Join Sascha and Darcy as they travel through three headlines that have them intrigued. Apparently, Twitter no longer exists, one million people are going to be given free vapes in the UK. Lastly – a pair of trainers were sold for $2.2 million dollars. But these aren’t just any trainers, and their sale broke a record in this division.
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Sascha: [00:00:03] I'm Sascha Kelly and welcome to the Dive, the podcast that asks, Who ever said that business news needs to be all business? We're returning to one of our favourite styles of episodes today, and that's when we bring you three short stories for right to your ears. Ones that have jumped off the page and made headlines in this past week. Our first story. Twitter no longer exists.
Audio Clip: [00:00:26] Twitter is no more. That's according to a document submitted in a California court on April 4th.
Sascha: [00:00:32] A second story, 1 million people are going to be given free vapes in the UK. What?
Audio Clip: [00:00:40] They're highly addictive and in Australia, illegal without a prescription. But in Britain, nicotine vapes will be handed out free to help smokers stop out their cigarettes.
Sascha: [00:00:51] And lastly, a pair of trainers was sold for $2.2 million. These aren't just any trainers, but their sale broke a record in this division.
Audio Clip: [00:01:03] A pair of shoes from one of the NBA's greatest and the guy synonymous with his shoes might be the most valuable shoes in the world.
Sascha: [00:01:11] These are three stories that we loved. We're going to give them 5 minutes each because who said business news should be boring? To talk about this today. I'm joined by my colleague here at Equity Mates. It's Darcy Cordell. Darcy, welcome to the dive.
Darcy: [00:01:25] Thank you. Sascha, I got to love these episodes and we've got a special surprise coming at the end, too.
Sascha: [00:01:31] I know. Nice little tease there. We do have a very special guest joining us, but let's start the time and dive straight in. The headline is that Twitter doesn't exist. But, you know, I'm not going to tell Alec. I've had Twitter open on my laptop all day. Everything seems to be fine. What on earth is this on about?
Darcy: [00:01:51] Yeah. So cast your mind back to last year, Sascha. When Musk bought Twitter for $44 billion, he made it pretty clear back then that his ultimate ambition for the platform was to turn it into an Everything app called X. And now he seems to be taking a pretty significant step in that direction. He's ended Twitter's life as an independent firm, and he's merged it with a shell company called X Corp. This move was filed last week in California, and Musk basically confirmed it by tweeting a simple X last week.
Sascha: [00:02:22] And something like this has been on Elon's mind for decades. We did an episode on it last year. Back in 99, Elon started X.COM, which eventually merged into PayPal. But in July 2017, Musk repurchased the domain name X.com from PayPal, saying it had great sentimental value to him.
Darcy: [00:02:44] Yes, that's right. So when Musk bought Twitter, he also formed three holding companies, each named with a variation of X Holdings X Holdings one would function as Twitter's parent company, X Holdings two would buy Twitter and X Holdings three would fund the deal. But now Twitter has merged into what he's called X Corp.
Sascha: [00:03:05] And it's all about building this concept of a super app, which isn't a new idea. It's just not overly common in the West.
Darcy: [00:03:15] Yeah, the term super app was first used to describe WeChat, which is owned by Chinese tech giant Tencent, and that has a variety of uses. It basically connects every facet of life in China from hailing a cab to buying groceries. You can book doctor's appointments, purchase insurance. The list goes on. WeChat has over 1.2 billion active users, but it's not the only so-called super app. In South East Asia, there's Grab in South America, there's rapper and in Japan there's Line. There are quite a few other examples too.
Sascha: [00:03:47] And how is Twitter itself actually going? Do you think Musk can create a super app if Twitter is still struggling to be profitable?
Darcy: [00:03:56] Since he took over, he's been on an absolute mission to cut costs. He's shrunk the workforce from around 8000 to just 1500 now, and that has helped it reach a break even point in terms of its financials. But there have been six major outages on Twitter since the year began, and that's probably not helped by those cost cutting measures. And Musk has also cut Twitter's valuation from the $44 billion he bought it at, down to about $20 billion now. So even if you ignore the fact that Twitter only breaks even, it might be difficult to turn it into a super app with all these new functions like e-commerce and payment features when they're just wireless stuff.
Sascha: [00:04:35] There are also some legal barriers preventing super apps.
Darcy: [00:04:38] Absolutely. Sascha, regulators in the US are pretty keen to break up any companies that show monopolistic tendencies and bigger companies like Meta and Alphabet. They're struggling themselves to make headway with their own Everything app. So I don't think we're going to say Twitter become part of a super app any time soon.
Sascha: [00:04:56] Look, I'm checking the clock, Darcy And you just serve at the time. So we better move on to the second story, which I am bringing to you, because across in the UK, 1 million smokers are being given free vapes.
Darcy: [00:05:10] Sascha, This one stood out to us because I can see and hear the vaping addiction everywhere. There are these flavoured devices that let you inhale vapour instead of smoke. But now the U.K. is handing them out for free. What's going on?
Sascha: [00:05:23] Yeah, it's called the Swap to Stop scheme. Try saying that really quickly. And it's where vape starter kits are going to be offered to almost one in five of all smokers in England as part of the government's plan. Currently, 13% of the UK population are smokers and the government wants to reduce this to 5% by 2030. In my mind that feels ages away, but it's really only six and a bit years and 5% represents, quote, no smoking. Country tobacco is still the highest preventable cause of death and illness in Britain, according to the UK health department. And they spent £68 million, which is a little over 120 million AUD in the last financial year on local authority measures to get people to stop smoking. It did lead to 100,000 smokers quitting, but they think this new program is going to cost them about £45 million over two years and obviously going to affect 1 million people.
Darcy: [00:06:24] So Sascha, we know smoking is not good for us. But can you give us some numbers? Why exactly are the UK doing it? Why How much money they're saving by cracking down on smoking?
Sascha: [00:06:34] Yeah, Action on Smoking and Health UK, the catchy title they've estimated in 2022 that smoking costs the country £17 billion annually. It's really interesting after watching a couple of UK breakfast TV shows and reading a few UK based news reports, they're saying that this is a proven path to quitting smoking, which is kind of in direct contrast to a lot of the reporting that we're seeing here in Australia. On the NHS website, there's a lengthy article that says that you're roughly twice as likely to quit smoking if you use a vape compared to other nicotine replacement products like patches and gum. But it does stress that while vaping is substantially less harmful than smoking, it's also not completely harmless.
Darcy: [00:07:19] And as I mentioned earlier, Sascha, it's just taking over with the younger population. One of the concerns about the rise in young people vaping in the UK.
Sascha: [00:07:27] Yeah, it's the cost really, because disposable vapes are the cheapest e-cigarettes on the market and they're now the most used product among young people who currently vape. It's up more than seven fold from 7% in 2020 and 8% in 2021. It's up to 52% in 2022, according to research.
Darcy: [00:07:47] That's a really significant increase. But let's bring it back here to Australia. Sascha, the Australian Government has cracked down on vaping here. Do they think vaping stops people from smoking.
Sascha: [00:07:57] In a lot of Australian reporting on this story? They cite a report released by the ANU, the Australian National University, that was only released last Friday, saying that it found there was limited evidence that nicotine e-cigarettes were helping people to quit. However, there was substantial evidence, according to this report, that e-cigarette use can increase the uptake of tobacco smoking in people who don't smoke.
Darcy: [00:08:21] So vaping is on the rise here in Australia. Has that affected the amount of taxes that the government takes in? Have the new laws had any impact yet?
Sascha: [00:08:29] In Australia, vapes are illegal without a prescription and according to a report from the Australian Institute of Health and Welfare, in just three years, e-cigarette use has doubled and daily cigarette smoking has decreased to 11%, so that's cost the Australian Government about $5 billion in taxes that they used to raise through cigarettes. And smoking still costs us a lot as a society. In the most recent study we could find from 2019, they said that in the year 2015 and 2016, which is the most up to date statistics that they had smoking accounted for 20,000 preventable deaths, but cost us $137 billion in social costs. So it's not insignificant.
Darcy: [00:09:16] Yeah, not at all, Sascha. It's going to be interesting over the next years and decades to see more studies on the impact of vaping compared to cigarettes. I know anecdotally the amount of nicotine available in Vape Sold in Australia is actually higher than in the UK, so that's something to consider when we're talking about addiction. But I can't see the Australian Government handing out free vapes any time soon.
Sascha: [00:09:38] Alright Darcy, I said that we'd have a very special guest joining us in the dive studio very shortly and he's here to talk about the most expensive sneakers ever sold. $2.2 million. And no, they aren't your smelly sneakers that have been stuck in your wardrobe, but they are second-hand. We'll tell you more about that in just. Mr. Moment. Alright, onto the final story and we have a very special guest returning, Simon Harvey. Simon, welcome to The Dive. I'd love you to tell me why on earth someone has paid $2.2 million for used pair of shoes.
Simon: [00:10:18] Hey, Sascha, great to be here. I think maybe you have over to a super exciting special guest to be back, but I'm pleased to be here all the same. So, yeah, $2.2 million for a pair of shoes. Quite unbelievable, really. But Michael Jordan, he's arguably the greatest basketball player of all time. He wore this pair of Air Jordans 25 years ago going to 1998 NBA Finals series. His team, Chicago Bulls, beat the Utah Jazz 9380. It was his final season before retiring from the Bills. And it's that season, that incredible Netflix series The Last Dance was based on.
Sascha: [00:10:55] So, Simon, we did say there were a used pair of shoes, but, you know, they weren't used by just anyone. They were used by the goat of basketball. Michael Jordan.
Simon: [00:11:05] That's right. And what's really fascinating about this story as well, that Jordan, he actually gave these sneakers, these shoes to a ball boy in the stadium at the time who had apparently found and returned his lost jacket just a few days previously.
Sascha: [00:11:19] So these shoes, they sold at an auction last week and broke the record for sports footwear. But last year, a Jersey Jordan wore in the first game of those 1998 finals was sold for a staggering $10.1 million. It seems like he's got the Midas touch. Virtually anything he puts his hands on turns to gold. And Simon as a brand, Nike seems to have been the biggest beneficiary of that.
Simon: [00:11:47] Yeah, back in 1984, when Jordan's career was still very, very young. Nike actually took a punt on him and signed them as an ambassador, hoping that his career would take off. As part of him signing with Nike, they made signature basketball shoes called Jordans and they had a goal, a time to reach free million dollars over four years. But their expectations were completely blown out of the water. From the very first month of sales, they realised he was a brand all by himself and his shoes sold like crazy. As we know, he became a cultural icon around the world and today that Jordan brand that generates those $3 million every 5 hours.
Sascha: [00:12:26] Five hours. It's been pretty nice to make 3 million every 5 hours. Of course, it wouldn't have happened if Jordan wasn't the goat. If he hadn't been such a successful athlete. I'd love to know how much does he actually generate himself from this lifetime Nike deal?
Simon: [00:12:43] Yes, Jordan himself. He makes up 5% of every single Jordan brand item sold, which might not sound like a lot and a percentage perspective, but considering that Knight generates now about $15 million a day of the Jordan brand, he gets paid an incredible $750,000 per day. Yes, $750,000 per day. And according to Forbes, in 2021, he earned a staggering $150 million just in that year based on that deal.
Sascha: [00:13:14] So the Jordan brand makes an absurd amount of money. But these sneakers were sold on the resale market, which is absolutely taken off since the pandemic. What are some of the most expensive sports memorabilia items sold? You know, I love a list. Simon, Why don't we hear the top four?
Simon: [00:13:31] Well, I've done my prep. I've come in, we've talked for Sascha, and I'm going to test you if you can guess roughly what they sold for. So coming in at number four was Muhammad Ali's Rumble in the Jungle championship belt.
Sascha: [00:13:43] Okay, so ten is the record. Let's go around 4 million.
Simon: [00:13:49] Is behind us, around $6 million, but not bad. Let's see if you can do better on number three. That was the original Olympic Games manifesto. How much did that sell for?
Sascha: [00:13:59] Okay, What about 7 million?
Simon: [00:14:01] 8.8 million. it's actually.
Sascha: [00:14:03] Getting closer.
Simon: [00:14:04] Getting closer. Number two, Diego Maradona, Hand of God Jersey in the 1986 World Cup quarter final, where he cheated to score against England. How much is that?
Sascha: [00:14:16] Simon, I might have to do some fact checking on the cheating. But look, I want to say 9.5 million.
Simon: [00:14:23] Very close, $9.3 million on that one. And then number one is the goat himself, Michael Jordan, back in 1998, again, a game one jersey sold for just over $10 million. And this global sports memorabilia market is only expected to continue to keep growing. The market was worth an estimated 26 billion in 2021, and by 2032 is expected to grow to over $225 billion. So expect to keep hearing those records broken, Sascha, and hopefully be back in again to test. You have some new sales in the future.
Sascha: [00:14:57] Holy moly. Sorry, Simon. That's up by $200 billion. In ten years. It is so much.
Simon: [00:15:05] How can we invest?
Sascha: [00:15:07] You're nuts. Next question I've got here. There's also a new film directed by Ben Affleck that I'm really keen to see, which is called Air. And it's the story of Nike's courting and eventual signing of Jordan. So I'm definitely going into cinemas this weekend and going to try and watch it. Well, thank you so much, Simon, for joining us on this edition of The Dive. And thank you, Darcy, for bringing me that first story about Twitter. As always, when it comes to the dive, the best thing that you can do is jump in your podcast player right now and give us a five star review. It really helps in terms of climbing the charts, getting in front of other people, just being on browsing lists. When people are searching for that new podcast that they're going to love. So it's a really small action from you. Makes all the difference to us. Thanks so much, guys, for joining me today.
Darcy: [00:15:52] Thanks, Sascha.
Simon: [00:15:53] Thank you.
Sascha: [00:15:53] Until next time