Slate Money — The Pet Cause Edition (April 22, 2017)

Episode Overview

This “Pet Cause” edition of Slate Money, hosted by Felix Salmon and joined by co-hosts Anna Shymansky and Jordan Weissman, is a whirlwind weekly deep-dive into the top news from business and finance. In this episode, the team explores:

• The wild drama of activist hedge funds, focusing on Paul Singer’s Elliott Management and its campaign at Arconic.
• The merits and implications of Portland divesting from all corporate securities.
• The so-called “retail apocalypse” and the much-hyped $3.35 billion Chewy.com acquisition.
• A “numbers round” filled with striking statistics and quirky business stories.

Key Discussion Points and Insights

1. Activist Hedge Funds & Arconic Drama (00:31–16:30)

Paul Singer vs. Klaus Kleinfeld

• The team begins with the saga of Paul Singer, the famed activist investor, and his battle with Klaus Kleinfeld, CEO of Arconic.
• The narrative gets juicy with the disclosure of an outlandish letter sent by Kleinfeld to Singer, referencing a wild party at the 2006 Berlin World Cup—with singing in a fountain and Native American headdresses.

“My favorite person in the world, Paul Singer, who’s completely insane…The guy who famously extracted billions of dollars from Argentina in a decade-long court fight.” — Felix Salmon (01:10)

Activism Tactics and the Bizarre Letter

• The panel reads excerpts of Kleinfeld’s strange letter:

  "It was much to my delight when I recently learned from Berlin what a phenomenal soccer enthusiast you must be..."
  — Anna Shymansky, quoting Kleinfeld’s letter (05:39)

• Discussion on whether this was a threat to “reveal kompromat,” with the group lampooning the ineffectual attempt at intimidation.

The Effectiveness of Activist Hedge Funds

• Deep dive into why hedge fund activists like Singer are more successful than pension funds—it's about concentrated portfolios, more resources, and different client expectations.

“Most strategies have much more concentrated portfolios…which means you have the time and resources to devote to individual investments.”
— Jordan Weissman (09:20)

• Anna and Felix note the negative public perception:

  “The PR problem…you’ve got guys like Carl Icahn who are famous for just demanding money.”
  — Anna Shymansky (11:31)

Are Activist Hedge Funds Good or Bad?

• Debate over the “duration mismatch”: activists often seek short-term gains, potentially leaving “smoldering wrecks.”

  “The idea that you can waltz in, dividend yourself out a huge profit, leave a smoldering wreck behind…you can see why that leaves a bad taste in people.”
  — Felix Salmon (12:10)

• Jordan counters that evidence shows many targeted companies actually perform better after five years.
• The conversation turns philosophical: Are they doing the dirty work of holding management accountable? What about the ethical costs?

2. Ethics, Divestment, and Portland’s Investment Fund (16:31–28:41)

Portland’s Radical Move

• Discussion shifts to Portland’s $1.7 billion fund and the city’s decision to divest from all corporate securities due to mounting demands for ethical exclusions.
• Felix outlines the paradox: every time the city banned a new company, management said, “This is unwieldy,” leading to their dramatic solution—no more stocks or corporate bonds at all.

“They came up with the most glorious solution to this problem...they said, okay, let's just not invest in any corporate securities whatsoever.”
— Felix Salmon (18:06)

A Fiduciary Duty Debate

• Jordan argues this is a “clear violation of fiduciary duty” (18:40).
• Felix pushes back: fiduciary duty isn’t just about maximizing returns; it's also about matching the client's ethics.

What Now? The Risks and Rewards

• Anna notes the portfolio will likely lose return; Felix suggests alternative investments (impact, local projects) might make up the yield and offer new “double bottom line” potential.
• Anna and Jordan voice skepticism about the risks and practicalities of such impact investing.
• The segment closes with mutual skepticism but appreciation for Portland’s boldness—and the inherent tension in aligning municipal investments with local values.

“How do you measure [your duty] without something like a vote or something formal?”
— Anna Shymansky (25:13)

3. The "Retail Apocalypse" and Chewy.com’s Mega-Deal (28:41–41:50)

Is Retail Dying or Evolving?

• The hosts dissect headlines about collapsing department stores (Macy’s, Sears) and widespread job losses.
• Anna clarifies that only a particular sector—department stores—is imploding, while broader retail is more resilient.

“You do have one sector of retail that is being kind of eaten alive by online merchandising... that is something to take note of, but…whether or not that has profound consequences for the economy isn't totally [clear].”
— Anna Shymansky (30:47)

• Felix spotlights how the retail crisis is largely invisible compared to coal mining, even as losses dwarf those in coal.

Chewy.com, the $3.35 Billion Sock Puppet?

• The retail debate segues to Petsmart’s $3.35 billion purchase of Chewy.com, evoking flashbacks to the infamous dot-com bust and the meme-ified pets.com failure.

“Somehow pets.com was a really stupid idea which deserved to go to zero and did go to zero. And chewy.com is worth three and a half billion dollars.”
— Felix Salmon (35:21)

• Anna cites Marc Andreessen’s theory that many doomed dot-com ideas were "just before their time." Is Chewy.com next-level genius, or a bubble-blown repeat?
• Jordan points out Chewy.com’s expensive, loss-leading business model; skepticism runs high.

"I would argue I don't see how this growth possibly continues. This is a company that doesn't make any profits..."
— Jordan Weissman (37:41)

What Does This Say About Tech Bubbles?

• Felix reveals pets.com’s peak market cap (00:39:12):

  “The answer is the maximum ever market cap for pets.com was $300 million. It was less than a tenth of what chewy.com is [sold for].”

4. Numbers Round & Memorable Moments (41:50–49:17)

37% — Social Media Use in Germany

• Felix: Only 37% of Germans use social media, compared to 69% of Americans. (41:50)

  “Germans. 37% of Germans actually use social media at all.”

3.8% — Turkey's Current Account Deficit

• Jordan: Turkey’s current account deficit represents its reliance on foreign capital, which may hold authoritarian impulses in check (42:12).

2 Million — Venezuelan Protesters

• Felix: Two million Venezuelans protest against Maduro, drawing parallels to global political unrest (44:02).

$400 — The Juicero Juicer Flop

• Anna: Juicero, a $400 (once $700) cold-pressed juice machine venture-backed for $100M, is lampooned after Bloomberg discovers you can squeeze the juice packs by hand. (45:29)

“Bloomberg had a fantastic article where they discovered that you could just take one of Juicero’s juice bags and using your bare hands, squeeze it and get basically the exact same result as the $400 machine.”
— Anna Shymansky (46:33)

$190 — The Most Expensive Dog Food?

• Jordan mentions Chewy.com sells an eight-pound bag of New Zealand lamb dog food for $190. (48:33)

“One of their products that they sell is a $190 bag of dog food…an eight pound bag of New Zealand lamb.”
— Jordan Weissman (48:33)

Notable Quotes & Memorable Moments

• On Activist Letters:
  “In your mind, imagine Hans Gruber from Die Hard...when Alexander saw the breadth of his domain, he wept for there were no more worlds to conquer.”
  — Felix Salmon (05:26)

• On ‘Retail Apocalypse’:
  “I like this idea of velocity of employment, that coal mining was a low velocity industry…retail was a high velocity industry...”
  — Felix Salmon (33:00)

• On Chewy.com’s Price Tag:
  “Pets.com was the ultimate dot com bubble bad idea…chewy.com is worth three and a half billion dollars.”
  — Felix Salmon (35:21)

• On Juicero Ridicule:
  “I have literally put up a…post on Instagram that said if anyone ever sees me buying $10 juice, they are entitled to shoot me with a dart gun and drag me out of the store.”
  — Anna Shymansky (47:51)

Timestamps for Key Segments

• Arconic & Paul Singer drama: 00:31–16:30
• Activist fund analysis: 08:14–16:30
• Portland divestment ethics: 16:31–28:41
• Retail apocalypse & Chewy.com: 28:41–41:50
• Numbers round (miscellaneous business curiosities): 41:50–end

Tone and Style

The conversation is irreverent, witty, and deeply informed, blending sharp financial analysis with cultural critique and plenty of asides. The hosts play off each other’s insights with banter, skepticism, and the occasional digression into “singing grannies” and juice tech absurdity — all while striving to clarify complex business news for a general audience.