This Week in Startups - Comparing 2022 to the Dot-Com bubble + Activist investor challenges Peloton leadership | E1368

Episode Date: January 25, 2022

Due to the volatility in the market, Jason and Molly review the fundamentals of Block, Zoom, Netflix, Coinbase, and AirBnB and compare this correction with the Dot-com crash (2:11).  They discuss investing in a downturn, the difference between private and public investors, speculative businesses vs. strong fundamentals and more! To wrap, we cover activist investor Blackwells Capital calling for the Peloton Board to terminate CEO John Foley and consider a sale (57:10). (00:00) Jason and Molly intro the show (02:11) Breaking down the fundamentals of Block (09:57) Marketerhire - Get $500 off your first hire at https://MarketerHire.com/twist (11:28) The difference between private and public investors (12:18) Breaking down Zoom & Netflix (20:20) Superside - Go to https://superside.com/twist to get $3000 or more in credits when you sign up for an annual subscription (21:38) Breaking down Coinbase and AirBnB (32:38) FanDuel Sportsbook - Sign up with promo code TWIST to place a special $1000 risk-free bet at https://fanduel.com (34:24) Breaking down AirBnB (38:12) Is crypto really an uncorrelated asset? Fundamentals vs. speculation (46:46) Comparing this correction with the Dot-com crash (51:43 )Are we at peak SPAC? (57:10) Blackwells Capital calling for the Peloton Board to terminate CEO John Foley and consider a sale FOLLOW Molly: https://twitter.com/mollywood FOLLOW Jason: https://linktr.ee/calacanis

Welcome, everybody. It is going to be a great show today. We're going to talk about all this market volatility because we cannot help ourselves. We decided to go through a bunch of fundamentals, try to put this through the startup evaluation lens, go through the fundamentals for five tech companies that are down between 35 and 75% off their pandemic peaks. Yes, we know there was a big comeback, but we do not think that this is the last of the crash cycles. We go through Block, Zoom, Netflix, Coinbase, and Airbnb, and see if each one of them remains a buy. And then, in addition to looking at the current companies and trying to figure out their business fundamentals, revenue earnings, PE, evaluations of the companies, we're going to

compare this to the doccom crash and we'll separate the real companies with high revenue that are undergrowing a correction and more high growth from, say, some speculative assets like crypto or certain specs, not all of them, that are basically trading with very little underlying fundamentals and what that means. And then finally we'll cover one of the large Peloton activist investors writing a letter asking for the termination of CEO John Foley's reign at the amazing but troubled, smart workout equipment company. It's going to be a great episode.

Stick with us. Oh, we nailed it today. Yay, we did it. We did it. It took two weeks. This week in startups is brought to you by Market to Hire. Need expert marketing help fast, hire vetted marketing specialists this week from the company already used by Netflix, Allbirds, and more. Get $500 off your first hire at marketerhire.com slash twist by using code, twist. SuperSide.

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and potentially all the companies we want to invest in. Tech stocks, when we started preparing for the show, we're in the toilet. The broader market had lost something like a thousand points throughout the day, full-on correction slash crash territory. Now, as we're taping, the market rallied, most tech stocks actually ended only down slightly. NASDAQ and S&P ended the day up.

But it's very clear that this is the start of a cycle, right? that people are calling either a correction or a crash. Today there was dip buying, but one assumes that that is not going to last. And so we kind of want to stop. We'll talk about today, when will the bleeding stop? Was today maybe the bottom? And then we're just going to play a fun game and talk about how this might compare to the dot com bubble in terms of some assets versus the stock market overall. Yeah. And I think it's really instructive for people who didn't go through the dot-com bubble to understand that that mania did in fact parallel a lot of what's going on today.

There was a lot of speculation and there were a lot of new market entrance. What's a new market entrant? We called them day traders. Now you can look at them as crypto folks or day traders who are on Robin Hood, trading stonks or stocks, and basically participating in the market. Retail investors, in fact, took largely two decades. off after the dot-com boom. It was that bad that it scarred a lot of boomers and Gen Xers who said like, just playing the market is a sucker's game. And here we are, you know, probably

30, 40, 50 million more people playing the stock market, especially young people, getting educated and, you know, maybe trading futures, maybe trading on margin, maybe buying crypto. And so we thought it would be instructive today to look at the stock performance of really strong companies were popular business models. Now, I've talked before about the four big business models we like to go after, you know, as investors. These are four classic ones

that are working today really well and have worked. FinTech obviously is one. You got Square or some people call Block Now. You got B2B. Consumer Sassy used to be called Enterprise Computing,

but that includes people like Zoom and Slack. Consumer subscriptions, something I've been into, which includes the Spotify's. We'll talk about Netflix today. Marketplaces where you have one side is buy, one side is sell, and they come together

and the marketplace takes a fee and that's Airbnb. And then as a wildcard, you know, a subsection of crypto and trading, of course, is FinTech. So for our crypto pick,

we'll talk about Coinbase. So there's five companies, Square, now Block, Zoom, Netflix, Airbnb, and Coinbase. Yep. All right,

let's start with a Square renamed Block. And I'm really, look, I get it. Sure, blockchain. It's just that all it ever makes me think of is Minecraft. Yeah.

So I'm going to have to start calling Jack, Minecraft, Steve. And anyway, Square, aka Block, bottomed out around $102 a share today, down 65% off its peak of $281 in August 2021. This represents a $70 billion loss in market cap, making Block's new market cap $54 billion. Over the last year, this company has done about $7 billion in revenue from transactions, SaaS, and hardware. TTM net income, $537 million as of that same quarter. And of course, we have seen a decline since then. When you look at this, though, Jason, do you think the decline represents the business fundamentals?

Like, is it an overreaction to what is otherwise almost $7 billion a quarter business? Okay. So full disclosure, I have shares in Square because I was in an LP and a venture fund that invested in it early. And so I've done quite well. I think I sold half of them and I kept half of them. So I have a pretty significant position. If you, so this is not super objective, but I think Jack is a product genius, right? So I always look at the founder.

And then to your point, you know, it has, I'm looking at this one chart where it's trading at $112, which I think was today. You know, it's down massively. And the market cap of $51 billion PE ratio of $118. So the price to earnings is, you know, very high at over $100. But these companies are not trying to be super profitable. They're trying to grow. And so that is the question is you would have to look at what is the revenue growth here.

So are they growing 30% or more? It's a high growth company. You can get a much bigger valuation out of it. I think it's a company. I made the decision with this name specifically that I would hold it for the next decade. And I think it's really because as much as Square was a great product for small businesses, etc. You know, you use those square things when you go into a lot of cafes, etc. Any company that can grow on a large number, 20, 30%, and I think their last square, they were 26% year

over year. I see here in my notes, that is really hard to do, right, Molly? Like, you got a big number and you're growing it, you know, 10, 20, 30%. That's considered high growth because it's growing on top of a big number. And what other companies do that? Apples of the world, Googles of the world, Facebooks of the world. It's just not easy to do. Most companies, when they get that big, start to slow down and grow. Single digits, you know, maybe 10% a year, 12%, something like that. And that's even considered good because it's a big number. So I decided to hold this for the next decade because the cash app to me seems like, you know, the way people in the future are going to, you know, exchange money. And I think Jack is a visionary and a great product person. And I think he understands

crypto really well. So I think now that he's 100% focused on square, I'm even more committed. And so here, I would advise a family member or friend who was interested in this name that if they were going to buy it, I would buy it, you know, whatever, you know, five times over the next year or two, dollar cost average, you know, take the price you paid per share and you can just average it and then hold it for a decade and see where you're at. I think you beat the market. That's what I would tell a friend. I'm not giving financial advice. This is not, I know, I was just about to say, this should not be considered official investment advice and no way are we licensed for that. But if my friend was very interested in the name, I would say, this is my strategy, hold for a decade.

I mean, what you would always tell your friend is like, today is not the day to sell anything. That's the rule. Generally speaking, when there's blood on the streets, that's when people want to buy stuff, right? And I was looking at it today. Which we saw today. Yeah. I think you're going to see some Peloton buying. I think Peloton was up today. And we'll go talk about that in a minute. Yeah. And then I even think like my Disney, which I really want to build a Disney position because I just think that company is going to be great forever. I don't know how Disney wound up today, but I know it's been, you know, it's corrected a whole bunch. Yeah. It ended the day basically.

It's 137 share and it's valued at 250 billion. So that's it's 10% of the price of Apple, right? And I just think about what most assets they own. Yeah. Yeah, that feels $2.5 trillion, you know. That actually does feel underpriced. I mean, when you express it that way, I mean, just everybody owns a really expensive iPhone, and they upgrade every two years. It prints a lot of money, as you've talked about.

But yeah, I just love Disney for some reason. I just still think this is like, if I had to give my daughters, like, I had to pick like three stocks for my daughters to own for their inheritance or something. Like Disney would be one of the three. Listen, founders have to be able to prioritize and delegate to see the best results. We all know this, right? it's intuitive. And a great way to do that is by hiring expert freelancers, the benefit of freelancers, they're experts, they're efficient, they get paid for the work they do, and you can scale up, scale down with them based on your needs. And one way to do that is by hiring a marketing ringer.

I can come in, crush it, and they just leave when they're done, right? They pack it up, they go on to the next job. That's all possible with a great service called marketer hire. Marketer hire gives you access to expert freelancers on demand and you get a great experience specialist across the most valuable marketing disciplines that you can learn from paid social page search growth SEO content and even a fractional CMO chief marketing officer if it's your first time working with the freelancer well they're going to start you with a no-risk trial you only hire what you need and you can stay on budget with powerly part-time or full-time agreements every freelancer on marketer hire goes to a rigorous vetting process with industry experts and freelancers from marketer to hire have been hired at over

1,500 companies, including top brands like Netflix, all birds, and Lambda school. And get $500 off your first hire at marketerhire.com slash twist by using promo code twist. You can also get a free consultation on who to hire based on your needs and goals. That's $500 right now at marketer hire.com slash twist and use the promo code twist. Producer Justin has a good question too, which is how does this differ in venture? When you see something with strong fundamentals that had, for example, a down round, do you ever go big in a down round? So if the company is doing well and it's got great metrics and stuff like that, there tends to not be a down round because private market investors do have a 10-year view. So we assume, it's a great question, producer Justin, we assume as private market investors like, hmm, great team, great product, great growth, whatever, problems to figure out.

I'll make a bet. I'm going to hold at least five, 10, 15 years. So they just, private market investors have just a much different outlook. We always think in a decade, maybe a decade and a half. In public market folks, they think in quarters. So they might think 10 quarters. So you're talking about just a magnitude difference in outlook. All right, let's keep our tour through the, tour through the fundamentals going. Zoom. Big pandemic winner, obviously, bottomed out at $140 a share today.

it's down 75% off its all-time high of $559. I mean, $120 billion loss in market cap. Its current is $44 billion. It's revenue, maybe about half of a block, $3.9 billion. Last quarter had 35% year-over-year growth, so you are seeing that high growth. But, I mean, clearly, this is a case of just like highly profitable. Yeah. But obviously, like, massively overreferable.

valued, right? You know, 10 times top line revenue is where it trades today. So that's like 10 times sales, right, to the value of the company. So we, and then it's trading at 44 times their profits. So that is still pretty high. So you're basically betting on this thing to keep growing at a very, very fast clip. That would be the bet you're making. And so their PE ratio is 37, right?

And so the average P.E. ratio tends to be, you know, historically, I think 10 to 15 is a pretty good range historically. For a high growth company, it tends to be double or triple that. So this actually makes sense to me at this price. At 44 times? Is that what you said it in there? Well, it's 44 times top line 37 times. Oh, okay.

If they made a billion dollars, they're, you know, 37 times. So we have to ask is, can they keep, will people unsubscribe post-pandemic? No. No, no chance. I don't think so. everybody's going to keep you there keeping Zoom forever. Yeah, forever. And then you have to ask, can they, is there margin expansion or is their customer expansion? So certainly there are both of those things.

Margin expansion can come two ways. They charge more for the same product. Or they add to the current product line, which I think they could do as well. So I would still be bullish on this company, especially because it's profitable. Anything that's profitable is default alive, has money to play with, they can acquire a company. So what you're going to see in a down market like this is, everything gets repriced. And the things that have revenue and profits will be favored in a, you know, internet winner,

a stock market winner more than things that are speculative and have yet to make money, as we'll see as we go through these. Yep. Netflix has a product, has revenue, has profits, down 50% though from its peak of $691 per share in November of last year. that's $150 billion loss in market cap.

Its current is $170 billion on revenue of $28.6 billion. Last quarter saw 16% year-over-year growth. I know you talked about this sum on all-in, so we probably don't have to hash, rehash too much Netflix for people who listen to both shows, but a little bit. I mean, the stock has fallen 50% in what, six months, not even. Yeah.

So at the current market cap of $170 billion, the, if we round up the $28.6 billion, trailing 12 month to whatever, $30 billion. It's like what, five, six times the sales ratio. And, you know, what's their growth rate going to be? Again, when we talk about the growth rate, you got to put that. Competition galore.

Competition galore. So maybe they're at, you know, 10% growth they'll hit. They're slowing down, but they're still a money printing machine. They still have, you know, a decent amount of profitability here, five billion in profits, let's say, back of the envelope here. $5 billion in profits, $170 billion. You know, we're looking at 34 times or something like that. So that's pretty aggressive on the price to earnings ratio.

I'm looking here at one chart that says 31.5-ish. So it's still expensive, but it's a high-growth company still and worth owning. And do we think there's a world in which they are not as relevant today as they are in 10 years? I think the answer is no. That's why they command a pretty juicy price to earnings ratio. and a good market cap. And if they weren't spending as much on content, you'd see that price earnings ratio easily go down to half, right?

If they really didn't want to invest, then they can make $10 billion in profits a year. But you want to see them investing in that library, creating original IP and building the value there. So I still love both of these companies. I love all three and would hold all three and might increase my position. Really?

Netflix is the only one where I might disagree with you a tiny bit. I think that this is such a money pit game to play, to have to keep throwing money at content. Netflix has an okay library, but the more you see NBC launch peacock and CBS really actually try to do whatever the hell it's doing with Paramount Plus. And, you know, Disney and HBO want to own their own libraries. I think that represents a long-term risk for Netflix in the library department. And then I think it becomes at some point a zero-sum game to keep throwing money at content. And then just pure. from a like anecdotal one household perspective like when I look at all the things I subscribe to and it's

all like yeah I have all of those where is Netflix on the list Netflix is the one that is closest to irrelevant to me and they keep raising the price so like I don't need to be spent in 20 bucks a month for 4K Netflix when I've also got Hulu HBO Disney peacock like a paramount plus like I have so many other things to watch and even though the content is good I'm like there's only so many hours in a day, that's the one I could lose. Yeah, I put them at number three or four for me. So I, I'm, I'm going to have to agree with you that the competition is the X factor here. And then you look at the market cap now at 150 billion.

You know, we talked about Lena Kahn's new rules of future competition, etc. Is there a world in which Netflix and Disney, HBO, you know, etc., somehow come together or Apple or Amazon? Who knows? You know, and I don't know if they could be bought. out or not, given the current structure, but the current changing rules around, at least in a

under this democratic governance right now, I think they're going to be in the administration. They're not going to be pro mergers and acquisitions. If Republicans win again, it could flip very quickly again to allow something like that. So it's certainly not clear that they will be number one

forever in terms of total subs, but I don't see them slipping out of the top three. I think all of the top three would be worth owning. Yeah. So this is probably going to wind up a great buying opportunity for people who own Netflix as well. And also, Netflix itself should go shopping. I think they need a more cost-efficient way to build up content, like buy Steam. Get seriously into video game streaming or something like that. If you look at Spotify, they edit podcasts. They started doing original podcasts, bought Joe Rogan,

bought The Ringer, yada, yada, they bought Anchor. So they really said, you know what, music. We have to give all the money to the labels, podcasting. We could sell the ads ourselves. And then they were like, hey, can you want to be part of the video? And so now you can watch us on video inside of Spotify. It's a bit of a tell that Spotify is going to be, feel more like Netflix perhaps and podcasting. Yeah. So why wouldn't Netflix add more podcasting and games?

Exactly. It's cheap IP. Cheaper IP. And sticky, right? And so if they, if Netflix decided they were going to have Netflix plus podcasts and had a podcast channel, man, they could just go to all of the talent base they have and just say, yeah, you know, let's make a companion podcast for Ozark. Let's make a companion. Let's get the Dave Chappelle podcast going. You know, we got Dave Chappelle. We pay him $25, $50 million per comedy show.

Let's offer him to do, you know, a Jerry Seinfeld, car, comedians getting coffee and cars, whatever kind of, you know, project and see what that does, right? And it could be he's on video. It could be it's just audio. So yeah, they're going to look for product extension for sure. Yeah, absolutely. And just more cost effective because content is just a money thing. Are you having design problems?

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Okay, now to some slightly more speculative, well, maybe one more. speculative bet, Coinbase, which is down also over 50% from its November peak of $357. It's low point on Monday was $165 a share, $50 billion loss in market cap on revenue of about $6 billion. Last quarter growth was only five and a half times year over year, which, you know, listen, that's decent growth. We should be delighted. Everybody should be delighted.

But when you look at, you know, Netflix was 16%. even though we're now saying they're the expendable one, all of a sudden, five times year over year is like, that's fine. Trading based revenue is super volatile. Coinbase's profits about $3 billion, $2.9 billion. Is this a fair?

Is this, you know, is that 50% drop fair, I guess, as a metric. Well, let's look. Price earning ratio is, you know, 17 or something, 1617 right there. So you're getting what would be the high end of normal, but with a high growth company.

So why is this company? that has much higher growth, getting a much lower price earnings ratio, you have to ask yourself. And I think it's because people are looking at crypto and are not convinced, or some group of people are not convinced that this is built to last,

and that this isn't a fad. And they're probably not wrong. In that, you know, there's going to be a lot of ways to trade crypto that'll be easier and more fluid than going on Coinbase and actively trading. So think about like crypto ETFs and stuff like that,

which I know have been hard to get past, et cetera, but it'll become easier and easier. I think if Bitcoin and Ethereum in this basket of crypto is actually real, you'll see a lot of money market or money managers be able to just say, you want to be 1% in crypto,

you want to be 4% in crypto, we can manage that for you. And just like they manage, like, we have a way for you to get access to bonds or real estate through these various funds that, you know, balance them out and,

and abstract it from you having to manage it. So, yeah, it does, you know, but obviously they're going to add NFTs. We saw that. And so maybe there's more to come.

I would not, I think Brian Armstrong is a very unique founder with a very unique set of principles. Um, you may or may not agree with them. Obviously him saying there's no politics at work and taking that stance. Caused a lot of like hand-wringing and ultimately, he said the company ran better

without having people talking about politics or social causes at work. So he's iconoclastic and iconoclastic people like Jack also is iconoclastic. Reed Hastings is iconoclastic. Elon's iconoclassic. A lot of the companies we're looking at here.

When they have that founder authority, I would not bet against him. Founder can do crazy things, you know? Crazy ambitious and crazy. Fidelity or TD America or Chase, any or Schwab, Any of these could come in and essentially replicate Coinbase's business, fundamental business model, almost wholesale, right?

I don't think they would be as aggressively going to every nook and cranny and adding NFTs and adding these kind of coins at the same pace. So just like, I think Robin Hood and Coinbase represent for this younger generation, how they interact financially with the world. And I think also the cash app does. I do think that they are unique and generational and that the names you rattled off are for are boomers. And then Gen X kind of falls in between probably falling closer to the Coinbase, moving to the Coinbase Cash app, you know, Robin Hood part of the world. So I think

if you wanted to have a wild card in your portfolio at this price, Coinbase would not be the worst thing to own either. You know, at these prices, you start to look at these companies, and if the founders in there, their product innovation, product velocity I talk about a lot, If there's product velocity and the original founder still running the place, I'm feeling pretty good about it. Because that means they're going to keep innovating. Right? Keep innovating.

Square would not be where it is if the cash app didn't happen. Now you see Jack's going to do some other things. You might Bitcoin mining rigs, whatever. All that crazy stuff, sometimes it hits. And when it does hit, it could hit and make a trillion dollar of business. That's the thing with founder-led companies. They always have that ability. like Steve Jobs did to create the iPhone

and then the iPad and then Apple TV and then AirPods like and you go on a run like that and each of those things prints money. Well, and they have the internal permission. I do think that that's super important that when you're a founder, you can make things happen within a company that might not otherwise if you've got like

you brought in the grown-up CEO or you've got some turnover then you get a little more protective. You get a little more safe. You maybe don't have as many ideas and you don't have the sheer, the word that you use, authority to just say. I mean, if I'm working at Square and all of a sudden it's block and Minecraft Steve is like,

we're getting into mining rigs. Like, no. You know, there's not a lot of companies where that level of disruptive business planning would happen. And if it's founder led at that, you know, at that level, I think a lot of those employees are sitting there like, okay, let's go. Sure, you've been right every time so far. And then, you know, for both Robin Hood and for Coinbase, there is the issue of, you know, during the pandemic, people didn't have the ability to bet on sports or spend their money going out. And so what did they spend their money on? They gambled on crypto, they gambled on stocks.

It was like a, you know, a specific type of pursuit that was also for entertainment value, right? Entertainment value of owning crypto, whether it's NFTs or Bitcoin or picking your coin that you want to see win something. I don't know. Most of the coins don't actually do anything in the real world. a little weird. And then trading stocks, like, you know, it's one thing to trade Disney or talk about names like we're talking about here today that have consumer products consumers love. But, you know, if you're trading SPACs, which we'll get into, or you're trading a meme stock like

GameStop or AMC, what are you actually trading? Because the fundamentals of those businesses are whacked in some cases. Right. So you're just gambling in some weird way to beat some shorts or whatever. like, that's like high risk crazy behavior, you know? I mean, Russian rule that. We're going to talk a little bit more about specs and crypto in a minute, but just kids, like again, this is not official investing advice, but if you're buying the dip on margins,

I want you to stop. I know that's, I saw like, I saw by the dip trending yesterday and I was like, oh my God, I know this is all crypto kitties like buying the dip on margins. And every time, you know, look, when you wash out, when you have the leveraged washout because of all of you who bought on debt, then lose all of your money. A, you lose all your money. And B, the institutions that you're trying to disrupt only win.

They just come in and scoop it all up because they buy the dip for real. Like, don't do it. Margin and leverage, all this stuff, you know, are really like interesting, fun devices when the market's going up. And then there's a concept called the risk of ruin,

which I've seen in poker because I've played in very large poker games. And I played a large poker games that were a fraction of my net worth and a fraction of a fraction of some of my friends' net worth. And then somebody gets in the game, and it's their entire net worth is on the table. And it's uncomfortable, Molly. Like to be, when I was in L.A., I saw this more often because, you know,

in Silicon Valley, people are flush and they care about money. In Hollywood, you got people who get quick money, you know, entertainment, people, whatever. They don't value money. They didn't work hard to get it necessarily. And all of a sudden, you know, they've got $200,000 in the table. You're like, what percentage of net worth is this of this,

TV writer wherever. It's like it could be, you know, 50% of their liquid net worth. It could be, you know, very significant and people face something called risk of ruin. What that means is your bankroll runs out and you're out of the game. So there's no way to come back. That's what's happening to a lot as crypto folks. They own two Bitcoin. So Mazeltov, you know, they bought it at 5K and it went up to 70. Now they got 140. And then they get that levered up so they have some crazy buying power on it. What they don't read in the fine print is if it goes down 15%, it gets called and all the Bitcoin gets sold. And I don't know. I was hearing people getting five to 10x leverage, and I'm like, that doesn't make sense. Like, I'm not allowed to do that. I mean, that's actually

the hidden story about crypto, honestly. Like, it's the, it's how much people are being able, how much people are able to borrow and how much they're buying. And these are offshore, with those barrow. Exchange is doing this. So they're offshore exchanges. You're putting your money up. And if you just get a modest trip, you just trip, you know, somebody's putting 20x in the, uh, yeah, one of the notes for 20x.

And, you know, that's like going to a loan shark and they're like, yeah, I'll give you $10,000 to play in the World Series of Poker. You got to get me $100,000, you know, next week. And it's like, well, I'm going to win the World Series of Poker and make $8 million. So it's not a problem. It's like, it can only be one winner. A lot of these people are. Right. you know, betting, and they don't have the ability to cover it.

So if you don't have the ability to cover your margin, they sell the underlying asset, and then you lose everything. And that's what they said happened. And when that triggers, it can create like a spiraling event from what I understand. Leveraged washout is what they're calling. A leverage out, right? So if you were, you know, leveraged up and you were forced to sell at 50,

and then I was forced to sell at 49, and then a bunch of people at 47, and then even more people are 45, everybody starts getting this leverage washout, and then people who might be buyers are like, huh, am I going to catch the falling knife? I'm going to just, I'll wait it out six months. I don't need to buy it now.

I'll wait six months and see how this. People will do with buying a home. If the homes are going down in value and the market's correct, and they're like, I think it's got more to go, so I'll wait. Yeah. Some exchanges even provide 200X. says that's crazy yeah 10x isn't

I mean this is this is like a joke that's indicative of the mindset though Bo John says leverage no sorry 10X isn't even leverage 50x minimum or go home I don't know if they're I'm just kidding or am I at what point do they cover

so if you took that 50X and you know let's just say Bitcoin was at 50 at what point do they cover you know because if you went down 10% and it went down to 45,000 a coin. And you had 50x leverage.

Like they would have to liquidate you immediately. Yeah, I would think. Yes. Makes no sense. And that's what happens. And then Citadel comes in and is like, ha-ha, suckas, and buys it all that. Okay, everybody, it's championship weekend in the NFL.

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1-8009 with it in Indiana, T.N. Redline, 1-8009-9 in Tennessee, or visit www.1-800-gambler.net. West Virginia. All right. Airbnb is a great. Airbnb. Our last, yeah, exactly. Our last business of fundamentals here bottomed out $136 a share, down 35% from its November peak on revenue of $5 billion. It's lost about $30 billion in market cap.

Let's see. Not so bad as the others, right? 25%. Not so bad as the others. I mean, Airbnb has had a hell of a ride through the pandemic, obviously. But down 35% overall, big layoffs. My ex-husband got laid off in that first wave. Yeah.

But Airbnb, I think, so it, let's see, it lost $4.5 billion over the trailing 12 months, which is significant unlike the other companies that we've talked about. Most of that was related to $3.8 billion in losses in Q4, 2020, which was about the IPO, but also stock compensation expense, presumably because of those layoffs. Yeah. In their most recent quarter made $830 million in profits. Yeah. So it's a profitable company. They're right-sized. So if they were making $3 billion a year, $4 billion a year, and their market cap is, let's see what their market cap is here. It is $92 billion. Yeah. So if they, if they're money losing, you wouldn't have a P.E. ratio.

But if we were to assume they had $3 billion in profits next year, right? We just take that $800 and times it by four and put it out about $3 billion in profits. They would $3 billion times $30 would be $90. So, you know, they're just under, yeah, it's probably $28x. price earnings ratio seems reasonable to me for a high growth company. Again, 10 to 15 would be normal in the price earnings. So if you doubled or tripled that for a high growth company, you would be betting on the future and that they can keep that incredible growth up. Kind of makes sense to me as well. So when you reprice companies like this, all of a sudden,

things that didn't make sense start to make sense. And if we look at what happened over the past, let's just call it three years, you know, the year or two before the pandemic, the two years in the pandemic, we had a disconnection between the reality. We had a disconnection between the of companies and reality means revenue and earnings and growth, right? You just look at those three things and some and the valuation, right? So when you start looking at the valuation

in relation to the growth, in relation to the earnings in relation to the revenue, you can actually say, this is a real company and here's where historically it would be pricing. And that's what people are doing. They're actually doing the math. They should have been doing all along. Instead of what's called momentum investing,

which is also known as bullshit. You know, I hate to say it that blunt, but, you know, if you're just making it up, you know, you're like, well, it's gone up, so I'm basing it on momentum. It's like, you know, momentum trading. Yeah, that's like some like hot score. And you're like, well, Clay Thompson just hit seven three-pointers in a row. So he's going to hit 70 in a row. Like it's, it's right. Possible, but not probable. There's always some version of that that happens. But that is why everything that you've just described in the idea that Airbnb now finally with this 92, billion dollar valuation matches the math is why you call it a correction.

It's correcting something that was wrong. That's a very astute point. And if it was a crash, you know, then you'd be looking at it going, okay, you know, a crash tends to be over 30 percent. A correction tends to be 20 or 30 percent. That's why I have advocated for calling this like an audit and a repricing. So I think we're auditing all these companies looking at the fundamentals and then repricing them to what is the fundamental actual value of the company. Now, if you were to look at things that

are super speculative like a cryptocurrency, what is the actual revenue being generated by a certain coin or an NFT? Arguably, there is no revenue being generated in most of these projects. Therefore, the underlying asset has no value. And yet, incredibly, when you look at the drops in Bitcoin and Ethereum in particular in this exact same time period, November to January, each of them has also, much like most of the companies that we just talked about with the exception of Airbnb, which only went down 35% from November to January, they've dropped 50%. Interesting. They've lost 50% in their market cap almost identical to block to CoinBate, right, to these

companies with real strong fundamentalists behind it. Wait, I thought they were supposed to be uncorrelated assets. Bitcoin was uncorrelated to the stock market. What happened to that? Right. Once Bitcoin became Bitcoin, I believe, is an asset class that is almost identically correlated to the market now. What went wrong? Why would that be, Molly? Why would it be?

And you know, you worked at marketplace in New York Times before this. Why would it be correlated in your mind? I mean, honestly, I have no idea why it would be correlated other than the fact that it has become, well, here's why, actually. I do have an idea. Because it is not decentralized.

Sorry. Right? Because it is a very lucrative asset class that has been snapped up by institutional investors, the same institutional investors that are currently selling out of Coinbase or Square or Netflix. Like, it's correlated because retail investors don't actually own the vast majority of Bitcoin and Ethereum. And another way of saying it's correlated is it's the same group of buyers from the same balance sheets. So that's sort of what you're dancing around here is like, the same people who are buying Bitcoin and Ethereum are also buying

Square, Block, Airbnb, Robin Hood, whatever. So it's the same market participants. So now I assume you're a market participant and you just went through the five stocks we did and looked at them and said, wow, some real revenue here. Oh, profitability. Okay, great.

Oh, okay. This is starting to look good here. Now your sixth holding is Bitcoin. Yep. And you're looking at it going, well, how many customers do they have? and what's the library value of Netflix? What's a library value of Bitcoin?

Nothing. Okay. Well, how many customers does Coinbase have? Okay, you know, 10 million, uh, 20 million, whatever. Okay, how many customers are there Bitcoin? Are there any customers to Bitcoin? Like, who's, I mean, they're speculators, but are the customers who are getting a service out of it other than entertainment value?

No. So which would you sell? If you own the six, the five companies we just did and Bitcoin and you said, you know what, I got to get rid of one name. I got to sell off because I got to sell off. you gotta pay my mortgage. Where would you start pairing? And I think that's when people are scared.

The scariest asset to own is one that has no intrinsic value, which is the criticism of cryptocurrency. There's no intrinsic value. That's what the boomers say. I will tell you, if I were looking at this list and I had to pair one, I would sell my Netflix before I sold my Bitcoin. Really?

That's what's so crazy about momentum. Momentum is dangerous, but momentum is actually real. So Bitcoin has yet, to be forced to prove that it can operate in the real world as like a currency, right, or as a mainstream product. However, Bitcoin has proven quite conclusively that it can kick a lot of ass as an asset class. And it's not going to go anywhere because it has intrinsic value. I mean, it's like the dollar, right? We only believe Kyra's doll is a fan of saying that it is the full faith in credit of the United States that makes the dollar the world's reserve currency.

that's a leap of faith. And I would argue that investors the world round have taken that leap of faith on Bitcoin and Ethereum and the blockchain. And they are confident that those markets will eventually be found and that that confidence alone makes this safer than it should be given the fact that, yes, it's like a total invention. Well, here's the thing. You know, when you talk about, and Kai talks about the dollar, like people, you know, project into it that it has some core value because it's the United States. It's a proxy for our value in the world. Well, if you look at our value in the world, we create the best companies in the world. And we got the biggest army in the world.

So those two things combined make it easy to buy into. So now, why would you buy into Bitcoin? Well, the answer would be a lot of other people do. a lot of other smart people do and there's a finite amount of it that technology seems to be rock solid because this technology has not been hacked with the exception of like endpoints

which are different than hacking it's like somebody leaving the car unlock so if people leave their cars and the keys in the car that's not the problem with the car or the key so here you know maybe you're making a bet that Bitcoin's built to last stability is why it's worth this but even still

I would rather own the other five companies. But I mean, as a gambler, you might want to own Bitcoin. But yeah, it does seem to me that a lot of the most recent people who bought, and this is what I've heard from like, there are these on-chain analysis people. So what they look at, and I, you know, Pomp does a podcast about this, where they look at who is selling. And it turns out the original holders, you know, people have very low cost basis in Bitcoin.

you know, under 10K, under 20K, they don't sell. Because they're, you know, in the money and they just sit there. And then if you look at the latest people who bought, you know, people bought at 70, 60, 50, 40, they're selling. So there are the bagholders, like the most recent people who bought into it are like, oh, this is BS, I lost half my money, I lost 30% of my money, I'm going to lose it all. I'm out of here. But the early people are, they're not yet expanding their positions, which is kind of cool.

So they look at the wallets and this could be easily manipulated. it's so take it for what it's worth. But the early wallets that bought Bitcoin early are not expanding their position, nor are they selling it. So they're kind of neutral. What we've seen in the past is those early ones may be add to their position, but they just may be out of capital.

They have enough Bitcoin that they don't want to expand it. But the latest wallets that bought in are having the paper hands and they're getting paper cuts. See, that's just foolish. You only lose money when you sell people. Yeah. Well, but the corollary is all money has value. So if you lost half your money,

money on Bitcoin and you believed it was going to, you were going to lose another half, putting this money into Disney or Amazon and trying to get whole, you know, you still have a bet you can place. So chip in a chair. Sometimes you want to get out of a bad. If you believe there's bad management at a company and they're not, don't have good product velocity and the founder's gone, then that might be a good reason to leave, you know? Yep. Yeah, absolutely. It's, uh, this stuff is not easy, folks. Especially when you're trying to figure out cryptocurrencies, I think, is really one of the hardest things to figure out because they don't have fundamentals. There is no fundamental. It's just so much speculative nature. It's like trying to get the fundamental

value of an artist's work, you know? What is the fundamental value of that artist's work or another's? Like, one of them might have spent a thousand hours on a painting. The other one spent 10, and the 1,000 hour painting is a better painting, but the 10, you know, caught heat. It's interesting, though, because it's like not yes and no. It's not unhurstant. heard of for like it's true that the that bitcoin doesn't necessarily have fundamentals at least not as we think of it but we're also having conversation in which you said it is perfectly normal and acceptable for like Airbnb to trade or a high growth company to trade at 30 times price earning yeah that's not a problem like a that's a lot there's like a lot if you think

they're growing 30% year over year that means every two years are basically doubling so they're you know, you own a much bigger company very quickly. Right. But it's the same thing is what I mean, I guess. It's a leap of faith. It's a leap of faith. Either way. You are looking and saying,

can they continue to grow and delight customers, right? And sometimes it's very clear, like Airbnb or Uber, like, are they going anywhere? No. You know? Right.

And other times it's unclear. Like Peloton, are they going anywhere? Is it clear that they're going to keep growing 30%. I'm not sure. But let's get into this. Dotcom comparison, because I think this is... This is a lot of fun

and I know that Nick put a ton of work into this too. He's going to leave us for the Ray Dalio hedge fund. How to think about thinking? The question on everybody's mind of a certain age, your hosts in particular, is how does this compare?

Is this a bubble burst that could end up anywhere near the level of the 2000.com, particularly since you are in fact talking about these massive runups on things that have very little value behind them like Bitcoin Crypto and then of course also specs. Yeah. Yeah. We looked up an article CNN Money published back in November of 2000 and it was titled the $1.7 trillion.com lesson. Here's a quote. It's hard to think of a publicly traded

interdic company that is not down at least 75% from its 52-wing high and that hasn't trimmed its expenses are laid off workers. And this was unbelievable. The amount of people being laid off was crazy. There were literally airy on chairs, you know, those really expensive chairs in the streets of San Francisco because they would give them to the laid off workers instead of their last two-week pay. They just say, take your $800 chair home with the people walking home with them. Yeah. And we have a lot of tech companies here that are down 50 to 75% from the peak. So how is it different? Well, if the asset was overpriced, a lot of the companies did not have revenue. you back then. They did not have customers.

So they did have customers. It was hundreds of thousands or low millions. Now you've got people with millions, tens of millions, hundreds of millions of customers, paying customers in the case of like a Netflix. So the SPACs, though, make a better correlation because the SPACs to me feel very similar to the dot-com bubbles in that they were massively overvalued in some cases and didn't have a lot of traction. So there was a big delta, a big difference between the reality of the company and the valuation being assigned to it. Lots of SPACs, 70% are off now, 70 to 80% from their peak. And this is where, you know, our like to get behind the curtain, our pre-show conversation was like, let's try to separate because we have many more market dynamics now than we had during the dot-com crash, right?

The primary market crash in the dot-com bust was, or sorry, dynamic, was IPOs. Right. And they were just simply publicly traded companies that were way, way overvalued. And out of, you know, $3 trillion in value, they lost $1.7 trillion. Now you have a situation where you have IPOs. You have publicly traded companies like Airbnb and Block. And that's like you can evaluate that in one way. You also have crypto, which is driving massive investment, trillions of dollars in investment.

and then you have SPACs, which is like a financial vehicle as the likes of which we've never seen before, massively overvalued. And so I think what we want to do is try to separate when you look at a drop like today, followed by a rebound. I'd be interested to see how much of the rebound affected

some of these SPACs. And whether, in fact, 2021 is going to turn out to have Ben Peek SPAC. Yeah, it's going to be peak for a lot of companies and markets because people were at home during the pandemic, not spending money and pouring money into stocks and crypto and all that kind of stuff. If you look at the Internet Index from 2000,

280 stocks, 79 were down 90%. In the 52 weeks size, 72% were down over 80%. 72 were down over 80%. So you had this big washout because many of them were speculative. If you look at the dot-com crash losers that were referenced in the article above,

Yahoo had lost 100 billion from its peak, AOL, 90 billion, Cisco, 210 billion from its peak. And then if we look at, you know, the companies we just went over, Netflix, down 150 billion, Zoom, 120 off the peak, Square, 75. So it's actually similar numbers. The difference is the scale of the companies we're talking about here are much bigger. The revenue from, you know, Zoom, Netflix, etc. is just tremendous when compared to those. Like, pets.com do not have revenue.

They certainly didn't have earnings. Yahoo had tons. Yeah. At that time, people were not concerned about earnings. They were just concerned about top level growth to the point at which, you know, if you leave that out, you can start selling $100 bills for $60 and the growth is going to be tremendous because there's a line around the block to buy them. And that's what people were doing at that time. They were like, oh, pets.com is cheaper than me going to the store delivered. So that's where earnings really in that discipline around unit economics, I think we talked about that a little bit in VC Sunday school, you know, at unit economics.

that's what's happening here. And that's when people get a red flag when they see a company that's just breaking even. Are they doing that because they want to keep growth and beat competitors? Or is there something fundamentally broken with the business that it can never be profitable? Like delivering dog food,

which is heavy and cheap. And the shipping of it might be as much as the actual dog food. Well, yeah. And here's what I think is interesting about SPAC. So when we have this conversation about whether we're at peak spec. So producer Nick found this chart that said in 2022, 81% of US IPOs were SPACs.

Those are raised SPACs. That's just so far. 2021 is the big number, of course. That's where 63% of all US IPO activity was SPACs. So just shell companies, right? Empty hermit crab shells on the beach waiting to merge with some new company, just sitting there. So what we don't know, it's sort of hard to figure out, I guess, how many of them have successfully then had a hermit move in.

Yeah. I don't know. I don't know why I'm so obsessed with this hermit crab metaphor. I think it's a pretty good metaphor. Yeah, the crab has to get into the shell and the shell is the shell. It's not bad. And they're all over the place, right? They're just scattered across the beach now and they're either going to get stepped on.

Yeah. The shells are getting washed out. By a server or get washed out. Or they're going to find a little crab to move in. So the best, it looks like data that we can. could find is this chart from Bloomberg Law from September 2021. Of the 589 active SPACs in September 2021, 75% of them had no deals pending or even rumored. Yeah. 4% had rumored deals that had not yet been announced and 20% had pending deals that were announced. Now, that sounds like a bubble.

Yeah. I mean, I think what happened was a lot of smart people saw what Chama was doing with Spacks and others were doing and said, hey, I could do that. How much is it cost to set up a shell company? There's money around. Oh, it's $10 million to set this up and we could make hundreds of millions. Great,

that seems like a logical thing to do. And so venture firms started creating them. Former CEOs, Mark Pink has started creating them. Everybody just said, let's just test this new vehicle out. And then I think what they found was finding quality inventory of a public company that wants to be public at this time is not that easy. Now, the way Spacks work is people,

buy those shares typically at $10. It sits there. But then you present the deal to them and they can redeem, right? They don't have to fund the company. So it is kind of contingent on finding a great company. And I think that's what happened with BuzzFeed was a lot of people were like, why would I give the money to this company, right? I don't want to be in BuzzFeed kind of for the SPAC.

And so I appreciate people wanting to take more companies public and give earlier access to tech companies to the public. However, if the public is going to run up these shares and they're going to, you know, sell them and flip them, that's really a problem. You know, you have to be willing to hold these for a decade. And so when we had a company like Desktop Metal go out and SPAC, you know, we were planning on holding that company as, you know, a holding for, you know, another five or 10 years. And now it's trading at whatever, you know, $4 or so. and I would have rather just stay private, right? And it had bounced up to 30,

but we couldn't take advantage of that because we were locked up. And then it just slowly came down to where it is today at $3.90. I would like to hold it and see it go back up to 30 and 10x from here. But I don't think a lot of public market traders want to sit on a company for 10 years.

And same thing with the other companies that probably went out too early. That's the problem. is do public market investors want to be this early or not? Right. And I don't think they do want to be this early. I mean, so far, it seems like maybe no. Or the real problem, like you pointed out,

isn't even that the investors don't want to be there. They might want to be there. But if 75% of the specs can't find a company to absorb to turn themselves into a fully formed termite crab and not just an empty shell, then why would you ever buy that? Like, who's buying shells? I'm not buying shells.

Yeah. So maybe we just had too many people. wanted to get in the race and then just weren't enough drivers. Exactly. A lot of cars and a lot of drivers, you know. Every plan makes sense until it encounters scale. Yeah. Yeah.

I mean, there's something about that like, yeah, the, the, the, the, it's a great plan until it faces the enemy. Exactly. Contact with the no plan. No plan survives contact with the enemy. Exactly. Right. Exactly.

So this is. That's what's happening. Financial instrument survives contact with way too many people trying to copy it. Yeah. There you go, folks. And so what does this mean? it means this is a healthy process for a market caused by, you know, a crazy pandemic in which we printed a bunch of money, did a bunch of quantitative easing and, you know, inflation and then

raising rates, all of these crazy variables and knobs and dials being turned has resulted in the public markets getting overheated and now maybe getting overcooled or not. And now everybody is saying, let's just do cement. math. Let's just do some math. And so people take it out their calculators and that's it. And tease ahead. T's ahead possibly to Sunday BC school. Yes. When we will have a conversation or I would love to have a conversation about what a down market might mean. If this does turn out to be the start of a crash and listen history suggests it's a crash. Yeah, it's a crash for certain companies. What we're going to want to know is, uh, hey, I just got here. What does that mean for our job?

Yeah. And it may not be as, it might not be as, it might not be. as dire as you think, so just a little tease there. Okay, another public market news. A large Peloton investor has called for CEO John Foley to be fired. Jason and Tabby, founder and chief investment officer of Blackwell's capital, never heard of him or the firm, wrote the following this morning. According to the Wall Street Journal, Blackwell's owns a significant stake under 5% of the company. And the letter says, quote, we believe the pandemic offered Peloton a tremendous and unexpected opportunity to accelerate consumer adoption of its category defining products and drive performance of the business and value for shareholders.

With the stock now trading below its IPO price and down more than 80% from its high, it's clear that the company, the executives and the board squandered this opportunity. Remarkably, the company is on worse footing today than it was prior to the pandemic with high fixed cost, excessive inventory, a listless strategy, dispirited employees, and thousands of disgruntled shareholders. And no wonder the latter given the past. Pelotons underperformed every other company in the NASDAQ 100 over the last 12 months. The ride for Mr. Foley is over.

This board must now independently chart a new path for Peloton. I like that you eventually, I know, I like that you eventually got into an Emperor Palpatine voice because this is a mean letter. Like, if I got a letter about this and my performance to CEO, I'd be like, whoa, it's a nasty gram. But man, when you put it that way, that is pretty bad. How do you keep your job? Some of the gripes cited in the letter. include committing to a 20-year lease on a massive office space in New York.

That sounds crazy. Confusing pricing strategy. Can't disagree with that as a lover of Peloton's. It does confuse me. Fully's handling of a massive product recall after the death of a young child. I thought, they said this on the show. I thought they overreacted to that.

Very badly handled. Yep. Yeah. Very badly handled. I hate to be candid here, but kids should not be playing anywhere near a treadmill. we know this.

Like, period, full stop. There was nothing that can stop a child and a treadmill being a deadly combination. No, it's, they're super dangerous and everyone knows it. And the thing, and it was the handling of first being like, bite me, that's not a problem, right? Sounding completely unsympathetic without acknowledging that these things are dangerous. And then doing a recall after the fact, making it seem like you were a totally jerk and then you got in trouble for it. Like, it just couldn't have been, it was very,

very, very, very toned deaf on every level. I mean, the thing goes to sleep right after you get off of it, basically, there's a pin code they added, and there is a safety key.

When I get off my peloton, tread, I undo the safety key, and I put it in the cup holder. Right. So my five-year-olds, don't take it and plug it back in. I also don't let the five-year-olds

in the gym area. I also put a pin code on it. Yeah. There's, and when they come in the room, I pause it immediately. I don't let them, if they come into the room,

to talk to me about something, they have a question. I stopped the treadmill. And the reaction, I mean, the reaction was, it was a knee jerk, followed by a knee jerk, and both knees ended up just kicking themselves in the balls. Like, it was just a terrible. Then there were also, evidently, there were complaints of some Newman-esque governance issues, such as fully promoting his wife to an executive position inside the company. And then on more of the business fundamental side, large investments in increased manufacturing capacity, which of course we talked about, This is why we're doing the follow-up of the story, which were ultimately canceled over a decrease in product demand, which suggests some serious forecasting fails. I mean, these are pretty fair critiques, it seems like.

You know, and if the company was selling machines at a brilliant clip and let's say Amacron and people were not getting back to it and the Amacron was more deadly, he'd look like a genius because they would be selling even more of them at higher margins and, you know, running out of inventory. So one thing to keep in mind is if you win, you know, promoting your wife to an executive position in the company. You don't get in trouble. At the least, like nobody cares. This is why, whenever you do any behavior inside of a company, you have to say, if things are going poorly and people, you know, find out that I, I don't know, bought an apartment for myself or, you know, whatever. I bought myself a plane on the company like Newman did. Yeah. You know, like, or I bought a company that makes wave machines.

or something's stupid. Register the IP and then sold it back to my own company. All that stuff nobody cares about if the company is doubling its valuation every two years. And then when that stops, all that stuff gets reexamined. So impropriety, the appearance of impropriety is impropriety in business. If you accidentally put, I don't know, your warrior season tickets on your personal, on your corporate card and you used it personally, like, and you're a founder, just reverse that and pay for it yourself.

Like, I've seen founders do all kinds of wacky stuff where they paid for something that really shareholders should not have paid for. And I just say to them like, that doesn't look good. Why don't you just pay for it out of your money? Well, I don't get paid a big salary. I'm like, okay, why don't you ask for a larger salary

and then pay for it with your own money? Yeah. Yeah. Come on, guys. Come on. You got to be careful. Tight is right. On this note, I think the noties have picked up on my suggestion

that Apple should buy Peloton. And so Rock Mike and others want to know, all right, Jason, how much should Apple pay for Peloton, which is currently at a $10 billion, $9.7 billion market cap? Yeah, so you would have to make an offer that is at least 20 or 30% better than what the current price is. So it would have to go for 14, I think, or 15 to get the sale done. You'd have to be a premium over the current price.

So as companies do better, it gets even more expensive for a buyer. Yeah. And so, you know, they did offer it. It would have to be 14, I think, at this point. 30, 40% of them. Doesn't Apple have $200 billion in cash right now? Yeah, they just don't like buying things. They don't buy things that weren't built there.

Yeah, that's true. That is actually very true. Yeah. Which is a shame because it would be a delightful accessory to the Apple Watch, which itself is an accessory to the iPhone. And I'm just saying your Peloton could sell iPhones go for. It would be perfect. I don't know why they didn't get it done.

But it is what it is. Yep. I mean, it could be that, you know, I think Google wound up buying Fitbit. Yeah, Google about Fitbit. Yeah, I know Facebook was considering it. And that was such a minor acquisition. I know they looked at that with a lot of scrutiny. Again, back to antitrust.

I think they were looking at the privacy issues around. That was a day. Yeah, that was a major data acquisition. That had nothing to, like, who cares about them reducing competition in the fitness market? They bought so much data. Exactly. I mean, literally know what we weigh what our heartbeats are.

But I think it could be like Google actually has done a good job in hardware with Nest. Software's been a little janky, but Nest hardware's pretty good. The Fitbit is okay to good. Google should buy Peloton and that would be a nice Yeah, alphabet buying it

and having a hardware division that created this range of products. Right? Kind of cool. I'm picking up what you're laying down. Yeah. I'm smelling what you stepping in. So to speak, I think it would be

I think it would, you know, I would rather see Apple buy it, but for Google, you know, maybe you put, you know, maybe the founder is actually good and we, you put him in charge of Nest and everything over all the hardware at Google. So I think they did figure some things about hardware and software out. I would rather see them buy hydro and tonal and just run all of these things into one subscription at a really great price and then start opening gyms up with all this equipment. So when I went to the, I talked about this on a previous episode, I went to the proper hotel. in Austin, they had a tonal. Took out my tonal app that was like, do you have a tonal account? Press here. I pressed there.

It's gave me a QR code. It's a take out your app. Scan the QR code. Boom, all my settings, all my workouts at Austin proper hotels gym. So I used the machine. It recorded everything.

And I understanding is pelotons are now showing up in, uh, corporate gyms and other places. And, you know, if tonals are doing that and hydros, it's going to be a great future where all your stuff will just automatically be connected.

So, if that would be what I would want them to do. If I was this activist investor, I'd say, listen, we got to use our market cap to buy tonal and hydro and create a bigger suite and just, you know, okay, yeah, maybe we're going to be for the top 10% or 20% of consumers, but we're going to have four different items for them. Because in my gym right now is the tonal, the hydro and the, um, Peloton and they don't talk to each other, yeah. They don't talk to each other. But if you think about them, you know, if you were, what does Equinox cost now? 150 a month, I heard, 200 a month. Yeah. Yeah. I don't know.

I think Equinox is like 150 to 200 a month and you have to sign two years. So if my wife and I did that, you know, you're looking at like, that's a lot of money. It's like $5,000 a year. So you do that for 10 years is $50,000. Okay, $50,000 is crazy. You start thinking about these machines. You could buy all four machines for $3,000 or $4,000 each and then, you know, pay the monthly fees. And you probably wind up in the same space and have a better dope gym at your house if you have the space.

Assuming you have the space, yes, which people outside of cities do. All right, everybody, it's been a great show, and we'll see you next time. Bye-bye. Bye.