Ban the Bra!

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S1: Hello and welcome to the band, the Bra episode of Sleep Money, a guide to the business and finance news of the week. I’m Felix Salmon of Axios here with Stacy-Marie Ishmael of Bloomberg. Hello, and I’m here with Emily Peck and fundraise.

S2: Hello.

S1: And we are going to talk about bras, T-shirts, jeans and all other forms of fast fashion. They are bad for the environment. They in involve all manner of labor abuse, but they are still as popular as ever. Emily You have found an amazing Chinese company that has taken over this space with astonishing speed and effectiveness. You discover that, well, rest of world discover that we’re just going to read the internet. We are going to talk about Omicron and CEOs and the amount of psychic stress involved in living through yet another wave of Covid and what that means for the economy. We are going to talk about Reddit, which is going public and what we think of it as a social network. We are going to have a slate plus segment on IP infringement and H&R Block. It’s all coming up on sleep money. Stacey, you have now officially given up on going into the office for the rest of the year. You are not the only white collar professional to do that.

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S3: Yeah, that is that is correct. I have been keeping an I mean, it’s gotten to the point where when at least one person per group text is like, Oh yeah, I have Covid, I’m like, OK, no, this is this is this is way too close to home. It is absolutely too many people that I know. And you know, the good news is and I was saying this, you know, in a conversation earlier, pretty much I don’t know if this is good news about you, but everybody I know who has gotten Covid has been vaccinated. A handful of them have been boosted. And so everyone’s symptoms are comparatively very mild. And I’m not as terrified as I would have been if we were having this conversation, you know, last December that there was about to be a wave of hospitalizations and deaths in my friend group, but it’s still not a convenient or ideal thing to be facing the possibility of infecting other people or long Covid. So I’m just like, I’m working from home.

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S1: One of the things that strikes me about this wave is that it’s the first wave, I think, to really hit the, you know, college educated professional crowd. It’s not that it isn’t hitting everyone. That obviously is. But the previous waves had this kind of class dynamic to them, and they’re like poor folks, people of color, general or worse, retail workers, frontline workers. This one, it’s like, you know, it’s it’s hitting the media class, it’s hitting the professionals and. I don’t know what the implication of that is, or whether there’s any implication of that, do you think that makes a difference in some way?

S3: That depends on who you’re talking about, whether it makes a difference to, I think one of the implications is that the media class was all out having dinner as an anchor holiday parties. But I do think that it. I remember in the first wave of Covid when it was like, Oh, I don’t know any black people, so I don’t know anybody who has it or I don’t know any Hispanic or Latino people, so I don’t know anybody who has it. And having a conversation with various employers about the fact that, look, you can’t take it for granted. This isn’t going to affect anybody on your teams just because you don’t personally know who is being hit by this. And I do think to your point, Felix, now that it’s, you know, the families of the CEO or the very senior management team that some of the conversations about everybody needs to return to the office might now right now at this very second might take on a slightly different tenor.

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S2: We did want to get into that to just this notion of a return to office date is is over. It’s twenty. It’s almost twenty twenty two now.

S1: The dates, I mean, there was one, right? It happened in like September. And now now we’ve gone back. I think everyone kind of expects that this wave will peak and fall just like all other waves. It’s like we’ve seen this movie before. We haven’t seen this exact movie. It is entirely possible that the number of cases will be higher in this way of any of the previous waves. But at least what we’re not doing is staring down this kind of exponential rise like we were in March 2020 without any ability to foresee it getting better rather than worse. We do know this will somehow get better. We just don’t know like when or how bad it’s going to get. And the big question is what happens when you multiply two numbers, right? The first number is how much worse is? Omicron in terms of number of cases. Compared to previous waves, and then the second one is like, how much better is Omicron in terms of being, you know, much less likely to wind up in hospital than previous waves? And if you multiply those two numbers, you basically wind up getting the effect on hospitalizations and deaths. And most of the people I know who are multiplying, those two numbers are saying, yeah, it’s less severe. But the number of cases is so much higher that the number of hospitalizations and deaths is going to be like a really big peak on a par with previous waves, for sure.

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S2: Especially in places where people aren’t vaccinated. Exactly, exactly. A significant portion of the U.S. population.

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S3: I mean, my favorite slash. Not favorite. Most depressing pandemic chronicle along came out. You know, when he’s like dropping a big Atlantic piece, you know, things are about to be really bad again. It’s like I like my reverse happiness indicator. But one of the things he was talking about is we keep forgetting that hospitalizations are bad for the people who are in hospital with Covid and for the people who are in hospital with other things. Right. And it’s the it’s a such a stressor on the ability of doctors and nurses to provide care. But if you are in hospital for any reason right now, Covid or otherwise your standard of care isn’t going to be anything comparable to what it would have been in 2019.

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S1: One of the things I’m hearing from New Zealand is that, you know, they. Pushing back their reopening dates and recalibrating on the sort of daily basis for precisely this reason that they don’t have a huge amount of hospital capacity and they want to be able to keep the hospital capacity for things like that aren’t Covid. But the minute you start allowing Covid into the country and the minute starts taking off, then all of the hospitals deteriorate in quality. And it’s not a question always of running out of beds or anything like that. It’s just a question of, you know, people getting exhausted and limited resources and health care in general has clearly deteriorated as a result of Covid, and it’s going to get worse as a result of Omicron.

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S2: Yeah, that’s exactly what you said. Felix like at the beginning in March 2020, it was like there’s going to be a shortage of ventilators, a shortage of beds, etc. Now it’s like there’s a shortage of nurses. The doctors are too tired, like it’s a human issue. There’s just not enough labor anymore to deal with these waves.

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S1: So bringing this back to like the corporate world, if you’re a CEO and you know the Omicron is spreading among, you know, the professional classes, if you know the. If they do get and end up in the hospital care they’re going to get, it’s going to be subpar. Not so great. There’s you know that you can see how that affects your calculus in terms of, you know, turning around to your employees and say, well, never mind any of that, you have to come into the office anyway.

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S2: Yeah, and you see some CEOs now going back, I think the most high profile one was James Gorman at Morgan Stanley saying, like literally saying I was wrong about return to office and admitting like he doesn’t know when things will be OK and probably people should work from home like the most. Certain people are uncertain now. Exactly.

S3: And it’s not just the the thing that is hard about all of this. There are so many things that are hard. Let’s let’s be real clear and about. I’m about to make a statement that is very much for the privileged white collar work from home classes is the uncertainty of when you go back and when you don’t go back kind of compounds with every additional quarter, right? You’re like, Do I buy this house in this new place that I live now in the expectation that I have another year of not going back to the office? Do I put my kid in this school? Do I put my kid in that school? You know? Do I like, extend this lease or try to, you know, I’m happy to be moving back and forth, and it’s just the the the decision making tool that people are faced with, you know, because I feel like CEOs are like our lives are so hard. Yes, yes, yes. But also, you know, your employees who are trying to figure out what they should be doing, where they should be doing it from and for how long. Like that is just such an intense driver of uncertainty right now. And I really think that we have insufficiently accounted for, you know, just the pure productivity cost of having a bunch of people having to spend a bunch of time doing the calculus of where can I get a rapid test? Am I going to have to queue up for all of these things? You know, is the return to office February 22 for real, for real? Or are we looking at more like April? Like what’s going on here?

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S2: Yeah, I was just speaking to someone who he moved to away back home to take care of her sick parent because he was able to because the work his office was allowing people to work remotely but wasn’t ever sang was kept sang like, you’re going to have to come back at some point. And at this point, this guy is kind of settled and he’s like, You know what? I’m just to find another job. I don’t want to work at a place that’s like, you’re going to have to come back at some point, but we don’t know what point. Like, that’s just you can’t have a life like that after a while.

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S1: Stacey, what do you think the economic implications are of what you just said, I feel like Jay Powell came out this week at his press conference, saying when he was asked, like, Are you worried about the effect of Omicron on the economy? And he basically said no. The stock market seems to be doing fine. The bond market seems to be sanguine about the whole thing. Like clearly, there are effects on the economy. You know, a bunch of restaurant reservations are being canceled. You know, the as you say, there’s a productivity hit in terms of people just worrying about Covid rather than doing their jobs. But is this just going to be another case of each successive wave of Covid has a smaller economic effect than the last. Even if the wave itself is big, I think

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S3: that would be truer if we were better at investing in resiliency. And one of when I was in a position where I had to make a lot of these kinds of decisions all the time, and you sort of wake up every day and be like, OK, here’s the plan and then Covid to be like, Ha ha, you thought, you know, kind of a big thing that I tried to adopt and that I tried to kind of inculcate in my team was we cannot make fragile plans, right? We cannot design a return to office plan or get equipment to people plan that relies on everything going perfectly and to a certain kind of schedule. And we are now in the second time. The first was that glorious summer, right right after everybody got vaccinated. We were like, Everything’s great. And I think the you know, and then again, this summer, we’re like, Boosters are here. Delta is over where we acted as if, OK, great, we can now just go back to the original thing that we wanted to do, which was get everybody back into these offices, not have a conversation about really designing for flexibility. Kind of not really engage with the people who are asking questions about, you know, can we really think about restructuring, how we do these jobs so that people who do not have to be in a single physical place don’t just have like a wink wink, nod nod ability to not be in that physical place, but an actual understanding. And, you know, sometimes hope gets in the way of progress. Right. And I think that’s what we’re seeing here right now, where because we, the managerial class, are trying really hard to be hopeful in the face of uncertainty, it limits the willingness and the ability to say things like, OK, we’re just going to have to structure this as if we might never come back, do.

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S1: Jay Powell and the markets have it wrong like that is going to be like this long term drag on productivity and the economy, from everyone just having to be way more redundant and careful than people are expecting and hoping. I think we

S3: when folks were like, Oh, the great resignation quits Reddit burnout crisis, etc., etc. I think six months from now is going to be worse. Right? Because I think that every time you give someone like the fresh feeling that it’s going to be OK and then you rip that away from them, it’s the the ability to recover is reduced. And I was just reading a piece in ESER magazine about a restaurant like one of my former favorite restaurants in queens that they just closed down. And the offer made this excellent points of like, I thought that they because they survived the past two years, they were going to be OK and sort of used the analogy of sort of tip of the iceberg versus what was really happening beneath the surface. And I still think from a like a people’s psychology level, we have not yet reached how bad it’s going to get for like the people who have been dealing with this for years and years versus what the market is pricing in right now.

S1: There you go. That’s a nice, happy note to start talking about fast fashion.

S2: Yeah. Woo.

S1: Do you have any good news? Emily, do you have any good news for us on the first fashion front or is that just bad news too?

S2: Look, it depends on your perspective, Felix. It’s good news, certainly for the Chinese company Shein. I guess that’s how we’re pronouncing it fine. It started out its life as Shean, and it’s basically taken over the fast fashion world, dethroning H&M and Zara as the the most popular fast fashion site, the most popular fast fashion app. And I wanted to talk about it because there’s this great story in rest of worlds that really kind of dives into how Shein works, and it works differently from those other fast fashion retailers in the way it makes clothes and in the way it sells clothes. That’s pretty interesting. And so the reason why it could be a good story about story is good story, I guess, because that sales are up 250 percent from last year. It’s a bad story because part of the way Shein is able to be so fast and nimble is because, you know it over works. The factory workers in in China and all this and and landfills are filling up around the globe with these clothes that people wear like a couple of times and then throw away

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S1: when when an item of clothing costs less than it costs to dry, clean it, that’s

S3: probably a bad sign. Yeah, yeah. If you if you’re buying jeans for $5, someone, oh yeah, it’s getting exploited really hard in some or multiple parts of your supply chain.

S1: I have spent a bunch of time talking to the relatively small but genuinely heartfelt group of people who concentrate on the S in ESG, everyone mostly just concentrates on the E and carbon emissions and that kind of thing. But the S is precisely this. And I do know ESG investors who care about the S, which is a minority of them who basically say they can never invest in or lend to any kind of fast fashion company because it’s just inherently a terrible industry from a. You know, labor market and various other and environmental perspective, and it does seem that Shein is, you know, in a terrible industry, it is it is bad even by a terrible industry standards,

S2: but it’s very innovative and interesting. Despite that, I will say this, this

S3: is not how I expected this like Emily Felix exchange to go like I feel.

S2: I mean, I think

S3: exactly

S2: what was it? It was just interesting to me because the story talks about this this woman who bought a vest in a thrift store that was like cute, an argyle and short, and she posted an image of herself in the vest to social media and blah blah blah. Shein saw the image and created the vest, and then the vest goes viral, and all these different fast fashion sites are selling her vest. And it’s just so interesting how fashion has kind of and fast fashion has evolved to the social media era. Where is like H&M and Zara used to be accused of ripping off the big, you know, designers in big fashion houses. And now it’s like these companies are ripping off a vest that’s, you know, young woman bought in a thrift store to the point where they were using her image, the social media picture of her wearing the vest to sell their own vest. I just thought that was crazy.

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S1: What I love about that story, in particular, is that the kind of. Original IP of the vest, if you will, in he is not in the manufacturer of the vest, but in the finder influencer who first put it on Instagram. OK, here and there, like if you oh, everyone’s like, it doesn’t actually matter who made the vest. It doesn’t actually matter what the label is in the best. Like the company that made the vest like they may or may not have that IP being ripped off. But the person who’s really responsible for like this vest being Google is the influencer, and they are the person who who set this whole snowball in motion. And I’m like, Wow.

S2: And the other thing I found innovative was how Shein and the way it works kind of developed out of what Amazon had been doing with retailers in China who are making stuff for Amazon specifically. And that kind of change the relationship between Chinese manufacturers and and U.S. platforms and websites who at some point and I might botch this, but at some point Shein was like, Well, we can just outsource to these little manufacturers ourselves and create a cool layer on top of that to sell the clothes. We don’t need Amazon, but they they have like very advanced technology that lets these manufacturers know how different items are doing of what needs to be produced and when and blah blah blah. And it’s all very to the minute. And I just found that all really interesting, like Amazon somehow in part created this like fast fashion like monster, basically unintentionally.

S1: It does feel a little bit like the Uber model if we’re going to be the platform and everyone’s just going to sort of compete with each other to try and make money on the platform. Only in this case, it’s small Chinese manufacturing shops competing with each other to make money on the Shein platform, which

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S3: I when we say money, we mean like to sell $5 vests.

S1: Exactly which is which is obviously a way of creating some kind of ersatz deniability when it comes to labor conditions.

S2: Yeah. Oh, and the labor conditions part was I’m not going to say innovative again because obviously it’s not great.

S1: But labor conditions in general

S2: was like this. The people making the the Shein clothes aren’t underpaid necessarily like they’re paid on time. So that’s apparently very important and good, obviously, and isn’t common. They’re paid on time and they’re working. It’s the hours that they’re working that makes the conditions so terrible

S3: 75 hours a week.

S2: But yeah, it’s not uncommon to work a shift from like 6:00 p.m. to 8:00 a.m. or something insane like that and walk miles every day. Everyone was complaining about the kilometers walked and unlike you to, I have no idea what that means, but it sounded like a lot of walking.

S1: Emily. I don’t speak kilometers, Patrick.

S2: I don’t. But yeah, so I was kind of surprised by that, though, that the piece didn’t focus on low pay as so much as just like overwork, an average that every every garment worker in China is already working overtime. Like there’s no such thing as not working overtime.

S1: One of my good friends is in the garment industry and has always for at least a few years now, but probably I would say a decade considered Cheyna to be the place where you go to get your highest and clothes. Maybe and maybe, even maybe not a super super high like couture level $10000 clothes. But if you’re selling like a $900 a piece of like incredibly sophisticated clothing, which needs very great in exact sewing, then you go to Cheyna. If you’re creating a commodity product, you don’t you haven’t historically gone to Cheyna, you’ve gone to Bangladesh or, you know, maybe Nicaragua or Honduras or something like that. And it’s very interesting to me to see this sort of very low price commodity product coming out of China in this particular instance.

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S3: I want to go back to the I.P. points, in addition to the labor points, because there is also the IP and the labor of the people who design clothes, right? And Shein and various other companies, including massive U.S. listed retailers, have in the past three years received a lot of more attention than necessarily lawsuits because the folks suing them can’t afford the lawyers around the fact that they will see a design on the internet that someone has made for their little Etsy store or, you know, just for their personal use on the Instagram. And then it suddenly is selling in these places again for like five or seven dollars. And those designers and those artists and those print makers really have no recourse. And what it’s also done is it’s set up this expectation that this thing that personally costs them, you know, hundreds of hours of expertise and materials to make to sell on their Etsy or wherever they are. People emailing them be like, Why should I pay you $80 for this hand knit scarf when I can buy the same thing at a fast fashion retailer for seven?

S2: I think people are aware two of the of the costs of cheap clothes like you can get from from Shein. Like, I think everyone’s aware that, like you said before, you’re paying $5 for a pair of jeans. Don’t think that some people just you don’t. You don’t think people are all aware of that.

S3: No, I absolutely

S1: don’t think people really. Yeah, I think I think I think we have seen company after company. We’ve seen it with H&M and Zara. We’ve seen it with Forever21. We’re seeing it with Shein. We like it. This is a story which is decades old, which is that you slap her cool and trendy brand on clothes and make them cheap and people get into it and they are not bellyaching about ethics.

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S2: Huh? I was just visiting friends of relatively affluent. They were like, We don’t know where to buy clothes anymore, because everywhere is is evil, good or exploitative? And I was like,

S1: Actually, this is a real. A real issue is that there is no. Way of telling, if you’re looking at an ad on Instagram, right, which is basically some kind of a Shopify thing, right? And it’s like handmade Italian shoes or beautifully handcrafted cashmere scarves or whatever it is. Anyone can write that copy and you can press the bay button and wind up getting dropship something from Cheyna, which is like, exploitative. And it’s really, really hard to be able to tell what’s real and what’s fake. And you know, I was having a conversation this week with a friend of mine who runs an olive oil company, and it’s exactly the same as the problem with olive oil. It’s basically impossible if you’re looking at a supermarket shelf, you know that probably more than half of the olive oil which claims to be extra virgin is not in fact extra virgin, but you just have no way of telling which half or you know which one is real and which one is fake. And I think we have reached that point now in fashion, in a world where everything gets bought on the internet and anyone can make a website look like anything. It becomes unbelievably difficult to be able to work out where the ethical consumer can

S2: shop or the non affluent consumer because, yeah,

S1: especially the non affluent consumer, right? Because if you’re. Yeah, exactly. If you’re going to, you know, Louis Vuitton is probably treating their workers, OK, but not everyone can spend that kind of money on clothes.

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S3: There’s a woman who named Cora Harrington, who on social, you know, goes by the nom de plume, the lingerie addict. And one of the things that I have really learned from Harrington over time is the I go to a Felix explains how hard it is to know the provenance of something and to how much more expensive everything actually is than you might think. And three, that so much of this conversation about affordability ignores what we used to do in the past, which is we had way less stuff. We took better care of it. And we in sourced the labor of making it to like woman in households right where it’s like, you know, because the people who are patching and darning and sewing and buying patterns from McCall’s were kind of absorbing costs onto themselves that we now outsource to the laborers in countries that we buy a lot of this from. And I remember being fascinated sort of an archaeologist, an architectural historian, weighed in and was like, Yeah, back in the day, closet space was not a thing. You know, if you if you look at houses that were built, you know, from the 40s, 50s, you had a tiny little nook where you would hang some clothes in and that was the totality of your wardrobe. And now everyone’s like, I need three walk in closets for my abundance of fast fashion accoutrements.

S2: That’s a really good point. You get an old apartment, has no closets in New York City. Has always been a frustration.

S1: Exactly. No, that’s why. But apropos lingerie, the one exception to this rule, the one thing that no one has ever been able to do is make cheap Bra right bras unbelievably difficult to make. They have, like hundreds of different places. Sewing them is unbelievably expert and difficult, and there’s just no shortcut.

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S2: Yup. I did not know that. Yeah. And in sports bras.

S3: Ish. It’s one of the reasons it’s sports bras are notoriously difficult if you’re either like, I’m not, I’m not going to finish the sentence. But sports bras are less complicated, but only within certain body types, right? And like lace, Felix is another example, right? You know, like one of the questions that Cora often has, people asking her on Twitter is like, Well, why can’t we just build robots that do patterns? And she’s like, Robots are just not smart enough to recreate what a really skilled soloist can do with incredibly delicate materials on tiny, tiny, tiny stitches.

S2: So interesting. But Shein yet another example of how technological innovation has all these unintended consequences from the IP of fashion designers being undervalued to workers. You know, walking many kilometers a day to us talking about bras,

S3: you really get everything.

S1: But it is also very interesting the way in which, like, you know, we are probably going to have we already have computers that are better than any human at chess. We are going to have full self-driving cars and all of the artificial intelligence that goes into them before we have a robot that can make a Bra.

S2: Yeah. Maybe the answer is to ban the Bra

S3: incredible, incredible sex.

S2: Oh, I don’t know where we go from.

S3: The only place that we can go, you have to go to Reddit subreddit.

S1: Yeah, yeah, we have to go to the subreddits. I have never had any occasion to go into the brush subreddit, but if I wanted to learn everything there was to know about, like where to find a decent Bra Stacey, that would obviously be the place to go.

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S3: I mean, there is there is genuinely a subreddit for everything. And just as a notes, if anybody is thinking about going to the Bra subreddit, it is flagged as adult content. So do not do that from your work computer, please. So.

S1: Reddit is going public, this is the news hook. There was a Reuters story saying they’re hoping for a $15 billion valuation. You know, it’s not going to happen until 2022. We’ll see how much it goes for, but it looks like it’s going to be kind of the baby social network is going to be worth less than Twitter, a lot less than Snap and like not even close to Metta, but it kind of punches above its weight in some ways. Reddit Stacy, wouldn’t you say?

S3: I completely agree. I mean, as a person who’s been on Reddit for longer than is probably appropriate to admit. I think that I remember when they were first sold to Condé Nast and then spun out

S1: for the amazing sum of $10 million. Condé bought the entire country and they

S3: still like shadows of their M&A person, but unsure as I was with them for selling them, spitting them out later. Prior to this to this IPO, one of the attractions of Reddit has always been that it seems to be one of the only places on the internet where you can find mass mostly moderated conversations about pretty much everything in one place in kind of multiple languages, multiple geographies, multiple points of view. And that has kind of scaled over time in a way that other, I would say, even like a Hacker News or, you know, some of some Stack Overflow. So or some of these other boards, like have not sustained that kind of momentum because like a Hacker News and a Stack Overflow are very, very domain specific. And Reddit is this kind of sprawling, you know, it’s like our skincare addiction to, you know, our cryptocurrency and everything and everything in between.

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S2: And Stacey, I’m not really on Reddit very much as compared to other social media networks. I feel like for a while, we heard about toxicity on Reddit a lot. I mean, is there? I don’t hear about that anymore. Did they figure something out?

S3: Well, they banned some of the biggest subreddits and they were like, OK, that’s too toxic. When you’re in the Wall Street Journal and The New York Times and The Washington Post regularly, you’re talking about these particular boards as being bad places. But look, I mean, the has Reddit has served as a kind of certain parts of Reddit have serves as a kind of 4chan lite for a long, long time, right? And if we think back to that particularly awful time in history when the iCloud accounts of various celebrities got hacked and you know their their intimate photos were all over the internet like Reddit was one of the primary distributors of a lot of that imagery. And it has taken, I think, multiple rounds of CEOs to get to a point where they will even acknowledge or they have started to acknowledge that there is a problem on a lot of these boards and that there are stricter measures that are but need to happen. Interestingly, a lot of that willingness came from around the time when they started to want to monetize through advertising. So, you know, the needs are kind of clean up. Certainly had a useful selling point attached to it.

S1: The economics of Reddit have always been fascinating to me. I remember when I was at Condé in like 2008 2009, it was so famously neglected that they wound up having to sort of go begging to their users and say, like, give us money for this ridiculous thing called Reddit go, Oh my God. Because because because there was, they just couldn’t keep the lights on, basically. And then and then they realized it was much easier to just persuade Condé to sell off, you know, small little chunks of it piecemeal to venture capitalists, ever spiraling valuations. And they seem to have been doing quite a good job of like living off of VC funding for a while. But historically, the big fight was like, who’s going to win? Is it going to be Reddit or Digg? And we know who won that one. What what? What was the difference between Reddit and Digg and why did Reddit win and Digg, Luke?

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S3: Oh, you know, you make me think about what I’ve done in such a long time, which I think so. You know, I think Digg attached itself too much to media people. I do genuinely feel like the people who loved Digg the most or are also the people that if you want to like, go somewhere viral on Twitter, you just be like, Oh, let’s think about Google Reader. Or, you know, like it’s like a certain, relatively small, mostly nostalgic elder millennials and Gen Xers for whom there was this perfect sanctified vision of the internet. Organized by what was most interesting, as decided mostly by us because Digg had this element of. Editorial curation, light touch, but still but still there in a way that Reddit has mostly rejected, or at least the moderators of Reddit, the all powerful people who really control these individual boards have rejected over time.

S1: So what you have is is a series of communities that Reddit really has become a place to participate. It’s probably I mean, it’s much more participatory than, say, Tok, which is worth, I don’t know. Thirty times as much, you know, the the tick tock is overwhelmingly a place to look into consumers

S3: broadcasting or you’re consuming exactly

S1: like a tiny number of broadcasters and a large number of consumers exactly where and. Whereas, like Facebook, I know that people are producing and consuming on a more sort of even level, and I think I would I would put. Or even Instagram, for that matter. And I would per Reddit on that. Like obviously you have. Big name posters like. What was this deep fucking value, the guy? Oh, yeah, yeah, yeah,

S3: yeah, yeah. Mm-Hmm.

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S1: But like it does seem to be much more of like the only way you really get value out of Reddit is by jumping in and actually posting and engaging.

S3: Yeah. You know, and one of the other things I have always appreciated about Reddit is that it does not care about identity in a way that was very interesting. And that was kind of the opposite of like a place like Facebook, which has always had this explicit premium on real name plus photograph of you, right? And like your Reddit identity, could exist in a silo of just Reddit with kind of associated political and social capital. But, you know, and it was so unusual to know who someone was that every now and then certain subreddits would have a, you know, post a picture of yourself and be like, Oh my God, I didn’t know you were a person. Well, I think the surprise is just like genuine at seeing people and kind of experiencing them in in different contexts, which is again one of the reasons that makes it so hard to stamp out toxicity because of that element of difficulty of tying things back to real world consequences. But banning somebody from Reddit if somebody is really invested in the ecosystem, banning them from Reddit is actually a big deal because you are kicking them out of not just one club, but multiple clubs at once. Right. Because, you know, people are often members of multiple subreddits and have spent time cultivating their many networks within within those things.

S2: How how will going public or will going public affect Brett, its culture or, you know, how will it affect Reddit? It’s relatively small compared to some of these other, I think Felix pointed out in his newsletter. It has a relatively small valuation compared to the other big social networks. We’re going public change the way it is in some way.

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S3: You know, I think Reddit has gone through, you know, it’s a Felix point. They were like independent, started off small, a couple of co-founders, some of whom still post regularly to corporate owned to weird in-between kind of private equity ish situation to now like a potentially a medium sized, publicly traded company. And they’ve been fairly even keel, at least from the the user experience of it throughout. I mean, I think the CEO upheavals, you know, there’s been there was like an Ellen Pao era compared to the sort of like the the Ohanian Spurs era that has made a lot more difference in the kind of the material experience of what it’s like to be a Redditor than whoever owned them at the time.

S1: Do you think they have the potential to become a meme stuck? Yeah, everyone does very

S3: well, you know, hilariously there. Hoffman, Steve Hoffman, who’s currently the chief executive, is explicitly making a pitch to individual investors right here. He’s saying that like, we want individual investors to participate. We want the Reddit community and the OG Redditors to really have this participatory experience. Even like highlighted, you know, like you could buy your shares on Robinhood, like once we go, once we go public. So it’s certainly something they’re trying to talk up.

S1: If they find a way to get outsize allocations to people with lots of points on WallStreetBets, who knows how this could end? So let’s talk about numbers. Do you have a number for the numbers from Stacy-Marie?

S3: I do, and it’s depressing.

S1: Oh, just one more depressing.

S3: Oh yeah, yeah. There’s just going to that. It’s 19 percent. I started my day with this absolutely horrifying story from my pair of Bloomberg colleagues that having a prior Covid infection probably only offers 19 percent protection against the current variant, according to a study that just came out from Imperial College in London.

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S1: You went through all of that crap from getting Covid, and you don’t even get more than 19 percent immunity, but you deserve immunity.

S3: I’m like, I dealt with this nonsense before, but you know, it’s like, Hey, what can you do? But if you get a booster, right? So if you have either been vaccinated and boosted or you’ve had Covid before and are vaccinated, then you get up to like, you know, a much higher rate of protection against infection. So again, just like, get boosted, please.

S1: Although it is, it is very hard to know what, like one of the things which no one knows is the degree to which being boosted. Helps prevent you getting infected at

S3: all as opposed to symptoms.

S1: The only thing we can do, the only thing we can really measure is the degree to which being boosted reduces your chance of, you know, having to go to hospital once you are infected. So yeah, there’s still like so much we have no idea about. I’m going to have another interesting, mildly depressing, maybe not depressing number one hundred and five million dollars. Which is the amount of money that Steve Easterbrook has had to give back to McDonald’s.

S2: That was almost my number.

S1: That was almost Emily is no Steve Easterbrook, the former McDonald’s CEO who was fired for having an affair with a subordinate. He was not fired for cause, but McDonald’s reserved the right to claw back various equity awards and bonuses if they found out that his behavior was particularly egregious. They then did a bunch of investigations, and they found out that his his behavior was particularly egregious. I think he had more than one affair with a subordinate. He was sending nude photos in his work email. And of course, as we all know, the thing that he really did wrong was he lied about all of this to the investigators, so they tried to claw back a bunch of his pay, and he said he was going to fight them in court and they all lawyered up and then suddenly he settled for $105 million.

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S2: So it was that this whole bonus?

S3: Like what percentage of his comp was that?

S1: That’s a pretty large chunk of his company. I mean, like and plus like, this is the other thing which is kind of interesting. They gave him like $40 million worth of McDonald’s shares, or he had those vested when he left. And presumably, he didn’t just hold on to them all in McDonald’s shares. But then what they’ve asked for, what they’ve asked for back is like the value of those shares today. So if he sold those shares, it all depends on like, did he invest that money in something that outperformed McDonald’s stock or underperformed McDonald’s?

S3: I guess. Yeah. Don’t lie to investigators.

S2: Good news. Not depressing.

S1: There you go.

S2: I mean, usually corporate investigations into sexual misconduct go very much nowhere. So this is actually quite unusual. And I say positive news.

S1: Positive news. Any Emily

S2: with McDonald’s

S1: and eggs? Well, maybe that’s all he can afford now. He’s just going to have to live on Chicken McNuggets for the rest of his life.

S2: A bitter meal. A bitter pill to swallow. My number is, however, too. I guess I’ll go with the news year one and hope I don’t regret it. It’s $500 million. That is the amount that Bruce Springsteen got for selling his entire music catalog to Sony. And it’s believed to be the highest amount ever gotten for a music catalog. This is the new trend to emerge out of the pandemic and the music industry. Artists who couldn’t make money from concerts started selling like their intellectual property to make money. And apparently, those deals are intensifying as the year comes to an end because it’s cheaper to pay taxes on a big win cash windfall from selling your IP than it is to pay taxes on your royalty stream. And there’s all new players in the market buying up IP rights from musicians. Stevie Nicks sold her catalog. Bob Dylan sold his for like three hundred or 400 million. It’s not clear how much, so this is like the big thing in the industry right now. There’s tons of these deals happening.

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S1: I love this story. It’s a super interesting story. A couple of things going on. I had a piece in my newsletter this week about the rise of inside the stock sales, which is $162 billion this year alone, which is like a massive, unprecedented level. And one of the main reasons why insiders have been selling a lot of stock this year is because they are all kind of convinced that the capital gains rate is going to go up. Long term capital gains is going to go up, so you want to get lock in those gains now rather than when the capital gains rate is higher. That’s part of what’s going on. And then the other part of what’s going on is, you know, if you look at Bruce Springsteen, Bob Dylan and Stevie Nicks, they are, let’s just say, the estate planning point of their lives. They have more than enough money to live on for the rest of their lives. That’s not a problem, but they’re trying to work out how do I preserve the value, you know, for my heirs or wherever else you know is going to wind up inheriting my estate? And again, for estate planning purposes, it kind of makes sense to do it now or to wait for, you know, the new tax regime, which everyone is kind of expecting. But yeah, and then the third thing that’s happened is like, these are. Annuities, right, like these things we do, these songs are old enough now. Bob Dylan songs, Stevie Nicks songs, Bruce Springsteen songs are old enough. Now there is. We have like decades of data of how much revenue they have generated year in and year out. Everyone who expected them to be, you know, hits that died away were wrong. And in fact, in many of these cases, the revenues are going up rather than down over time. And so if you look at these, it’s a pretty steady income stream, which is not going down any time soon in the low interest rate environment. You can easily see why someone like Sony who bought the Springsteen catalog are happy to pay 30 times revenues for a catalog because like, as you know, on a p level basis, it’s not so bad if the if the revenues are going up rather than down.

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S2: Also really interesting to me because I remember a long time ago when Michael Jackson bought the Beatles catalog and it was like the biggest news story ever. Like, I saw it everywhere. And this Bruce Springsteen story biggest deal ever. Half a billion dollars for his music like the boss doesn’t have his music anymore. Like, no one cares. It’s interesting how things have changed. I don’t know.

S1: Yeah, although although I feel like, like, didn’t didn’t Michael Jackson and Paul McCartney have a massive falling out over that. In this case, it’s very much it’s it’s a decision. It’s a decision by Springsteen to sell like it’s very much a consensual thing. Whereas I think like some, if not all of the Beatles were very upset that Michael Jackson had managed by that right. OK, I think that’s it for us this week, we’re going to have a slate plus en bloc versus bloc, the trademark fight of the century. We’re going to have Emily Peck weigh in on that one. And other than that, thanks for listening thanks to Shein Emma with producing, and we will be back next week with another sleep money. Emily high as the IP expert around these parts. You know, I love to remind you of that. You can take the lead on the Slate Plus segment. H&R Block is suing Block, a former Newsday formerly known as Square. Yes. What do they do they have? Is this a good suit? Is this a frivolous suit? What is going on here?

S2: Felix. I only learned about this suit yesterday and the slate money slack when you brought it up, but I quickly researched it and I have come to the conclusion as an IP expert, as we all know, because 20 years ago I edited the IP law and business magazine, now defunct H&R Block, which is an old company since, I guess, 1955. They’ve been around and everyone knows what they do. They do your taxes. That’s their thing. They’re suing Block, which used to be until last last week. They used to be square, and they’re suing for trademark infringement. And tldr, I think they have a really good case here, so I’m very interested to see what happens because I actually due to it’s very confusing. Block is called Block and H&R Block is also called Block. A lot of the time and the new Block Square, I don’t.

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S3: When you walk on the block, talk

S2: about they do tax stuff like I was like, Is this a good suit? A bad suit? Then I read like, basically, Jack Dorsey’s block has has bought into its tax prep business and Credit Karma’s tax prep business. They are competing in the same well,

S1: not into it, into it. It’s still doing tax prep, but credit. They walk for Harlem as they walk head of Credit Karma, and now they have this thing called Cash App Tax Prep. So they are doing tax prep. They are competing directly with Block H&R Block on this website. The little thing saying Cash App Tax Prep has little sign at the bottom saying from the law What’s more, both logos are kind of green squares. Yes, it’s it. I think. I think that’s the case. I I have promised the Twitters that we’re going to get Alexandra Roberts on this show. Who’s everybody’s favorite IP? Follow on Twitter. And she seems to be inclined that there’s the case here, too. I do. I do wonder how much of this was a calculated risk by Square and how much they would just like, move fast and break things. And we don’t care.

S3: It could really go either way.

S2: Someone had had to have mentioned it to them, like a lawyer vetting this vetting. The name change would have mentioned it. What I mean is that it could go both ways, so that could mean they didn’t give. No.

S3: I mean, I think in the in the grand crazy tech companies, lots of lawyers mentioned lots of things all the time. But, you know, ultimately CEOs are going to see you. So like genuinely, who knows whether they have? There’s a pot of money. Somewhere marked a litigation IP fight that they’re willing to engage with or not.

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S2: I mean, this is why you have a trademark.

S1: Jack was busy resigning from Twitter at the time. He had his mind on other things, right?

S2: Yeah, yeah. I was just going to say, this is why you have a trademark like because you don’t want to confuse people. So this is confusing legitimately. So I think it’s just a great trademark case. Mike, it’s

S3: wonderful. As with all things, all, the lawyers are going to make all the money and then they’ll result.

S2: Congratulations, lawyers.

S1: Congratulations to AP lawyers everywhere. Thanks, Emily.

S3: That was awesome. I learned some very interesting things of this.