Square, PayPal, Spotify, Peloton: Has a bubble burst without us realising?

Bryce: [00:00:15] Welcome to another episode of Equity Mates, a podcast that follows our journey of investing, whether you're an absolute beginner or approaching Warren Buffett status. Our aim is to help break down your barriers from beginning to dividend. My name is Bryce, and as always, I am joined by my equity buddy Ren. How are you going? 

Alec: [00:00:32] I'm good, Bryce. I am very excited for today's episode. We have a lot to talk about. We're talking tech stocks. We're talking crypto. We're talking SPACs. We're talking all of the super hyped asset classes of 2020.

Bryce: [00:00:49] That's it. So much to get through. So just a reminder before we get started. Ren the Equity Mates awards are still open. We're still looking for nominations. This is the last few days that nominations will be open, and we're giving the Equity Mates community the opportunity to call out highlight rewards some of the best experts and CEOs and community members from 2021. So there will be a link in our show notes. There's a link on our Instagram page as well to submit your nominations. We're looking for Expert of the Year based on content that any of our podcasts in the network have done. We're looking for CEO Business Leader of the Year based on any of the podcasts content. We're looking for a community member of the year, those that have really added value and demonstrated the Equity Mates spirit in our community groups. And we're also looking for ETF of the year and for platform of the year. So there's been plenty of nominations coming in. We're sifting through all of them at the moment, and it's great to walk down memory lane with some of the amazing stuff that has happened this year. Finalists will be announced later this week for next week. And then we're going to be doing a walk and an awards ceremony the week commencing 13th of December. We're really excited for it. So pleased to share with us your thoughts on those topics. 

Alec: [00:02:05] One more piece of housekeeping very quickly. If you didn't say our stories, we want to sponsor your local sports team, social, sports, social sports team, the team. You know, we're all for the retail investor here. And similarly, we're for the retail sports player the the that no other sponsor will go now. We want to we want to show you guys some jersey and uncover. We want to show you guys some jerseys and cover your regioes. So head to our Instagram Stories and check it out there. 

Bryce: [00:02:35] Yeah, there's a form for you to submit. We want to help you and your team-mates kick some real and invest in goals. So, yeah, we're looking for some amazing social teams to sponsor. But Ren, let's kick into it five topics to get through today. And let's start with the growth stocks, because if you're in an index, if you're in the Nasdaq index, you might be somewhat fooled by what's actually going on in the growth stock landscape.

Alec: [00:03:04] Yeah, a bubble has burst. Yeah, and just no one is really noticing it because the index is just driven by the Fang. What is it now? The fan stocks? Yeah, but I'm going to say Fan Mag + Ti and Tesla. 

Bryce: [00:03:20] Netflix, no Tesla. Nvidia in 

Alec: [00:03:25] Nvidia in Nvidia is now an $800 billion company, and it's had

Bryce: [00:03:28] a phenomenal,

Alec: [00:03:29] yeah, yeah, phenomenal year. So if you look at the chart of the Nasdaq 100, it's been a great twenty twenty one. It has you have gone up almost 30 percent. Twenty percent year to date like that is a cracking year. That is a year that is unlikely to be repeated. But look under the hood and tech stocks are getting pummelled at the moment. Yeah, they are. So from all time highs, just some of the notable names Peloton down 75 percent. Are you going to stay slammed a lot? Zoom down 60 percent. Square down almost 30 percent. Spotify down almost 30 percent. Shopify down 12 percent. Twilio down over 40 percent. Teladoc down 66 percent. Roku down forty five percent. Coinbase down 27 percent. Did I say Uber already? 

Bryce: [00:04:21] You didn't. But you can say 

Alec: [00:04:22] Uber down 33 percent. Tech stocks are getting slow. 

Bryce: [00:04:27] Tech stocks are getting slammed. And if you're holding any of Cathie Wood's ETFs, her ARK is the the primary one. AK is the ticker of those stocks that you read out. Ren. I think almost all of them are top holdings. You'd be in a world of trouble. It's really interesting. A lot of those companies Roku, Coinbase Square, Spotify, Twilio have all been spoken about on the show by, you know, a lot of our growth fund managers who have come on. So I wonder what they're feeling about it. You know, are they taking this opportunity to buy into the stock? I'm sure it's not changing their thesis on the stock, but yeah, it'd be interesting to know what their approach is here. 

Alec: [00:05:10] And I think the important thing is it's not just unprofitable. Tech stocks, like a lot of it, is unprofitable tech stocks, but PayPal down 40 percent buying. Yeah, buying. Yeah. I imagine they would be pretty disappointed. Their growth managers. Mm hmm. Yeah. But all the

Bryce: [00:05:27] performances, 

Alec: [00:05:28] yeah, I was trying to find a Nasdaq 100 chart and then a Nasdaq 100 Chart X, those fan mag plus 10 that are on the Nasdaq, some obviously listed on the New York Stock Exchange. I couldn't find it, but I think that would be a pretty telling chart because it feels like it's a tale of two markets in the tech world at the moment, this sort of eight companies that can't put a foot wrong. And then there's everyone else. 

Bryce: [00:05:53] In some ways it's a bit of a defence here. It being in these these indexes, like, as you said, these these companies have been absolutely pumped. But due to the weighting of these top eight companies, you really barely feeling it in in some instances, and it's obviously showing that the market believe that the valuations and future prospects of these top eight are much more realistic than the valuations than that the market were putting on a lot of these sort of second tier tech companies, the Peloton's The Zooms, that Etsy's the Pinterest's, you know, all these assets is up, Etsy's up. Yeah, is it? So yeah, I mean, there's plenty of [00:06:28][35.6]

Alec: [00:06:29] also, Coinbase has come back incredibly strongly. It was down. But crypto baby, sometimes crypto is undefeated as we [00:06:37][8.8]

Bryce: [00:06:38] are going to talk about crypto a bit later on. [00:06:40][2.2]

Alec: [00:06:40] So I found a tweet from earlier this year that sort of sums up some of these companies and just how different 2020 and 2021 has been. Now this this is this was from May 20 21. The 2021 returns have obviously changed. But it tells the story. It tells the story enough that I didn't want to do my own research and year to date returns. So do not try this hard. All right. 2020 Tesla up seven hundred and forty three percent, 2021 down 18 percent. I think that's changed. But Peloton 2020 up four hundred and thirty four percent, 2021 down 39 percent, now down 75 percent. Yeah, Zoom 2020 three hundred and ninety six percent, up twenty one 10 percent down. Square up 250 percent in 2020, down eight percent, but more than that now down 30 percent in 2021. So that a lot of these companies are companies that have had incredible 2020's. They did very well during the pandemic, but God, it is a sea of ride out there. [00:07:45][64.9]

Bryce: [00:07:47] So the thing is, even if you look at this and go, OK, great, all these amazing companies, well, all these companies up to you, if you think they're amazing or not are have taken a pretty hefty haircuts. You know, if you were to anticipate that over time, they do get back to their all time highs. You're looking at some pretty significant growth from where a lot of these companies are now. Yeah. However, if [00:08:07][20.3]

Alec: [00:08:08] you if a company falls 50 percent, they have to go up 100 percent. [00:08:10][2.8]

Bryce: [00:08:11] Yeah, yeah. So if you then take the approach, all right. Well, I'm going to buy buy into the index to realise this growth over a period of time. It doesn't feel like that's the right approach because you're going to need the top eight companies to also pump. Significant growth to even feel some of this bottom end stuff. Does that make sense like buying into the Nasdaq 100 because of the top weighting? Even if Pinterest goes up 100 percent, even if Zoom hits 100 percent. If you're in the Nasdaq 100, you're really going to feel it. [00:08:40][29.3]

Alec: [00:08:40] Well, yeah, yeah. But that's not new news. I know that over time in 1990. Yeah, but [00:08:46][5.5]

Bryce: [00:08:46] I'm just trying to spell it out for someone at home. See this as being OK, and now's the time to buy and AQ. Yeah. You know, you're not. You're not. What you're really buying into is 70 percent weighting of the top eight companies. [00:08:59][12.8]

Alec: [00:08:59] Well, I don't think it's quite 70 percent, but got it. Like, Yeah, yeah, yeah. Like, it's basically just a super concentrated Big Tech ETF now. Yeah, yeah. Yeah, that's that's that hasn't been a bad bet. [00:09:13][13.6]

Bryce: [00:09:14] Exactly. It hasn't made about that. [00:09:15][1.0]

Alec: [00:09:15] And just unbelievable thing is that the the returns that these big companies are getting just doesn't seem to slow down. No. Yeah. [00:09:23][7.8]

Bryce: [00:09:23] Yeah, well, that's what I mean. I think the market's obviously looking at these top out and going, they're there for a reason. People can still justify. It feels like a lot of experts we talked to can justify the multiples that these companies are pumping out. And and, you know, their future prospects. [00:09:39][16.1]

Alec: [00:09:40] Yeah, well, I mean, like some of the multiples aren't even that crazy. Microsoft is trading on a thirty seven page. It's not not. It's just the fact that two and a half trillion dollars, but like thirty seven is pretty half true. Pretty. Okay. Yeah, it's [00:09:52][12.6]

Bryce: [00:09:52] crazy. Interesting what's going on. I'm sure a lot of people in the community who are in the ark and those sorts of things might be hurting a little. But yeah, pretty fascinating to see the dominance of those top eight. [00:10:04][12.1]

Alec: [00:10:05] Yeah. So in case you missed it, there is a bubble bursting. It might feel like nothing can ever go down, but I think the headline is these second tier tech plays and second tier isn't meant to be derogatory. It is just if you're not Apple, Microsoft or, [00:10:22][17.5]

Bryce: [00:10:23] you know, we don't have time for you. [00:10:24][1.0]

Alec: [00:10:24] Yeah, well, no, I have. I have a lot of time for you, but you just you are second tier. Yeah, there's a bubble bursting. I guess the question is why is the bubble bursting? Valuations, inflation? Yeah. Risk of interest rates. All of that stuff like this is how the market is supposed to function when inflation concerns are high. People worry that interest rates will go up. They worry that will affect growth stocks, especially unprofitable growth stocks that need to borrow money and they reduce their valuation. And also, if we're getting very technical, the discount rate in a DCF will go up with if interest rates go up because the risk free rate is going up and relative returns in the bond market are changing. And that will drag down the present value of future earnings for tech companies. So this is how the market is meant to function when interest rates go up, high flying, unprofitable tech companies should come off. It's just the speed and the extent to which they've come off. It's surprising, like Peloton buying of seventy five percent hertz, but in some ways it reassures me that not everything goes up all the time because we're about to talk about crypto. [00:11:39][75.2]

Bryce: [00:11:40] Well, then let's do it. Let's keep moving. So we spoke about last week on last Monday's chat, we did a bit of a Deep Dive or an introductory Deep Dive on Web3 and tried to get our head around what's going on and we'll [00:11:53][13.3]

Alec: [00:11:53] know the episode. Was you convincing me about word three? And you obviously did a pretty good job because in the last week, we're now we're now in word three. We're now officially right. We're now officially members of a [00:12:05][11.7]

Bryce: [00:12:05] DAO, if you have joined us for the first time. Welcome to Equity Mates. It's great to have you on board for the next five minutes. You might have no idea what we're talking about, so go back and listen to the Web3 episode on Monday because yes, Ren we are now officially part of the Web3 community. We are in a DAO, a decentralised autonomous organisation and God, it was tough to get in all of it. [00:12:30][24.5]

Alec: [00:12:30] In the last episode, I was talking about how Web3 is going to be incredibly technical, and I think there will be a web for that makes it easier for mums and dads to participate. The last week has only convinced me more. That is, I started to get into this DAO, which we heard about from someone we were speaking to, called Claymore. [00:12:50][20.1]

Bryce: [00:12:51] Yeah, let's pose this. So Klima is essentially a DAO that is, they say they're driving climate action by essentially buying carbon credits. The idea that they have is to buy as as a serious amount of carbon credits over a period of time, to the point where they have so many that they will force companies to buy credits off them to offset. And the price of their credits are going to be more expensive than markets now. Plenty going on there. We. Kind of just got into it because we wanted to get into a DAO and we thought it's the same reason I like [00:13:27][36.1]

Alec: [00:13:27] the idea of increasing the cost of polluting. Yeah, like there, if companies have to buy credits and work, these guys are adding buying pressure to that market. I like that idea. Yeah, but I also like the fact that it was paying 38000 percent interest. [00:13:42][14.6]

Bryce: [00:13:43] Yeah. So there's a thing called an API annual payment yield or something like that, and it currently is paying 39000 one. [00:13:49][6.6]

Alec: [00:13:50] No, it's stupid anyway. [00:13:52][2.3]

Bryce: [00:13:53] So we got it [00:13:54][0.5]

Alec: [00:13:54] basically means you're doubling your money every day. [00:13:56][1.4]

Bryce: [00:13:56] Well, that's what they say. But then in the fine print, I think it's eight percent for a five day ROI. So we're in [00:14:02][5.8]

Alec: [00:14:02] only an eight percent away. [00:14:04][1.2]

Bryce: [00:14:06] I think it's one and a half percent every eight hours or something. Anyway, well, we'll come. We'll come back next week with an update on actually. Did that transpire? [00:14:14][7.6]

Alec: [00:14:15] It's going to get arbitrage to way so quickly. Mark Cuban was tweeting about it. [00:14:18][3.6]

Bryce: [00:14:18] It was incredibly difficult to get it. And I think that's the main thing that I want to call out the process to get into this DAO involved. I think four different crypto platforms. [00:14:29][10.6]

Alec: [00:14:30] Yeah, and we got five different coins. Yeah. And some of those platforms, like stopped us sending it to other platforms. So much for being it makes sense, decentralised and no authorities. Filecoin is trying to transfer money out of a bank. The amount of hope that this crazy. [00:14:43][13.4]

Bryce: [00:14:44] Anyway, so we've learnt in the last week about the idea of staking. We've essentially staked our coins into Klima and we're making a return on those coins. Yeah, if only we could show you, we might put a screenshot. [00:14:53][10.0]

Alec: [00:14:54] I mean, we can we can talk about how we did it. We had to buy one coin on a on an exchange, so independent reserve or a swift x or anything like that. And that was what was a matic polygon polygon. Yeah, never heard of it before. And then we had to send that to a MetaMask wallet, and then we had to plug that into SushiSwap. And I remember this and transfer it to claim up Klima. And then we had to transfer token and we had to transfer that back to our MetaMask wallet [00:15:24][29.8]

Bryce: [00:15:25] and then claim a sat in [00:15:26][1.3]

Alec: [00:15:26] MetaMask. Okay? And then we had to transfer the claim up to now. Then we have to go to the website and stake [00:15:32][5.8]

Bryce: [00:15:32] you transfer it onto the claim, a website and then you stay. Yeah, then you sit back and relax. [00:15:37][4.7]

Alec: [00:15:38] Yeah. So that whole process was a real learning experience for us, and I think that's the main thing that we're going to keep dabbling and try and figure it out because the technology is really interesting. But if you were lost in that explanation, trust us, we were lost in the in the doing as well. Crazy. [00:15:52][14.6]

Bryce: [00:15:52] So we'll we'll try and keep everyone happy. [00:15:54][2.0]

Alec: [00:15:55] Obviously, it's not a buy hold also. No, no. Anything we talk about in this space is us figuring [00:16:02][6.7]

Bryce: [00:16:02] that our learning journey and we're currently trying to learn and get our heads around what's going on. But on the crypto theme, Ren look, one of the most renowned stadiums in Los Angeles, it's the home to the LA Lakers has gone through a name change. [00:16:20][18.1]

Alec: [00:16:21] Yeah, people probably saw this new story that asked the Staples Centre where the Lakers play the L.A. Kings play in ice hockey is being renamed Crypto.com Stadium, Crypto.com Arena. [00:16:33][12.0]

Bryce: [00:16:33] I think it's [00:16:34][0.3]

Alec: [00:16:34] like, Yeah, [00:16:36][1.2]

Bryce: [00:16:36] you're right, it was the Staples Centre from 1999 when it was first built. Yeah, they took out a long term lease and it's a $700 million deal to Crypto.com. [00:16:46][10.3]

Alec: [00:16:47] Twenty years, is that right? Yeah, yeah. [00:16:49][2.0]

Bryce: [00:16:49] When are you due to rename the stadium? Crypto.com Arena? Crypto.com, for those who are unaware, is, I think, the 10th largest exchange. It's a Singapore based company. Yeah, massive marketing play from them. The the company that owns Crypto.com Arena said that they have done this because they felt that Staples was now a bit of out of touch with their with the way that they want the stadium to be perceived in the new target market and all this sort of jazz. So I think they bought it, actually bought out the rights of Staples so that Crypto.com could come in. But you have other thoughts on this. [00:17:27][37.6]

Alec: [00:17:27] No, I don't. I mean, I have thoughts. The key thing, like instantly, when I heard this, the first thing that I thought about was it is an exact echo of the peak of the tech bubble. So let me ask you some stadium names and you tell me if you've ever heard of them. Network Associates Stadium, no CMG Stadium. No pay a sign that stadium. Have you heard of any of the companies that underlie that? No. Yeah, because what happened in 1999 and early 2000 is a bunch of tech companies that had really expensive share prices and big balance sheets as a result went on a stadium sponsoring blitz. And then within like a year or two, they were all bankrupt and the the biggest echo is so the Baltimore Ravens, the NFL team, they signed a twenty or their stadium. Signed a 20 year deal, a sign that stadium 20 year deal. The stadium came down in 2002. [00:18:30][62.3]

Bryce: [00:18:31] Catlett looked like a bulldozer. [00:18:32][1.0]

Alec: [00:18:33] No, no, no. They took the side and it's now called M. A. Bank Stadium. Thanks a lot. History may not repeat, but it rhymes, and in this instance it is is rhyming. Twenty years of it just feels palpable. [00:18:46][13.2]

Bryce: [00:18:47] Yeah, you are very feeling peak bubble at the moment. A lot of things. Yeah, I'm nervous, but I'm not so peak bubble with the crypto space. I don't think I think they just have so much cash like, oh, it's [00:18:58][11.2]

Alec: [00:18:58] not exactly what you could have said about the unprofitable tech companies. [00:19:01][2.4]

Bryce: [00:19:01] Yeah, yeah. But they're profitable. [00:19:04][2.5]

Alec: [00:19:05] Crypto.com, these guys. Yeah. Well, so here's the interesting thing about Crypto.com. They have a coin, they have a token. So it's a $700 million, twenty year deal. Yeah, I think the market cap of their token went from nine billion to 18 billion. Because of that deal. Wow. Because of the press and PR around that. Wow. So in theory, it's a 20 year, $700 million commitment. And then they and they've just created $9 billion worth of value. Yeah. Obviously, they don't own all their coins, but still, it's an interesting Afterpay. Yeah. But everything feels good when the rising tide is lifting all boats. It feels like everyone has a lot of money. But if all of these coins start tanking, then it won't feel like they've got a lot of money. Yeah, yeah, yeah. [00:19:50][44.9]

Bryce: [00:19:50] What are you? What were your thoughts around when Marvel renamed Telstra? The Telstra Dome down in peak streaming [00:19:56][6.5]

Alec: [00:19:57] peak peak bubble peak bubble in the Marvel Super Cinematic Universe and what's happened since then, the movies [00:20:03][6.4]

Bryce: [00:20:04] have turned to [00:20:04][0.2]

Alec: [00:20:04] shit. Movies aren't as good. My Marvel obsessed housemate came home from saying the most recent one and said it was the worst one I've ever seen. So for me, it's like, obviously it might not be peak bubble, but be aware that this was a key key indicator of peak bubble. These these businesses doing big, splashy things with their balance sheet. That leads me to how I'm approaching this time. [00:20:29][24.7]

Bryce: [00:20:29] And before we do that, let's just take a quick break to hear from Massachusetts. All right, so Ren, how are you approaching this time you have been hearing a bit of bubble mania bubble fog at the moment. [00:20:40][11.2]

Alec: [00:20:42] So I think there's so much really exciting technology being developed at the moment and the commercial models around it are being figured out. It feels very similar to a 2000 where a lot of the faces were right at the time. It was just too early. If you've read the hard thing about hard things by Ben Horowitz, he was the CEO of a cloud computing company in like 2001, which cloud computing 20 years later is industry standard and huge. But it was just like 15 years too early in the company it got acquired, but you know, it didn't live up to its potential. I look at the world today, Web3, and it was blockchain DApps, all of that and think we're in a similar moment. The promise and the potential of it is so much, but with that comes that bubble mania. And there's this mental model that we've spoken about on the show before, but I want to talk about it again because I think it's a really useful one when thinking about a time like this. It was introduced in a book Technological Revolutions and Financial Capital by Carlota Perez, and it talks about it looks at bubbles throughout history or technological revolutions throughout history and how financial markets react, and it normally moves in two phases. The first phase is there's a new technology. It's super exciting. Financial capital flows into the area because there's all this promise. All these new companies are started and there's a lot of euphoria in the market, and it leads to a bubble that bubble bursts. And then we get to the deployment phase after that, where the real companies emerge and the real business models are established. And that, like we all know that that happened with tech 2000 was the bubble bursting. And then out of that came those real business models in the Apple, the Amazon, all of that stuff. But you know, in this book, it's the same with a bunch of bubbles throughout history, like if you look back at when cars were first invented, it wasn't just General Motors and Ford that were established. There was similarly a whole bunch of car makers that were created. A whole bunch of financial capital flooded into the space. There was a bubble burst and those long term businesses emerged out of it. And for me, that mental model makes a lot of sense here. There are some brilliant companies being created today. The question is which ones of those which are the pets.com of this era? [00:23:12][150.5]

Bryce: [00:23:13] And you're talking specifically about crypto? [00:23:14][1.3]

Alec: [00:23:15] Yeah, crypto. Web3, like everything that's basically been enabled by blockchain, I think. I think the underlying technology is blockchain, and more and more, it seems like it's the Ethereum General Blockchain and other general blockchains. And then everything is getting built on top of that web. Three DApps, all that stuff. And it is all of that part of me gets excited that it might be a bubble because if the bubble burst, that's the opportunity for investors. That's the that's the buying Amazon in 2002 opportunity. [00:23:45][30.0]

Bryce: [00:23:46] Yeah. Well, I guess. Where do you draw the line? What's the crypto bubble of 2017? [00:23:48][2.7]

Alec: [00:23:49] Yeah, great question. But I mean, it's not like, it's not like there's just one bubble like the internet. We all think about the one bubble being 1999 2000, bursting in 2001, but there were other there were other booms and busts before that. Mm-Hmm. Yeah. [00:24:03][14.0]

Bryce: [00:24:04] I feel like it's just a rolling thing. [00:24:05][1.4]

Alec: [00:24:06] You think we're just going to keep, [00:24:07][0.9]

Bryce: [00:24:08] you know, like you go. It's like, it's not like everything aligns perfectly. So like, you might have all these small bubbles that are occurring within the crypto space, like the Web3 versus other crypto. What's going on in metaverse versus what's going on just in tech generally? Just, you know what I mean? Like, it's all kind of just a rolling. It's not like all of a sudden there's going to be this Big Bang. Everything drops. And then from there, it's smooth sailing because I look at what happened to bitcoin in 2017, massive run up. But then that gave rise to like the altcoin sort of vibe. Like, it wasn't all like 2017 wasn't. It wasn't as prolific as it is now in terms of the amount of coins that are around and these Dow's and all that sort of. Yeah. So figuring out where you are in that circle, I think, is specific to what you're looking at. Do you know what I mean? [00:24:56][48.0]

Alec: [00:24:56] I know, I know it may. And but I think that might just be because we haven't, haven't had it yet. Like, I think if we put ourselves back in 97 98, we probably would have felt the same thing. Like, oh, different parts of the tech ecosystem are up or down and, you know, nothing's ever linear. But then you get hit by the big one and then you know that that that's the big one, I guess. So, yeah, probably. Simon Lot residential. Unlike the housing market waiting to happen leading up, not in the US, you know, like some parts of the market probably went early. You know, like Florida was probably more overleveraged than other parts and then it all collapse and the end of 2007. I feel like we have just. Lived this life as investors where we haven't really been hit by a big one. [00:25:37][41.3]

Bryce: [00:25:38] Yeah, I think that model doesn't really apply to the stock market right now, though, right? Like you're talking about the adoption of the technique. [00:25:44][6.4]

Alec: [00:25:45] Yeah, yeah, yeah. I feel like if there's one thing to do at a time like this is right, that bought. Yeah. And also learn to code in theory and coding language. But yeah, for me, that's a really useful mental model that I think it's worth people understanding. Yeah. [00:25:58][13.8]

Bryce: [00:25:59] So that is Carlotta Perez for anyone who wants to do a bit more research on that. Go and check it out. We will include, I think it's on our book resources page and our website. If it's not, we'll make sure that we get that uploaded so you can go and take and go and buy that. But let's close out Ren. We can't go too long without speaking about SPACs. And there's another there's another SPAC deal that's hit the market, one that I don't think is yet interesting. One that you were more surprised. [00:26:27][28.1]

Alec: [00:26:28] I made a meme about it and sent it to our work group, and I was like, How crazy is this? And you're like, It's not that crazy at all. So I feel we should talk about it because we obviously have different views on it, although in chatting before we went live. Maybe you've convinced me that it's not that crazy. [00:26:43][15.4]

Bryce: [00:26:44] Well, put some context to it all. Man Scape have revealed that they are going to be going public through a SPAC. For those that are unaware of man escaped, it's a business that is prolific in marketing. [00:26:58][14.7]

Alec: [00:26:59] If you are not aware of manscaping, not listening to an off podcast [00:27:02][3.2]

Bryce: [00:27:03] American podcast, particularly, yes, they're a company that specialises in men's grooming, particularly focussing on the pubic region, and they are going public. [00:27:16][12.6]

Alec: [00:27:16] They are a virus buyer of via a SPAC. [00:27:18][2.1]

Bryce: [00:27:19] Yeah, they are making money. They're pumping out about two hundred and fifty million in revenue at the moment. [00:27:23][4.4]

Alec: [00:27:24] Yeah, that blows my mind. So a few things blowing my mind. First of all, they were founded in 2016. [00:27:29][5.5]

Bryce: [00:27:30] Yeah, it's been an incredible growth story. [00:27:32][1.4]

Alec: [00:27:32] Yeah. Secondly, they specialise in shaving one part of your body. Yeah. But like, it's just it feels so niche. [00:27:41][8.8]

Bryce: [00:27:42] It feels niche. But yeah, [00:27:43][1.8]

Alec: [00:27:44] yeah. But then the amount that they're doing 295 million in revenue, that's impressive [00:27:49][4.8]

Bryce: [00:27:49] to five million in revenue, and they expect that to hit 500 million by 2024. So doubling that over the next couple of years. I feel like it's not surprising it's big money for what they do, but they just it's a marketing machine. [00:28:05][15.5]

Alec: [00:28:05] Do you remember 10 years ago when people would speak about start-ups that were unicorns and it was like Airbnb and Uber with the unicorns and everyone was like, Oh my God, these start-ups are worth a billion dollars. Yeah. Now we have below the belt grooming start-ups that are worth a billion dollars. [00:28:21][15.8]

Bryce: [00:28:21] Yeah, tons of change chain [00:28:22][1.1]

Alec: [00:28:23] types of jobs. [00:28:23][0.5]

Bryce: [00:28:24] Yeah, yeah, you're right. It's going, it's hitting it that they're trying to get a billion dollar valuation. [00:28:28][4.1]

Alec: [00:28:29] So they have a Oh, they got it. Yeah, that's right. This deal values them in a bill. [00:28:33][4.4]

Bryce: [00:28:34] They go billion dollar valuation. Yeah, look, that's that's the environment where [00:28:39][5.0]

Alec: [00:28:39] for me, I would think of manscaping and I would say maybe like a Phillips or like one of those big old body razor companies, a Gillette maybe says this is a product extension. They build a good brand. Let's acquire them. I just think about the opportunity of buying alphabet or buying man escaped on the market. And I'm just like, What's the growth? What's the growth? Yeah, it's certainly [00:29:03][23.9]

Bryce: [00:29:03] not a company [00:29:04][0.8]

Alec: [00:29:05] like, I know you really are a big man shaper and you've got like you creams and gels and different razors. But like, no way. I don't know. It's just, [00:29:15][10.3]

Bryce: [00:29:16] yeah, look, there's a big tailwind here for that. Skype's the the male grooming sector is definitely growing, and it's becoming more and more acceptable for males to groom not just down below, but everywhere in this products galore. But yeah, I'm not buying it. [00:29:32][16.4]

Alec: [00:29:33] But you have a man's Scott Rose, so yeah, you do not mind. [00:29:37][3.8]

Bryce: [00:29:38] You know, man, Scott Raisa, we did try and do. They did reach out to do some advertising, but we said, no idea. I'd love to know. [00:29:46][7.3]

Alec: [00:29:46] Should have done or should have done the Jay-Z Beyonce. I do you know how they Typekit? They did that for Uber and they got equity. We should have man's got it right. [00:29:55][8.4]

Bryce: [00:29:55] I know that they do take I do spend a lot on mocking. I'd love to know how much they do spend. But yeah, SPAC deals continue. Just an interesting one that's come across our desks. [00:30:05][9.4]

Alec: [00:30:05] It honestly is really impressive execution. Like, I don't really know the founding team. I think I've seen the CEO's name, but that's I haven't looked into them at all. But if you think about the amount of founding teams out there and the amount of teams that could have got man like a man skate racer to a billion dollar valuation in four and a half years and to an IPO via a spark that is truly impressive. Execution marketing? Yeah, like forget Stripe or PayPal or eBay and pay these businesses that are just like truly great products. This is a this is an execution story. [00:30:43][38.4]

Bryce: [00:30:44] Would they hit up every single influence and podcast and anyone who has an audience and just went ham on them? Yeah, yeah. And just and just the way they even engaged with us around links and tags. And you know, this is what you need to do and all of that jazz like it was a machine. Yeah, I'm ashamed. Yeah, and they were pretty, I would say, ruthless on how they how they wanted their advertising to be executed. So but that's the thing at the end of the day, like it's the same with funds management. All these things like you're going to have the best product, but if you can't market it and you can't talk to consumers and sell the dream, get in front of them, be aspirational. That's just what it's all about. [00:31:26][42.3]

Alec: [00:31:27] Yeah. Now here's the question, though, like what's the future for man's like product adjacencies? Like women's scapes, I guess. Yeah. But it's like, Oh, they go that big, they go big and they go, they go to the face, your chest. Yeah, it's a chestnut. They keep inventing. Yeah, that's not bad. Actually, chess isn't bad. I don't know. Back, back, scoped. [00:31:46][19.3]

Bryce: [00:31:48] It is what it is. We'll see how it plays out. I have no idea. No idea, but it's pretty fascinating that they've got this far. But anyway, Ren that does bring us to the end of our episode today. A reminder please submit your nominations for the Equity Mates Awards. Stay tuned because we've got a massive summer series coming up later in December. We're really getting towards the tail end of the year. We've got some big episodes coming over the next few months. We've got the say sorry, the chairman of the Swans, Andrew Pridham, coming out. We've got an awesome episode coming up this Thursday with Eleanor Swanson from Fire Trail, all about Zone Hearts and Minds Conference and a couple of stocks that are on her watch list in the biotech space. So really enjoyed that? Don't forget to buy your tickets for the Sign Hearts and Minds conference that is this Friday. Charlie Mango will be speaking at 11am. Not often you get the chance to see him talking and then where are where? Up to bold predictions and stock of the year wrap up and we'll have Andrew Brown back to wrap up 2021. So only a few weeks left of content before we hit our deep dives on specific stocks over the summer, which we cannot wait for. We've got some amazing CEOs, plenty going on across the network as well. The CBA boys closing out the year with the big headlines and you're in good company and Get Started Investing feed are doing an amazing job as well. And don't forget, talk money to me and crypto curious plenty going on in the Equity Mates media network. So we'll leave it there and Ren we'll pick it up next week. [00:33:18][90.4]

Alec: [00:33:18] Well, if people, if people lasted through all of Bryce housekeeping at the end, at the end of the episode, I've got a little a stroke for them. Just been looking at some of manscaping capital raising, so they've raised twenty three million in equity funding to get to where they are. Wow. Which for me, one is impressive that they've turned that into a quarter of a billion dollars in revenue to who's investing venture capital into a below the belt grooming start-up that I had a look at. Who has Channing Tatum is a name is being thrown around. Also, Mark Cuban invested half a million. He's everywhere. Yeah, I guess if you got a billion dollars, you got to do something with it. Yeah. But yeah, two funding round raised $23 million. [00:34:02][43.2]

Bryce: [00:34:02] You know, the model that they've tried to replicate here is the Dollar Shave Club. I reckon a slightly different model, but that's just gone. Execute business bang. [00:34:10][8.3]

Alec: [00:34:11] But the thing is well, and maybe we should have looked at the landscape business model. But you know, like, I just shave my own head and I just go to like, shave a shop and buy a razor, shave it. There's no like the beauty of the Dollar Shave Club was there was a subscription and it was ongoing subscription revenue. Like, I'm not paying the shaver shop a monthly subs. Option four, like anything, I just want some done. I would assume the business model is the same here again, assume we should have looked, but I should have anyway 23 million dollars into a billion dollar company. Well done. Well done. We'll see how it goes. [00:34:11][0.0]

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