We Study Billionaires - The Investor’s Podcast Network - TIP751: Mastermind Q3, 2025: Uber, Merck, and Bath & Body Works

Episode Date: September 7, 2025

In today's episode, Stig Brodersen is talking stocks with Tobias Carlisle and Hari Ramachandra. Stig’s pick is Uber, the world’s largest ride-hailing company. Tobias is pitching Bath & Body Works, a category leader in home and personal fragrance. Hari’s stock of choice is Merck, a pharmaceutical giant that owns the blockbuster oncology drug. IN THIS EPISODE YOU’LL LEARN: 00:00 - Intro 02:23 - Stig’s bull case for Uber (Ticker on NYSE: UBER). 17:15 - The bear case for Uber, including the regulatory risk. 58:37 - Why Hari is bullish on Merck (Ticker on NYSE: MRK). 01:12:10 - The bear case for Merck, including the “Keytruda patent cliff.” 01:17:32 - Why Toby is bullish on Bath & Body Works (Ticker on NYSE: BBWI). 01:27:10 - The bear case of Bath & Body Works, including the debt level. And so much more! Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences. BOOKS AND RESOURCES Join Clay and a select group of passionate value investors for a retreat in Big Sky, Montana. Learn more ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠here⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Join the exclusive ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠TIP Mastermind Community⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ to engage in meaningful stock investing discussions with Stig, Clay, Kyle, and the other community members. Stig Brodersen’s Portfolio and Track record.  Listen to Shawn and Daniel’s episode about Uber. Listen to Mastermind Discussion Q2, 2025 or watch the video.   Listen to Mastermind Discussion Q1, 2025 or watch the video. Tobias' podcast, ⁠⁠⁠⁠⁠⁠⁠The Acquirers Podcast⁠⁠⁠⁠⁠⁠⁠. Tobias' ETFs, ⁠⁠⁠⁠⁠⁠⁠ZIG⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠Deep⁠⁠⁠⁠⁠⁠⁠. Tobias' Acquirer's Multiple stock screener: ⁠⁠⁠⁠⁠⁠⁠AcquirersMultiple.com⁠⁠⁠⁠⁠⁠⁠. Check out all the books mentioned and discussed in our podcast episodes ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠here⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Enjoy ad-free episodes when you subscribe to our ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Premium Feed⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. NEW TO THE SHOW? Get smarter about valuing businesses in just a few minutes each week through our newsletter, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠The Intrinsic Value Newsletter⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Check out our ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠We Study Billionaires Starter Packs⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Follow our official social media accounts: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠X (Twitter)⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠LinkedIn⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Instagram⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Facebook⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠TikTok⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Browse through all our episodes (complete with transcripts) ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠here⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Try our tool for picking stock winners and managing our portfolios: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠TIP Finance Tool⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Enjoy exclusive perks from our ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠favorite Apps and Services⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Learn how to better start, manage, and grow your business with the ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠best business podcasts⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. SPONSORS Support our free podcast by supporting our ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠sponsors⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠: SimpleMining HardBlock AnchorWatch Human Rights Foundation Linkedin Talent Solutions Vanta Unchained Onramp Netsuite Shopify Support our show by becoming a premium member! ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://theinvestorspodcastnetwork.supportingcast.fm⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

You're listening to TIP. I always look forward to recording our mastermind episodes with my good friends Tobias Carlisle and Harry Ramatandra. These are some of my favorite conversations because once a quarter, we each bring a stock to the group. And together we explore both the bull and the bare cases. It's never about just cheerleading and company we like. It's really about testing our ideas, asking the hard questions,

and seeing what we might be wrong. All the years, I found this format not only makes me a better, investor, but also keeps me grounded and curious, and I really hope it'll do the same for you. In today's episode, I'll be pitching Uber, the world's largest rod-hailing company. It's a business that many of us use frequently, but when you dig into the numbers, you see there's a fascinating story about scale, networking effects, and how the company is building an expanding ecosystem well beyond just rights. Tobias is sharing his thoughts on Bath and Body Works, which is a category leader in Home and Personal Fragrance.

It's one of those companies that might fly under the radar for many investors, yet it has an incredible strong brand recognition, customer loyalty, and generates a ton of free cash flow. And finally, Harish Peg is Merck, one of the biggest names in pharmaceuticals. Merck is best known today for a bugbuster oncology drug which has changed the landscape of cancer treatment. But like many other pharma companies, there is a challenge ahead with a lumont patent clef. and we'll be digging into what that means for long-term investors. So, grab a cup of coffee, get comfortable, and join us as we dive into three very different

businesses. We'll cover makes them compelling, risk to look out for, and hopefully, leave you with a few new ideas for your own investing journey. Since 2014 and through more than 180 million downloads, we've studied the financial markets and read the books that influence self-made billionaires the most. we keep you informed and prepared for the unexpected. Now for your host, Stake Broderson. Welcome to The Investors Podcast. I'm your host, Dick Broterson.

Today, as always, I'm here with Toby and Harri. How are you today, Jans? Hey, fellas, good to see. Thanks for having me, Stik. Yeah, good to see you all. Thanks for having us. Amazing. And, Jans, I'm going to, shamelessly,

I'm just going to go straight to the pitch here. My pick is Uber, certainly at stock, I think most of the audience have heard about before, $190 billion in market cap. And the first time the stock really came on my radar was not as a service, I should say, but as a stock worth investing in, was whenever I listened to this episode that my co-host, Daniel and Sean, on the Intrinsic Value podcast, whenever they did that and took a position, And I feel a little uneasy about pitching the same stock to you guys, but apparently not so much that I won't do it because here we go. But I invest in so few stocks. It's more than a year ago

since I last bought a new stock. And so I want to be very transparent about everything that we do. And I really want you to save me if I do something ridiculous, which I probably well. But anyways, I have a blackout period until September 22nd. And so with fullest close, I'm going to say I don't have a position. Some here on TAP have, but I don't have a position myself and I can't invest before September 22nd. But I probably would take a position at 1% position here at today's price of $91. I strongly believe that this is a double digit compounder over the next decade. Now, whether it's a double digit as in 10% or as in 20%, time will tell. we're going to discuss a lot more about that in the evaluation segment. But you might also be thinking

if you really have such a high conviction that it's anywhere between 10 and 20 percent, why only 1% start a position? And it's really because I'm just not smart enough to scale to a full position of which for me is 10%. I need to first own the stock. I need to, I learn differently whenever I own the stock, I guess. I wish I was smart enough to do it, you know, just right at the gate, just go full position. Every time I do that, it seems like I just get burned. So I've stopped doing it. And then I also kind of feel like I run this risk of being stuck in this TIP echo chamber. And so I really hope that you'll tell me why Uber is a terrible investment. So the first interaction I had with Uber was at the Berkshire meeting in 2014. And I remember it vividly. I was in Council Bluffs

and we were doing, we were trying to figure out how to get to Omaha. And I was standing in the lobby together with my co-founder, Preston. And he told me about this amazing new company called Uber, which probably sounds ridiculous whenever you hear it now. But like, I was blown away because he showed me this app and then you could sort of like track where the car was. And it was sort of like a number of thing in 2014. And to me, there was something very special about the meeting.

Also because I'm just going to mention this because as Harry is on the call. It was from that meeting when Hari actually sat next to Preston out of Omaha and conceived the idea of TIP in the first place. So anyways, and so it was just a side story. So of course, as a customer, I've known Uber for a long time, as I'm sure a lot of listeners here of our show. And I always had a really hard time investing in companies that were unprofitable. I remember that we've talked here on the show about this company called Amazon many, many years ago, even whenever people knew Amazon, but they were still burning cash, and we were like, who how much money are you willing to pay for a company that loses billions?

And it's just, it's as a, I'd like to think I'm a value investor, perhaps I'm not, now pitching Uber, but for someone who is sort of like being brought up at the church of Buffett and Munger, I feel it's been very difficult for me to invest in companies. companies that are unprofitable, and Uber has been unprofitable for the longest time. And so one of the things that's interesting then is that you then have these businesses that all of a sudden, I wouldn't say it called all of a sudden, but they eventually turn profitable. And so that just makes it a little bit easier for me to make the plunge. But of course, the multiples can still look absolutely ridiculous.

Like, simplistically, if you have a $1 profit and there is a market cap of a billion dollars, it looks like, you know, the multiple is a billion. And that's obviously not the case, but some of the multiples, if you just at a glance look at Uber, they look absolutely ridiculous. But what I hope that I can convince you, or even better be told that I'm wrong, throughout this discussion is really to look under the hood and see what's there. To a large extent, not necessarily because of the inflection point, but I also find it difficult to invest in a company at the size of Uber, at least, It's a $190 billion market cap.

And so a part of me is thinking, ooh, like how long can it, like how big can it get? And I almost have the same feeling as it had whenever it comes to Alphabet, which is another stock of Pits here. And I took a position back in May 2018 just before Berkshire. All of my position have this thing about Berkshire anyways. I was on my way to Berkshire. And I've been looking at this company, you know, Alphabet. And not that people didn't know the company in 2018.

but it looked so big, you know, market cap more than $700 billion. And it just seemed to have such a long runway of growth and I bought into it. And since then, now today it's a multi-trillion dollar company. It still looks like you can grow at really high rates for a very long time. And so it's also with that mindset that I look at Uber. And I think, well, this could probably get to a trillion dollars within the next, let's just say next decade. I think there are good reasons why I can go a lot faster, but if it will go to a trillion dollar

in the next decade, we're talking about a Kager of 17.5%. Everything else equal. Anyways, let's talk more about the business. So there are three segments here of Uber, mobility, delivery, and freight. And it's really the two former I want to talk about. Mobility, 58% of revenue, and 69% adjusted EBITDA. So mobility segment, that's really the two form. what most people think about probably whenever we think about Uber. So that is delivering people from point A to point B. Then they have the delivery segment, which is 32% of revenue or 31% of adjusted Ibita. I'll get to this point about adjusted Ibetta.

That absolutely drives me crazy. But I'll get to that later here in this pitch. That is mainly food. 90% of what's in the delivery segment is food, but they also do other things. They have some groceries. They have different things in that unit. And then the last segment, it's just your 10% of revenue that don't really make any money. They even can chatter about selling it off.

So let's just disregard that for the time being. And so, you know, it's sometimes the weirdest things that makes you look closer at a company. And for whatever reason, it was really the embedded, you know, the advertising business. It really drew my attention to Uber. And sometimes, you know, there's just something about a stock that just clicks. And for whatever reason, knowing Uber for the longest time, whenever I heard about this idea of advertising and how much data they really have you and how they can target you with advertising, that was really, really what may click for me.

And as you'd say for the record, we're only talking about like 3% of revenue whenever it comes to advertising. Obviously, it's a lot higher margin business than the current business that they have. But there is something there. And it really seems like in this world. of AI, there seem to be two types of winners. Like, they're the winners who own this technology, such as the big tech companies, but then they also have the big enablers of big data, and it could be Spotify. That's one example. Could it be a company like YouTube? I know it's owned by Alphabet,

or a company like Uber, because they have so much data about the users. And as you can imagine, the value of that data is really valuable for advertisers too. So let's talk a bit about the competitive advantage in some of the competitors. The networking effects is just really, really strong. And Uber, as our listeners would know, is that it's just a global company. There are certain markets where it's very difficult for them to compete, but by a lot, it's a global company. And the networking effects are strong, but it's also important to understand that it's a

supply-driven networking effect, and it's a two-sided marketplace. And whenever I say it's supply-driven, like, you really need a critical mass of drivers before it makes sense, and you need those first. And then it sort of creates the demand. I know it's sort of like sounds off because we're taught that demand drives everything. I would argue that for a company, like Uber is actually a supply that's driving, which is an interesting dynamic in itself. And like, so being based in almost Denmark, it's not.

super helpful for me that if there is excess capacity in Berlin. No, I need it right here. And so doing that, and generally for two-sided marketplace, it's just a really, really difficult business to disrupt once you have scale. You need to burn a lot of cash to get to that spot. So I'm inclined to say that Uber does have a competitive advantage in the brand, even though there's certainly been a lot of cases where Uber hasn't been coming off as a wonderful company. to say the least, but it is very much so that whenever you travel in different companies, that is a brand that you would know, that is your go-to. And I'm always inclined to say it's equivalent to your Starbucks or McDonald's. Whenever you're traveling internationally,

they probably don't have the best food or coffee, but there is a certain minimum standard, and there's Wi-Fi, even more importantly, there might be a clean toilet. And I know it's it doesn't really translate on one-to-one basis whenever it comes to Uber, but there's certainly a name recognition to the brand. But I do think the travel metaphor, even though that most of us would use Uber domestically,

I think it speaks to some of the competitive advantages with Uber. So if I can use that metaphor here, where do you get the, this is a rhetorical question, I'm not putting you against on the spot, where do you get the worst service and the worst food in Italy?

No, actually, let me not make a rhetorical question. Let me actually ask you just a bit about where do you get the worst food and worst service at all, in all the Italy? I've never been to Italy, so I can't answer that question. Yeah, I can tell you worse Italian food in Silicon Valley. What I have no in the Italy. All right. So I'll say that is a pizza place right next to the Ponti DiRialto. It's absolutely terrible.

So, from an economic lens, why is the food and service terrible? Well, it's kind of terrible because they know you're not going to come back. And they more or less have bonaply power because it's there and you don't want to walk to the next restaurant and you're about to leave. Anyways, so far food, service, you're overcharged. Now, let's talk about Uber. Uber changed the game from the whole legacy taxi business. It was just like the food and business like it would be bad.

and it would be overpriced. And, you know, you rate your Uber driver. He has an incentive to treat you well. And he also rates you. Because if you have below a certain rating, no driver wants to pick you up. And so it's almost like you have this two-sided marketplace where you're in force to have a decent behavior.

And I can't help but tell the story about Amazon. You know, Jeff Bezos, who I should probably mention, just as a, he just got married in Venice. Anyways, but you have Bezos, you know, famously, an early Amazon backer famously was frustrated that they didn't delete the battery reuse on their site. And Bezos said, no, no, no, the user there to help the customers. And I very much see the same thing happening with Uber. They're there to inform you and to reward the right behavior.

And the bulk case for Uber, and I probably should say Airbnb, also was original that you got the upside but without the capix. So meaning that you get the fleet of cars and the hotels, but without all the expenses. And of course, for Uber, you can say that's still the case. But then you look at their financial statements, you know, like, oh, my God, it looks like they're so low margins, like what's going on. And really what's happening is that there are vastly under-earning and they have a lot of operational leverage. So what you're going to see now is that they don't need a lot of extra, let's call it,

In this case, it also depends on how you define KAPEX, I should say, for a tech company, but margins are going to widen quite dramatically. And another competitive advantage I want to talk about is perhaps we should just start with logistics. You know, you might think about Uber as a company that just moves something, whether it's a person or whether it's food from point A to point B, and saying that shouldn't be that hard. Well, you know, just before, you know, we hit record Toby and I were talking about Shopify. They have famously, you know, failed on logistics, and now they're using their biggest competitors,

you know, at Amazon's for the logistics. Like, it's incredible, difficult to do logistics, even though it might seem like a somewhat random thing to do or a relatively easy thing to do, but it is very much, it's not the case. And I would argue whenever it comes to Amazon, and I know I'm all over the place here, but like some would say, oh, the secret sauce they have is like this wonderful e-commerce website. It's like, really like a big part of that wonderful, wonderful business called Amazon is logistics. It's just really, really hard to do globally at scale.

So I have a long segment here about risks and valuation, but before we get to that, I feel I've been brambling for such a long time. So I want to go back over to you, Jens, for any comments or concerns. interesting big stick over especially as I said like now it's one of those cuttle but kind of investments where we are all very familiar with the product yeah I agree it's interesting because we use the product so much but it's the the valuation is the is the thing that I'm interested to hear yeah I had like in a couple of points about headwinds that over might be facing but maybe I can wait until you complete your pitch.

Okay, so let's talk about the elephant in the room. We have to talk about AVs. It always comes up whenever you bring up Uber and for good reason. So I go through a lot of earnings calls these days, and there are different cycles, you know. There are cycle and everyone talks about tariffs. And then there are cycles and everyone talks about AI. And then there's cycles of everyone talks about both things, I guess. You have so many CEOs out there and all of them talk about how AI is actually a tailwind

for a business and not a hit wind. Uber is no different. And they're also no different whenever it comes to AI and then AV, AV, which is not necessarily the same, but has a lot of overlap. But I would argue that AVs are a tailwind. And it probably sounds a little bit odd. And I'll also be the first to say, I don't neglect that companies like Alphabet or perhaps even Amazon, which I may get it to later, could be competitors. Less worried about Tesla, but that's sort of like another thing, another avenue.

But you look at a company like Waymo and you're like, whew, like Waymo right now is partnering with Uber in some cities, but they're also competing with Uber and they have their own ride-haling app. And it's not profitable right now. I think most people probably expect eventually AVs will be profitable. It's just the technology is not at a price right now where it is profitable. But certainly they're collecting a lot of data and there are some concerns about what happens whenever they would put up their own fleet. I would probably say that the way, like one of the advantages of Uber is that they do a really good job of utilizing the supply. And the supply is just really, really important. And they have a very flexible supply.

So they can call in drivers whenever they can make more money, and then they can create that. And as you can probably imagine on the demand side for ride hailing, for example, or for Uber Eats. It's not constant throughout the day. And so if you manufacture a lot of AVs, they're there all the time. and you have to pay for that all the time. Whereas if you tap into a fleet of course that you don't own, it comes at a different cost profile. And so that's also one of the advantages that Uber has

where because delivering people and delivering food to some extent is somewhat similar, they can increase every hour that the driver put in and maximize the earnings that way. And so that's most certainly a part of it. And another part of it is that even if you have manufactured AVs, really the secret sauce is in the magic technology. And the more you dive into what goes into that algorithm, it's just incredible, incredible

difficult to match, say, a driver and then a person who wants to arrive with that person, like in real time. Like, there are so many factors that once you start digging, like, okay, but then what if that person is taking to the suburbs? What's the next thing it could be? What's the next ride? What should the cost be? How can we make sure that once it's taking that it goes out as quickly as possible, that there is the lowest risk of cancellation, which is the worst experience? How do we make sure we prioritize people who are a member and then who are not a member? Like there are so many, so many factors that once you sort of like open that Pandora's box,

it's just absolutely crazy how much. And so I would argue, and I'm probably super biased here, but I would argue that if you have the AV technology, it makes more sense for you to team up with Uber rather than compete with them. Perhaps alphabet doesn't look at it the same way, and you can also say that Alphabet does have a cash reserve to create that two-sided marketplace themselves, or at least in certain areas. Who knows? But it certainly is something to be concerned about, and I don't know if I'm too biased from listening to now years of, or going through years of earning transcript, where they talk about how much AVs or a tailwind. All CEOs right now have an incentive to say that.

I would generally say that regulation is probably going to be a headwind, or there's certainly a risk that it's going to be a headwind. I think it, and it also depends on where you're based, probably what you, what factor into that. I know that if you're based in the States, the whole insurance piece, get a lot of attention. And it is true. Like, if you look at, we talked about operational leverage before, like Uber has a lot operational leverage, but the one thing where they don't do a good job of reducing that

is whenever it comes to insurance. And it's regulating by each state. And so they actually have a provision on the balance sheet where they're self-insure. So unless I can get the right rates, they are self-insuring because it's, otherwise it's just too expensive. But I would say that outside of North America, I can see why there are some regulatory headwinds. That is, for example, and very anecdotally in Denmark, we used to have Uber for the longest time. Or, no, a long time ago, and then they got kicked out by the union, and then they came back.

And so it's not a discussion of, oh, is this a better service for passengers? That's not so much it. it's more a question of how does this work with unions and regulation? And so there is generally a tendency in most countries to favor local champions. You know, a few examples come to mind whenever it comes to e-commerce, you know, you have, you look at China, India, Japan. You might say, why is MSN not bigger in those countries? Well, you know, those three countries have local champions. And it's not too different, for example, whenever Uber tried to compete in Southeast Asia, Uber had to give up.

Like they exited eight countries in Southeast Asia in 2018. And then they sold the operation, then they got shares in Grapp. It has later been diluted. But it's difficult as a foreign company to compete with the incumbent, even if your product is better for all intents of purposes. That is not necessarily how regulators think it. about it, especially if they're politicians who wants to be elected or reelected, they do employ a lot of people and you employ a lot of people who likes to get minimum wages, perks,

different type of protection. And it's not always well received that a foreign company comes in and hire local workers in the gig economy. So those are just some of the risks I want to highlight. I don't know if that was what you were getting at, Harry. I think you've kind of touched upon what I wanted to highlight stick. But what a very interesting pick stick. And it's very hard because not just Uber, but any company right now, it's very hard to be certain because the platform is changing. That is the interesting times we are in.

It's very similar to the internet era when a lot of incumbents got disrupted. And some thrive like Microsoft, but with a lot of trouble in between. Now, it's very hard to know where Uber will land in this, because Uber is now one of the incumbents. They have a current business model, which is capital light. I think that's what proper their success, that they were capital light, unlike other companies where if you want to expand, you have to invest in plants and equipments or vehicles. didn't have to. They could just expand by expanding their network, city by city, and they have conquered city by city and established their near monopoly in most cities. So that's their strength. But with AI, that model itself might come to a question. I don't know if you have taken a ride

in Waymo. Have you guys tried Waymo? Yeah, I tried to catch it twice, but there's only four seats and I've got a family of five. So I couldn't catch it in San Francisco and then I'm outside the boundary in Los Angeles. So I haven't actually managed you, but I would like to. I haven't. How is it? How are you? I mean, it is a really, really seamless experience.

I really liked it. I've tried it in San Francisco. it even provides step-by-step direction where you are, where the car is parked. Once you're in, it recognizes you, it even turns on a music that's your favorite if you have a past history. So it feels like you're in the future.

And for the first time when I tried that, I felt, okay, San Francisco is coming back because it feels like the city of the future. and the ride is really seamless. They're expanding now to other cities. And that is where the risk lies for Uber. If Tesla also tries this, I think they're piloting in Austin

and if they're successful, the latest FSD in Tesla is really good. I tried it. It can even park itself. So that was amazing. When these companies are coming in, they have the resources to build that brand presence

as well, that becomes a challenge for Uber. Because now Uber is reliant on multiple small vendors or suppliers, like according to Porter Forces, like if you have distributed suppliers, you have the strength, you have the advantage over them. And when I talk to Uber drivers, I always strike a conversation with Uber drivers to see how they're feeling. Many of them are hurting. Actually, it's a sad thing to see because one of them was asking me, how much are you paying for this ride when I was going to San Francisco from my home?

And I was shocked to know he was barely getting any much money to his account. And Uber was charging quite a bit of all the search, charge and everything it was keeping for itself. So that power Uber has now because there are so many small suppliers to Uber. are these drivers. But imagine a company like Tesla or Google who have a fleet of robo-taxie who can operate at much lower cost than having a driver.

Even if they work with Uber, they have more leverage over Uber than the small drivers. That's the other risk. The third one is switching costs, like how I did. I just downloaded a Waymo app and I just took Waymo.

It's not a big switching cost for me. personally. Ober has a big presence in enterprise, but even there, I think it's not easy for somebody like, it's not difficult, sorry, for somebody like Google who has this ambition of getting into enterprise market with their Google Cloud, whatnot, offering this another service, along with their Google enterprise services for companies. So those things, and then finally, with the robot taxi, of course, safety is of a less concern. You don't have a driver, so you don't have to worry about rating the driver. So I see these patterns where a lot of businesses,

they build a lot of these technologies that are really their competitive advantages, like reviews of drivers and all their stuff. And it's all gone in the era of robot access. There is no reviews required anymore. So it might catch Uber management of guard because why would Google or Tesla be subservient to Uber? Waymo is already launched.

They have their own app. Tesla has such a big brand presence. They can easily command a big market. And more importantly, I think Uber is not like Facebook, where the network effect transcends geographical locations. They have to win city by city. The network affects is only within the city, the demand and supply that entire ecosystem. And that's well documented in many books and analysis of Uber.

They have to go and win city by city. And even now in many cities, like in India, for example, Ola is very popular in many cities. Uber couldn't win those cities because OLA had a – Ola is an Indian brand, very similar to Uber. But there are a lot of head start over Uber. And for various reasons, they could understand certain cities better than. Uber. Of course, Uber is also there in many cities, but it's not like once you win in one area that also helps in other area because most of the time when we are taking Uber, it's for local commute, not intercity. So it doesn't matter to me. I will just go with Lyft or Uber or anything

else. And if Vamo is there, if Tesla is there. So that is the other race that I see and how Uber will navigate this, I'm not saying they'll not be able to, but I'm saying there are headwinds. Let's take a quick break and hear from today's sponsors. All right, I want you guys to imagine spending three days in Oslo at the height of the summer. You've got long days of daylight, incredible food, floating saunas on the Oslo Fjord, and every conversation you have is with people who are actually shaping the future.

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That's Shopify. All right, back to the show. Yeah, I think you bring up some really great points, Harry. And that is certainly our risks. And so how would I respond to that? I mean, whenever I try to do the math, and obviously all of these are crazy assumptions, because we don't know what the cost is going to be.

Right now, it's not financially feasible for Tesla or Waymo to do that. It's just too expensive, but there is a question of time before the technology would be so cheap that they are going to, you know, considering eating Uber's lunch. And so what I'm thinking about is, can they do it as cheaply as Uber? Is it, are margins just going to be driven down? Is it going to be a price more? And if you ask who is going to win that?

It's a tricky question. I'm inclined to say Uber, and the reason why I am is that they can tap into the human workforce. Whereas if Waymo has to make sure that you can get a car any point in time of the day, think about how many cars they need to deliver everywhere, whereas it's a lot more flexible for Uber. But another thing I've been thinking about is what people like to get their own AV. And if the answer is yes, what does that do to the supply side for a company like Uber? I think that there are some studies done in the U.S. where it's like a car is idle, like if it's private, like 95% of the time, something like that.

I can see a lot of people don't want to be an Uber driver, but what if it's an AV? Like, would they be okay? You know, as long as you can probably tap into Uber system, they were going to be there at four or six or whatever you need it. So they're going to have people and providers bid for the lowest possible price. One of the interesting thing is that after Uber has sort of like lost the game, let's say in the Middle East to Kareem or to grab in Southeast Asia, they got extra in those companies. And they're selling that or recycling as they're calling it, selling that equity right now to make, that's called a vertical integration with some brand. So smaller brands like Luset and a few others. I think they sold there. A part of the original AV, which is sung around $3 billion into, was Aurora, which primarily now in AV trucks, but they're trying to see if they can verbally integrate with some of the smaller players, not taking controlling stakes. But for some of those smaller players that are not Tesla, Waymo, it might be a win because they do get access to that.

Messing technology. I am worried about alphabet, and I'm worried partly because they probably have the best tech, but also because there is a huge advertising opportunity. And if anyone understands advertising, it's alphabet. I'm shocked by how well the advertising business is doing for Uber. And I'm going to give you some random numbers here, but the click-through rate is 3%, and the CPM is $45. And for anyone who is in advertising, and we are funded mainly by advertising, like, those rates are just amazing. So why is that? Well, you know, they're sort of like, know, if you're going to this, I don't know, this restaurant, they can sort of like target you to go to the comedy club afterwards next door. Typically, you're skewing a bit younger, wealthier,

people who are very open to new brands. It's a very interesting demographic to have. But certainly all your concerns are well noted, and it might very well be so that, you know, they can't compete with, well, alphabet and the Teslas of the world. You know, there's this joke that fusion energy is 30 years out and it always will be. I kind of feel like, you know, I kind of feel like, If you're listening to some people in the AV space, they're always like, next year, the world is going to be on it. It's probably not going to happen next year. One of the interesting things about Uber is that, and they talked about this in the latest earnings call that came out here last week, was they see themselves as a platform for the gig economy. So whenever we think about Uber, we might be thinking, oh, you know, it's like a taxi just nicer.

How they think about themselves is that, no, that's not the case. Like, we are catering to a new generation. Like, I remember, you know, I'm at an age where whenever it was Sunday night, eight o'clock, you know, we holleled in front of the TV because that was whenever, whatever kind of thing was on. Otherwise, you had to catch the reruns at, you know, Tuesday, 10 a.m. or whatever. That was how it was. Right now, you have a new generation, and they're used to everything on demand,

whether it's food or rides or whatever it might be. And so that matching technology isn't just the case for mobility or delivery. Like, think about delivery for anything you need locally within 30 minutes. And so that's interesting self. And actually what they talked about in the last earnings call was that some of their drivers, because they're very much thinking about how much money is their driver making per hour, which is why they're supposed to lift. They both have mobility and they also have delivery.

But they're also now in certain areas offering drivers to do AI labeling for big tech companies. So if you're sitting waiting for your next assignment, you can actually sit on your phone, do AI work. It's not that well paid, but it's very much, I think you're seeing a macro trend of gig economy being more prevalent in lots of parts of the world that didn't used to have that. They also talk about how 70% of the drivers came to the platform because of inflation. There is a certain demographic that were going to that line of work. And it's very supply driven. Another trend, and we've go back to ride hailing, there's also a new generation where a lot of people don't have driver's license. I do have driver's license. I never own a car. And it's kind of interesting because whenever I speak with someone who's 50,

they would always tell me, I have a car, it gives me a lot of freedom. I felt the the way that the landscape is here where I live, I have so much freedom because I don't have a car. It's terrible to park and parking spots alike. It's incredible, you know, expensive. And so, there's so much freedom in not having a car, at least where I'm based. And I can always get an Uber within three minutes and they can drive me, whatever. So it's like, and that's a trend that you see more and more. And so, I don't know, that's a macro tailwind too, perhaps. I do understand that point of view because I've lived in San Francisco where a car is just a hassle because it's so hard to park and this the density of public transport and things like it was pre-Urubber but you know taxis and zip cars and things like that. The only time you really need one is when you live in the suburbs or you've got kids in car seats and it's such a pain to get the car seat into a taxi that's just easier to get particularly if you've got a number of kids in car seats.

but that's a pretty limited use case. So I can easily see a world where everybody, or everybody has maybe one small car and then you have an AV for everything else. One of the interesting things when I was in China and we were meeting with some of the VCs and the things that VCs are focused on AI, robotics, and autonomous driving. And their view was that Tesla was the furthest ahead

in autonomous driving, or most likely to be successful because they spend so much less less on their cars because the nature of the sensing system doesn't require the or the extra cameras that the Waymo cars have, even though the Waymo cars have a little bit of a head start now. So the final state of this is some sort of network attached to probably a car that's operating a system like Tesla because it's cheaper. It's like $20,000 or $30,000 cheaper without all of the things on it so you make more money out of it. So you have people who will provide the cars. I think that's Tesla's vision, right?

That individuals will put up the capital for the car, then put it on the network, and then they'll share the revenue out of the network. So you have someone who's just basically a passive capital provider and someone who operates the network. And that seems like a pretty good, that seems like probably the likely outcome

to me. The question is whether Uber can get enough Tesla-type cars on its network before Tesla can get an Uber-type network built out And I think that's the challenge. Uber's at least 50% of this fight, right?

It's halfway there. They've just got to figure out the other, whether they partner with an autonomous vehicle provider, and probably there are enough around that they can find one. And then maybe Tesla buys Lyft or something like that. I don't know. But I would be, I think it's, I like the bed. I'm interested to hear how you feel about the valuation, though, Stig.

Actually, I have one more point. Yeah, I have one more point to make. I think great point Toby brought up about. Tesla versus Waymo. I think there was a fundamental technical decision that was made by Waymo and Tesla that are completely different. So Waymo went for the LiDAR technology that is Google, way more expensive and not scalable, but their hypothesis was that's the only way we can go to level 5 AV, which means no drivers

at all. Whereas Tesla took this approach of saying, hey, why go that route? Because we can't really make it scalable. Every car should be autonomous. That was their vision. So they went with cameras with the point of view that Elon had that if I am seeing through my eyes, cameras should be suffice. I think they have eight or nine cameras now.

And that should help. And I think your assessment, Toby, based on the conversation, you had with the VCs is absolutely right. I think the latest version of FSD in Tesla is leaps and bounce better. Actually, it's very close to level 5. It's not

completely there yet, but Waymo is already at levels. From what I see, because they're able to operate without a driver, they have that license now to operate without a driver, whereas Tesla doesn't really have it yet, so because the driver has to be in the seat,

but it's eventually, if Tesla is able to figure out how to get to level five and get those regulations figured out. And that's the risk that others have stick that can work in favor of Uber is if there is a huge backlash in terms of employment and public sentiment, governments might limit the AVs. If that happens, that is in favor of Uber because Uber is an incumbent. incumbent, but if that doesn't, and if AV as a technology takes hold, and I agree to your point that it's almost like nuclear fusion for past 15 years, I've been talking about AV coming in, but this time it feels real because I have ridden in Waymo in San Francisco. I have sat in test class with the latest FSDs.

It's there. It's no longer a lab project. it's just productizing it and way more is already ahead with that they're already have productize it but now they have to escape so I think it's a regulation that can if regulation is against JV it's in favor of Uber that's a very bad spot to be in in my opinion because now you're hoping somebody will stop you from getting disrupted and if you remember when Travis was there Uber actually had a active division working on autonomous car.

They met with the, there was an accident during their test drives. Travis left, the company got spooked and they completely shut down that operation. So now they don't have that part, the autonomous part. And as Toby was saying, Uber has figured out the distribution,

that's the 50%. But hasn't figured out the autonomous that the other 50%. Tesla has the other 50%. Waymo has the other 50%. Now they need to figure out, out the distribution and Waymo is at it actually. They're going city by city.

But stick, your point is also valid. Like, how will Waymo scale? If there is a surge in traffic, they can't just suddenly add more cars. Whereas in case of Tesla, Tesla's model will be, as Toby was saying, every car owner of Tesla will be like live, will be a passive capital provider. When the car is parked, it just goes. And I can just turn on in my Tesla app saying, I'm available now.

So it goes and I can even set a schedule saying between 10 a.m. to 2 p.m. Do whatever you want, but come back to this parking lot. But then will Elon give it to Uber or have Tesla app for all Tesla drivers and make it like a Tesla clone? And these are all unanswered question. So like it's very hard to say this is how it will play out actually. So that's why it's very hard to make a case against your pitch as well. One other argument for Uber is, not Uber, sorry, for Waymo is if you go to somewhere like San Francisco or to Santa Monica here, last time I went to Santa Monica, the first four cars that I saw

were Waymos. Like there are lots and lots of Waymo's on the car. There are lots and lots of Waymoes around San Francisco. Like they really are rolling out the fleet. And that fleet just gets, as far as I'm concerned, like they've proven the concept. But they've launched the business. Now they're just growing the business. And in the next few years, it becomes a problem for Uber.

That's not to say that Uber can't compete because I think the network is a hard part of that problem to solve. But Tesla and Google are certainly two companies that can compete. But I still like Uber as a, I think Uber's part of it. Uber's got to be part of somebody's plan or they'll be able to have access to their own AVs. And to your point, we don't know how far out that is. but people do seem to have a preference for the for the AVs. I've read some of the people who travel and I'm like the fact that there's no driver. Yeah, it makes complete sense.

And I think people that right now, there was this study in Austin. Like they're willing to pay more money for not to have a driver. Do you think that that's novelty? Like I would pay a little bit more money to have my first ride on it, but after a while I'm going to be just going with the cheapest one. I think price probably matters a lot to most people. I do think there is a certain segment who would be willing to pay more for there not to be a driver. And it speaks really well about Uber also, like how much of consumer surplus they capture.

Like they have all of these different offerings. You know, if you're willing to share a ride, you know, if you want a nicer car, if your company is paying, then you also charge something else. And so they're very good at targeting people with the right offer at the right time, and we see that with companies like Spotify and so many others who have a lot of data about how you are as a user. So we mainly talked about Waymo and we talked about Tesla. And I do agree those are the two main competitors. I can't help but think that it's going to be all driven down to the cost of capital.

Even whenever you would say they would need $10 billion, random number, generic year or two, to secure that fleet, I think it's going to be come in in a form of a read. It's not too difficult to think about a business model. It's either a fixed payment per ride or revenue share or something. You can model that relatively easy and figure out what kind of dividend coupon can you get. And so whenever I'm thinking about how many players you have in the AV space,

thinking about subsidized Chinese companies, are way more and Tesla really going to be cheapest? Are drivers of Tesla more likely to allow other people into the cars versus others? It seems to me that Uber has a pretty good case for getting to the lowest cost of capital. And being able to capture those who would be willing to pay more if there is a driver, or even less if there's a driver. So who knows? As you can tell, I'm pretty big.

bullish on Uber, even though you certainly give me pause, both of you, Jens. And I need to think more about this threat from Waymo and Tesla. Do you have some thoughts on the valuation stick? Like, whatever? Can you walk us through where you see there? Yeah. If I can skip to the end, I'm looking at something like 15% in the internal rate of return over the next five years. But again, it comes with so many, you know, so many Fs whenever you would do that. So what are the key metrics? to look at, you're probably looking at the gross bookings, and I would expect there would be 15 to 20 percent here for the foreseeable future. You've also seen take rates go up across the board. It's a little bit different what kind of take rate you have whenever it comes to

mobility or whenever it comes to delivery. The tip of a little lower in delivery, around 5 to 7 percentage points. Globally, and I would also say it really depends on the maturity of the market you're looking at. So globally, take rates for mobility, which is basically right-hailing is around 30%. They used to be significantly lower. The way Uber does is that they subsidize new cities, and then both for, both whenever it comes to drivers, so they guarantee different kind of pay, but also for passengers. So then they reach critical mass, and then they, you know, start increasing the take rates, especially whenever they're search, they take higher take rates. So it's sort of like a dynamic.

thing, but it's roughly 30%, again, depending on maturity of the market. And so one of the things that frustrates me a bit is stock-based compensation. And I know this is sort of like, this is a thing you have to think about for all big tech companies. And if we don't do it, we can attract the right talents and so on and so forth. And it seems to be the name of the game, but you are seeing a dilution of three to four percent over the past few years. and then they have started to ramp up share buybacks to offset that.

And that drives me a little nuts because the way that they talk about it is that, oh, we issue these shares, but because we buy them back, it's not really a concern for shareholders. And you're like, they just, you know, authorized a $20 billion package, which was in top of the $3 billion that was already authorized. So it's like, but those $23 billion doesn't come out of thin air. Now, those are real dollars. And you also talk about how many growth opportunities that you have. And those $23 billion are not invested into growth opportunities. So, like, you're still diluting shareholders, whatever you would.

So that drives me a little bit crazy. I'm also not a big fan of the adjusted EBITDA number. No, every time my company is talking to you about adjusted EBITDA, you sort of like have to go on a treasure hunt to figure out how they came up with that number. during their investor day, they talked about how the next three years, it would be, just David, 90% of that would be free cash flows. I'm really curious to see if that is actually going to materialize. If that is going to be the case, you know, it's a little bit easier to look at some of those

numbers, but not saying the share-based compensation is not an expense, just drives me a little nuts. Anyways, I'm really happy that a few years ago they changed the incentive structure for management. So now it's not just restrictive stock units, which is basically slang for saying, as long as you have a pulse, you just get free CS. Now they actually need to perform. But what really upsets me about that is, so you can go in in the proxy and you can be like, oh, you know, for the, for example, what I'm looking at here is the bonus structure here for 2024. And they talk about adjusted EBITAD 20%, and then they have another 20% of, which is adjust EBITAD less stock based compensation, and then 20% on

gross bookings. And then they have some other things that are, that are not. financial. But then they don't define for you how to reach those targets. They're just saying, oh, it's about the growth. Yes, but how much, how much growth? Is it 1%? Anyways, I like transparency whenever it comes to sector compensation, especially also because you have what I would call a weak board. Whenever I look, and that is the case with a lot of non-fund other companies. If they're in the S&P 500, a major company, they hire an outsider to be the CEO. I'm not saying that he's not a competent CEO, like, he typically doesn't have a large ownership stake, steak, perhaps, you know, per his net worth. It's a lot of money to him. But you have, you know, your usual sucks

on the board, you know, your black rocks, vanguard, state streets, so on and so forth. And you sort of like get this vanilla type compensation package, which is just a bit annoying. Like, you don't have that wonderful alignment you want to see as an investor. And you generally don't want to be, like for a company that's probably going to grow like 15, 20% over the next few years every single year. You do start 3 or 4% in the whole every year. And yes, again, that has been offset by share bybacks, but that money could also be used to grow the company. And I would argue that with a company as mature as Uber, you wouldn't need to structure that way. I can see why it makes sense for a VC back whatever. But like, the IPO is a long time ago and they're already

at a stage where you can probably turn some of that down. But then, you know, you look at all the big tech companies and it's like even worse. And then you're like, what is the childmonger said? If you mix raisins and turts, they're still turts. So I don't know if it's useful for me that other companies are doing it even worse. But anyways, if you put me on the spot, I'm looking at something like a 15% return here over the next five years. That's what I modeled out. Sorry that I went so long here on Uber. Any concluding of the Macs before you throw it out to either Harry or you, Toby? No, I think this is a great big stick because this is the sign of time.

It's a poster child for a lot of tech businesses who are navigating disruption. So there are some disruptors, but many within the tech industry who are trying to manage this disruption or trying to take advantage of this disruption. And Uber is one of those. So it's a great pick to kind of, you know, summarize the time we are in right now. So interesting. And it will be great to follow through and see an year or two where Uber will be. Yeah, I agree.

Good pick. Good pick. I've been looking at it for a long time. I think it's very interesting. It's just because there's so much going on on that space with big, well-funded competitors, but who don't have the network. And we're going to see, I guess, which is. the more important part. I'm guessing that Lyft gets taken out. I'm surprised that Lyft hasn't been

taken out yet by somebody else because it's, they get part of the problem solved, but maybe it's cheaper just to build, build fresh. I don't know. It's going to be interesting. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up, and customers now expect proof of security just to do business. That's why VANTA is a game changer. Vanta automates your compliance process and brings compliance, risk, and customer trust together on one AI-powered platform. So whether you're prepping for a SOC 2 or running an enterprise GRC program, VANTA keeps you secure and keeps your deals moving.

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slash income. This is a paid advertisement. All right. Back to the show. All right. Thank you so much, Jens, for your feedback. Hari, you're up. Okay.

So my pick today is Merck. And there are a couple of reasons why I picked Merck. And that is because the, obviously the tariffs and trade tax. caught my attention because pharma is also in the crosswinds of that. And on top of that, Merck also has some kind of short-term headwinds that are coming towards it because of some patent cliffs on some of its key drugs. So before I get there, that's the reason I started looking into Merck. Farmer industry in general, and in that I picked Merck because it's one of the cheapest now

among all the big pharma. To give you a background on Merck, Merck is one of the top five pharma companies with 60 plus billion dollars in revenue. They are the, by far the most dominant leader in the oncology segment within pharma.

In fact, one of their top drug, Ketruda, is the most dominant platform. in oncology with bringing in around $29.5 billion in revenue in the latest year. And the oncology in general, and it's a sad thing to say, but it's projected to be a tam of around $500 billion or more by 2032, which is a cagger of 11.3%. This is one growth rate that you don't want to see, but it's sad. I think that plays into this story. And Mark also kind of, you know, has a history of bringing in these kind of really blockbuster drugs

and has that ability to innovate internally and then develop. In fact, if you look at Ketrua, it started with zero revenue. Then it accomplished $1 billion and then it kept going. And if you see last 10 years, and you can, you. You can see that from 0 to 1 billion to 29.5 billion, how they have grown this business. And without Ketruda, if you look at their revenue, it will be stagnant. At around $34, $35 billion today without Ketrula. So Ketruda is a very important aspect.

And therein lies the current headwind. So why are they cheap? Because Ketrua's patent is a schedule to expire in 2028. and that means other biosimilar drugs can come in with much cheaper alternatives. So that's one of the headwinds they are facing. The other headwind they are facing, which is again recently, the current administration made a executive decision on NMF pricing, that is, or MNF pricing. Most favored nations pricing.

What it means is the price of a drug in a similar developed market will be used as a reference for pricing it in US. And that might impact Merck and other pharmacas. It's just not for Merck. Other pharma in terms of their pricing power. For example, Ketruda per dose can cost you anywhere between $10,000 to $12,000.

And for a patient undergoing treatment, it might result in an annual expense of anywhere between 150 to 180K. And that's a big concern for many of the voters within US, obvious, and citizens. So it's a big concern. The pushback Merck has is that out of that $10,000 to $12,000, half of it goes to middlemen. and that's an inherent inefficiency in our medical system in US. It's not like Merck is making all the money. 50 cents is going to the middleman. But however, it does pose a risk for Merck

if the prices are brought down for similar medications. So these are the two headwinds that are staring at Merck. And that's the reason the stock is now at a PE of 12 and a forward P.E. of 11, I believe. compared to all other peers, if you look at Johnson and Johnson or Pfizer, they're all trading in the range of 18 and above P. So their value is much lower in terms of investors' sentiments. However, the reason I'm pitching is that this is pretty much a feature in pharma industry, not a bug, in the sense that all these, pharma companies goes through the cycles of patent cliffs, revenue decline, then they develop

their new drugs. In fact, I'll talk soon about the late stage drugs that they have in the pipeline. And then basically, they again increase their revenue. It's never smooth. Like Pfizer experienced it with Lipitor in 2011. That's when the stock hit, say with Abbe. So many other companies have faced it in the pipeline. past. Mark, however, is already taking steps to mitigate this. Number one is they're coming

up with their subcutinous version of the K. Truda. Today, if I'm a cancer patient, it takes 60 to 90 minutes or 30 to 90 minutes for me to get the drug through IV. So it's a very painful process. You have to go to a clinic, wait in the line, then again spend another hour for the IV, come back, it's a painful process. So this new version, new way of delivering the medicine is like a shot. You don't even have to go to clinic. Can we delivered anywhere or in your doctor's office? It took only a few minutes. That extends the patent life because the delivery mechanism has changed. It does have some challenges from some other companies, but I think Mark is already working towards it. The second thing is they also acquire Verona through that they got a

COPD based medicine. It was a $10 billion acquisition. Their wind river, which is a pulmonary hypertension drug, has a huge potential according to them in the future. It's a few hundred million dollars now. But that's how Ketruda started too. And then they're curating other drugs that are in the later stage of the pipeline. So by 2032, they might have compensated for most of the loss from Ketruda. And the other thing is, unlike the molecular drugs, in case of this biosimilar drugs, it's more like a hill, not a cliff in the sense. We will not see Ketruda kind of revenue go down to zero come 2028.

it will be like a 3 to 5% decline every year in Ketruda's revenue and then gradually others are picking it up. But there will definitely be pockets where the decline rate versus the revenue growth rate, it's very hard to predict as Munger says, right, like business is never predictable, but stock investors always expect predictability. and the key difference between a risk of the business versus risk of volatility are two different things. So that's how I see. The business revenue might be slightly volatile, but the lead they have, the expertise they have in oncology and the growing time of oncology sector positions them really well for the future. And it's a long-term investment.

And while we are waiting for all this headwinds to subside, we get a 4 plus percent dividend paid to us. And especially in this market, which I feel Toby and Stig, you might agree, market is richly priced today already. There are very few stocks that we can find where it's a good business, has a good mode, well-known company. It's not going to go away tomorrow, but selling it a reasonable P.

And I think you guys are more experts in the valuation, but that's my, at least my analysis. And I feel like, you know, holding this talk for the next five years will help us kind of, you know, earn the dividends of 4%. It's kind of better than what I would get anywhere else. And then there is an upside too with limited downside. But of course, the risk is they're not able to come up with any drive. are nothing pans out, their acquisitions don't work out. Those are some of the tail risks,

which I believe are minimal. So that's the reason I am bringing this up. Open to your feedback. I think healthcare, I've seen a few statistics that say that healthcare's as cheap as it's been against the market in 25 years or something like that. It's a similar scenario to the late 1990s where healthcare got really cheap relative to the market for whatever reason. And then healthcare is a high margin, high earning. very consistent business and they tend to do well over the long term. And the fact that these guys are buying, they've bought back stock pretty aggressively over the last few years indicates that they think that they're cheap as well. So I think it's very interesting and good dividend yield,

as you say. So you're carried for the period of time that you're waiting. And I think it's a good time. There's a lot of negativity around healthcare from the administration. And I think people have got some COVID hangovers as well, they're a little bit avoidant of health care. So I think this is one of those good contrarian, good undervalued contrarian picks that probably works out over a three to five year period. Probably in three to five years we'll be talking about how it's all-time highs and looking expensive. Actually, that's a very good point, Toby, you brought up. One is it is selling at 40% discount to its all-time high. So it's down 40% from its all-time high. one number two, their operating margin today is 31%, 31.5%, which is the highest in the

former industry. The rest are all in the 70 to 18% operating margin except ABB, which is around 30% as well. But ABV is selling it a really premium valuation. So I think that way, I think that's a good point you brought up high margin business and also the stock is kind of, you know, significantly down from it all time. You know, Hari, if you allow me to come out, just as said, oh, it's in the too hard pile. I'm probably going to say that, but I'm going to make a lot longer

and then say it's in the two hard pile. So pharmaceuticals are just, it's just really challenging. It reminds me of the time that Toby pitched Joliet here on the show and I was like, oh, the numbers look great. I just don't know what I'm investing in. So, and I think, think it also has a bit to do with how you invest. Whenever I, for example, would say, oh,

I invest like 1% in Uber. I don't invest in these stocks unless I want to take it to a 10% position. There's typically because I don't understand it well enough or the prices right, that it's not a full position. But my intention is always to take a full position. So whenever I'm looking at a stock like Merck, I'm like thinking, I don't think I would ever get the conviction to take it to a 10% position. But then, and I know, for example, like, Toby's strategy is different. He's a lot more quantitative than I am. And you hold more like in a basket approach.

I don't think there's anything wrong with saying, let me allocate, I don't know, 8% of my portfolio into pharmaceuticals, and then I have 15 companies or whatever, like into that. I can definitely see why it would make sense. It is incredible, difficult for me to look at a company, like Merck. And, you know, not that it would be easier for me to do in the 90s for a bunch of different reasons, but there was almost like an affliction point around where you have your own R&D. There was internal and that was you develop and you can sort of like say, you know,

this is what we do and we have a certain culture about how we do things here. And of course, then you run the risk of some of your best scientists being posed by other companies. But, you know, you have a lot of that inside. And now you go out and you acquire a, uh, different R&D. And so you can, of course, say, well, isn't that the same? You have to have people who also get posted and you have to figure out if they have the right culture, the right process to go out and find the right projects. You know, Ketruida has just been one of the examples. Like, they didn't develop that themselves. Like, there was something that they acquired and then just became a lot more successful than they originally thought. And so, I don't know,

it's super, it's very tricky. I don't like the lack of insider ownership. I don't like the big unknown whenever it comes to regulation. And then some listeners are tuning in and like, but stick, you just pitched Uber. Like, talk about poor inside ownership and regulation going against you. Yes, you're absolutely right. Let's just pretend that didn't happen. But there are some things there about Merck I'm concerned about.

And then you can, of course, say, well, it's all priced then. And I think you're absolutely right. It is all priced then. In terms of Toby's point about share buybacks, I would look very carefully at the proxy. I'm not questioning what Toby is saying is the right thing. I've seen a lot of management buyback stock at the wrong time, or because they really very much had an incentive to do that. So that's definitely something I would look into.

Share buyback really only works if the company is getting better. At least that's a framework you can put into it. otherwise you might want to get it as dividend, even if you have to pay taxes of it. Whether or not Merck is getting better is sort of like, it's very tricky for me to determine. Well, awesome. Thank you, Stegg. I think it's definitely one that can fall in a two-hard pile, but I just couldn't resist the P. So I had to pitch it.

All right, Harry. Thank you very much for your Merck pick. Toby, you're in the hot seat. Thanks, Dick. I have a pick. It's called Bath and Barth. Body Works. The ticket is BBWI. It's not Bed Bath and Beyond, which went bankrupt a few years ago. This is a spin-out from L Brands. It's a different value proposition to Bed Bath and Beyond, but it's the same

kind of, you know, it might occupy the same kind of space if you're not familiar particularly with these things, which I was not. I did do a channel check at the Doamo Mall over the weekend with my son. and there were people in this store and the rest of them all was pretty quiet. So I was a little bit surprised by that because it's not something that I pay attention to as I walk around necessarily or not that I go to malls very much either. What they sell is fragrance. That's a very broad kind of idea to be selling, but that's how they sell it. That's how they market it. And so what that means is that they have personal fragrances and house fragrances.

And if you read some of the research on it, the people who work in the store, or believe that they sell candles that burn longer and smell better than everybody else. They have other stuff in there, but they're very proud of the candle. So that's a value proposition. They have customers really like Bath and Bodyworks. They're quite loyal to this brand. And it kind of amazes me, but it has continued to grow through this sort of period of retail weakness, particularly because they're mostly store-based.

Until very recently, they're almost exclusively store-based. They've had this digital strategy only more recently. The company spun out of, as I said, the company spun out of L brands and went public in about 20, 21, 2020, near the end of 2020. They listed a 20 bucks out of the gate. They were very popular, and they ran up to $80 in that sort of meme stock craziness through 21 at 22.

And they're probably over-earning as, you know, when people were home and they're spending a lot of money on stuff for the house. And so they've had to work off that stock price overvaluation. And, you know, it looks like they've had earnings haven't been great for a period of that time because some of that over-earning has had to come off. But I think from a valuation perspective, it's a very sort of compelling opportunity. So the stock price is $28-ish today. Market capitalization at that level is about $5.9 billion.

Enterprise value is $10.4, which means that they're carrying about $5 billion, $4.5 billion, $4.5 billion of dead, which I don't usually love. But I think they can carry it. They've got free cash flow of $750 million this year, which on the market cap is a 10 to 12%. more like a 12% yield, free cash flow yield, which is gigantic. They cover their debt many times over. The P.E at this level is 7.5. E.E.B.B. is 7.7. Price to cash flow, 6.3.

So very, very cheap on those kind of metrics. They've been buying back stock pretty consistently since the top. So just after they listed, they had nearly 280 million shares out. They've currently got 212 million shares at. So they bought back quite aggressively over the last few years, which I like seeing because the stock's been down. I think the analysts who sort of follow this stock have got this. They like the stock around $41 to $45.

So at $28, it's a very big discount to that. It's way off. It's all-time high. And I think it looks pretty cheap here. They've continued to beat, which I think is. impressive given what the retail backdrop which has been pretty weak for most of the things that i follow they've changed CEOs i don't know how much impact these people have and i don't pretend to know these people particularly well but they've got a guy who's a nike executive he's going to

help them with the international expansion and their digital strategy which are the two areas where they've been a little bit weaker but he comes from a background where they've done very well So they're very hopeful that he can do well in this position. I think the risk-reward scenario, I think, is pretty good here. I think your downside is limited because it's really trading at trough valuation. It's as cheap as it's been. It's very cash flow generative. They're buying back stock at this level.

So that says to me that there's a flaw around here somewhere. And then I think 12% free cash flow yield is probably silly. You could easily see that being their long run, They're longer on average. So it's only five years worth. They've been more like eight times price to cash flow. So it's 6.3 times. They've got a fair, just to get back to average, there's 20 or 30 percent embedded in the stock.

And then I think with the buyback and a little bit of continued growth, I think there's quite a lot of upside in this stock. I think it's like a 50 to 60 percent upside. But the risks are that it's a retailer. it's got a very sort of niche approach and I'm not the target demographic and so I don't fully understand the desire for it. But in my portfolio, which is this is my mid-large cap value portfolio, it's one of 30 names, has all the things that I like, lots of free cash flow, buying back stock, trough valuation. And I think it's a reasonable bet if your timeline is like two to three to five years. That's my pick. BBWI as the ticker.

Great pick, Toby. The reason it's very interesting to me is I have had similar observation and I never thought about it from an investing perspective. So that is the difference between you and me. It's like, I always saw this store always had more people than the rest of the stores and the mall. So that's number one. Number two, the staff. was always very friendly, offering samples and inviting people into the store. It had a different vibe than the rest of the mall, especially in the last few years I'm seeing the malls are becoming less and less inviting. It almost feels like a rundown town because a lot of things have moved online. This store usually has a different vibe. They are into candles. They're also

into body spray, especially for women, and a lot of them really, really are loyal to that. And in fact, when the one that was closed near our home, like, you know, I know we had to search for another one somewhere else. So definitely, I think they have some kind of a customer loyalty that they have figured out. It's not something that you can get somewhere else. they make their own, they sell, so that's their unique mode. The other thing is the stores are all very small, so their cap, OPEX might be much smaller than, say, big retailer. So that's the other advantage they have.

And the other thing I feel is like, you know, this is one business where it's kind of AI proof, you can say. Can't be disrupted by AI. But we'll have to see whether recession impacts them. Are they cyclical? That was my question. to you to be like because if if there is recession this is one of the things candles and other things that people will kind of you know try avoid or easy to avoid at that point of time it's a nice to

have so I think those are some of the risks I see for them but otherwise as you said like for a three to five year term it's probably you're getting it's one of the lowest price points compared to the past yeah I think that's I think it's an interesting point I think that we I think that there has been some recession for a lot of the market since 22. I think that most people are feeling a drop off in their wages and an increase in the amount that they spend. And I think that's reflected in lots of different data series. One of them is that people aren't making payments on their student loans, people aren't making payments on their car loans,

making payments on their credit cards. There's a lot of delinquency out there. And so I think that that is already reflected in the numbers for many of these businesses. So I think that they have been suffering through a little recession. And even through that period, they've managed to continue to grow, despite this sort of revenue headwinds, they're exceeding guidance, maintaining profitability. There was a little revenue decline. They say due to calendar shift effects, too many, not enough Saturdays in the month or something like that.

there's still forecasting growth for the next year, one to three percent. That might be under inflation. That might be all cost pressure and not reflected in unit. But I still think that any sort of growth through this period is a positive. So I think if they're still growing, that indicates that possibly they are going to struggle through, avoid the recession. And so I still think this is a good time to be putting this position on. I'd certainly rather a position like this at this point in the cycle than when it was

roaring in 2021. So, Toby, it was interesting that you would mention this is not Beth Bath and Beyond. I actually pitched it once. I don't know if you remember. I said proudly since now I've gone bankrupt. It's coming back. It's all going screaming back. I actually, my wife walked by here the other day whenever you sent the email that you're

going to pitch Bath and Body Works. And she was like, what? What are you looking at? Why are you looking at Bath Body Works? I'm like, no, no, Toby sent me an email. He wants to talk about it. And so I need to figure out what it is. And she looked at me and she was like, you don't know what it is?

They're everywhere. We've been to one together, you don't remember? I have no recollection at all about going there. Like you, I guess I'm just not the Thai group. But I like the numbers. I'll be the first to say that. I tried comparing it to Bed Bath Beyond because I had this, is it like, not just because of the, you know, the similarities with the name, but like there was just some of the numbers. They were just like, I need to double check. Is this a value trap in the making? And of course, we don't know that, but there are a lot of things that are much much better with Bath and Body Works. So gross margins, different, certainly high level of loyalty. 80% of their sales are from members. I feel like they're probably slightly over-livered, even though it's probably manageable.

Whereas for Bethbath beyond, it was just getting kind of ridiculous at the end, and they were just boring, and then buying back jazz. But anyways, I find the multiple is very compelling. I'll be first to say that. And so I was trying to go through the most recent presentation, and I looked at the debt maturities. And the first thing I thought was, oh, it doesn't look too bad. And, you know, whenever it's being refinanced and the interest rate that they're paying. And then I thought to myself, well, you're looking at debt maturities. Isn't that a bad

thing in the first place? And so it sort of like depends on what kind of glasses that you have on. It also depends on how big you're going to swing. I agree. Just before you move on, I agree. I had to look at their debt. Five and a half billion dollars on a five and a half billion, or four and a half billion dollars on a five point on like a six billion dollar market cap always gives me pause too. And I don't like seeing that. And I looked at their debt maturities too. And it looked to me like it was turned out pretty well.

I think they were doing like $500 million chunks on a yearly basis was my recollection. Is that right? Yeah, that sounds about right. Which I thought was like that was pretty reasonable. I think like they're going to be working all the time to do that. It's not doing a $5.5.5. It's not doing $4.5 billion in one go. It's 500 million at a time, which I think is achievable.

But they're probably paying higher rates as they roll, almost certainly. Yeah. And, you know, whenever you're thinking about how much money they return to the shareholders through buyback and dividends, I mean, there's just a part of me who would probably prefer that just pay out some of that debt, even though they would be the first to say that, I think, you know, the first maturity that would here is like $284 million in 2027. like 6.7%, and then have 444 maturing 28, 5.3%. So it's like, you can probably in an Excel sheet say that they shouldn't work off that debt. It's probably just more from principles of being

a bit more conservative. I like the stuff. I don't by any means consider myself an expert in what they do. I do think it was kind of interesting. So correct me if I'm wrong, you being an expert the frequencies, or hopefully more than me, Toby. Is there a case to be made where, you know, bath and body works dominate, let's call it, more emotional categories, like fragrance, you know, body care, whereas the bath, bath beyond or just a bit more commoditized or towels and sheets? And I don't know.

I might be overthinking this. Is there something to be said about that 80% coming from members? I should probably just do a very quick peer comparison here. So, you know, Alta Beauty, which is one of the picks we talked about before. Toby, again, speaking right to our call competence when we're talking about cosmetics. But, you know, they had 95% from members, but that's also like top of the class. You have something like a Sephora in North America is like also 80%. Starbucks is like 53.

I know that's a very different type of product. But like, how should I look at that 80% loyalty from members? I think that it's a very, very positive thing. And I think when you look at, they ask people to rank the, I'm just struggling to find it at the the moment, but they ask them to rank the brands that they like. And it ranks, there's a handful of brands above it. And I forget what they are, but it's like Starbucks and, you know, very well-known brands. And then Bath and Body Works is right up there.

It's one of the, it's higher than Target. It's a very well-known brand in this group. And they have people seem to be very loyal. well, they get the good feelings when they go into the stores. I think, you know, that stuff's a little bit voodoo, that sort of psychology. What happens if you lose that? I don't, I'm mistrustful of that stuff. I tend to be more of a quantitative, I look at the numbers more. And I think that their performance is borne out in their numbers and born out in that 80% figure that you quote that most of their sales come from members. People seem to be very loyal once they go to the store.

they were like going back to the store. They like visiting regularly. I was surprised, like I said, when I was walking around the mall, the mall was very empty, and this store was kind of a little bit out of the way, and I was walking towards it following three people and all of them went to the store. So I just stuck my head in at the entrance, and it was like, there were a dozen people in there and not a huge store, whereas like there were a dozen people in the entire mall.

So I thought that I was surprised that they were doing as well as they were. Not that I would ever, I don't use, that's not part of my investment process. I just wanted to see why is the stock down so much, and it's not like a lack of foot traffic. It may just be that they're working off their 2021 hangover, and there is a little consumer recession going on. And the debt looks scary against a market cap of $6 billion, but there's an argument to be made it with $750 million of free cash flow, it's probably about half price. and so with a market cap closer to $12 billion, the debt looks less frightening at that kind of level of EV of like 17 or something like that, you could probably support this sort of free cash flow.

Plus with the buybacks and probably the continued growth, those numbers will be higher and more impressive next year. I think it's a kind of stock that I like, I think it's quite asymmetric. I think it's got limited downside and pretty good upside for the risk that you're taking, and it's just a little undiscovered stock, not necessarily an undiscovered brand, just undiscovered stock.

Yeah, certainly whenever you look at the numbers and you think about that it's retail, it looks very good. 80% of products are manufactured in the US, so you can look at it as, they're very dependent on North America. You can also say that there are some tariffs and shock minimization there.

Now 57% is off malls. They want to have 75%. they have this declared goal. They don't want to be as much in malls anymore. You know, we all know what's happening with malls across the country. There's also an element that is a little bit easier for buy online, pick up, and store, which very much speaks to this experience that they want to create. So they want to, for that reason, also make it a little bit easier to visit the store.

I found it's always interesting because if I said, you know, oh, it's like 30% buy online pickup and store, is that high or low? You mentioned Target before. they're 35 to 40. I also know that depends on how much, like, where they're located. It's just not as simple as that. You know, Gap Old Navy, for example, is like 15 to 20. So it's kind of like interesting to see.

And again, very, very different businesses. But it is something, and we also saw that with Alter Beauty, you know, the way that they have more and more data about you, the way they're upsell on the app. Like, is the company big enough to have that critical mass of data to hit you with the right advertising, probably? Well, one thing that they do is they have very short lead times for new products. So in COVID, they were able to get out a hand sanitizer by March 2020. They have this like five or six week turnaround.

So if something's working, they lean into it. If something's not working, they cut it off really quickly. So that's been they're good retailers from that perspective. Like they're good data-driven retailers. So I think that they're pretty well optimized for what they're seeking to. achieve. I think they're doing a good job there. All right, Toby, thank you so much. Where can the audience learn more about you? I'm on Twitter at Greenbacked, G-R-E-E-N-B-A-C-K-D. I have Acquireasmultable.com where I have a whole lot of low value, good value picks, and I run two E-T-Fs, Zieg, which is a mid-cap,

deep-value, domestic US, lots of small companies very similar to Bath and Bodywork. where they're generating good cash flow, buying back stock, very undervalued and Deep, which is a smaller microfund. Deep and Zig will sort of track factors like value quality and small size, and those factors have been very beaten down for an extended period of time, really starting since 2011. There was a little reprieve from 2021 to 22, but at the widest valuation discount to the growth end of the market going back to 1999. Last time we saw these sort of discounts, the following five or ten years were very good. So I'm very optimistic for small value right now, even though the historical record doesn't look great. This is the kind of investor that I am, the contrarian

that I am. You want to put these positions on when it looks ugly like this. And so I think this is a very good time to be a small value investor. Thanks for having me stick. It's always It was good saying you. That was absolutely wonderful. Hari, where can the audience know more about you? Hey, it's Jake. Fun as I were, talking to you both. Everyone can find me on Twitter or X now.

Hari Rama is my handle and looking forward to all the conversations, feedback about today's speech as well. It's always good seeing you. Toby, Hari, thank you as always for your time. And we'll see each other again next quarter. And for the listeners, next week. Thank you for listening to TIP. Make sure to follow We Study Billionaires on your favorite podcast app and never miss out on episodes.

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