Monday Oct.28, 2019

The difference between "Profit Puppy" & "Promo Puppy"

"_What do you mean you don't need our streaming passwords anymore?_"
"_What do you mean you don't need our streaming passwords anymore?_"

Hey Snackers,

A SoftBank moneybag handing out blank checks. Elon Musk's lawyer with view-only access to his Twitter account. "Beyond" + "Your Name" (looks like you but made from plants).

Let us know your best 2019 business-themed Halloween costumes.

Markets rose last week after a hefty serving of earnings reports. More coming this week from heavy hitters in tech, plus the 1st ever space tourism IPO and a Fed decision.

Stream

"Promo puppies," and the Netflix/Disney/HBO Streaming Wars

Cancel your plans to see people... Your binging schedule is about to take over all social commitments — Apple TV+ hits November 1st ($4.99/month), then Disney+ takes position #1 in your bookmark manager on November 12th ($6.99/month). But last week we noticed that plenty of these new Netflix rivals will actually be free:

  • Verizon is giving away 1 year of Disney+ free to customers with unlimited plans.
  • Apple is offering 1 year of Apple TV+ free to customers who buy a new Apple device (iPhone, Mac, iPad).
  • AT&T announced its HBO Max (debuting in April) will be free to subscribers who have HBO already.
  • T-Mobile revealed a partnership with Quibi (the name is a mashup of "quick" & "bites"). Details are TBD, but we wouldn't be surprised if the mobile-first premium video is free to those with T-Mobile plans.
  • Netflix’s deal with T-Mobile goes waaaaaay back to 2017. But “Netflix on Us” only happens for T-Mobile users if your account has 2 lines.

The era of password mooching is over... Mobile phone companies are paying for your streaming. Binge-able content for free is their "promo puppy." Let us explain.

  • "Profit puppy": The part of a company's business that makes a huge chunk of the profits. Like Ford's F-150 pickup truck, Lululemon's yoga pants, or Amazon's cloud service, AWS — they all drive profits.
  • "Promo puppy": A shiny, cuddly, free perk that attracts customers to sign up. Think free streaming for a year, free shipping with Prime, or "60K reward points if you spend $4K in the first 4 months" — they all drive sign-ups.

Promo puppies are discounts in disguise... It’s not clear who’s subsidizing the Disney+ account that Verizon offers for free. Is Disney+ giving it to Verizon customers, or is Verizon paying, or something in between? For customers, these promo puppies make you love Verizon and get addicted to Disney+ — both brands win. Discounts have the same outcome, but make the discounted thing look cheap.

Highs

Who's up...

New Tesla collector's item... Profits. Shares surged 27% last week after Tesla revealed it made more money than it spent over the last 3 months (Elon's still never pulled that off for a whole year). Plus, that battery-producing gigafactory in China is ahead of schedule, and so is the new Model Y crossover.

Survivor... WeWork stock isn't publicly-traded since it canceled that IPO. At least it's not bankrupt. The injured unicorn that loses $219K each hour was weeks from running out of cash — then SoftBank (a Japanese fund that's the top investor in WeWork) bailed it out with billions of new money. Ex-CEO Adam Neuman walks away with $1.7B, yet employees' options are nearly worthless. If you're keeping score, WeWork's valuation fell from $47B to $8B and now SoftBank owns 80% of it — but it's still in business.

Lows

...and who's down

No rest 'till everyone is Primed... Amazon showed investors it'll do whatever it takes to beat Walmart and Target in the shipping wars — like spending 46% more on shipping so your packages arrive in 1 day instead of the old 2 (that hurt profits last quarter). Then the Trump Administration crowned Microsoft winner of its coveted $10B Defense Department deal — Amazon was in line to win the contract until politics got involved (the President's not a fan of CEO Jeff Bezos).

Hoodie formal... Mark Zuckerberg tossed on a tie and visited Congress to defend Facebook's Libra cryptocurrency. We learned how he's pitching Libra (to help the world's un-banked) and how it'll make money (the ability to "buy with Libra" would let Facebook charge more for ads). Zuck's biggest surprise: He won't launch Libra unless US regulators OK it, which may not happen. Then Friday he unveiled Facebook's new news tab, which finally pays news agencies directly — but only 30M of Facebook's 2.6B users are expected to use it.

What else we’re Snackin’

  • Work: The "Minternship" (real thing). It's meant to fix your mid-career worries
  • Life: And the "Micro-vacation" (also real thing) to take time off when you don't have time
  • Money: To retire at 65, Millennials may need to save half their paychecks
  • Invest: A 3rd rate cut in a row could boost stocks overall. Here's why
  • Venture: 4 Venture Capitalists on what to expect when you're expecting VC funding
  • Crypto: China passes its 1st ever cryptocurrency law

This Week

Disclosure: Authors of this Snacks own shares of Beyond Meat, Lululemon, and Tesla.

ID: 994855

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