Wednesday Oct.02, 2019

GoPro's Problem: Mainstream > Extreme

_"What do you mean cabinets don't matter, Meg?"_
_"What do you mean cabinets don't matter, Meg?"_

Hey Snackers,

Coconut Cheerios want to be the new PSL. They're coming this month.

Stocks dropped Tuesday after an econ report that US manufacturing fell to its worst level in a decade.

Filmed

GoPro unveils 2 new cameras to end its 3-year profit draught

If you land a fakie-to-fakie 720 and no one sees it... did it even happen? That's why GoPro exists. The action camera icon just unveiled 2 new models: $399 for the uncreatively named HERO8 Black and $499 for the HERO Max. Just in time for the holidays, the only gift GoPro shareholders want is a charming return to profitability.

  • Sales are down 35% from 4 years ago.
  • The stock's down 83% over that same period.

GoPro’s problem: Mainstream > Extreme... The new iPhone boasts 3 cameras. Three. Apple's photographic game is more than enough for most mainstream buyers. That's pushed GoPro to focus on extreme customers who appreciate the 12 megapixels and hypersmooth stabilization of its new lenses. Too bad "extreme" is a much smaller market than "mainstream."

GoPro's got no moat... A "moat" is how a business guards itself long-term from competition (picture Tylenol's patents that protected its recipe for years). GoPro boasts some unique technology in its surf-proof, snowboard-capable cameras, but rivals like Garmin and Samsung have effectively (and legally) replicated them. For cheaper.

Discount

Charles Schwab slashes stock trading fees to $0. Then its shares fell 10%

Big summer blowout... Stock trading is 100% off. Online broker Charles Schwab will stop charging $4.95 on stock, options, and ETF trades starting Oct 7th. But the commission-free announcement dropped Chuck's shares 10% — and rival E-Trade fell 14% and TD Ameritrade plummeted 26%. Here's the percentage of all their revenues that come from trade commissions:

  • E-Trade = 16%
  • TD Ameritrade = 25%
  • Charles Schwab = 7% — Chuck's more diversified in how it makes money, so killing a revenue source won't sting as badly.

Back in the day... buying a stock meant yelling into phones and paying a fee that might cost you more than the stock itself. Chuck is betting that sacrificing short-term revenue (the $4.95 it makes today for each trade) will win customer love and make more money long-term. But here's our Snackable history of stock trading fees:

  • $49/trade: That was the average trading commission in 1975, when Chuck launched its discount brokerage.
  • $10/trade: The average commission dropped by 2015, triggered by Robinhood's commission-free trading app, which launched in 2013 (full disclosure: Robinhood Snacks... is owned by Robinhood).

This is now a price war... and price wars destroy profits. Once a large company starts slashing prices, it can become a price competition among rivals that ends at rock-bottom prices (customers love it. Competition is good.). E-Trade and TD Ameritrade shares fell Tuesday because now they're pressured to join the commission-free battle, too — everyone's profits get wounded in this war.

Renovate

The Midwest's home furnishing icon, Masco, tries recession-proofing itself

Cabinets don't get enough appreciation... Holding up Nana's china like a never-ending bench-press is hard. But that's Michigan-based Masco Corp's bread-and-butter — producing home furnishings under brands like Hansgrohe, Delta, and Behr. Now Masco's selling its window division for $725M. And that's critical to its grand recession-proofing plan.

Homes get built, repaired, and remodelled... Masco wants to focus on those last 2 and sell the first. Here's what's in and what's out of Masco's feng shui makeover:

  • What it's selling: The parts of homes that only happen during new-house construction, like windows, doors, and kitchen cabinets.
  • What it's focusing on: The parts of homes that get repaired and remodelled over the years on existing houses, like paint, lighting fixtures, paint, showers, sinks, and more paint.

"But Masco's cyclical, and a recession could be coming"... Execs at Masco hate hearing that, but it's kind of true. Masco is 'cyclical': business is good when the economy is good, bad when it's bad. During the '05-'11 housing downturn, fewer homes were built so Masco's profits dropped. Masco's sprucing up its business model in order to recession-proof itself — and shut up Wall Street critics.

What else we’re Snackin’

  • Out: Credit Suisse loses an exec because of a spying scandal with the Swiss bank
  • Bzzzz: UPS snags the 1st broad FAA approval for drone delivery
  • ETA: Papa John's decides it wants to do one thing completely different than Domino's: let someone else deliver instead of relying on its own delivery team
  • Down: Uber and Lyft shares dip to record lows after WeWork and Endeavor canceled their IPOs
  • Re-cast: Netflix renews Stranger Things for a 4th season and signs its creators to a nine-figure deal
  • $$$: PayPal acquires 70% of China's GoPay, gaining access to digital payments across the Great Wall (not easy to do — China's Central Bank had to approve)

Wednesday

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Latest Stories

Tech

Meta’s not telling where it got its AI training data

Today Meta unleashed its ChatGPT competitor, Meta AI, across its apps and as a standalone. The company boasts that it is running on its latest, greatest AI model, Llama 3, which was trained on “data of the highest quality”! A dataset seven times larger than Llama2! And includes 4 times more code!

What is that training data? There the company is less loquacious.

Meta said the 15 trillion tokens on which its trained came from “publicly available sources.” Which sources? Meta told The Verge’s Alex Heath that it didn’t include Meta user data, but didn’t give much more in the way of specifics.

It did mention that it includes AI-generated data, or synthetic data: “we used Llama 2 to generate the training data for the text-quality classifiers that are powering Llama 3.” There are plenty of known issues with synthetic or AI-created data, foremost of which is that it can exacerbate existing issues with AI, because it’s liable to spit out a more concentrated version of any garbage it is ingesting.

AI companies are turning to such data because there’s not enough good, public data on the entire internet to train their increasingly greedy AI models. (Meta had reportedly floated buying a publisher like Simon & Schuster to satisfy its insatiable data needs.)

Meta, of course, isn’t the only company that’s tight-lipped about where its AI data is coming from. In a now infamous interview with WSJ’s Johanna Stern, OpenAI’s chief technology officer Mira Murati was unable to answer questions about what Sora, OpenAI’s video generating app, was trained on. YouTube? Facebook? Instagram — she said she wasn’t sure.

What is that training data? There the company is less loquacious.

Meta said the 15 trillion tokens on which its trained came from “publicly available sources.” Which sources? Meta told The Verge’s Alex Heath that it didn’t include Meta user data, but didn’t give much more in the way of specifics.

It did mention that it includes AI-generated data, or synthetic data: “we used Llama 2 to generate the training data for the text-quality classifiers that are powering Llama 3.” There are plenty of known issues with synthetic or AI-created data, foremost of which is that it can exacerbate existing issues with AI, because it’s liable to spit out a more concentrated version of any garbage it is ingesting.

AI companies are turning to such data because there’s not enough good, public data on the entire internet to train their increasingly greedy AI models. (Meta had reportedly floated buying a publisher like Simon & Schuster to satisfy its insatiable data needs.)

Meta, of course, isn’t the only company that’s tight-lipped about where its AI data is coming from. In a now infamous interview with WSJ’s Johanna Stern, OpenAI’s chief technology officer Mira Murati was unable to answer questions about what Sora, OpenAI’s video generating app, was trained on. YouTube? Facebook? Instagram — she said she wasn’t sure.

Today’s earnings: Who’s making money edition

Here are some some notable numbers out this morning, as earnings season gathers steam. Thursday’s main event will be Netflix after the close of trading. (Keep an eye on its advertising business.) But until then...

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Scuba Diving in the Wild Blue Yonder in French Polynesia
7.13%

The 30-year fixed rate mortgage is back above 7%, according to weekly numbers from the Mortgage Bankers Association, the highest level in four months. High borrowing costs are creating havoc for would-be buyers, as affordability lingers at the low levels not seen consistently since the late 1980s.

Business

Amazon’s spy ops on rivals: shell companies, printed docs, and a fake Japanese streetwear brand

Some companies check out rivals’ websites, stores and public filings to stay abreast of the competition. Amazon made its own fake shell company and brands, transacted hundreds of thousands of dollars per year undercover on competitors’ platforms, and kept its intel operation a secret for nearly a decade even from others at Amazon, according to a fascinating investigation by the Wall Street Journal.

Working as a seller called Big River, a secret group of Amazon employees gained access to rival platforms, including Walmart, FedEx, and Alibaba. They used Big River email addresses and went to seller conferences as Big River employees. They even stayed hidden within Amazon itself. These employees would take screenshots of competitors’ systems that they would then show others at Amazon in person to avoid an email paper trail.

Perhaps most strange of all, the company created a fake Japanese streetwear brand called “Not So Ape” (clearly a play on A Bathing Ape) and continues to sell products from the brand on a Shopify store, presumably as an attempt to learn the inner workings of the shopping platform. Of course, copying is old hat for Amazon.

In meetings where they’d use this clandestine information to inform Amazon’s own business practices, the group resorted to literal paper. “[T]he team avoided distributing presentations electronically to Amazon executives. Instead, they printed the presentations and numbered the documents. Executives could look at the reports and take notes, but at the end of the meeting, team members collected the papers to ensure that they had all copies."

Working as a seller called Big River, a secret group of Amazon employees gained access to rival platforms, including Walmart, FedEx, and Alibaba. They used Big River email addresses and went to seller conferences as Big River employees. They even stayed hidden within Amazon itself. These employees would take screenshots of competitors’ systems that they would then show others at Amazon in person to avoid an email paper trail.

Perhaps most strange of all, the company created a fake Japanese streetwear brand called “Not So Ape” (clearly a play on A Bathing Ape) and continues to sell products from the brand on a Shopify store, presumably as an attempt to learn the inner workings of the shopping platform. Of course, copying is old hat for Amazon.

In meetings where they’d use this clandestine information to inform Amazon’s own business practices, the group resorted to literal paper. “[T]he team avoided distributing presentations electronically to Amazon executives. Instead, they printed the presentations and numbered the documents. Executives could look at the reports and take notes, but at the end of the meeting, team members collected the papers to ensure that they had all copies."

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Crypto

Worldcoin pivots to the blockchain… with a 'humans only' discount

Worldcoin, the “proof of personhood” crypto project launched by OpenAI’s Sam Altman, said it plans to launch its own ethereum layer-2 (L2) blockchain dubbed World Chain. The pitch: a blockchain where it’s both easier and cheaper for people to transact than bots.

Worldcoin has made waves for its iris-scanning metallic orb that promises a future where people can mathematically prove they’re real humans and not AI bots.

But it’s run into trouble: the orbs have been banned across Europe and Africa, and the associated WLD crypto token has plunged 50% over the past month.

For project insiders, who reportedly received a token allocation of 25% of supply, that could equal significant losses. 

Which is what may make World Chain attractive. Crypto exchange Coinbase launched its own L2, Base, last year. Base has since seen rapid user growth — activity that’s generated the exchange millions of dollars in weekly fees

Worldcoin could benefit from similar revenue if its L2 is adopted around the world.

But it’s run into trouble: the orbs have been banned across Europe and Africa, and the associated WLD crypto token has plunged 50% over the past month.

For project insiders, who reportedly received a token allocation of 25% of supply, that could equal significant losses. 

Which is what may make World Chain attractive. Crypto exchange Coinbase launched its own L2, Base, last year. Base has since seen rapid user growth — activity that’s generated the exchange millions of dollars in weekly fees

Worldcoin could benefit from similar revenue if its L2 is adopted around the world.

Business

Smooth sailing? Not for superyachts

Sales of the luxury boats sank 17% last year. Meanwhile, Super-SUPER yachts (over 650 feet long) took the biggest sales dip, falling around 40%. Part of the problem: a pandemic-era backlog has led to a three- to four-year waitlist for new yacht orders. Meanwhile Russian oligarchs — former MVP customers — are largely out of the boat-buying business due to sanctions.

Dr Martens shares have been stomped

American sales of Docs have dropped

2024-04-17-ai-capabilities-site

AI is getting good at a lot of different tasks

Business

The monkey’s paw curls on endless shrimp

Red Lobster’s shrimp promotions may have contributed to jumbo problems for the company.

The seafood chain is considering a bankruptcy filing to deal with cash flow problems, Bloomberg reports.

Red Lobster has been weighed down by pricey leases and labor costs, but it’s important to remember that it also blamed an $11M operating loss last fall in part on too many people going crustacean-mode on its Ultimate Endless Shrimp deal.

“The proportion of the people selecting this promotion was much higher compared to expectation,” said Red Lobster owner (and seafood supplier) Thai Union Group last year. The chain bumped the price of infinite shrimp by 25%, but Lobsterfest and Cheddar Bay Biscuits may not be enough to save it from Chapter 11.

“The proportion of the people selecting this promotion was much higher compared to expectation,” said Red Lobster owner (and seafood supplier) Thai Union Group last year. The chain bumped the price of infinite shrimp by 25%, but Lobsterfest and Cheddar Bay Biscuits may not be enough to save it from Chapter 11.

Power
Rani Molla
4/17/24

Elon Musk’s car company pays for Elon Musk’s security company

Elon Musk is a rich man who owns a lot of companies. One way he keeps those companies and himself rich is by making his companies support his other companies. Left pocket, meet right.

TechCrunch’s Sean O’Kane dug into Tesla’s latest annual proxy statement to find out the value of these relationships.

Musk’s Tesla bought ads on Musk’s X, aka Twitter, to the tune of $200,000 just through February this year. Tesla also paid X another $200,000 this year and a million in 2023 for “commercial, consulting and support agreements.” Musk’s SpaceX has also advertised on X, presumably helping prop up some of the budget the company has lost from non-Musk advertisers Musk seems hell-bent on driving away. Musk’s Tesla paid Musk’s SpaceX $800,000 to use a private jet and paid Musk’s The Boring Company more than a million dollars for “commercial agreements.”

It also turns out that Musk owns a security company, whose job it is to protect Musk. Naturally Musk’s Tesla paid Musk’s security company nearly $3 million since entering into a service agreement in December 2023. Apparently that represents just a “portion of the total cost of security services concerning Elon Musk,” so presumably Musk’s other companies will be left to foot the rest of the bill.

Musk’s Tesla bought ads on Musk’s X, aka Twitter, to the tune of $200,000 just through February this year. Tesla also paid X another $200,000 this year and a million in 2023 for “commercial, consulting and support agreements.” Musk’s SpaceX has also advertised on X, presumably helping prop up some of the budget the company has lost from non-Musk advertisers Musk seems hell-bent on driving away. Musk’s Tesla paid Musk’s SpaceX $800,000 to use a private jet and paid Musk’s The Boring Company more than a million dollars for “commercial agreements.”

It also turns out that Musk owns a security company, whose job it is to protect Musk. Naturally Musk’s Tesla paid Musk’s security company nearly $3 million since entering into a service agreement in December 2023. Apparently that represents just a “portion of the total cost of security services concerning Elon Musk,” so presumably Musk’s other companies will be left to foot the rest of the bill.

Tech

A social app, but it’s just voice notes on 2X speed

Airchat is basically X meets Clubhouse, and Silicon Valley types are all over it. The social app consists of a feed of audio snippets that plays continuously on 2X speed until you press pause. The speed makes sense: chugging a cold brew and plowing through podcasts on 2X speed is a rite of passage for modern multitaskers.

A surge of new users joined Airchat over the weekend, joining entrepreneur Gary Vaynerchuk and Y Combinator CEO Garry Tan.

If users don’t want to inhale voice notes at hyper speed, there is a somewhat hidden way to adjust Airchat’s cadence, but it’s an intriguing feature. User-generated audio has struggled to break out of a niche, so targeting the personality that wants to listen to a podcast at twice the speed is one way to make the user experience more efficient.

A surge of new users joined Airchat over the weekend, joining entrepreneur Gary Vaynerchuk and Y Combinator CEO Garry Tan.

If users don’t want to inhale voice notes at hyper speed, there is a somewhat hidden way to adjust Airchat’s cadence, but it’s an intriguing feature. User-generated audio has struggled to break out of a niche, so targeting the personality that wants to listen to a podcast at twice the speed is one way to make the user experience more efficient.