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- [00:00]
A
Foreign. Hello, welcome to the Dear J Letter episode of Slate Money, your guide to the business and finance news of the week, a week in which Treasury Secretary Steve Mnuchin seems to have broken up with Fed Chair Jay Powell. I am Felix Salmon of Axios. I'm here with Emily Peck of HuffPost.
- [00:34]
B
Hello.
- [00:35]
A
I'm here with Anna Shymansky of Breakingviews.
- [00:38]
B
Hello.
- [00:39]
A
We are going to talk about this breakup, which came in the form of a letter from Mnuchin to Powell, a letter which we're going to unpack. We're going to talk about a whole bunch of companies that have filed to go public this week. We're going to talk about Airbnb, we're going to talk about Affirm. We're going to talk about Doordash. We're even sort of on on going to talk about Peloton, which turns out to have been a large part of a firm's business. And we have a Slate plus segment about traveling for the holidays. Should you do it, even if you think you're going to be safe? Emily is shaking her head. Emily, should you travel for the holidays?
- [01:16]
C
Absolutely not. Do not travel for the holidays.
- [01:18]
A
The Slate plus segment is a little bit more involved in that, but that's the TL Dr. Stay tuned. All of that coming up on Slate Money. So let's talk about the Federal Reserve and this amazing dynamic duo that we've talked about before on this show of Jay Powell and Steven Mnuchin working hand in glove together to provide the kind of backstop that has undergirded a surprisingly strong recovery from our spring doldrums. Looks like suddenly this hand in glove, we love each other relationship between Steven Mnuchin and Jay Powell has become a massive great fight. What on earth is going on, Emily, do you have a clue?
- [02:09]
C
I have a clue. It appears that the honeymoon period between Steve and Jay is over, as you said, because on Thursday, Steve wrote him like a Dear John letter. Essentially, Steve Mnuchin wrote to the Fed and said everything seems elaborate.
- [02:27]
A
It's not you, it's me.
- [02:29]
C
Yeah, yeah. Everything seems better now in the economy. Banks are doing well and we don't need some of the emergency measures we put in place back in the spring. And Anna can talk more about the specifics of those measures because I'm probably not the best one to explain them.
- [02:48]
A
But.
- [02:48]
C
But they involved basically Congress letting the Fed lend out a bunch of money to organizations that normally doesn't lend a bunch of money to. It didn't even lend that much of the money and again, I would defer to Anna's expertise here, but it was providing, like, psychological insurance, I think, to, broadly speaking, the markets.
- [03:10]
A
Yeah, to the markets, but more to the point. But like, before we get into the specifics of the 133 programs and the all the rest of it, I want to just stay at the high level here, which is to say he really did do the Deirdre, John, it's not you, it's me thing. He really did come out and say, listen, it's not up to you. These programs are not up to you. It's what Congress wants. Congress wants these things to expire, which you can debate that. I'm taking my money back, I'm picking up my ball and going home. And he did this in a very unilateral way. And he did this in a way that for the first time that I can remember since the crisis started, or even pre crisis, the came out with a public statement saying, what in ever loving fuck do you think you're doing? And again, putting aside the whole question of what these programs are and how they work, I have never seen this much distance between treasury and the Fed literally in decades. It's kind of amazing to me that he would create this rift like this.
- [04:14]
B
The way that Mnuchin and Trump are doing this is just incredibly unwise. Very, very poorly designed. We can get into whether what they may be intending to do is actually unwise, but I think the way they are doing it definitely is.
- [04:33]
C
One thing I couldn't really figure out from reading the coverage was why. Why is he actually doing this? I mean, the Times framed it as, this will weaken the incoming Biden administration, because if they want to tap this resource, they'll have to sort of do more stuff to restart it. But I actually. Is that why? Like, I don't understand. Why not just let it come out?
- [04:55]
B
I think there are two. There are two ways to think about this. One can be to think this is just Trump and Mnuchin being petty. This is just them saying, you know, we don't care about the country, we want to screw over Biden. The other way to think about this is that potentially they want to be able to get some type of stimulus done. And it is going to be easier for Republicans in Congress to say, oh, we're not spending new money, we're just reallocating money that we already spent. And it is possible that that is partly what they are doing. Now, that is still dumb, because there is no reason to create the danger that you do by removing this money. When you could simply just borrow more. But I do wonder if that's actually maybe what's behind this.
- [05:37]
A
So that's the stated reason from Mnuchin, who came out on CNBC on Friday morning and basically said in as many words, this is a lot of money which is just sitting there, not doing anything. I want to take it back, bring it under the control of Congress and spend it on small businesses and people who really need that money. As you say, Anna, like that seems a little bit weird because if Congress wanted to spend money on small businesses, they could just pass a bill spending money on small business, small businesses. But that's the stated reason for this. And then, and then the opposite idea is that the Trump administration in the lame duck is deliberately setting a bunch of fires and salting the earth and basically making life as difficult as possible for its successive Biden administration. And whether or not that is Mnuchin's intent, there is no doubt that this move would be consistent with that reading.
- [06:38]
B
Yeah, although I do think it's interesting to think about what these programs were designed for though, outside of like, oh, we think Trump is crazy. Yeah, okay, we all agree with that. But like looking at what these programs are actually designed for, the fact that they like, quote unquote, weren't being used is really not an accurate way to think about it. Because these programs are designed to provide confidence to the market so that companies will go to the private banking sector to get funding. If these programs had been completely tapped, that actually would be a sign that they weren't working.
- [07:10]
A
So the word we need to use here is bazooka. This is a classic bazooka thing, right? Which dates back to what I still think of as the financial crisis in 2008 when the Treasury Secretary was Hank Paulson. And he said, if you have a bazooka, then you don't need to use it. If you give yourself a huge amount of firepower, then that means that people are going to know that you're there and so you're not going to need to use it. In fact, he gave himself a bazooka and then he needed to use it. It didn't work back in 2008. It worked this time around. He gave the, you know, the Mnuchin and the Fed created this bazooka and the proof of it working was that it didn't need to be used. The idea is that in extremis, these non bank companies that the Fed is now allowed to lend to under these 13 programs could go to the Fed to borrow money. From the Main street lending facility, from the municipal lending facility, and places like that. And because they could go to the Fed, the market knows that when push comes to shove, they're not going to go bankrupt because they can always just borrow the money they need from the Fed or they're not going to default, they're not going to have major debt distress, because the Fed will always be there for them. If you know that the borrower is never going to go into major debt distress, then you feel much more comfortable lending to that borrower yourself. And that's exactly what happened. The market just came in and lent to those borrowers themselves. Now there's a little bit more of a question about whether those borrowers will actually be able to borrow from the Fed. If Bush came to shove, and we don't know what the answer is anymore.
- [08:46]
B
That is the danger here. The danger is that markets will start to get very anxious, that spreads will blow out, that companies will have a harder time raising funding in the private market.
- [08:57]
C
I had been thinking it along a very personal lines, because a few years ago, we spent a bunch of money on a renovation at our home, more than we had planned to. And Christmas was approaching.
- [09:09]
A
First rule of renovations, they always cost more than you plan.
- [09:11]
C
It was the first time. And, yeah, it was bad. And so Christmas was approaching. Our bank account was also approaching, like, very low numbers, very terrifying numbers. But, like, it's Christmas and we have kids and, like, one day we know, like, everything will kind of work out. I'll get paid, the money will come back or whatever. Nevertheless, we did borrow some money from a relative, and we never used it. We just parked it in the bank account. And I know this is a very privileged take. We just parked the money in the bank account, and we were able to spend money on Christmas just with the psychological knowledge that there was this backstop in the bank account. We knew we had to pay it back sometime, but without that, I think we would have just not done anything. It was just like we needed the psychological reassurance.
- [10:00]
A
This is exactly what happened, like in. I have exactly the same story. When my grandfather died, my grandmother was. She'd never really looked after their finances, and she was worried about running out of money. There was no way she was going to run out of money. She had all the money she needed. It was not a real problem. The money would come in. The money coming in was much more than what she was spending. It was fine, but she needed a little bit of, like, psychological reassurance. So what we did was we Sold a bunch of my grandfather's wine, put it in the bank account. So there was an enormous amount of money in the bank account and then she was fine, then she never worried again. She never touched that money. We knew she wasn't never going to touch that money, but that money was still incredibly useful.
- [10:42]
C
Everyone needs, I guess, a rainy day wine collection to backstop them financially, I guess.
- [10:48]
B
I would say, although I'm sure we can all agree that this is a dumb move, they should not be doing this. I do wonder, though, if they actually take the money and actually use it to engage in more stimulus that they may have not politically been able to do, even if they literally could have been able to do, they may not have politically been able to do it. Is that not potentially a better use of the money? If right now markets are functioning perfectly fine, if anything spreads are narrower than they probably should be? Again, I'm not saying this is the ideal solution, but if that's the only way you can get stimulus done in the next two months, maybe it's not the worst thing in the world.
- [11:28]
A
Yeah. The answer to that is unambiguously yes. If this brings the possibility of a second round of stimulus in the next two months up from whatever it was before, like, I don't know, 10% to something more like 50% or 60%. If this really does assuage Republicans in the Senate to the degree that they'll be like, oh, I already spent this money, of course we can do more stimulus. I was worried about deficits before, but now I'm not worried about. If. If that works on any kind of political, congressional politics level, then maybe it will have been worth it. But I have seen nothing from Congress from either side of the aisle suggesting that, like, oh, well, this is money we just took back from the Fed, so it's easier to spend, is really a part of the calculus.
- [12:19]
C
And was Mnuchin on Friday talking about using the money for ppp, which to my mind is one of the least successful stimulus pieces of the stimulus that was. That was passed.
- [12:29]
A
He absolutely was.
- [12:31]
C
So that just.
- [12:32]
B
It's still more useful, though. I mean, I would argue that it would still be more useful and anything we can do fiscally with this money is more useful than what we are currently doing with it. Again, not saying that we shouldn't just do both, that we. There is a danger, there is a very real danger to the markets by removing this.
- [12:47]
A
There was definitely noises about, like, maybe what we do is we create like a special PPP program for restaurants or Something like that. You know, I don't think that PPP2 would look exactly the same as the original PPP, but like there would be a headline about small business, something, something. Because small businesses are the one sort of Venn diagram overlap when it comes to stimulus that the Republicans and the Democrats can agree on. Everyone wants to support small businesses. So that's the easy bit. And if we can throw, you know, $150 billion at small businesses, like, that's better than nothing. So we had a bunch of IPO filings this week, which I wrote about in my newsletter and I want to talk about on the show because it's a fascinating set of companies. The one I know the best, which I'm going to start with just because I know it the best is Affirm, which is an American version of an European company called Klarna, which is very, very successful. And it's basically a kindly, gentler form of credit installment plan, rather than just having this single credit card which you use to pay for everything and is a payment device and also a borrowing device. And those two things get confused. Affirm is much simpler. It's like you are buying this specific item, you are going to pay off this specific item over time, and then every month you will see a very predictable amount of money leave your bank account, which you can think of, which is you paying off that specific item, which you still have, and you're getting benefit from. And it feels like there's so much more connection there between I'm paying off this item and like the amount and the connection between the money that you're spending and the good that you bought than there is with credit cards. It's an interesting and I think positive innovation. Emily, you with me on this one?
- [14:53]
C
Yeah, actually, I mean, I didn't know that much about Affirm, but basically it's like if you're checking out and you're buying something online, you just decide to pay via this Affirm. So you make monthly payments. They could be as low as 0% interest, which is really cool. Like, if you pay something off over three months, there's no interest, which you can't do with a credit card, obviously. So it seems like a very reasonable and unsurprising option. Like, apparently they tell you how much your payments are going to be, they tell you what your interest rate is, which is actually a little bit different sometimes than credit cards, which can surprise you.
- [15:29]
A
And.
- [15:29]
C
And then I just started thinking, wouldn't it be great if people stopped buying stuff, you know, on credit like that you know, with their credit cards. Like, wouldn't it be great if credit cards weren't. Weren't as popular? So it does seem like kind of a good. A good thing.
- [15:41]
A
I think it is. It is a good alternative to credit cards for people who don't pay off their credit card every month. You know, you don't have penalty fees, you don't have late fees, you don't have massive, great interest rates. And one of the interesting things about this is that the credit card companies don't have, like, direct relationships with the merchants. Right. The merchants just go through a bunch of rails and it goes through. But it's not like they have a direct relationship with the firm is very different. The reason why a Firm can offer 0% interest on, say, pelotons is not because, like, there's zero credit risk. They're lending you thousands of dollars to buy this peloton. They're taking credit risk, people will default. But it's because peloton pays a firm a bunch of money. Every time someone uses a firm to buy a peloton. Right. Every time you get 0% financing from a firm, it's not like a firm is doing that out of the goodness of its heart. It's because they're getting money from the merchant that there's a little bit of that profit margin that is going from the merchant to a firm in order to pay for all of that credit risk and financing that a firm is doing. And so the cost of the credit is being hidden in a way. And I don't always love hiding things. I like things being more transparent. It's not transparent how much is being paid and how much the actual credit is. But as far as the consumer is concerned, it's all just bundled up into the sticker price of the product. And once you've paid the sticker price of the product, that's all you're paying. There's no, like, extra surprise interest on top. And I think that's good.
- [17:17]
B
Yeah, I'm a little bit more skeptical in terms of using it on a broader base. Like, I mean, I think if you're talking about one or two expensive items that you might not buy otherwise and you will buy because it's easier to eat these kind of smaller payments than fine. If you're talking about every individual product that you would normally buy with a credit card, all of a sudden having an individual loan that you're paying off for every single different thing, well, I.
- [17:42]
A
Think that's a straw man. I don't think anyone is Talking about that. Right. And I think that if you. If you talk to Max Levchin, who's founder of a firm, he's very clear that that's not where he wants to go with this. He does not want people buying, like, restaurant meals with a firm because, like, that's an experience that disappears. And if you're still paying off a restaurant meal three months later, that feels really weird. He does not want it being spent on, like, small ticket items that you can just use the money in your checking account to buy. The idea is very much that it's for a relatively small number of consumer durable goods. It'll be things like, you know, an expensive mattress or an expensive item of clothing or something special that maybe once upon a time, you might feel like you wanted to save up for, but now you're just kind of saving up for it backwards.
- [18:29]
B
Yeah, it's fine if we're using it not to replace credit cards, which we suggested a few minutes ago, but to say, okay, no, you're using this for a limited number of goods, then fine. Now, whether or not that makes sense for this company long term is another question.
- [18:44]
A
Well, no, I think so. Let's just be clear about the replacing credit cards thing. Right. As I was saying, there's this very unhelpful confusion about what a credit card is. It is a borrowing device, and it is also a payment device. A firm is not trying to replace a credit card as a payment device. A firm is trying to replace a credit card as a borrowing device. Most of the things that we use credit cards for, we use credit cards for because we're using the credit card as a payment device, not as a borrowing device. If I buy a $5 sandwich on a credit card, it's not because I want to borrow money to buy the sandwich. It's because I just want to pay for the sandwich. And the credit card is convenient. So those kind of convenient transactions where I have the money, like what Max would say is, like, use your debit card for that, use your checking account for that, or for that matter, use your credit card for that. If you're going to pay off your credit card every month. It's just if you want to borrow money to pay for something, if you specifically want to borrow money to pay for a specific thing, then that's where a firm comes in.
- [19:50]
C
Yeah, that's what I meant. It was a good option for people who don't pay off the credit card bill every month because they buy stuff, big items or whatever, that they can't afford. It's better to have 0% interest than like 18% or even higher, sometimes 29%. My one thought was we're increasingly living in this like monthly fee world where everyone is, people are subscribing to all different kinds of things like razors and the Peloton fitness app and Netflix and like six other streaming services. Like if you looked at your credit card bill in a given month, you probably see so many different monthly fees and monthly this and that. And it all starts to add up after a while. And even like if you're buying a Peloton or another big ticket item now with this service, it's like we're heading into this world where you think you're, you don't know where your money's going anymore because every month like little fees are getting sucked out of your bank account or your credit card bill that you. It just seems like an explosion of this like monthly fee consumer world.
- [20:52]
A
Absolutely everything is becoming a subscription. You know, media is becoming a subscription. As you say, toothbrushes are becoming a subscription. Everything is a subscription. This place. And honestly I'm. Yeah, I'm not sure I really want a subscription to toothbrushes. But there is, it's the model these days.
- [21:08]
B
Yeah, it's no different. I mean, it's just we're shifting towards a like more kind of intangible market where more of the things we buy are not necessarily some physical things, some of them are like toothbrushes. So you're going to pay more by subscriptions where otherwise you may have paid for more physical things, but it's the same thing. It's just we happen to be purchasing different types of products now than we did.
- [21:29]
A
No, I mean, the point is you.
- [21:30]
C
Wind up spending more money because you don't have keeping track of it, it's tangible anymore and it's more diffuse through your system. Like there's more payments to keep track of. You're not really having like tangible contact with the people.
- [21:46]
A
I don't think tangible versus intangible is the question here. The question is are you paying money for things one at a time or are you paying money for things as a monthly fee? And you know, if one look at the Microsoft share price will tell you that Microsoft is making a hell of a lot more money selling Microsoft Word and Microsoft Office as a subscription than it ever was selling Microsoft Office as something which you bought for however many hundred dollars in one off fee. And that kind of move from turning everything into a subscription, putting everything into the cloud, even toothbrushes, you know, we. I'm quite sure that people spend a lot more money on toothbrushes when they have a toothbrush subscription than they ever did when they would have to actually go down to the drugstore and buy a new toothbrush when they wanted to replace their toothbrush. So, yeah, the subscription economy is great for businesses. I do think it. I do agree with Emily that it does tend to lead to consumers spending more money overall.
- [22:50]
C
Should we talk about a firm's IPO and how much of it hinges on Peloton? Apparently, like, it's 30% of their revenue or something.
- [22:58]
A
So that. Yeah, that's. That's the other big thing about Affirm is that from the very early days, Affirm and Peloton had a very close relationship. Pelotons were extremely expensive, and so Peloton needed a way to allow people to pay them off over time. A firm came along and said, we can do that for you, and they put this relationship together. Then, as we all know, Peloton exploded, especially post pandemic. And now in the third quarter, Peloton alone accounts for 30% of a firm's revenue, which is enormous. And on some level, if you are being like a naive, just looking at the top line of a firm could be worrying. You're like, wow, so much of a firm's revenue is this one company that can't be good for a firm. I think most people looking at a firm are a little bit more sophisticated than that. They're looking at the core affirmed product, which is really not aimed at Peloton consumers. It's aimed at people with much less money than that. And they're saying, well, that's growing at a certain rate. And then on top of that, we have all of this amazing Peloton gravy, which is great as long as it lasts. I don't know.
- [24:14]
B
If you look at what a firm has actually put out, they've made it very clear that they're targeting, like, luxury products. It's millennials to buy luxury products. They've been very clear about that. So I actually do think that there is a concern that. That you have so much of it tied to one product that happens to have blown up because of the pandemic. And also goods in general that. Because a lot of people, if they haven't lost their jobs, have been stuck at home over the past eight months or whatever, they're spending more on goods than they are because they're not spending on services. So that can help a company like a firm look really good, right? Now, does that mean they're going to look that good in another year or two? Probably not.
- [24:50]
A
It depends what the luxury products are. Right? I mean, we're buying pelotons. We're not buying, like, expensive dresses. Maybe in a year's time we'll be buying fewer pelotons and more like haute couture. But who knows? It's true. Like, there is this tension in the firm. If you're the kind of person who can afford something and just pay cash for it, then you're not the core affirm customer. But I think a lot of the peloton buyers are in that category. Right. They probably did have enough money to just buy the peloton. They just didn't want to write a $2,000 check. So they'd rather do it on a monthly basis because it's zero percent interest.
- [25:25]
C
Do they do anything with cars? Because that's obviously could be a big segment.
- [25:29]
A
That's a very good question. I think that's, you know, that's an obvious place for a firm to move into. They're not doing it yet. So car loans are super interesting because they actually work the opposite way. If you buy a peloton, then what happens is that peloton, very quietly, without you seeing it, writes a check to the financing company, that is a firm, and that allows you to buy the peloton on an installment plan, on paying a monthly fee. If you buy a car, it's the other way around. The financing company, the lender writes a check to the car dealership, and the car dealership uses the financing as a. Not as a cost center, but as a profit center. So a firm is going to find it incredibly difficult to compete in the cars because it can't effectively bribe the dealerships to, say, use a firm. Because the way it works is so clean and transparent. In order to be able to compete in car dealerships, they basically need to get into the whole skeevy car financing world, which is very opaque and very skeevy. And so I'm not sure they'll be able to break into cars, but it would be good if they could because it is much more transparent.
- [26:51]
B
Yeah. The large auto companies also have their.
- [26:54]
A
Own financing arms, which are profit centers.
- [26:58]
B
Right, Exactly.
- [26:58]
A
But that's the point. My point is that the financing is very rarely a profit center at merchants. So while we're on the subject of IPOs, look at this. Airbnb, the classic service in the hospitality and travel industry, like services went off a cliff in the pandemic. Hospitality and travel went off a cliff in the pandemic. Suddenly Airbnb is coming out with this ipo and it's doing great. Who knew?
- [27:22]
C
Airbnb has a great, like, pandemic comeback story in March and April. You know, when Covid first heated up, their business fell off a cliff, essentially. They did layoffs, they cut slashed costs, they did everything they could to lean down. And then what started happening in the summer is people still wanted to take vacations. They didn't want really far. They didn't want to go stay in hotels. So Airbnb's business actually picked back up and people were, like, taking, you know, like, driving vacations to the town next door, whatever, and booking Airbnb. And it actually managed to eke out, like, a little bit of profit even. And now the company's actually been able to hire a few people back from the layoffs. And it seems like some of the moves that CEO Chesky made, like slashing marketing costs, are going to be permanent. Like, maybe came to his senses about some of the hot tech companies spending too much money thing. He kind of, like, came to his senses from that and learned some big lessons from COVID 19. And longer term, I feel like the company is in a good place to do well, because I think people don't want to stay in hotels and would prefer to stay alone in a house or something. And I know, Felix, you wrote about also how Airbnb is leveraging, like, not being in big cities and being sort of more geographically diverse as well, right?
- [28:50]
A
Well, I had a summer holiday booked this summer in Denmark, and we had bookings in hotels, and we did not stay in any hotels in Copenhagen. We wound up getting into our car and driving off to an Airbnb in Maine. And that is exactly the COVID story of Airbnb in a nutshell. You know, it was not like some glorious big city. It was a remote little cottage. And that's where Airbnb shines, is in that kind of long tail of much less dense areas. People who are working from quote, unquote home are really just working remotely. And sometimes you get bored of home and you say, like, why can't I work from a beautiful cabin in the woods? And so you rent Airbnb out a cabin in the woods, and everyone wins. So the Airbnb business model turns out to have been much more robust to a pandemic than anyone really thought back in March and April, and quite possibly will survive the pandemic as well. Like, you know, the extra range of possibility that you have From Airbnb. Like, once people have begun to understand how nice it is not to have to deal with all of the humans in hotels, maybe they, maybe they're just gonna stick doing that.
- [30:11]
C
Yeah, maybe. And one thing I wanted to add from my research is that Airbnb also handled its layoffs pretty well. They laid off a quarter of their staff. They gave everyone a year of health insurance and let them keep their laptops and even created like a website listing all the laid off employees and I guess their resumes or whatever to make it easier for them to get hired. And there are even some laid off workers quoted in the Journal saying like, they did a good job with this. So I thought that was nice because a lot of companies did a really bad job in March and April doing layoffs, like en masse over zoom calls or conference calls and things like that. So I just wanted to put that in there too.
- [30:50]
B
I agree. I mean, I do think part of the reason they have the flexibility to kind of switch more towards maybe targeting the local stays or cutting expenses and doing this is partly because though they're not the traditional hospitality company that might have a ton of employees, including a ton of low paid employees. So that's also one of the reasons that they can do that.
- [31:13]
C
Yeah, for sure. Much lower overhead. Also, that whole working from home and a remote cottage thing made me think of WeWork, which is now trying to do some kind of like, you can have a WeWork for an hour or an afternoon, right, with an app or.
- [31:27]
A
Something in the city, which seems not the WeWork on Demand app to find the WeWork.
- [31:33]
B
Yeah, look at that.
- [31:34]
A
I wish you guys could see, could see Emily's face with her scrunched up nose going, no, I don't want to wear a mask in a WeWork.
- [31:42]
C
No, I want Maine to be my WeWork.
- [31:46]
A
The other company that really did well out of the pandemic was Doordash, which also filed to go public this week. Everyone was stuck at home and they got sick of cooking and they started ordering in meals and they actually, again, another company which turned surprise profit for one quarter, they do have a bunch of low paid employees, a million of them. Although they're not technically employees. They're called dashers. And you do have to wonder if those dashers were counted as employees rather than like independent contractors or whatever. Like there would be no way that this business made sense. I'm still not even sure, to be honest, that the business does make sense. I'm very skeptical that these three sided markets are particularly Easy to navigate because what Doordash is trying to do is it's trying to basically charge a bunch of money from customers for the convenience of having their food delivered, charge a bunch of money from restaurants for the supposedly excess revenues they get from food delivery, pay a bunch of money to the delivery people, but probably as little as they can, and then keep some money for itself. And trying to optimize all of those different things at the same time is hard in a world where historically a restaurant meal was just. You went to a restaurant and you paid them money, and there were only two individuals involved. Now you have, like, the Delivery Person and DoorDash. You know, that just raises costs for everyone, and it's easy to see how people don't want to pay those extra costs, and it's easy to see how Doordash is losing money.
- [33:22]
B
Doordash didn't just benefit from the pandemic. They also benefited from the election in California where Prop 22 passed, so that these workers are exempted from being considered employees.
- [33:33]
C
We talked last week with Jacob about business changes stemming from the pandemic and which are gonna stick and which aren't gonna stick. And I kind of feel like what Doordash does, which in a lot of, like, remote suburbs, is deliver fast food to people in their homes. I just think once we can, like, get back to normal, no one really wants delivery. McDonald's or Taco Bell, like those are. I think most of the time, it's really convenient to just go to those places and getting them delivered. Like, once the heat comes off of that food, it's 7,000 times worse. I just don't. I don't think the demand. I think the demand will evaporate a little bit. The high demand for that kind of delivery.
- [34:15]
A
There are reasons why historically delivery has been concentrated in Chinese food and pizza. You know, certain foods lend themselves to delivery. Other foods, not so much. People don't like. You know, if you order a ravioli, doesn't work so well.
- [34:30]
C
French fries are historically and forever terrible delivered because they steam. There's no way to deliver a French fry. It's. And that's like 50% of a fast. Fast food orders are French fries. Right? So right there, I just don't think long term, it's happening for this company.
- [34:47]
B
I would just like to say that bear burger, I don't know what they do, but their French fries arrive perfectly crispy. I don't know if they put something on it. I have no idea. But this is my Friday meal. I have every Friday Sweet potato fries and a vegan hamburger. And they're always perfectly crispy. And they're the only ones who do it. If you order from anywhere else, they're not. So somebody knows how to do it.
- [35:07]
C
Can you a picture of the container? Because now I'm very curious.
- [35:09]
B
Yeah, I will. It works. I don't know.
- [35:14]
A
How about a numbers round, people? Emily, did you bring a number?
- [35:17]
C
I did, I did. You asked us to do it every week. So I like to prepare and do, you know, around the kitchen table at the Peck household, everyone's always like, what's your number gonna be?
- [35:27]
A
Oh, wow.
- [35:27]
C
Really into it. Yeah. So my number this week is five. That is the number of workers at a Waterloo, Iowa pork processing plant owned by Tyson that died of COVID 19. Or that we know have died of COVID 19.
- [35:42]
A
Oh, this is such a nasty story.
- [35:43]
B
Yeah.
- [35:44]
C
In a really nasty story, there was a wrongful death suit filed against Tyson over conditions in this plant. And I guess the headline nugget from the suit was that managers at the plant were actually betting money on how many workers would get sick. And on top of that, they were forcing workers who were sick to continue working, sending them back to the line even if they were visibly ill at the same time. This is the company that was paying $500 bonuses to people who had perfect attendance during a pandemic when a local public health official came in and said, I've never seen or I've seen, conditions here are so awful. And you want to think the story is kind of like a one off, but I really think it's just an example of how our systems really failed these workers in this pandemic. I mean, it's really tragic. So that's my number.
- [36:40]
A
My number is 8, which is the position on the list of Airbnb's top 10 cities that you find. Toronto, which is no one's idea of a major tourist destination. It is the 8th biggest city in the Airbnb universe. And it's on there with like, San Diego, which is more of a tourist destination, but it's also quite suburban. And I just like, I'm put. I'm. And also the other thing which you learn from reading the Airbnb filing is that none of these cities, the biggest city of all is London, but none of these cities account for more than like two and a half percent of Airbnb's revenues. They really are a very distributed and diverse company. And it does show that there's a lot of demand from people who need a place to Stay in Toronto and you know, there's not a huge choice of hotels. And if there is, they're all in the city center and probably people want to live, you know, want to stay near their families in the suburbs. And so Airbnb is perfect.
- [37:43]
C
First, Felix, I feel like you're going to get a lot of emails from people in Toronto upset with the way you have just described their city.
- [37:51]
A
Name a single tourist attraction in Toronto. Name 1.
- [37:55]
C
The CN Tower. Isn't that a thing? I don't know. I've been there. It's very nice city.
- [38:01]
A
Yeah, I have no problem. I have no problem with Toronto. I've been. I've been to Toronto many times. There's some decent Indian restaurants there. But. Yeah, no.
- [38:10]
B
All right.
- [38:11]
C
Also, I had wanted to say in the earlier Airbnb conversation that a lot of cities have pretty strict restrictions on Airbnb or there, there's like a push for that. So that's another reason.
- [38:22]
A
Well, New York is the biggest. Is the second biggest city in all of Airbnb, and it's basically illegal to Airbnb anything in New York, which is. I don't know what that says.
- [38:33]
B
So I have two different numbers and I think I'm going to use the one that's less finance related. So my number is.
- [38:39]
A
Oh, wait, I knew what. Okay, all right, wait, I want to ask, was the finance related one, was that minus 0.152%?
- [38:47]
B
It's not. Although I know that that's the Chinese yield. Chinese bond yield. I thought you were going to use that one. You know, it's funny you mentioned that, because I was actually going to use it and I was like, no, I think Felix use that. No, that was not the one. The finance one was related to a carnival unsecured bond. But the number I'm going to use is 300 or technically more than 300. So as many people may have heard, there were these people in Wayne county in Michigan who were going to refuse to certify the election results in Wayne County. And so then they said, okay, we're going to have a Zoom call. And it was originally supposed to be 100 people, but so many people wanted to be on this Zoom call that it was ended up being slightly over 300 people. And they just basically all screamed at these people who were saying that they weren't going to certify the results. And so then they reversed themselves and said they would certify them.
- [39:34]
C
Another win for Zoom.
- [39:35]
B
Yes.
- [39:36]
A
You see, this is the great democracy. Subscription cloud services. They can host 300 people screaming at election officials at the same time. I think that's it for us this week. If you like. China managed to borrow money at minus 0.152%. Congratulations. You're getting free money. Otherwise, thank you for listening. Thanks for emailing us all of your comments and Questions to slate moneylate.com thank you also for coming to our live show. I should mention the live show, it is coming up on December 2nd, so save the date, as they say. On Wednesday evening, December 2nd, we're going to do a Slate Money Live. Many thanks to Jessamine Molly for producing this here show, and we will talk to you next week on Slate Money.