Wednesday Feb.17, 2021

🏦 You don't need a yacht anymore

_Microsoft trying to spend $50B_
_Microsoft trying to spend $50B_

Hey Snackers,

An eventful life, in a nutshell: Planters mascot Mr. Peanut died during the 2020 Super Bowl. Then, he was reborn as "Baby Nut" (more like Benjamin Nutton). Soon after, Baby Nut turned into bar-going Peanut Jr. Now, he's being sold to the company that makes SPAM.

Stocks barely budged after the long weekend (same). Meanwhile, Bitcoin topped $50K for the first time yesterday, partly thanks to backing from companies like Mastercard and Tesla.

Yachty

Goldman Sachs launches wealth management for retail investors

So relatable... You don't need $20M and a yacht registered in the Maldives to invest with Goldman Sachs anymore. The OG Wall Street firm just unveiled "Marcus Invest," a robo-advisory platform that can get you started with $1K. For a small fee, customers can get their money robo-managed according to Goldman's investment strategies. The $$$ is allocated across stock and bond ETFs.

  • It's all part of Goldman's push into mainstream banking, which is seen as more stable/reliable than its riskier Wall Street trading biz (though the upside potential is lower).
  • In 2020: Goldman made $1.2B in consumer-banking revenue, up 40% from 2019. But it's still a tiny fraction of Goldman's $44.6B total 2020 revenue.

Trading the AP for a Timex... Goldman has slowly been expanding its digital consumer banking suite "Marcus," which launched in 2016 with savings accounts and loans. Last year, it shipped an app and added financial insights. It also plans to launch checking accounts. Marcus Invest is the next step toward Goldman's goal of becoming the only banking app on your phone. But the competition is steep.

  • Thirteen years late: Goldman is lagging behind Wealthfront and Betterment, which pioneered robo-advisory services in 2008.
  • Dozens deep: Most big US banks and brokerages offer some type of automated-investing. And unlike delivery apps which can be easily switched, brokerage accounts tend to be "stickier."

The retail investor is too big to ignore... and big banks want in before it's too late. In 1975, the average fee to place a stock trade was $49 — and investment banks wouldn't pay much attention to you unless your net worth ended in "ion." The rise of commission-free trading apps, pioneered by Robinhood (which owns Snacks), spurred major brokerages like Vanguard and Schwab to cut fees. The rest is history: during the first half of 2020, individual investors accounted for 19.5% of all trades, nearly double from 2010. Now everyone from JPMorgan Chase to Citi has raced to offer retail investing — and Goldman is the latest.

Splurge

Microsoft reportedly tried (and failed) to buy Pinterest — we're looking at why

Finding inspo in a Word Doc... feels almost as hard as Microsoft's failed acquisition attempts. Last year, Microsoft was trying to buy TikTok’s US operations for a whopping ~$50B. Not only did it lose the bid, but the entire sale got scrapped indefinitely. Last week, we learned that Microsoft reportedly tried to buy Pinterest, which is valued at ~$51B. It would’ve been Microsoft's biggest acquisition ever. But it got shut down there too, according to the FT.

These moves seem as random as Bing... which, BTW, Microsoft also owns. Besides Xbox and LinkedIn, which it bought in 2016 for $26.2B, Microsoft hasn't really ventured into the consumery social world. So why does it seem interested in social splurges?

  • Ads: The digital ad market is growing fast: Facebook, Snap, and Google all reported blowout earnings last quarter. Microsoft wants a slice of the pie to better compete with Google and Amazon (Bing search ads aren't cutting it).
  • Cloud(s): By acquiring hundreds of millions of users from TikTok or Pinterest, Microsoft would gain a massive base for its Azure cloud platform. FYI: LinkedIn is currently one of Azure's top 10 cloud customers. But...

Shopping might be the main reason... why Microsoft has eyed social apps. In 2019, Microsoft launched a cloud commerce solution to help customers create online shopping experiences. It also bought ecommerce advertising startup PromoteIQ. By buying a company like TikTok, which has started experimenting with in-app shopping, Microsoft could make sure that sales happen through its own cloud solutions. It's a triple whammy of cloud growth, ad sales, and valuable customer data that positions it against Rival #1: Amazon. Etsy could be a good next target. At $28B, it would be a relative steal for Microsoft.

What else we’re Snackin’

  • Vax: The Biden admin will ship out 13.5M Covid vaccine doses per week, up from 11M last week.
  • Rocket: Elon Musk’s SpaceX reportedly raised $850M, launching its valuation to $74B.
  • Dark: Brutal snowstorms have led to rolling blackouts in Texas, leaving millions without power and heat.
  • RIP: Marriott CEO Arne Sorenson, who created the world’s largest hotel operator, died at age 62 after battling pancreatic cancer.
  • Pharm: CVS beat earnings expectations thanks to higher prescription volume and Covid testing/vaccine foot traffic.
  • Buffy: Chevron and Verizon shares ticked up after Warren Buffett's Berkshire Hathaway revealed it has taken big stakes in the companies.

Wednesday

Authors of this Snacks own shares of: Microsoft

ID: 1527819

Get Your News

Subscribe and thrive

Snacks provides fresh takes on the financial news you need to start your day. Chartr provides data visualizations on business, entertainment, and society. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Latest Stories

Casey Newton
Platformer
4h
Meta’s new AI paves the way for social networks where nothing is what it seems

Five ways of thinking about Llama 3, its latest large language model

Screenshot of Meta’s AI image generator, frog in a bathrobe
Power
Matt Phillips
8h

World out of balance: It costs the US 3¢ to make 1 penny

The cost of producing the US penny rose 13% in fiscal 2023 to 3.07 cents. Yes, that means that Uncle Sam loses more than two cents for every cent it produces. (And no, you can’t make it up on volume.)

For the record, that’s the 18th-straight year the penny’s face value has been below production costs, fueling calls for abolishing the lowest value denomination coin. Canada started to phase out the penny in 2013, joining Australia, Brazil, Finland, New Zealand, Norway, and Israel, according to Smithsonian Magazine.

3.07¢

Pop Quiz!

What’s the world’s busiest airport?
Don't be a sucka
Sponsored by
Go Deeper with Market Depth

Nasdaq TotalView powers the need-to-know data serious investors rely on.

Read more
Scuba Diving in the Wild Blue Yonder in French Polynesia
Business
Rani Molla
9h

Netflix is going to stop sharing subscriber numbers

After posting subscriber numbers that beat expectations today, Netflix says it’s no longer going to share those numbers starting in the first quarter of 2025. That’s a big deal since subscriber numbers have long been one of the main metrics that investors have looked at.

“In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential,” its shareholders letter read. “But now we’re generating very substantial profit and free cash flow.” The company said that it will focus on revenue and operating margin as its main financial metrics, while it will look at time spent on the platform to gauge customer satisfaction.

Another way to read this? They’ve hit market saturation and just aren’t going to be growing that much anymore, and they thought they’d end on a good note. Going forward they’re focusing on how to get more money out of the customers they do have.

They’re doing so by cracking down on password sharing and charging for extra members. They’re also pushing people to ad tiers, which are more profitable than non-ad tiers.

“Scaling ads to become a more meaningful contributor to our business in ‘25 and beyond,” Netflix said.

Netflix’s ads membership grew another 65% in Q1 over the previous one, after rising 70% the quarter before, and 40% of signups in ad markets continue to be for those ad plans.

10h

Frozen Dead Guys

The audacious and expensive world of cryogenics

Jamie Wilde
US-NORWAY-TRADITION-DEATH-FESTIVAL-OFFBEAT
Jack Raines
Adios, ERP
12h
By one measure, stocks haven't looked this bad in decades

Earnings are important, but they aren't everything in the stock market.

Dow Jones Industrials Average Closes Day 477 Points Up
Tech
Rani Molla
12h

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.

Meta’s battle with ChatGPT begins now

Meta’s battle with ChatGPT begins now

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.

Matt Phillips
13h

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...

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.

Your inbox is ready

Subscribe and thrive

Snacks provides fresh takes on the financial news you need to start your day. Chartr provides data visualizations on business, entertainment, and society. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Business
Rani Molla
18h

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."

Exclusive | Inside Amazon’s Secret Operation to Gather Intel on Rivals

Exclusive | Inside Amazon’s Secret Operation to Gather Intel on Rivals

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."

World
April 18th
20h
What’s happening
22h

Tesla pushes for a massive Musk pay package as the EV maker rides the struggle sedan

Jamie Wilde
Read
22h

Big Banks Earnings Wrap: Investment banking rebounds, but interest rates are a double-edged sword

Nia Warfield
Read
Tech
Time’s ticking
4/17/24
Big tech vs. big government
Jack Raines
More taxes, eh?
4/17/24
Capital gains taxes won’t fix Canada’s terrible housing market

Canada's proposed solution to its housing crisis may exacerbate the problem instead.

SWITZERLAND-DIPLOMACY-ECONOMY-SUMMIT-DAVOS
Crypto
Jack Morse
4/17/24

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.

Worldcoin, Sam Altman's Crypto Project, Is Building a Layer-2 Chain

Worldcoin, Sam Altman's Crypto Project, Is Building a Layer-2 Chain

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.

Rani Molla
Ad-ing up
4/17/24
Turns out Netflix makes more money if it just acts like regular TV

Streaming companies will let you watch ad-free, but it will cost you.

German Shepherd Dog on TV Screen
Markets
Earnings
4/17/24
Companies report things
Business
Nia Warfield
4/17/24

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.

Read more

Superyacht sales plunge as wait times rise, Russian oligarchs drop out of the market

Superyachts
Dr Martens shares have been stomped

American sales of Docs have dropped

Tom Jones, David Crowther4/17/24