← Morning Brew Daily
Morning Brew Daily
Wait, Allbirds is Pivoting to AI? & Jury Calls Live Nation a Monopoly
00:27:40
Wait, Allbirds is Pivoting to AI? & Jury Calls Live Nation a Monopoly
Loading summary
Transcript58 lines
- [00:00]
A
Study and play come together on a Windows 11 PC.
- [00:05]
B
And for a limited time, college students get the best of both worlds.
- [00:10]
A
Get the unreal college deal everything you need to study and play with select Windows 11 PCs. Eligible students get a year of Microsoft
- [00:17]
B
365 Premium and a year of Xbox Game.
- [00:20]
A
Pass ultimate with a custom color Xbox wireless controller. Learn more@windows.com studentoffer while supplies last ends
- [00:27]
B
June 30 terms@ aka mscollegepc
- [00:31]
A
Good morning, Bird Daily Show I'm Neal Freyman.
- [00:34]
B
And I'm Toby Howell.
- [00:35]
A
Today, Live Nation is a monopoly.
- [00:38]
B
A jury says Ben Allbirds is pivoting from shoes to GPUs. It's Thursday, April 16th. Let's ride.
- [00:50]
A
Good morning. Who would you guess is the most popular figure anywhere in the world to Americans? Hello, I'm Dolly. Country music legend Dolly Parton is by far the most popular international luminary in the U.S. according to a new UMass YouGov poll. With a net favorability rating of 65%, Dolly is more than 50 percentage points ahead of second place. Barack Obama with 14% and Vladimir Zelinsky in third place with 12% net favorability. Coming in last place with a minus 65% net favorability score. Toby I mean, Russian President Vladimir Putin.
- [01:25]
B
Of the 1,000 people surveyed, only 5% had an unfavorable impression of Dolly Parton. I need to know who the 50 people were who did have that opinion. What do you have against Dolly? I'm trying to think of anyone else not named in this survey who could possibly beat Dolly Parton in terms of popularity. The only thing that came to mind were some athletes. Maybe some Olympic athletes could be contenders. Alyssa Liu after she won gold medal. But it it is difficult. Even athletes are polarizing to a certain degree. So Dolly Parton, most liked person in the world according to a thousand people. And I can't think of anyone more deserving.
- [02:04]
A
This episode is brought to you by On Investing, an original podcast from Charles Schwab. It's hosted by Liz Ann Saunders, Schwab's chief investment strategist, and Colin Martin, head of fixed income research and strategy for the Schwab center for Financial Research.
- [02:16]
B
Each week, Liz, Ann, Colin, and their guests analyze economic developments and bring context to conversations around stocks, financial, fixed income, the economy and more. You can download the latest episode and subscribe at schwab.com/on investing or wherever you get your podcast. Allbirds is having an identity crisis. The shoe brand that rose to prominence for offering sustainable merino wool sneakers has pivoted to a GPU as a service company. What? Allbirds has been going through it lately, selling off its IP to a brand management firm for a paltry 39 million after peaking at a market cap of 4 billion in 2021. And that seemed to be that. Its fate sealed as a cautionary tale of flying too close to the tech bro fashion sun. But yesterday, the company shocked the world by saying it was taking a $50 million cash infusion to buy high performing GPU assets to turn itself into an AI native Cloud Solutions provider. The new direction comes with a new name, New Bird AI. And what competitive advantage does New Bird AI bring to the crowded AI compute game? That part is unclear for a company that has spent its entire existence more concerned with aglets than AGI. However, the move has also pushed its stock in a new direction. After announcing the switch, Allbirds exploded, rising as much as 800% at one point. Because of course it did. Neil calling this a head scratcher is an understatement. It's an Onion headline come to life.
- [03:45]
A
I mean truly. So allbirds finished up 582% yesterday for a market cap of $147 million. We have seen this movie before and investors usually leave before it ends. Back in 2017 and 2018, what was all the rage? Blockchain and crypto. I remember there was this company called Long Island Iced Tea. It became Long Blockchain and its stock did something very similar to what Allburn said yesterday. But it was also delisted from the stock exchange less than a year later. A couple of other types of industries have moved into more hot ones like biotech. There were a few biotech companies that just became bitcoin. Treasury Companies 180. Life Sciences Corp. Is now doing business as ETH Zilla. So this is a playbook that comes from a position not of offense but of defense. And Allbirds sold for, you know, pennies on the dollar. Now it's trying this desperate move to stay relevant as a meme stock.
- [04:39]
B
The issue is though that the AI compute crunch is a real thing. Right now there is a rapidly drying up supply of computer computing power. If you talk about AI as a gold rush, right now we are running out of shovels. We are running out of computing power. So there is an opportunity here because if I am Albers is a crazy sense to utter. But I'm looking at other companies like Core Weave, which rents out GPUs to firms who want to use them. They raised prices by more than 20% last year, a GPU rental of a Blackwell Generation chip, which is Nvidia's top of the line chip, is up 48% from just two months ago. So clearly there is demand for these chips. Allbirds is saying hey, might as well buy some because there will be demand out there.
- [05:26]
A
Right. The question, and I think you brought this up in the intro is sort of what, what assets does Allbirds again? Yeah, again it's, it seems like it's not real life, but what assets do Allbirds have that makes them capable of renting out GPUs? Besides, they just raised $50 million in financing. It seems like Pennsylvania that is going to be the thing. Like do they have real estate? Do they have data centers where they can stack these GPUs? It's all very unclear.
- [05:50]
B
Let's see what you know, some analysts had to say about it. The Financial Times wrote an opinion piece that said we suggest running away as quickly as possible if anyone can suggest a suitable brand of footwear.
- [06:01]
A
But then there was a Bloomberg Intelligence analyst who wrote the move exits a structurally lower footwear and apparel model for a higher value compute business. Though execution risk remains high, the the company has potential to improve its long term margin profile if the transition is executed well. Sounds like an I wrote that.
- [06:17]
B
I think the though is doing a lot of work there as is the potential to improve going forward. But yeah, we've seen this story before. Maybe this industry has a little bit more to it than the blockchain pivots of days gone by, but Albert GPUs
- [06:35]
A
baby, if you're going to a World cup game this summer, it's going to be ridiculously expensive. And I'm not just talking about the tickets tickets. I mean just the train ride to the stadium. The Athletic reported that NJ Transit is planning to charge more than $100 for return rail tickets from Penn Station in New Jersey's MetLife Stadium for the eight World cup games being hosted there. Typically, and I've done this one, that ticket costs $12.90, so that's more than a seven fold increase. And it's not just NJ Transit jacking up prices. Earlier in April, the Massachusetts Transit Authority said it would quadruple its prices for round trip train tickets from downtown Boston to Gillette Stadium in Foxborough. If you want to travel to a World cup game there, it'll cost you 80 bucks. But even that's less than a newly announced bus Service that's charging $95 to take fans from Boston to Gillette. Not only have these prices in range Fans who are already paying up to 4,000 bucks just to attend the games themselves. But they've caught the attention of politicians. And American officials are mostly blaming FIFA for saddling exorbitant costs on host cities and transit authorities. New York Senator Chuck Schumer called it a shakedown, saying FIFA's hosting agreement dumps added transportation and security costs onto states and cities. But while FIFA keeps the revenue from tickets, broadcasting, and concessions, NJ Transit sources told the Athletic that the overall cost of the agency for eight games will total up to $48 million. And they need to recoup these costs somehow. Toby. Less than two months out from the World cup, and it's just one controversy after another.
- [08:00]
B
Yeah, it's about who the buck stops with, because obviously New Jersey political leaders don't want New Jersey taxpayers to be on the hook for transporting World cup attendees to. To the stadium. But these costs are going to be incurred, so someone has to pay for them, which is why you are seeing these prices just go through the roof. The issue, too, is that it seems like FIFA has sort of misjudged demand for all of the World cup hoopla, because right now, the hotel industry is saying, like, hey, we are not seeing, you know, the bonanza that you promised us. We are seeing prices actually dropping about a third third from their peak earlier this year at some of the major cities where the World cup is going to descend upon. So maybe there is a miscalculation of just how much demand there would be and what prices you can charge.
- [08:48]
A
Yeah. The president of the Hotel association of New York City said he could categorically say we haven't seen much of a meaningful boost yet. It's possible we will get some more demand, but at this point, it certainly will not be the cornucopia that FIFA was promising. It seems like all these swirling issues in the United States right now, maybe anti American sentiment, the war in Iran, raising gas prices is really dissuading a lot of international visitors from coming. Tourism economics previously projected that international visitor numbers in the US will rise this year 3.9%. They just revised that down to 3.4%. Just because it's going to be so expensive has to be the biggest reason. Football supporters Europe, which is a fan group, estimated that one supporter would need to spend at least $6,900 on tickets to follow their team from the opening game to the final of the World Cup. And that is five times the cost of Qatar four years ago.
- [09:39]
B
US Fans don't have to worry about that. We're not making out of the group, say, I'm not going to put that bad juju out into the world. But one of the issues with the ticket prices, too, beyond just the exorbitant costs, is that FIFA has kind of been pulling the rug out from under people when they buy certain categories of tickets. So a lot of people are splurging for Category 1 tickets, which are supposed to be lower bowl best seats in the house. But then once they actually have their seat assigned, it's anything but the best seats in the house. And if you, God forbid, bought a category three ticket, people are so far up in the rafters, are closer to the roof, they know they're not going to be able to see the game. So just all sorts of every, you know, issue that could arise around pricing and a World cup being very expensive seems like it's coming to the fore right now. Hopefully everything gets ironed out and, you know, just like, the love of the game takes over. But right now, it's looking a little shaky. Moving on. What's the one thing swifties in a federal jury have in common? They both hate Ticketmaster. A federal jury found Live Nation, the concert giant that owns Ticketmaster, guilty of operating an illegal monopoly. Yesterday, the evidence the jury looked at painted a very monopolistic picture. Live Nation controls 70% of major concert venues and handles 86% of ticketing at those venues. Overall, Ticketmaster sells about 10 times as many tickets as its closest rival. Live Nation's own employees did them no favors here. A series of internal Slack messages showed a ticketing employee bragging he was, quote, robbing them blind, baby, while charging fans excessive fees for parking and VIP upgrades. Another pivotal moment was a phone call recording from Live Nation CEO Michael Rapinoe berating the former chief of Barclays center in Brooklyn that it was, quote, going to be a tough time to deliver tickets or concerts. After the arena dropped Ticketmaster, showing evidence of the coercive power regulators were scared the company possesses. Remember, Live Nation was originally brought to trial by the doj, but halfway through, the government cut a deal with the company and walked 34 of the 40 states involved in the initial suit. Said, actually, we want to keep going. And it's those state AGs who ended up winning. With a jury finding that Ticketmaster overcharged consumers by $1.72 per per ticket. Neal, now the judge presiding over the trial will hold a separate trial of what punishment actually looks like, where options can range from hefty fines to a full breakup of Live Nation and Ticketmaster.
- [12:05]
A
We were just talking about World cup tickets being expensive, while concert tickets make those look like a McDonald's value menu. In 1996, the average face value for a ticket to see one of the world's 100 top grossing artists was equivalent to about $53 in today's money. Adjusting for inflation, by 2024, the average face value for a ticket was $142. In today's money, that's an increase of more than 150%. And the antitrust watchdogs in this trial successfully argued to a jury that, you know, this tie up of Live Nation and Ticketmaster, which happened in 2010, which the government blessed with certain conditions, was a small reason why we're seeing these surging concert price tickets.
- [12:44]
B
Live Nation defense was basically that, hey, we're not a monopoly. We just offer the best ticketing service. And that's the reason why everyone uses us, is because we're just so dang good. Which is often a tact that many of these companies adopt when talking about monopoly trials. But a lot of people just did some meta commentary on this and said this was a high profile test of antitrust enforcement under the Trump administration. They kind of balked at the last minute with this settlement. So the fact that the states came in and said, we are not done with you. We want to keep going, it kind of does show that there is a path towards a different sort of antitrust enforcement, with states picking up a lot of the slack that people felt the DOJ let go.
- [13:26]
A
Yeah, we have some big mergers coming up that are going to be under antitrust review, which I was thinking about. We have, you know, Paramount buying Warner Brothers and United Airlines maybe buying American, and we'll see what the federal government does. But they really blindsided everything, everybody by the doj second saying a few weeks ago, yeah, we'll take the settlement. Meanwhile, 34 states said, no, we're going to plow ahead with. We'll see how that dynamic really affects these, these big antitrust reviews of potential mergers coming down the pipeline. What does it mean for Live nations business? You know, is this going to be a whole new concert ticket ticketing paradigm that we're about to, to enter? It's very unclear. I mean, the judge does need to deliver these remedies and what they need to pay and whether Live Nation is going to be broken up with Ticketmaster. But at least on the stock market, you know, there were some minor, minorly significant moves. Live Nation was down 6%. And then some of its rivals, Vivid Seats was up 9% yesterday. StubHub was such was up 5%. So maybe investors don't see a huge shakeout coming, but you know, at the at the margins a little bit.
- [14:27]
B
If Live Nation is broken up, we know that they what they should do and that is pivot to GPU as a service company. All right, we're going to take a quick break and come back with Neil's numbers right after this. This episode is brought to you by Apple. Neil, there's nothing like your first Mac. I remember my first Mac like it was yesterday. I got mine right as my sister started to get recruited to play socce in college, I was given the very important task of making her a highlight tape and Imovie was my best friend. She ended up playing at Georgetown, so I'd say it was all worth it.
- [14:59]
A
When I got my first Mac, I was heading into freshman year at the University of Maryland. A lot was uncertain that fall, but I knew I had a dependable sidekick for homework, connecting with other students and devouring blogs about our basketball recruiting class.
- [15:11]
B
That's how we felt with our first Macs. How will you check out the all new MacBook Neo, an amazing Mac at a surprising price?
- [15:19]
A
Learn more at apple.com/Mac that's apple.com/Mac Toby, what do you think of these new tax laws?
- [15:26]
B
Why are they making new ones? I don't even know the old ones.
- [15:29]
A
And that's why there's TurboTax, because being tax compliant is among small business owners top concerns. But it's often time consuming and research intensive to figure out taxes on your own.
- [15:39]
B
Turbo Tax Experts for Business can match you with a tax expert with expertise and knowledge for your specific industry to ensure you have confidence, you're maximizing deductions and your taxes are filed correctly.
- [15:50]
A
Learn more at turbotax.com/business that's turbotax.com/business
- [15:58]
B
marketing your brand these days probably feels harder than finding perfectly ripe strawberries at the start of spring.
- [16:04]
A
Lucky for you, the Instacart Ads ecosystem is the largest grocery ad ecosystem in North America, connecting brands with high intent consumers across more than 2200 retail banners and nearly 100,000 store locations.
- [16:15]
B
Keep your brand at top of mind and top of the grocery list with Instacart. Get started today and receive a $300 Instacart ADS credit when you sign up for a new account@instacart.com backslash brew that's instacart.com backslash Brew Ads, credit eligibility and
- [16:33]
A
use term supply welcome to Neil's Numbers, the segment where I share three stats in the week's news that will make you smarter than Hermione in Potions class. For my first number, the United States is a nation of hoarders and we're dumping our extra junk in storage facilities at record levels. Over over 12% of American households rent storage spaces tracked, accused Noah Star told the Wall Street Journal, adding there has never been a period with more people using self storage than today. The self storage industry has grown into a $60 billion colossus, and even more storage space is on the way, with developers currently on track to add another 164 million square feet. But how much storage is too much? The swelling ranks of windowless, drab facilities have put them in the crosshairs of local governments, who call them eyesores and argue that the land could be put to better use that nurtures more street activity. According to the Journal, parts of at least 15 states have enacted bans on self storage facilities since 2019, including Providence, Rhode island, which slapped a citywide prohibition three years ago. But to that Toby, I say you're going to have to pry all the stuff I don't and will never need from my cold, dead hands.
- [17:34]
B
It's why storage is such a enduring business model. Timothy Dietz, who is the president of the Self Storage association, said the four drivers of customer demand are four Ds downsizing, decluttering, divorce and death. And those are just evergreen sources of demand. So this is why we see self storage just be such a ubiquitous industry for sure. But a lot of people are kind of waking up to the fact that maybe I don't need to keep my stuff in storage constantly. The Wall Street Journal also wrote an article earlier in the week saying that they talked to a woman who had spent nearly $100,000 stories storing things that weren't worth a tenth as much because basically she got on the auto pay for 30 years and never really understood what she was paying. So it is just one of those things where you set it and forget it and sometimes the bills add up.
- [18:23]
A
It's pretty lucrative industry if you're in the game though. Okay, for my next number I got some interesting name information to share. So the government released its name data report for the 2020 Census this week on Americans for first and last names, and here are the main takeaways. The fastest growing last names from 2010 to 2020 were Asian, due to Asians being the fastest growing of the country's racial or ethnic groups in the 21st century the top three were Zhang, Lu and Wang. Another takeaway. Last names have remarkably little variation over the last 10 years, but also the last 230 years. In 2020, the most common last names in the US were Smith, Johnson, Williams, Brown and Jones. Those names were also among the Most common in 1790, the date of the first census, which is wild to think about given that the US population has increased more than 84 times over that time span. Final takeaway. The Hispanic or Latino population has a higher concentration of last names than any other group. 14.2% of people of Hispanic or Latino origin share the group's top 10 last names. Overall, I was just struck by how few last names there are in the US there are 7.8 million unique last names in a population of more than 330 million people. But I've yet to meet another Freyman spelled like mine.
- [19:35]
B
Not a lot of first names are changing either, because if you look at Census data, top five male first names in 2020, Michael, John, James, David and Robert. If you go back to 1990, it was James, John, Robert, Michael and William. So the only one we really lost there was William. Same thing goes for female names. And in 2020, the top names are Mary, Maria, Jennifer, Elizabeth and Patricia. Shout out Patricia's and in 1990 was Mary, Patricia, Linda, Barbara and Elizabeth. So again, there's not a lot of variation here because this is census data. It is not Social Security administration data, which always has, you know, Olivia and
- [20:12]
A
Liam, because those are just the newborns, right?
- [20:14]
B
Those are new babies coming in. This is about the entire population. So that's why you see older names more represented there. But I do think it is fascinating how names come and go into culture. One of my favorite anecdotes about this is the fact that Jalen Rose, who played for the Fab Five Michigan team, he was one of the first Jalen's ever born in the country. Now there are tons of Jalen's out there. So names do have the opportunity to kind of get thrust into the zeitgeist depending on if a prominent figure, maybe there's more dollies now than ever before because of how well like Dolly Parton is. So now there's tons of Jalen's out there. There is a chance for a name to break through and become very pop popular.
- [20:53]
A
Okay, my final number might give you a few vacation ideas that will really pop on Instagram. Travel insurance company Just Cover released a list of the most colorful cities in the world. And without further ado, the top five are Lisbon, Portugal, with its blue tiles and yellow trams, followed by Kuala Lumpur, Malaysia, Porto, Portugal, Cartagena, Colombia, and Rio de Janeiro, Brazil. The most colorful city in the US Is New Orleans, which ranked ninth in the world. So how do they determine the rankings? Just vibes? It's a little more scientific than that. The company analyzed photos of the landmarks, neighborhoods, and architecture of major cities to calculate a so called vibrancy score based on the number of unique colors in each image. The analysis of Lisbon, for instance, had 2.6 million unique colors. Why does this matter? Well, color vibrancy and photogenics have become a more important factor in travel decisions. Because if you traveled to Portugal but didn't post a photo of the Livraria Lelo, did you even travel to Portugal? Toby, how big of an element is vibrant color palette in determining where you decide to travel?
- [21:51]
B
Well, apparently zero, because I haven't been to any of the top 10 cities, not even New Orleans in the U.S. the only city I have been to that made the list is New York city at number 15. And the reason why New York City did make the list is that when they took, you know, screenshots and analyzed pictures, some of those had billboards in them, some of them had marketing materials. So I've been to Times Square. Does that count? Because that's a lot of colors coming in right there. But, yeah, overall, I guess I live a very drab life.
- [22:21]
A
Yeah. Have you been to Dublin?
- [22:23]
B
I have been to Dublin.
- [22:24]
A
Okay, so Dublin was the city with the least amount of unique color. So it seems like you seek out those particular drab spaces.
- [22:32]
B
Here's my take on it. This city is just a backdrop for me to paint your experience on. And so a drab background is just a canvas for a very vibrant time in the city. I had a great time in Dublin right there. That is what we call cope, ladies and gentlemen.
- [22:50]
A
Okay, let's sprint to the finish with some final headlines. Snap, the parent company of Snapchat, is getting smaller. In an announcement yesterday, CEO Evan Spiegel said he was cutting about 16% of Snap's total workforce, about 1,000 people, as well as closing 300 open positions. The reason is AI is making things more efficient, and Snap needs to cut costs to compete. Calling it a crucible moment for the company, Snap said it is, quote, squeezed between giants with enormous resources and nimble startups moving fast. And the only way forward is to lean into AI to move faster. Shareholders seem to like the move, sending shares up 8% on the day.
- [23:24]
B
We've seen this story before, and the inevitable stat that usually follows is how much code an AI agent is generating for the company. And Snap says that AI agents are generating over 65% of Snap's new code. This is basically the stat du jour that a lot of companies are citing when they do these layoffs, saying we just don't need as many people to maintain the code base and generate net new code that we did in the past. SNAP is just the latest to kind of go undergo this AI data transformation.
- [23:53]
A
And another pattern that we're seeing is when you announce layoffs, your stock usually gets a big boost. I mean we've seen this with Oracle and a bunch of other companies block by Jack Dorsey, but usually layoffs were signed that your business is shrinking in a bad way. Right? Like you're doing lower sales. But now with Snap and other tech companies, when you cut company, when you cut your workforce because of AI, your stock gets a boost. Also, people are pointing out maybe wasn't the best move by CEO Evan Spiegel because he was spotted at Coachella a few days before this layoff announcement.
- [24:24]
B
Moving on. Santa Claus is coming to court. Santa Claus is coming to court. Santa Claus is coming to court. Stephen Pildees, a 50 year old organizer behind New York's annual Santa Con bar crawl, was charged with wire fraud this week after federal prosecutors alleged he spent years stealing from the charity he swore ticket sales to the iconic event were funding. From 2019 to 2024, the annual crawl raised about $2.7 million in tickets and donations. Bill these nonprofit told participants that the money went directly to Santa's charity drive. But prosecutors say he siphoned off more than half of that piling. 365,000 into a renovation of his Jersey lake house, 124,000 into a Manhattan luxury apartment lease, and $3,000 of Santa's slush fund into a birthday dinner at a Michelin starred restaurant. Pill these faces up to 20 years in prison if convicted. Neil, talk about putting the con in Santa Con.
- [25:25]
A
It's downright poetic and it gets even better. So this allegedly has been going on for a while, like more than a decade. Gothamist got its hands on the financ of SantaCon from about 2014 through the end of 2022. So they raised $1.4 million through SantaCon programing. Zero from me. I've never participated, but I respect your right to SantaCon anyway. So of the $1.4 million that they raised, more than one third of their total giving went to groups or individuals who appeared connected to Burning man. And then their largest donation was to a for profit company, $66,000 to Spectaculum Productions, the maker of the Doc at your Cervix, which is an expose about pelvic exams performed by medical students on unconscious or non consenting patients. And then they also lost a bunch of money on crypto. They lost $17,000 worth of investments in cryptocurrencies, which was equal to about a third of their total charitable giving that year. So the Santa Con was appeared to be a long con.
- [26:27]
B
There were a lot of different intros I could have gone with for this segment and I kind of have to give my hat tip to ABC who called it a ho ho hoax. And I kind of wish I went with that one. But putting the con in Santa Claus, I feel like I did pretty well there too.
- [26:42]
A
You did find no one else thought of that, Toby. So creative and original. Okay, that is all the time we have. Thanks so much for starting your morning with us and have a wonderful Thursday. If you'd like to reach us, send an email to Morning Brew daily at Morning Broadcom or DM us on Instagram @me Daily Show. Let's roll the credits. Emily Milian is our supervisor. Producer Raymond Lu is our senior producer. Our producer is Olivia Graham and our associate producer is Olivia Lake. Hair makeup is pivoting to AI. Devin Emery is our president and our show is a production of Morning Brew.
- [27:10]
B
Great show, Danielle. Let's run it back tomorrow.