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- [00:10]
A
Hello. Welcome to the Literally making Money edition of Slate Money, your guide to the business and finance news of the week. My name is Felix Salmon. I am the chief financial correspondent at Axios. I am here with Emily Peck, who has some equally grand title at the Huffington Post.
- [00:31]
B
Senior reporter.
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A
There you go.
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B
I should get Chief in there, though. That's good.
- [00:34]
A
You should get a chief.
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B
Yeah.
- [00:36]
A
And we are here with Chief Anna Shymansky. Yes, it's an honorific. With her, we just call her Chief. We are going to talk about upzoning today. We're gonna talk about why Americans seem to be so resistant to optimizing the use of the land upon which they live. We are going to talk about Beyond Meat and various other ip' which are doing really well and ask ourselves, what makes Beyond Meat so special and so appealing?
- [01:03]
C
Pea protein.
- [01:05]
A
This was also a reference to a certain piece of English pop art, which we will reference in the Slate plus, which is all going to be about Sotheby's, which was originally an English company. But most of all, the thing which we are going to be diving into is library, which is this brand new cryptocurrency announced by Facebook and various other members of a consortium. And they want us all to be buying and selling and spending Libra. Are we going to be doing this? No, no, says Emily. All of that coming up on Slate Money. Okay. I'm super excited to talk about Libra.
- [01:44]
B
Really?
- [01:44]
A
Yeah, I am. Because it's the first time that someone has launched a cryptocurrency and people have taken it seriously from day one. You know, Ethereum, it took like a few months for people to start taking it seriously. And even then, people don't take it that seriously. Bitcoin took years. Libra barely even exists here. I mean, it only exists as a white paper and people are already all over it. And a bunch of super big name financial institutions have signed up with it. And it looks like with a pretty high degree of certainty it is going to happen and it is going to get rolled out and people are going to be able to see whether or not it falls on its face. And Facebook has tried to build payments into its apps before, famously with this thing called Facebook credits, and it failed miserably. So they have, you know, prior on this one. And yet somehow, for reasons I don't entirely understand, but I think have something to do with something, something crypto something. People are taking this attempt to break into payments much more seriously than they took Facebook credits. So my question for Emily is, why should we take this One more seriously.
- [02:50]
B
Because this is an ambitious venture and it's not just Facebook, right. It's teamed up with a bunch of other companies, PayPal, Uber, MasterCard, they're all coming together to create this currency Libra, that's going to be global and they seem to have like a very serious plan for it. And in the abstract the idea actually does make a lot of sense to have this, like not a lot of sense. It makes sense to have digital money essentially that's really easy to send.
- [03:15]
A
So my immediate reaction to that is but all money is already digital, apart from like the 0.01% of money that is in, you know, coins and banknotes. Yeah, the vast majority of money in the world is already digital, but it's not.
- [03:31]
B
I mean, so in China people are very used to cashless, but. And there's a lot, I mean, and.
- [03:36]
A
In Sweden we've talked about that, right?
- [03:38]
C
But if you're talking about there's a also large portion of the world that's still massively underbanked but tend to have a lot of penetration of cell phones. And so I think that is where partly this is aimed.
- [03:50]
A
Right? But again, like we can talk about Kenya. You know, there are lots of places which are underbanked where people have cell phones and people put money on their cell phones. The question is why would they want some weird Facebook sponsored cryptocurrency rather than just having the currency on their phones? What advantage does Facebook have over, you know, the payment systems of all of.
- [04:12]
C
These different currencies Specifically because it in theory would be something that would be more global. It wouldn't just be based on your currency, which also is not necessarily going to be based on a basket of relatively stable currencies, which.
- [04:26]
A
So, so, okay, right.
- [04:27]
B
So about the basket of.
- [04:29]
A
So, so, okay, number one, no one knows what the basket is, but number.
- [04:32]
B
Two, the basket, really.
- [04:34]
A
No one. Number two, this, this is super interesting, right? Which is that if that's the comparative advantage of Libra, then you can see how it would be attractive in Zimbabwe or Venezuela or some place where you just cannot trust a local currency. It would not even be that attractive in Kenya or normal developing countries where they have perfectly decent currencies and they transact in those currencies all the time. So I think that Libra has bigger ambitions than just Zimbabwe and Venezuela. Not to mention the fact that the Venezuelan authorities and the Zimbabwean authorities are going to be a little bit unsure about this, that it could be difficult for them to get regulatory approvals in those countries.
- [05:21]
C
I don't think Nicolas Maduro is going to be like, I don't think they're going to be trying to get regulatory approval from Nicolas Maduro. No, but they are.
- [05:27]
A
They have already said they've been very, very clear that this is the whole. They are not one of these, like, pirate bitcoin people. That they are very, very clear that to make sure that they get regulatory approval in every country they operate in, and especially with regard to Venezuela, because it's on the, you know, OFAC list, there were sanctions on Venezuela. Americans aren't allowed to send money to Venezuela. And so you need a mechanism like US treasury, never mind Nicolas Mazur. US treasury is going to want to insist on some kind of a mechanism to prevent people from sending money to Venezuela, in particular using Libra.
- [06:04]
B
That's the big question with Libra is this is sort of outside of. This is a private corporation running a currency. And there's sort of this danger that it can really run outside the financial system and things like sanctions that the US Puts in place to prevent countries from doing naughty things because it says no dollars for you. Now all of a sudden you have like some kind of legitimate. Outside the regulatory structure.
- [06:27]
A
It is absolutely not outside the regulatory structure.
- [06:30]
C
I mean, that is regulated.
- [06:32]
A
No, this is the whole reason why Facebook got into bed with large regulated financial institutions like, you know, Visa and MasterCard and bent over backwards at launch to say, you know, we want to be completely transparent to regulators and completely like, you know, play nice with them for exactly this reason.
- [06:53]
B
You already have pushback from politicians in the US and in Europe saying, like, this is crazy. We don't want Facebook to have a currency. This isn't going to happen. Well, the company's already abused our trust over and over.
- [07:04]
A
Exactly. And so. And so this is. And this is the thing which didn't make sense to me is that if you want to do that and create a brand new currency with the approval of domestic regulators, and especially regulators in the US And Europe, the last company you want to do to try and create that is Facebook, because it already has so much distrust built around it.
- [07:24]
C
Right. But I think what Facebook is trying to do here is that they're not trying to create the new bitcoin. They are trying to create a hybrid. They're trying to create basically like a bridge between what people are comfortable with in terms of like, normal currencies and where we could potentially move in the future. And that's why I think you're seeing a lot of the characteristics of a normal currency. And Facebook is being very upfront about that and saying, we are not going to be trying to go out of the, you know, regulatory architecture. This is going to be stable. This isn't going to be a trading instrument. And I think the reason they're doing that is this idea of getting people used to this. And when people use something like this so they're not going through potentially a complicated banking system that can reduce a lot of friction in payments. This is part of the reason that Uber and a lot of these companies that rely on credit cards are actually support something.
- [08:10]
A
Okay, so, but you see, that's an entire entirely different use case. What we've been talking about up until now is effectively a mild superset. But at heart, the international remittances market, like the thing that Facebook is doing is talking about sending money from one country to another. That's why it's international, that's why it's, you know, it has to float in terms of value against every other currency and all of this other kind of stuff which people are going to find hard to understand. Whereas this use case is where you convert your dollars to Libra. Maybe you get sent Libra by your friends over whats. You use your Libra to buy Uber rides or to order things on Amazon or to do any of the things that people buy online these days. And it just becomes an easy alternative currency rather than using your PayPal wallet or your credit card or any of the other payment mechanisms. And it's a domestic thing. And so that's the next question which I have for Anna is like, given the huge range of different payment devices that Americans are faced with, is there any realistic chance that it will take off in America? Especially in the context of having no real, what's known as on ramp or off ramp, like if you have cash, if you have American US dollars, if you have a $20 bill, it's going to be a long time until you can find an easy way of converting that $20 bill into Libra.
- [09:35]
C
Yeah, I mean, I think that it's an interesting question. I honestly think there's a possibility, I think if it's done well, I think if it's done to make it easier than current systems. So if it's done so that you're not constantly having credit cards that expire and all of this, if you're having a system that makes online transactions really, really seamless and which is, I think, really what Facebook is aiming for, because they're looking at that e commerce market that's clearly what this is really about, Like, I think there's a possibility. Do I think it's likely? I don't know.
- [10:05]
A
I think it's unlikely, if only because the credit card companies, America and the UK in particular, have massive credit card penetration. And it's very hard for anything which isn't a credit card to compete with credit cards. Because if, let's say you buy an airline ticket and your flight leaves next month, sometime, and then in a couple of weeks time, the airline goes bust, you know, if you bought that ticket with a credit card, then your credit card company will reimburse you everything you paid. If you bought it with Libra or with a debit card or with all of these other newfangled payments mechanisms, you will not be reimbursed. And so there's a natural reason why people prefer credit cards.
- [10:42]
B
It's just so undemocratic. Like, we have dollars here in the United States, we have the Federal Reserve, we have someone appointed by an elected official, and if things go awry, we have accountability. There's people jumping in to fix the monetary system so things don't go off the rails. You're going to put a bunch of private companies who really can't be trusted in charge of a whole new currency, aiming to take over the world with it. It just seems so.
- [11:11]
A
And what more? And what's more, you have a system which is deliberately designed to have zero accountability so that if something does go horribly wrong with Libra, let's say that the reserve gets stolen one day by a bunch of like, you know, cyber masterminds or whatever. Like, you know, suddenly, like a whole bunch of transactions just fail. And the way that everyone thought that you could transfer money, you stop being able to transfer money. Or someone stole a bunch of Libra wallets and, you know, whatever, there's a million ways that it could theoretically go wrong. Can you point your finger at Facebook and say, oi, this is your fault. Amazingly, Facebook has set this up so that they aren't accountable because they're going to turn around and say, oh, no, we only have 1% voting power and we don't actually control Libra.
- [11:54]
B
Currency is based on trust. Like the dollar isn't anything but what we say it is. Right?
- [11:59]
A
Correct.
- [11:59]
B
Who trusts Facebook?
- [12:01]
A
And plus, it's not even Facebook. They only control 1% of Libra or Uber.
- [12:05]
B
I mean, none of the companies. I don't want companies running my money. Like, literally, they already run enough.
- [12:11]
C
I mean, I think that. I know when this was first announced, a lot of people Are like, well, you know that no one's going to. No one will possibly do this because people have no trust in Facebook. But I honestly don't think that's true because I think that. I don't say they don't have trust in Facebook and they continue to use Facebook.
- [12:27]
A
No, I don't. I don't think the point is whether.
- [12:29]
C
It'S easy or not, whether it works well or not.
- [12:31]
A
No, you see, it's. There are two separate questions. The first question is, will people set up a wallet? And a certain number of people will set up a wallet if it's easy enough. And they will use it for what's known as P2P payments. They'll use it in much the same way that they use Venmo right now, and it will be largely domestic, and it will be people splitting checks or sharing the rent or something like that. And it's a tiny market, really, and it's not going to make much of a dent on anything if that's how it winds up being used. The. The big hope for Libra is that it grows much, much bigger than that. And up using it for, you know, actual commerce. And you use it at some point, even when you go, like, grocery shopping, you'll just scan your phone at the checkout rather than, you know, paying with a credit card or cash or anything like that. And it will be your main wallet, especially for poorer people who don't have bank accounts. And I think that vision, we're like miles away from there, and I'm highly skeptical that we're going to get anywhere near that.
- [13:31]
C
Possibly, yes, it is entirely possible that this will be a disaster or it just will go nowhere, like many of Facebook's other attempts at payments, but.
- [13:38]
A
Or Facebook's other attempts at things like the Facebook phone.
- [13:42]
C
Right, But I think that, like, when you compare the United States to a number of other, especially Asian countries, we are just so far behind in digital payments. And mainly that's because of our balkanized bureaucracy in the United States. But this is clearly the future ultimately of payments. Not necessarily Libra. Not even necessarily.
- [13:59]
A
No, no, no, that's it. I couldn't agree less. The future of payments, we are absolutely clear, exists in places like Sweden and exists in the UK it exists in India. If you get a central bank who understands fast payments and instantaneous payments, it's really easy for the central bank to push that out to the entire population at zero cost, where everything clears at par. You don't need to privatize it. It doesn't make any sense to privatize it. To say that the future of payments is privatized just does not make sense.
- [14:26]
C
I'm not necessarily saying that I think that that's better or worse. I'm just saying if you look at what we've seen in China with Alipay, with WeChat, where you have these enormous markets where people are using digital payments, it's not a cryptocurrency, but where they are using more and more of these digital payments, you have private actors involved. And granted, it's China, so fair enough. But I think that in the United States, because of, again, how complicated our regulatory system is, I actually think it would be much more likely that you would have private actors that would start to develop things than the US Government is going to start and take on this.
- [15:01]
B
I don't think this is the private actor to disrupt money.
- [15:04]
A
And also, remember, we have had. We have had private actors trying to. To break into payments for decades now, starting with X.com, this was the dream of X.com, which was founded by Peter Thiel and Elon Musk, and that wound up becoming PayPal. And then you had various other companies. Stripe and everyone else. Everyone wants to create clever payment systems on the Internet, and some of them are very successful. Square is worth $30 billion. Stripe is probably worth that. PayPal's probably worth that. So it's not like payments aren't an interesting part of the to build a company in, but that is a very different prospect to building an entire parallel currency which isn't even denominated in dollars. So. Emily. Hi. You live in the suburbs. We're gonna have a whole suburbs edition at some point. I'm obsessed by suburbs. You have, like, a white picket fence and a dog and 2.2 kids.
- [16:02]
C
And tomatoes.
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A
And tomatoes. So you live in this amazing utopia of single families only. How's that working out for you?
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B
It's fine. We have a lot of space, but the country is facing affordability crisis in housing. And sometimes I do feel kind of guilty about that because we don't have a lot of space. And there's actually some kind of zoning controversy that has been going on in Westchester for a long time. Anyway, we're here to talk about changes to zoning laws that some cities are trying to do in order to create more housing. The New York Times had a really good story with all these great maps.
- [16:38]
A
Friend of the pod, Emily Badger. We love her.
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B
Yeah. And the maps were just, like, really extraordinary. There are most of the United States residential Areas are zoned for single family homes. I think it was like 70%, according to Zargo.
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A
Over 70%, yeah.
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B
And this piece breaks down the cities that have like the worst zoning. So like in San Jose, which is facing, you know, real estate prices are crazy there at Silicon Valley, 94% of the areas where you can have a house, you can only have a single family home, which is like, it means you can't really have much diversity prices. You know, they go up and up and up. You can only have one home on one little plot of land.
- [17:14]
A
It restricts the utility of land. Like land in the, in cities is one of the most valuable things that we have. And as we New Yorkers know full well, the way to maximize the utility of land is to build lots of homes on any given plot of land. And we're very good at that. But that is literally illegal in most residential areas of most cities. And, and Anna, as the Midwesterner here, you're going to explain why.
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C
Well, I mean, U.S. government policy, I mean, especially since the 50s, but even, you know, has been about single family homes for the most part for a number of reasons, often for some pretty horrible reasons. I mean, the history of zoning laws in this country are often much more about keeping other people out than they are about anything else. And then they're also always about this idea of, well, we want to maintain property values. Now what that means is often not very good in terms of what people mean when they say we want to maintain property values. Now I do think it's always important to think about what it means when we say we have a housing crisis or when we have issues with space because we have a tremendous amount of space in this country. The issues with housing crisis are often around cities.
- [18:21]
A
Right, right.
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C
And that's what I'm saying because like you go to places in the Midwest, there's not a housing. I mean, there are housing crisis in some places in the west, but through much of it, like that's not really the issue. What we're talking about here, we're talking about around, especially around cities, where two.
- [18:33]
B
Thirds of Americans live in cities.
- [18:35]
C
Right.
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B
So we need.
- [18:36]
A
Yeah, so, so what we are talking about here is residential zoning in cities and why is it restricted to single family homes? And the first question I have for you, you're talking about people worried about property values. Surely if you upzone residential land so that you can have two families or three families or even 20 families on a piece of land, wouldn't that increase your property value rather than decrease it why does worry about property values? You know, wouldn't you want to upzone?
- [19:06]
C
It's for the property values of people who are already in that area. When people are talking about that if.
- [19:11]
A
I'm on a piece of land and I own a piece of property, the value of my property will go up if I have the option of bringing more families onto my property.
- [19:19]
C
If you're going to build an apartment block on your own property, then yes. But that's not what most people are thinking about. Most people are thinking about the idea I own land I bought in this area so that I could have a certain amount of space around my house so that there would only be a certain amount of density in this area because that's. That's quote, unquote, like what I want. And then when people talk about bringing density in, which don't. I mean, I agree with. I'm all in favor of upzoning, but when people talk about that, then it becomes we're going to completely change the neighborhood. You're going to all of a sudden have shadows everywhere. You're not going to have the same amount of green space. I mean, this is what people.
- [19:51]
A
So, okay, so. So, Emily, are there any examples of cities upzoning residential areas and seeing property values go down as a result?
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B
We don't know yet. I mean, it's really early. Minneapolis passed an upzoning law in December, but it hasn't. Nothing's happening yet. Right. They passed a law that the whole city is now up zoned, so single families can be triplexes and duplexes. So it's really too early to say.
- [20:15]
C
And this is a very. I mean, this is a very emotional issue for people. And I think it's often written about kind of with the idea of like, you know, people are horrible and they only care about their property values. And it's like.
- [20:25]
A
Well, I mean, no, I think it's clearly emotional because I think the property value thing is a red herring. I genuinely don't believe the property values will go down if this happens. I'm almost positive that they will go up.
- [20:36]
C
I think you're most likely correct, but it's nimbyism.
- [20:38]
B
Not in my backyard, like, like in my town right now. There was a rumor that they were gonna make a 711 across the street from like a strip mall area. And people are freaking out over a 7 11. They think it's gonna ruin the tenor of the area. It's just a strip mall with a gas station.
- [20:54]
A
I mean, there's a lot of tenor to that strip mall, it's gonna ruin.
- [20:57]
B
It's gonna bring increased traffic, like, and that's just for one little thing. You're saying to people like, the area you live in is going to radically change. People freak out about that. Especially when you're talking about families with a house, which is like their biggest.
- [21:12]
C
Asset, the vast majority of their wealth.
- [21:14]
B
How much is it worth?
- [21:15]
A
Right. And yeah, as I say, I think on a micro level that those worries are probably misplaced that the house is going to be worth just as much, if not more.
- [21:24]
C
Right.
- [21:24]
A
And you're on a macro. On a macro level, it's conceivable that if you, you know, double the amount of housing supply in the city, then prices might fall just because of supply and demand. But, you know, it will take a very long time to get to that point. I think in the first instance, all you just want to do is increase supply a little bit. And the bigger picture, I think that Anna is exactly right is emotional. And the thing I always come back to is this idea of the train carriage. In the old fashioned trains, which I used to ride into London when I was a kid, you'd have these little carriages where you'd walk into with like two benches facing each other. And you could he had like three seats on each bench. And you would walk into an empty carriage and go, oh, I have this carriage to myself. I'm awesome. And then someone would walk in and sort of sit opposite you, and you'd mildly resent them because you no longer had the carriage to yourself. And then you'd eventually get used to the fact that there were two people in this carriage rather than three. And then a third person would walk in. And then you would both weirdly feel a kinship with each other because you were both annoyed by the third person. And it's always the latest, newest person to come in, the person who wants to sort of make the newest change, who gets the brunt of the resentment. But it never lasts that long.
- [22:40]
B
But in the United States, I mean, you can't talk about this without talking about racism. I mean, historically, trying to change neighborhoods and diversify neighborhoods made white people very, very angry and upset.
- [22:53]
A
And one of the. Yeah, and one of the subtexts to this, of course, is that. And what you see this in Portland and a bunch of other cities is that if you have a big house up front and then a smaller house in the back, the idea is that you're gonna now be allowed to, like, rent out or even possibly sell the smaller house in the back to someone else. And that's awesome. Another family can live there. But now, you know, the people living in these big houses are all mostly white and mostly rich. And then the smaller houses in the back are going to be attractive to maybe less rich and less white people. And so that will change the demographics of the neighborhood.
- [23:29]
C
Yeah, I mean, and that's why when I say, like, property values, I kind of want to use air quotes. Because very often when people say that, what they really mean is people quote, unquote, not like us, which very, very often has to do with race.
- [23:40]
B
And I think it was. Farhad Mandu had a really good column in the Times a few weeks ago about they tried to do upzoning in California, and it failed. SB86 something, some number.
- [23:52]
C
SB something or other.
- [23:52]
B
SB something. And his piece was really good. He said, you know, there are all these liberals and progressives allegedly in California, but when it comes down to diversify your neighborhood, it's like. Like, they're basically like the equivalent of build that wall, but on the left. You know what I mean? Like, yeah, we want diversity, and we think immigration's great, but, like, we don't really want an apartment building, you know, near the.
- [24:13]
A
One of the. One of the interesting things about that bill was that it was about upzoning. Just the neighborhoods really close to the transit stations and, you know, the BART stations and subway stations and that kind of thing. Because the other argument that people always seem to use with astonishing efficacy is this argument of, well, we can't do that because we don't enough parking. And, you know, never mind the fact that everyone has twice as many cars per household now as they did, you know, 30 years ago. But, you know, all they care about now is parking. Get over yourself.
- [24:45]
B
And, well, that's one thing with upzoning. If these laws are going to be done well, in addition to rezoning areas to make room for more people, they're going to have to, like, update public transit and, you know, public parks and, like, make sure the area is livable for more people, which I think has been a failing in the past. I also think that Portland or one of those places.
- [25:05]
C
Yeah, I mean, I think it's also important to be realistic about what upzoning can achieve, because I think sometimes when you hear people write about it, it's almost like this panacea that it's going to solve everything. It's like. Well, no, I mean, like, if you look at especially really expensive cities, housing is one big problem. But the reality is, you Just have these incredibly bifurcated labor markets where you have very, very well off people and you have very, very low paid service sector workers. And all the upzoning in the world isn't going to make, make those apartments affordable for the second group.
- [25:31]
A
No, but it will make. No, but it can make, it can make it better, but it can make it affordable for the first group. What you're finding in places like San Jose is that even, you know, Google engineers earning a quarter of a million dollars a year can't afford houses.
- [25:43]
C
No, and that's why I'm saying I'm, I'm in favor of upzoning. I'm just, I think that when people talk about it, sometimes they give it a little bit too much credit for what it could potentially do in certain.
- [25:51]
B
Cities with other policies. Especially, you want to sort of mitigate against the risk that it's all going to be luxury housing. You don't want that to happen. Right. You want to make some provisions. So there's a mix of kinds of housing at least.
- [26:02]
A
Right. And there's definitely room in the zoning laws to do that.
- [26:06]
C
Well, and I also think, just. Sorry, one other thing because I feel like if we don't say this, someone's going to write in, because there was a study that came out, I think, like in the last year about, in Chicago about like a kind of perceived failure of upzoning where it didn't result in greater affordability. In fact, the opposite. But what some people have looked at the study who know more than I do seem to say is that often that was because you had this kind of entrenched political system in Chicago. So even though you changed the laws on the books, in terms of what actually could be done, that didn't change. And so that's why there wasn't actually any really new housing built, despite the fact that these laws are changed. So my, my point is also that, like, this is complicated. It's not just a matter of changing the laws.
- [26:46]
A
It is complicated. And it does definitely, in certain circumstances cause gentrification. You know, it works the other way around. It's not just the, you know, rich white people being afraid of poorer brown people. It's also just like relatively poor people in neighborhoods where they might have lived for decades and somehow managed to stay there just because they own their homes or something like that, worrying that their entire neighborhoods are gonna just become overrun by yuppies when a bunch of like, luxury apartment blocks goes up. And those are genuine, legitimate worries as well.
- [27:21]
B
Yeah. Another thing we should Mention with upzoning is there does seem to be an increasing need for it because of climate change right now. Like we can't afford more sprawl. We need more Americans in more cities where, you know, we're not driving cars as much.
- [27:32]
A
Cities are by far the most energy efficient way to live. This is my favorite thing, which I, I love to think about. The most efficient form of transportation in the world, even more efficient than bicycles, is the elevator.
- [27:46]
B
What?
- [27:46]
A
Yeah. Elevators are unbelievably efficient because they're all counterweighted. It takes almost no energy to move people up and down in the elevators.
- [27:53]
C
Fun fact, fun fact.
- [27:55]
A
Let's talk about IPOs and non IPOs. It's hot, hot, hot right now. It's so hot that even if you don't IPO, you're worth $20 billion. In the case of Slack, or 23 billion to be precise, Beyond Meat is worth 8 or 9 billion, something like that. I had a whole thing in Axios Edge about the val of the unicorns. And do you remember back in the day, I mean, we've been doing this for five years now and back in the day we would talk about unicorns and we'd laugh a little bit. All of these companies which are technically valued at $1 billion, but that's just for preferred stock and it's just this small little thing and they're not really worth a billion dollars. And now we're looking around at, you know, Uber is worth $75 billion and that's less than people thought it would be. Lyft is 17, Slack is 23, Dropbox is 10. Zoom video, which is this little, you know, fast growing but pretty small company, is worth $20 billion. So Anna, what's going on?
- [28:54]
C
I mean, in the case of Beyond Meat, the current valuation doesn't make a tremendous amount of sense. However, I think, you know, I've seen price targets around like 120, I think it was today was like 170ish or something. I mean, it's quite a bit above that. But there's a reason for that because you can, I mean you can model this out that you know, if you look and you have relatively not, not overly aggressive targets of like how long you think certain levels of growth are going to last. You know, you can get to a very, very high valuation. Like this is, like this is a company that has a large addressable market. You know, they are moving towards profitability though. Not there yet. But I think that what you're seeing right now are just a lot of investors paying for growth. Now, what we've obviously seen this year as well is that investors aren't willing to pay endless amounts of money for when there's no potential to become profitable. Although obviously Uber are doing were also disappointments, especially in the case of Uber.
- [29:46]
B
I want to talk about Beyond Meat a little more because I think it's interesting and I don't think we've spoken about the company yet. So their whole thing is like veggie burgers, which at first you're like, why is the veggie burger company worth billions of dollars?
- [29:58]
A
Yeah, I feel like veggie burgers have been around for a long time and have not been worth billions of dollars.
- [30:03]
B
Tell them about the innovation.
- [30:04]
C
Here's the thing, the marketing. Well, no, it's not ill genius. It is not yet. I mean, it's not just that. I will tell you, you from someone who's been on and off vegetarian for a very long time. Back in the day, we had things like Boca burgers.
- [30:15]
B
Gross.
- [30:15]
C
Which are horrible. And Boca burgers, yes. They're. They're really, really bad.
- [30:19]
A
What are they made of?
- [30:20]
C
I don't know. Something not good is what they're made of. I have very bad college memories of too many Boca burgers. But I mean, Beyond Meat and Impossible Burger have legitimately made really pretty decent burger alternatives. Now, I'm not saying that they're necessarily. They're obviously not going to be as good as an actual burger, but they're pretty darn good. And I think what these companies are trying to do is they're trying to market towards people who are not necessarily vegans and vegetarians, but people who are like flexitarians, people who want to potentially eat less meat, people who are looking for a, like, slightly healthier alternative. And this is potentially a very large market.
- [30:56]
A
I love to not eat meat. I just feel like when I don't eat meat, I will eat, you know, delicious vegetables or delicious fish or something else which is delicious. And I'm not quite sure why I'd want to eat a burger of any description.
- [31:07]
B
I think it's marketing genius because in the supermarket, it's all about where your stuff is, where your product is place. Right? And so the veggie burgers right now are really hard to find. They're in like the frozen vegetable aisle, which I'm willing to bet most people don't even venture down these days. But the Beyond Meat sells its quote unquote meat right next to the actual meat. So there's more of sort of like A crossover effect, I think, and more of, like, people who actually want a burger see the fake burger and they're like, oh, maybe. And I guess in its prospectus, Beyond Meat said, like, the people who buy Beyond Burgers also are buying meat at the same time. So it's sort of like. Like Anna was saying, more flexitarian. Like, or maybe you're having a. Like a barbecue or something, and you're more apt to just, like, get regular burgers and the vegetarian ones, because maybe you're having guests or something.
- [31:53]
A
Or maybe you just say, you know, these are all good burgers, so I'll just serve Beyond Meat burgers to everyone because it's easier that way. And then the vegetarians will be happy and they don't need to worry about their veggie burgers being on the same grill as the lamb burgers and all of that kind of thing.
- [32:05]
B
Yeah. And they're more expensive than meat.
- [32:07]
C
Well, and this is, I actually think, the biggest issue, which I will tell you, actually, as last Saturday, I was like, I was treating myself that evening. I was going to have a bur and fries, which I bought from Bear Burger.
- [32:18]
B
That a real hamburger?
- [32:20]
C
No, no, no. A. The Beyond Meat burger and sweet potato fries. But with the Delivery, it was $33. Oh, my God. Now, granted, I think Bear Burger just has, like, a very high delivery fee. But regardless, I was looking at this, and I was like, okay, this is a problem. Like, this is. I still paid that, but I really wanted it.
- [32:37]
A
But no, it's. It's a bit like the. It's the equivalent of the $5 shake in pulp Fiction, isn't it? It's like, it had better be a damn good burger at that price.
- [32:45]
C
Yeah.
- [32:46]
B
And White Castle sell not Beyond Meat, but Impossible Sliders. And so it's 90 cents for the regular hamburger slider with the beef, and a dollar ninety for the Impossible burger. And more fast food chains are starting to.
- [32:58]
A
And those are tiny.
- [32:59]
B
Yeah, they're really small.
- [33:00]
C
Yeah. And I think this is actually a big deal when you're looking at the numbers that people are baking into these valuations, because a lot of this has to do with pickup at places like White Castle, potentially people talking about McDonald's, and we have Impossible Burger with Burger King. But people are very price sensitive when they're going to fast food. So the idea that you're going to have a significant number of who are going to pay that additional money, it seems kind of unlikely. The only way that that is going to make sense is if they are able to improve the technology to the point that they could actually make it less expensive. And they are far from there.
- [33:32]
B
So is the stock just. It's crazy.
- [33:34]
A
Well, I mean, the other way it could conceivably work given America's unbreakable addiction to burgers, which I don't entirely understand, and we've had long conversations on slate money about McDonald's. The other way it could conceivably work would be if we started pricing beef correctly. Part of the reason why burgers are so cheap is just because beef is so heavily subsidized. It's basically just corn on legs. And we subsidize the corn industry massively because of something, something primaries in presidential elections and on an environmental level, not just in terms of like methane emissions and carbon emissions, but just in terms of just animal welfare. Like there's a whole bunch of costs which are an advanced society should not be okay bearing and which are being driven onto us as a society by the demand for like 99 cent burgers. And no piece of meat of that like, Quantity should cost 99 cents. It's just wrong.
- [34:32]
C
No, I agree with you. And I think that, I mean, if you actually look, you know, beef consumption in the United States is increasing and partly that is because it is not priced properly. It's funny because when there are potential subsidies for things like green energy or if, God forbid, if there were subsidies for like, you know, fake meat, people would like lose their minds and be like, oh, government intervention, blah, blah, blah. And it's like so many Americans, food choices are based on government policies and they have been for, you know, as long as we've essentially had a government.
- [34:55]
A
And this is why everyone eats beef burgers rather than the much more delicious lamb burgers, which are better in every conceivable way. But that's, you know, you can't, you can't subsidize lamb in the same way.
- [35:06]
C
Right. And last thing I'll say, and this is like slightly off topic, but I feel like if we are going to talk about beyond meat, you can't not talk about the short interest because part of the like.
- [35:16]
A
So that was a big short squeeze, wasn't there?
- [35:18]
C
Well, no, no, no. It's just that like. So right now it's like about 45, 46% of the free float are people who've borrowed those shares to short them. So now the short sellers are getting killed right now. I mean, on paper losses, they're really getting killed. Granted, a lot of those haven't been realized. But also the financing charges on beyond me chairs are really high. So they're like, that's actual money that people are spending. So it's a kind of interesting story about, like, how in theory, you look at this price and you say like, wow, you know, this equity is really, really doing well, but there's also a lot of bears in this market.
- [35:50]
B
So everyone's basically like, this is crazy. This thing isn't worth this much money. And just betting you have a lot of people. Exactly. Going up.
- [35:57]
A
Weirdly, the short bets cause it to go up. It's called a short squeeze. And basically the more short bets you have, the more the stock naturally wants to go up. The stocks always move in the direction of causing the greatest pain, basically.
- [36:10]
C
Right. And when people talk about a short squeeze, I mean, they're usually often talking about the minute when people are actually trying to get a. Out of the positions. And then as a result, like, they're squeezed, the shorts are, you know, like the price really goes up if it's not actually happening right now.
- [36:21]
A
But, but it could happen. Like if you short Beyond Meat at $100 a share and then your, your stock broker hits you with like a marching call. If this goes to 150, you're just going to have to get out because you've lost too much money at that point. So it hits 150 and then you have to get out. So then you have to buy back the stock in the open market that you weren't sure. And so that's buying pressure, which just causes the price to go up even more.
- [36:46]
B
Wow.
- [36:47]
C
Yeah. So it should be interesting. I mean, I think the valuation makes no sense, but I do think there's value in this company. Maybe not as much as the current markets would suggest.
- [36:56]
A
Let's have a numbers round. I feel like there are so many possible numbers this week. We have so many to choose from, but I'm going to start off with three. Three is the number of individuals on planet Earth who are worth more than $100 billion. It was always Bill Gates, of course, and amazingly, even post divorce. It's also Jeff Bezos. And now that famous American duo has been joined by shudder. A Frenchman. Bernard Arnault, who owns lvmh, is now worth a hundred billion dollars, too.
- [37:31]
B
But I thought France was bad for rich people.
- [37:33]
A
Evidently not. Well, I mean, we are going to talk a little bit about. No, actually, slate plus a Frenchman and just dropped $3.7 billion on a shiny toy called Sotheby's.
- [37:43]
C
Interesting. Yes and no. Actually, France is relatively Good. If you have a job. The problem is they have incredibly overregulated labor markets. So if you're younger or an immigrant, it's incredibly hard to actually get a job. So that's.
- [37:53]
A
Do you have a number?
- [37:55]
C
I do. My number. I feel like it's an Emily number.
- [37:58]
B
God, I hope it's not my number.
- [37:59]
C
It's 50.8 million. So that is the revenue from ticket sales generated by the US Women's soccer team.
- [38:06]
A
Team.
- [38:06]
C
The reason I bring this up is because, as I know many people might know, there's a lawsuit because the women's soccer players are paid significantly less than the men are. And I bring this up because, like, the women generate more revenue. They generate more revenue from ticket sales. And also, like, it's one thing when women are paid less for doing the same job is like, they're doing the same job better. Like, the women's team actually wins. Like, people don't tend to watch the men's as much. They actually do watch the women's. The most watched US Game ever was the final between Japan and United States when the women were playing.
- [38:40]
A
So does the women's team get more in, like, TV rights, too?
- [38:43]
C
Well, this is actually interesting because that's actually where the men will push back and they'll say, like, oh, well, you know, the, you know, men. It's paid higher for advertising, but not necessarily because it's all bundled, because it's not like other sports. Mainly because soccer is not as important in the United States, so it tends to be bundled with a bunch of other sports. So it's kind of hard to say what people are paying for. And when it comes to.
- [39:02]
A
But, like, when the TV networks pay to televise the World cup and then those fees go to the national teams, I'm going to assume they pay more for the Men's World cup than for the Women's World Cup.
- [39:13]
C
Right. And if you're talking about, like, globally, like, yes, obviously men would make more because globally. Right. No, but then soccer makes a lot.
- [39:19]
A
More money, even in America.
- [39:20]
C
Yeah, but the thing is, because of the way, for the most part, most men's games, it might be a little bit with the World cup, but just in talking about, like, the men's leagues, it's hard to actually say how much they're making versus how much other sports are making because the TVs are buying the rights in bundles. It's not just like a single sport. Again, it's because soccer is not watched quite as much.
- [39:39]
B
I learned a really interesting thing on Slate's what Next Podcast because they talked about the women's team. So the US Women's team is really, really good, and they're a great team. Other women's teams around the world, their countries don't invest a lot of money in them. And relatively speaking, the US Women's team is getting a lot of money relative to.
- [39:56]
A
Oh, my God. Even, like, the underinvested women's team is still getting more than the women's team in other countries. Wow, that's just depressing.
- [40:02]
B
Yeah. So.
- [40:03]
C
And these are.
- [40:04]
B
These are wonderful athletes. So I don't know, but something to think about.
- [40:07]
C
And I was just gonna say too Visa recently when they were saying, like, the money they were giving, they were actually earmarking, like, 50% for the women, which is kind of unheard of in men's and women's sports.
- [40:15]
B
So I have a number.
- [40:16]
A
What's your number?
- [40:17]
B
$2.743 billion.
- [40:22]
A
Wow. Yay.
- [40:23]
B
That's how much money Endgame has made at the box office worldwide since April. And this is disappointing news for Disney because it is $45 million short of the record holder, which is Avatar. Avatar, which made 2.788 billion. And these numbers were not adjusted for inflation. So it's actually even worse than I'm saying. So.
- [40:44]
A
So get yourself to the box office and watch Avengers so that we can.
- [40:47]
C
Find that little underdog there.
- [40:49]
B
They're re releasing the movie, I think, this weekend with, like, new footage added to it. This movie's already over three hours long, but they're making it longer to get. Get die hard fans back in the theater so they can, like, cross that little threshold for their weird egos. Even though Disney now owns the Avatar franchise also because it has 20th Century Fox now and they're doing sequels.
- [41:10]
A
The only thing which lasts longer than an Avengers movie is the amount of time it takes to make the Avatar sequels, which I think has been in production since 2008 or something, and they just never come out.
- [41:22]
B
Have a good weekend, everyone.
- [41:24]
A
Have a good weekend, everyone. Go see Avatar. Because we worry about poor Marvel and Disney not having an event. Endgame.
- [41:30]
B
Felix, go see Avengers. Endgame.
- [41:32]
A
What do they call it?
- [41:33]
C
You said Avatar.
- [41:34]
A
Oh, don't go see Avatar. Don't go see Avatar. Go see Avengers.
- [41:38]
C
They could try to find a place for Avatar.
- [41:40]
A
They both swing with av.
- [41:42]
B
Seen neither of these films.
- [41:44]
A
They both star Zoe Saldana. This is something I know. I don't know how I know this. It's a random factoid that sits in my head. Go see a Zoe Saldana blockbuster this weekend and come back next week where we will have more Slate Money. Ish Goodness for you. Unless of course you're sticking with us for a little chat about Sotheby's on Slate. Plus, other than that, thanks for listening to Slate Money this week. Thanks to Jessamine Molly for producing, thanks for keeping the emails flowing. Sleepmoney@slate.com and we will talk to you next week on Slate Money.