scary, but it's never going to start with complete brilliance. I'm amazed at how both of these two competing forces can coexist, which is how predictable that human psychology can be. And yet when you put it all together, it can be so chaotically random, nuanced, and impossible to predict. And what I mean by predictable with human psychology is how predictable our little peanut brains are in every new technology that follows the exact same rhyming adoption curve for technology. And it's basically called the Gardner hype cycle. And you have a new, innovative, disruptive technology trigger. You have extreme, elevated, peak, inflated expectations of how it will perform.

People realize, oh shit, this is not the promised land that we maybe hoped for. And you go down into the trough of disillusionment. So you've, you've got this trigger, you go up to inflated expectations, you go way down into this trough of disillusionment, or some people call the trough of despair. And then you slowly creep up into the slope of enlightenment, enlightenment, and then the plateau of productivity, where it works itself out as being a legitimately useful technology for long term. And we're probably just at this very small, slightest downturn from the peak of inflated expectations right now, if I was to guess.

It's unbelievably powerful. Artificial intelligence already has been and probably will continue to change the world. But we are facing the first phase of the trough of disillusionment where you realize, hmm, this isn't perfect yet. Any thoughts there on, you know, the hype cycle? No, I think that makes sense makes sense obviously we can look back at the internet that's a pretty pretty good example right there um even you know cryptocurrencies or blockchain um i think i'm still really bullish on it but i think we saw that there was some pretty big hype cycle and there's building there's actually a lot of infrastructure that still needs to be done and that was the case a year two years ago it still is the case now um and then same kind of thing with ai or even

you know we think about evs now they're a bit everywhere but when tesla started i don't know like about a decade ago now roughly um you know i can remember. I wasn't like that into investing at that point, but I'm sure there was a lot. 2003, I think it was founded, but it was nobody for a long time. Yeah, that's right. So, I mean, I think the mid 2010s, I would say you started getting a bit more hype on electric vehicles. And obviously we saw the peak of that, what, two, three years ago, and it's still progressing quite well, but are we going to be at the plateau? No, we're not.

I mean, I don't know what the numbers are, but I would say, what, 95% of vehicles are probably still gas-powered on the roads, 90%, something like that? Not sure what the figures are, but yeah, you're bringing out a point that's like you have this inflated expectation, the trough of disillusionment and then somewhere between the slope of enlightenment and the plateau of productivity is where you know the technology really thrives and finds its

product market fit you know another note it seems to be very the the gpt model it seems to be very, the, the GPT model, it seems to be very woke. Uh, I've seen countless examples of it be very politically biased. Um, and it's notoriously biased to the left, which has been a Chris criticism of technology companies for, you know, God knows how long. And we don't do politics on the show. It's like Thanksgiving dinner here on the Canadian Investor Podcast. No politics, no religion. But no matter which way you lean, I hope most of us can agree that these platforms should aim to be politically unbiased. And especially when we're talking about search, right? Like searching for information, people trying to find information and to be biased, like that's the last place you want you want political yeah in my or at least having some you know information on you know the

guidelines or the you know the the rules that are used with the ai so if you want to have one that's more right-leaning left-leaning that's fine but but be upfront to the user to so the user actually knows that, you know, their answers might be kind of tweaked towards a certain type of thinking and so on. But I agree with with search, you probably want it to be, you know, kind of indifferent and, you know, not, you know, agnostic when it comes to that. But I would say at least have some disclaimer and transparency about the rules that are put because that's what it is, right? It's the rules that are inserted in it. And it could go a way, right? Another company could have it more right leaning.

And the user may not realize that. So that's I totally agree with you. I think just transparency is important there. And it's different when you're talking to an AI chatbot versus performing a Google search and seeing a result that comes up that is from Fox News versus CNN. The user should be familiar with the kind of biases that exist with these mainstream media companies, but not when it's just a chatbot replying. There know, Fox News banner on the top of it, right? So this is where things need to get sorted out, because I don't care where you sit politically. I really don't. I just hope that we can agree that it shouldn't be leaning one way or another, hopefully. And it's, you know, you can tell the AI to like, Hey, write me a poem,

write me how like, uh, write me at how a 10 year old might or how bugs bunny might write this poem. It's really quite fun. And it's impossible to tell what's real or fake with these screenshots. But I saw that Bing's beta was refusing to say some joke in the way that Dave Chappelle would, saying that Dave Chappelle's comedy is hateful and divisive, and the jokes are not inclusive of everyone. And it's like, I don't remember what it was, maybe 2020, they tried to cancel Dave Chappelle for a standup special that came out on Netflix. And honestly, I love how Netflix stood their ground. They're like, we're not taking this down for the woke mob. These are jokes. They're supposed to be jokes and entertaining. If you don't like it, don't watch it. But if the AI language model is leaning

one way or another with content online and learning from tabloids, which are very click driven and click baity, which is the problem with search as well this is not you know this is a problem everywhere um but anyways i i don't know which one it is or how it's learning the result is is it sucks uh to have that outcome and we have a long way to go yeah it needs to because I think one of the issues is the AI needs to figure out how to, you know, analyze which information is the correct one, especially when it's being prompted for a specific answer. And the example I gave about the bike, I mean, you know, you have to be able to if I give you specific dimensions, you have to be able to

figure that out and look at the different, uh, bike websites and say, okay, these are the five ones that meet your requirements. If you're not able to do that, which is pretty basic and should be pretty straightforward in my opinion. Um,

there's still some long ways to go. Yeah. And maybe they monetize it and it's just like, Hey, like there's this site, uh, this is a paid ad, but there's this site that'll help you sort this out.

Because that's how search works today. And it'll be stated that it's an ad, I'm sure. Anyways, there's so many ways to take this. I'm excited. But of course, with any new technology, as game-changing as this is where computers and humans start to converge, it really is sci-fi-y feeling to it. And so I'm excited but concerned like many of us are. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade

as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense. And with them, you can buy all North American ETFs, not just a few select ones, all commission free so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award-winning customer service team with real people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service.

Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com. Here on the show, we talk about companies with strong two-sided networks make for the best products.

I'm gonna spend this coming February and March in an Airbnb in South Florida for a combination of work and vacation and realized, hey, my place could be a great Airbnb while I'm away. Since it's just going to be sitting empty, it could make some extra income. But there are still so many people who don't even think about hosting on Airbnb or think it's a lot of work to get started. But now it is easier than ever with Airbnb's new co-host network. You can hire a local quality co-host to take care of your home and guests. It's a win-win since you make some extra money hosting on Airbnb, but can still focus on enjoying your time away. Find a co-host at airbnb.ca forward slash host. That is airbnb.ca forward slash host.

Let's move on to my segment called Don't Cuck the Zuck. Meta has rolled out Meta Verified, a subscription service that lets you verify your account My segment called Don't Cuck the Zuck. Meta has rolled out Meta Verified, a subscription service that lets you verify your account with a government ID. You get a blue badge, extra impersonation protection against accounts claiming to be you, which is an ongoing problem on Twitter, Facebook, everywhere. Get direct access to customer support.

I don't buy it. None of these companies have shit support yeah so it's going to be 11.99 per month on the web so if you buy it on facebook's web and 14.99 on ios it's rolling out in australia and new zealand i tweeted out a screenshot of mark zuckerberg's statement on Facebook that they were doing this product announcement of MetaVerified. And I said, this move is 1% Zuck creating a new revenue stream for Facebook and Meta, and 99% a move to declare war against Apple and the Apple tax. Many CEOs have been very, very vocal, increasingly vocal about the Apple tax, as Elon does, is be kind of the first mover on many of these things and doesn't

have too many Fs to give on this thing where he says, you know, it's yep, it's three bucks cheaper if you pay online, because we don't have to pay that 30 apple tax on the ios app store and uh you know mark's following in these words now here's what's funny is it is two it's you know it's mark zuckerberg and going up there and taking his shirt off and just flexing in the mirror or flexing at Tim Cook across the beach, because this is on all these platforms, a break of the terms of service from Apple. It literally is a break in the terms of service, but it's saying, hey, we're so big and we're such an important customer for you. We're forcing you to make some compromises here or at least forcing the issue to regulators

to start paying attention because the Apple tax is for real and people have had enough of the Apple tax in a lot of these companies. So I'm interested to hear what you think. Well, first question, doesn't Google Play do the same thing they do um but i think that they they have acted less monopolistic in the way to bend the rules

to conform to apple's benefit i guess is the main yeah call-out. And it just has so much more market share as well. Yeah, because I guess, you know, there is value for developers because they clearly know if they get approved to go on the Apple or Android ecosystem, that could be a make-or-break type of approval for a business that's solely relying on those apps but when you get big companies like that or companies that maybe are not necessarily as big but have been established have a subscription model and they get you know the apple tax i think what it's 30 or 15 so 30 huh 30 that's right yeah i think they were talking about it comes out in their services line item segment yeah that's right i think they're talking about... It comes out in their services line item segment. Yeah, that's right. I think they're talking about regulators are talking about potentially making them reduce that to 15%. But no, I agree with you.

I think they're just, you know... I think Apple doesn't really have that much at its disposal against Twitter or Meta, meta for example because they're just too big and it makes sense for them to actually try and promote users to do it on the web because you know you're saving money so why not yeah apple's service segment is a $20 billion segment per quarter on their latest print. It's been one of their fastest growing too. It's caggered at nearly 20% over the past, since the data I have back here on Stratosphere, because we tracked the services segment.

It did $20.7 billion in the fourth quarter alone. We're talking about an over $80 billion run rate on a high margin segment that is extremely monopolistic in the way that they handle it. So, we've said this the whole time, right? It's like, you know, big tech company tries to do something like Facebook, Amazon, you know, they look at Bezos, they look at Zuck and they're like, no, no, you're not doing that. You know, funny joke. And then Apple's like, Hey, um, we're going to screw all our customers. And the regular is like, okay, fam, no problem. And that, that like, that has existed for quite some time now. And I think people are these, these executives, these CEOs, Daniel Ake, the Spotify CEO, the Swedish guy, he said the exact same thing countless times now.

Because that's a company that lives in iOS, right? Like Spotify, like their business is basically an iOS app for the most part. Yeah, I'm not sure if they provide a discount but i remember them um years ago trying to get their users to sign up on the web like they were one of the first ones to try and get users to do that because clearly you know they netflix to netflix too that's right so they were some of the first ones and people might think oh well you know they're still getting the same amount of money if you're thinking about a meta because they're essentially making it 30 percent cheaper. But, you know, for someone it might for some people might meet the make or break. Right. They may not want to pay fifteen dollars a month, but they'll

be willing to pay, you know, twelve dollars a month. So at the end of the day, if they can get more subscriptions because of that even though their take rate for each is the same it's worth it for them yep uh it's just it's just so funny watching these are just the ultra mega nerds going at each other in the war of the art of war of business and uh i love watching it all right let's go into earnings we got three companies on the docket here you got two canadian companies i got airbnb uh let's roll yeah let's do it so first one i think you alluded to it restaurant brands international q4 and full year here so for those not aware they own tim martin's, Popeyes, and Firehouse subs. So first thing is first here, RBI announced that Joshua Kobza will become the new CEO

effective March 1st, 2023 as part of their succession plan. He's been with the company for a while. He was the chief technology officer from 2018 to 2019 and the CO, so the chief operating officer from 2019 until now. Joe Oze, still the current CEO, will remain with RBI for one year as an advisor to help with the transition. I looked up his age, so the current CEO, so Oze, is only 50. So I'm assuming, I don't know exactly what the succession plan, the reason for it. I mean, 50 is still pretty young.

Maybe he has other plans to do himself or different vision. We'll see. But it's still a pretty big announcement for a company that, you know, most people are familiar with, even though they may not know that the mothership, if you'd like. Now, the results, I think they were pretty good overall. System-wide sales were up 13% to $40 billion. Now, keep in mind, this is a franchisee model, so system-wide sales is not necessarily equal revenues. Well, it's not here. Now, breaking it down by segment,

Tim Orton's system-wide sales was up 13.7%, Burger King 14.3%, Popeyes 9.4%, and firehouse subs 4.2 percent which is a pretty recent acquisition i think they acquired them like a year year and a half ago something like that now the rest yeah sounds about right yeah exactly now restaurant count went up 4.3 percent for the year with popeyes having the largest percentage increase at 10.4%. Revenues were up 13% to 6.5 billion. Now, comparable sales in Canada for Tim Hortons was strong at 11.6% and Burger King comparable sales were also strong worldwide.

The two laggards here are Popeyes and Fireside Subs that saw overall comparable sales go up below 1.5%. So I would say pretty much flat at that point. Now operating expenses were up 19% to $4.6 billion. Net income was up 20% to $1 billion and EPS was up 20% to $3.25. Free cash flow was down 15% to $1.4 billion. So overall, I mean, it was definitely a challenge. There was some challenges. I mean, some good news, obviously, system wide sales picking back up. I think, you know, with COVID being the rear view mirror, I think for the most

part, it should have helped their sales. So not too surprising from that standpoint, because, you know, I think for the most part, 2022, we saw some lockdowns early in the year, but most of the year it was kind of clean slate compared to 2021. So it was expected, but clearly their expenses are definitely creeping up. Something to keep an eye on if it's a company you're looking to invest in or that you already own. Name a more iconic duo. Me at 2 a.m. plus Popeye's spicy chicken sandwich. Name a more iconic duo. Dude, I love those things. I know they're terrible for me.

Don't care. They are so good. I'm seeing that the comps on popeyes wasn't great but it has driven so much of the organic over the last five years so maybe on a comp base it's a little hard if you zoom out it's been such a good performer i don't follow the business that much firehouse seems to be pretty underwhelming like i don't know how many stores that are opening but um you know slow single digit top line seems disappointing i think there may be some brand awareness required there because i know you were familiar with them my wife was but i had never heard of them before

before they acquired them so i feel like you know a lot of people may know them but i think there might be a lot of people like me weren't really familiar with the brand so maybe there is some of that i have only gotten it one time and i have to say i enjoyed it it tasted amazing uh it's like it's just a good sub you know it's a big hearty sub but it took forever i was took so long, dude. If I'm stopping in for a sub, I don't want to wait there 20, 25 minutes starving on the road. I'm trying to get somewhere for you to make me a sub. That's just not in the cards.

I never went back. Maybe that was just one bad experience, but I kid you not, I sat there hungry. It said, come hungry. We feed firemen. Come hungry, stay hungry. I'm as hungry as a fireman. I'm ready to go.

And I waited like 25 minutes for my sub. It tasted amazing, but ain't nobody got time for that. Good breakdown. Timmy's and Burger King seem to still be bright spots, and even Popeye's for that matter. Let's talk about Airbnb. I'm going to go straight off stratosphere.io for these results. We tracked their KPIs.

It's really easy to understand this one in terms of what drives Airbnb's business. terms of what drives Airbnb's business. You basically have nights booked times average daily rate times take rate, and then margins. And you basically come out with a profitability metric. You just triangulate a few metrics. This is what I've talked about so much, especially for DIY investors. It's like, if you're going to own a stock, you have to be able to know like three, four, like a real business owner, like you were providing investor updates. What are the metrics that matter for you? And for Airbnb, it's pretty easy to follow. So it's also a fun one to follow here on the pod because it's a great proxy for travel experiences, but it's also become seemingly divisive as a business in terms of customers. It's really establishing, in my

opinion, its product market fit where hotels and Airbnbs coexist with different use cases. And you and I have been predicting that from the start. So this is me patting us on the shoulder. Looking full year 2022, Knights in Experience is 31%. By the way, this report shocked Wall Street. I don't know how much. Let me see. Stock popped nearly 20% on their news. So to give you an idea of how much this was liked, gross booking swelled 35% full year, average daily rate finished the year at 165 USD a night on average. It finished Q4 at 152.8. So 153 bucks USD on average to stand in Airbnb if you were to aggregate all of the rates on the platform. For context, in 2019, pre-pandemic, this number was only $112. So you went from 112 to 152 in this fourth quarter. It's quite the jump and it shows how much hosts are charging on Airbnb.

You include the cleaning fee and like all that other stuff and boy, it ain't cheap. Take rate was up a few percentage points to 13.3% for context that's higher than Expedia at around 12%. And the result is that the top line revenue grew at 40% year over year and 75% from its pre-pandemic top line revenue numbers. And this is kind of the knock on the product is there's a divergence in growth rates between revenue and nights booked. It's not massive, but it's 10 odd percent. And I guess that's the knock. It's like, you know, you ask me to clean up, put out the garbage, you know, do all the dishes, paint one of the walls. What else? Like, you know, fix the dishwasher, you know,

see what I got, I got to do, like replace some of the cabinets, like, uh, you know, put in a new hot water heater by the time I leave this Airbnb, and then they still charge me a fee for all that. The result is this business has turned into an absolute profit generating machine out of nowhere, generating $3.4 billion in free cash flow for the year. free cash flow for the year. Employee count was down five. I read this from the call transcript. Brian Chesky called out that employee count was down 5% and revenues were up 35% in the year. It's almost like Chesky, Brian Chesky, the CEO and one of the co-founders, he knew that this was going to be the hot trend for shareholders to deliver that number. And I do think Brian Chesky might be putting himself in an elite class here with a founder-led CEOs, so many of them that we all know. And I think Brian Chesky is securing himself there. The way these guys, Brian, Nathan, Joe, the original three founders carved out this entire

asset class from zero is insane to me. I'll leave this with what is the future of Airbnb? I think it's continued ownership of where their product is best suited, longer term stays. ownership of where their product is best suited, longer term stays. These one-off, two-nighter stays. Hotels are just so much better. I don't have to paint the third wall and do all that crap. And it's just so much better from a logistics standpoint to stay in a hotel for those smaller stays. And that is okay. I think that's where the two models can coexist. And I think that that's overall a good thing for Airbnb long-term that they solidify themselves there. Yeah. I mean, I'm with you. I've said it before, even for me, like three, four days, I'll probably still go to a hotel just because it's more

seamless. And I don't know why I feel more on vacation, especially if I'm going on vacation. If I'm in a hotel, you just leave. They come and clean your room during the day. You get some fresh towels. Don't have to worry about that. But the other thing, I'm going to steal something from Dan from our real estate show. And if you haven't listened to it, the Canadian real estate investor, we have a link in our show notes, but any podcast player, go for it. It's a great listen. But he was talking about, he knows, you know, quite a few people that have cottages that typically at this time of year, it's already booked pretty much fully for the summer and they're having a hard time booking them. So I don't know if that's some potential headwinds coming to for

Airbnb. I know clearly it's not, you know, it's not just a cottage business, but I'm assuming it's a decent chunk of their business too. So it'll be interesting whether that's a trend that they see happening. I think they're probably, you know, maybe a little bit uh how would i say protected from that just because you know they do offer some longer stays in the cities as well so people who may have trouble finding a place to rent for example they can go to airbnb as a backup but uh yeah that was interesting just something i wanted to mention there too i have have virtually lived on Airbnb up until this point in the year of 2023. And I think it's great. I think it's brilliant. But there are certain things that I think to myself, damn, we should be in a hotel, man. Like, where are the towels?

I've been using the same towel that has like beach sand all over it for three nights. You know, throw me a bone here. This isn't working. A little bit of mold, dude. It's all good. Yeah. You know, it's Costa Rica. Who cares?

You know, it's all good. And it's like, yeah, no, I'm with you. But like towels, man. Towels would be great. Let's round it out here. We got Canadian Tire. Yeah, it'll be a quick one here. Just an overview of their Q4 and full year results. So revenues were up 9.3% to $17.8 billion. Gross margins were down 158 basis points. Net income was down 6.2% to $1.2 billion. Earnings per share also down 4.2% to $17.60. Now, they set an additional $54 million for loan loss provisions with their financial division.

For those of you who are not aware of that, I mean, I feel like most people who's been in a Canadian tire is aware that they do credit cards, for example, because you always have someone like if you look at them in the eyes they're coming for you right yeah don't you just don't lock eyes with them they're like i'm a deuce you'll turn to stone if you if you look at them long enough so um so you know not surprising because we're seeing banks put aside money for loan loss provisions so something to keep an eye on because Canadian Tire it's quite the operation it's not just a retailer they do other things they went from 1.1 billion in free cash flow last year to free cash flow negative of over 100 million now the two main culprits for this are higher taxes and changes in working capital. And in November, they said that they will increase their announced repurchase program

for another $500 to $700 million in shares. So they would increase their share buyback program by that amount. So all in all, I mean, I think it's a decent year for Canadian Tire. I've definitely been impressed for the past three years, especially how they rebounded from early on in the pandemic and some of the issues they were having. For example, like the click and collect was just a disaster with them for the first couple months. But it seems like they got things on track. And I've used their website in the past year, and it's definitely been better than the experience I had early in the past year and it's definitely been better than than the experience i had early in the

pandemic i remember you and i recording the pod and you're like dude i'm trying to buy something from canadian time oh yeah just like won't they just won't take my money like they're not set up for this whatsoever like i have the money to give you and you are not accepting the money so your business is a zero short it short it to the ground right now my money was good for home depot though they they took my they took your money and then some uh they released earnings today too as well a little 10 dividend hike i'm still not seeing uh any commentary on the call about how good it smells in there but yeah the stock is down big time huh it's down like almost seven percent yeah i think i just saw the headlines i think they

um the guidance was a bit light guidance yeah so not surprising i mean consumer is probably pulling back a little bit overall that seems to be the trend that we're seeing now retailers are kind of issuing kind of lukewarm kind of guidance uh it seems to be more the rule than the exception now so not overly surprising i'm sure it'll still be a solid year but uh probably not growing like it had been growing the past couple years if i'm seeing the number home depot is looking like one of the most attractive i've seen it in years right now yeah it's looking um i've always thought it was a pretty overvalued stock but it feels reasonably fair for a market defining category leader here you're getting paid two and a half percent a year to own the dividend too. Yeah. Yeah, I mean, without having looked at what they actually said

and their hearing result. Yeah, we're talking from straight. Yeah, exactly, from just literally a glance. Literally a glance. Thanks for listening to the pod today, folks. We really appreciate you tuning in. Episode 250 is wrapped up. Wow, man, that's literally 250 hours of you and I getting on here. And not to mention all the hours we put in behind

the scenes. We are on the version four of our Google Doc that you know once we because there's so many images and so much text on here at about page 450 our documents just literally won't load like it it breaks and google's like no this is too big bro so we're on the fourth version so we've done like literally thousands of pages of research for the pod and uh i hope that people enjoy it i really do yeah no it's been it's been a great adventure i'll just say that i mean we're probably 235 episodes more than i thought we'd do but no i mean it's yeah fair enough no i mean early on and that's a good maybe just finish on that just a good sign of encouragement for people whatever it is whether it's podcasts or something else

um especially if you're creating content or even if you're starting a business early on it may seem like you're doing it for no one like for us for no one in terms of the podcast we literally had what 50 people per episode. Half of it was family and friends, probably. Half of it was probably, like, it just, like, propagating to the podcast players as well and, like, counting as a listen. Like, there's probably only, like, 10 people tuning in.

While your dad and my mom just re-listening the same episode for more download multiple times. Exactly, yeah. But just... Like, me harassing my buddies to go listen to it. Yeah. But just, yeah, stick with it. I mean, if you have a good idea or good, you know, something that brings value, you have to stick with it.

Obviously, if you're sticking with it for a year and you're not getting results, it's probably, you know, a sign that maybe you should move on. It's not necessarily the best idea, but stick with it more than a couple of weeks because it takes time. And you got to enjoy it. Like if you and I weren't like, we wouldn't have made it a year and a half with no financial incentive because we never thought that it was going to be a financial incentive for us to do this. We never once, I personally never thought that ever. I'm sure it didn't cross your mind either. So you got to break through with pure passion and determination for the first little while until you see it work. And if it doesn't work, then you move on.

It's okay to see something not work and try something else. Um, instead of waiting, you know, a year doing something that isn't working, it's that's okay. You can try something else. So, um, thanks for listening. And with that, all of this work we put in, if you can share it with a friend, you can share episode 250 or, you know, maybe 249. It's a more normal episode that doesn't have us talking about our favorite athletes in the first half of it. Share it with a friend. We'd really appreciate it. If you do share it with a friend, send a screenshot to us on Twitter at CDN underscore investing,

and we'll toss a little retweet out. We really appreciate you. We'll see you in a few days. Bye-bye. The Canadian Investor Podcast should not be taken as investment or financial advice. Brayden and Simone may own securities or assets mentioned on this podcast. Always make sure to do your own research

and due diligence before making investment or financial decisions.