Slate Money: "Seamless Is a Verb" (May 16, 2020)

Host: Felix Salmon (Axios), with Anna Shymansky (Breaking Views) & Emily Peck (HuffPost)

Episode Overview

This episode of Slate Money covers three major topics swirling through the business and finance world in May 2020: the state and consolidation of the online food delivery market (with a focus on Uber's potential takeover of Grubhub), the crisis underway in the US childcare industry, and answers to listener questions ranging from ETF investing to urban parking dynamics. With a trademark blend of humor and practical insight, Felix, Emily, and Anna delve into how pandemic-era shocks are hitting essential industries and personal habits alike.

1. Uber’s Potential Acquisition of Grubhub: Food Delivery in Flux

[00:44-14:28]

Key Points

• Context & Deal Rationale

  • The group discusses Uber’s bid to acquire Grubhub, which would create a dominant player in food delivery (with DoorDash as the main competitor).
  • Anna: "I think it's incredibly unlikely" that regulators would approve such a merger, but notes industry's poor profitability might tempt regulators to let it slide as a survival move. [03:43]
  • Felix: “It certainly doesn’t benefit consumers or restaurants to give all of this pricing power to one or two companies.” [04:10]

• Market Consolidation Risks

  • Combined, Uber and Grubhub would control an estimated 55% of the market (possibly more in some estimates).
  • The hosts argue that any pro-consumer arguments for the merger are weak, but point out rationales based on cost reduction and industry survival.

• The Economics of Delivery

  • Emily highlights Uber’s superior logistics, citing potential per-order cost savings, but remains skeptical such savings would go to consumers. [06:23]
  • Anna: “Delivery is notoriously a business where you cannot at this stage make money. All of these companies are losing money.” [03:43]
  • Felix points out how Grubhub has engaged in “nasty things,” like setting up fake websites and phone numbers, charging restaurants high fees: “It just makes the economics of restauranting… even more forbidding.” [08:08]

• Winner, If Any: Delivery Workers

  • Notably, delivery drivers have always been underpaid regardless of how delivery is organized. Felix: “They are the one group of people who are actually winning here; people’s tips are up like 90%. Keep on tipping!” [14:03]

Notable Quotes

• Anna: "If you don't allow these companies to merge, at least one of them is probably just going to... go under." [04:54]
• Emily: (on tip increases) "They are the one group of people who are actually winning here... these people are out, they're frontline workers. They deserve all of the tips they're getting and then some.” [14:03]

2. Childcare Industry Collapse: Invisible, Essential, and in Crisis

[14:28-24:23]

Key Discussion Points

• Industry Snapshot and Pandemic Devastation

  • Emily investigates the childcare sector, noting that 90% of operators are small, privately held businesses running on razor-thin margins.
  • "When the pandemic hit, like, around 60% of centers closed down completely, so no more money coming in... basically just like, holding on by their fingernails.” [15:00]

• Structural Weaknesses

  • Most centers lack cash reserves (“It’s just like restaurants”) and rely on constant enrollment to survive. Staff are notoriously underpaid (average: $11/hour).
  • “It's a race to bail out the airlines, but not to bail out childcare. They're basically begging for money at this point.” [22:25]

• Systemic Implications

  • Without a federal bailout, many centers may close permanently, especially those serving lower-income families, exacerbating inequality.
  • The crisis will likely push many women out of the workforce, reversing hard-won economic gains: “What you're already seeing is... a lot of women, they're just not going to be able to work if these centers close down.” [21:37]

Notable Quotes

• Felix (on the fragility of small childcare providers): “There aren't really big national giant childcare chains.” [23:10]
• Anna (on economic impact): “One of the best ways to [increase GDP growth] is to get more women involved in the labor market... and yet continues to... fall into... the same weird argument you got from, like, the 1970s.” [21:49]

3. Listener Questions: Investing and Urban Parking

[24:23-34:57]

ETF Investing Through Robinhood

[25:12-29:32]

• Anna supports ETFs in general, but cautions about platform reliability and transparency (“Robinhood itself got into some trouble... outages... not getting the best price execution.”) [25:12]
• Felix: “There are two layers of fees... pick the index fund with the lowest fee... Then pick the platform that’s cheapest.” [26:13]
• Both warn against investing in obscure or leveraged products (e.g. “USO,” the oil ETF, which they specifically highlight to avoid). [28:50]

Notable Quotes

• Anna: “Boring is good.” [29:32]
• Felix: “Being able to trade easily... is a bug and not a feature... ETFs when they're done right are something you buy once and forget about for the next 35 years.” [27:13]

New York Parking and Pandemic Trends

[29:37-34:47]

• Anna’s dad asks if more high-rise parking is coming to NYC as car ownership rises. Anna speculates not, given prohibitive land costs but notes street parking could decrease as space is reallocated (“At the margin, there is going to be a bunch of people who... the number of people who drove into Manhattan in the past was always relatively low, and that number is going to go up.”) [32:22]
• Emily stresses, anecdotally, that “a lot of people drive into the city. Regular people, not just commercial.” [34:16]

4. Numbers Round

[34:57-38:46]

• Felix: 16.4% – April’s retail sales decline; surprisingly resilient given the lockdown (“It doesn’t seem that much to me... we wound up spending 85% of what we did in March.”) [34:57]
• Emily: 10 – The number of episodes in ESPN’s The Last Dance ("It is like the most delightful content of the lockdown... Michael Jordan revolutionized the sports merchandise industry.") [36:01]
• Anna: 70 – Her father's birthday ("My dad loves bread... I actually bought him bread from Zingerman’s in Ann Arbor.") [37:53]

Memorable Quotes & Moments

• “Seamless is a verb” – revealing the cultural pervasiveness of food delivery in NYC [03:07]
• Emily, on tipping: “They are the one group of people who are actually winning here... keep on tipping.” [14:03]
• Anna: “If you don’t allow these companies to merge, at least one of them is probably just going to... go under.” [04:54]
• Felix: “Being able to trade easily through a pretty app on your phone is a bug and not a feature... ETFs when they're done right are something... you forget about for the next 35 years.” [27:13]
• Emily: “[Childcare centers] are basically just like, holding on by their fingernails.” [15:00]

Tone and Style

The episode is lively, humorous, and critically engaged. The hosts combine in-depth financial analysis with relatable anecdotes and a candid, lightly irreverent edge. They move fluidly between the nitty-gritty of business models and the lived realities of families and workers, poking fun at financial jargon (“sportsball”), and mixing numbers with personal stories.

Timestamps of Key Sections

• Uber/Grubhub Merger & Food Delivery Industry: [00:44–14:28]
• Childcare Crisis Discussion: [14:28–24:23]
• ETF/Robinhood Q&A: [25:12–29:32]
• NYC Parking Post-Pandemic: [29:37–34:47]
• Numbers Round (Retail, The Last Dance, Anna’s Dad): [34:57–38:46]

Summary for the Uninitiated Listener

If you missed the episode, these are the takeaways:

• The food delivery business is battered, largely unprofitable, and ripe for questionable consolidation.
• The US childcare sector is facing existential threats, and its collapse would ripple through gender equity and the wider economy.
• Investing should be boring; skip the app hype and focus on fees, reliability, and basic products.
• Even in a pandemic, Americans keep shopping, keep tipping, and keep debating parking in New York—with warmth, humor, and lots of good bread.