Hey Snackers,
Mom said patience was a virtue.
The Fed don't care. By removing the word "patient" from its policy position, the nation's central bank just hinted that it'll help markets if necessary in the future with lower interest rates.
Plus, Slack's shares start trading today...
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YouTube considers a major change for kids (because it's under investigation)
This is why babysitters need references... According to WaPo, the FTC is investigating YouTube (owned by Alphabet) for violating children's privacy. YouTube has a history of conduct parents wouldn't approve of — and the WSJ reports that YouTube's considering two big changes to try to fix its kid problems:
- "YouTube Kids": Pushing all kids content to a separate children's app, insulating them from vids that would keep you up at night.
- Kill "Auto-play": Parents can put on a wholesome "Dude Perfect" video for the twins, only to be smacked by something totally R-rated right after. YouTube could cut the risk by cutting its favorite feature.
One of the best buys ever: YouTube... Google dropped $1.6B for a budding video website back in 2006 — Today, it's estimated to be worth between $75B and $160B. YouTube says humans are watching 1B hours on it daily, generating billions worth of ad dollars. But it's also been used for child exploitation and can radicalize people.
When kids need regulation, it actually happens... Paralysis in DC is constant. But children's safety is bipartisan. Google could be preempting future regulation by regulating itself for the kids. A couple fresh examples of kid-catalyzed business regulation:
Grocery Outlet: The not-Slack stock listing to know today
We'll cover Slack tomorrow after Day #1 of trading... Grocery Outlet earned your attention today. The 73-year-old chain is the nation's fastest-growing "extreme-value" grocery retailer. Picture Trader Joe's meets Dollar General — 300 independently-run stores generated $2.3B in sales with prices that are 40% under regular ol' "conventional" grocers. Here's how:
- The secret sauce: Strong supplier relationships — 30-year average connections with 15 key suppliers (Grocery Outlet buys their foods when other grocers won't).
- The not-so-secret risk: Relationships aren't permanent. They can end. And Walmart, Aldi, and Amazon's Whole Foods can build supplier relationships, too.
One word: "WOW!"... We noticed the term 48 times in Grocery Outlet's pre-IPO paperwork (aka its S-1) describing its values, business model, and risks. Turns out WOW! is how Grocery Outlet promotes its "Power Wall" (also a real thing) of top deals hitting you as soon as its automatic doors open. Here's how else it energizes your weekly guac run.
- “Deliver a treasure hunt shopping experience” with extra-wide aisles and ceiling-high packs of anything.
- Then it makes its cashiers circle the savings with a marker on your receipt.
This is the convergence of 2 major retail trends... Extremification and experiences. Society-wide income inequality is driving high-end luxury retailers and low-end dollar stores to record high stock prices. Meanwhile, stores that are actually fun to go to can get you off Amazon. Grocery Outlet covers both.
PDF-legend Adobe just hit a record high on record profits
Hate TPS reports?... You'll hate this story. Adobe, the digital design company that invented the PDF, has quietly grown to a $130B in value by market cap, after setting a record quarterly profit of $2.7B. Its mission statement is bold, but confusing:
"Adobe...gives everyone — from emerging artists to global brands — everything they need to design and deliver exceptional digital experiences."
It makes money because digital things need to look good... Adobe's a SaaS company (software-as-a-service) that brings in monthly revenue for its software, mostly from businesses:
- PDF: You use it and hope it's "ctrl+F"-able. Adobe invented it in '93.
- Adobe Illustrator: For professional designers who choreographed the graphics in whatever app you were just on.
- Adobe Photoshop: The photo filter from before Insta-filters.
- Adobe Spark Post: This new-ish app was built with social media in mind, offering small businesses beautiful templates to easily turn into shareable biz posts.
Adobe's profit margins are why investors love software... Every buck Adobe earns in subscription revenue costs it only $0.15 to produce. That shows how software is way more scalable than a car — GM's costs are much higher (think equipment, factories) at $0.93 for each dollar of a sale. Profits come easier when adding a customer only requires a new username/password, instead of metal and four wheels.
What else we’re Snackin’
- Efforts: Adidas loses its attempt to expand its trademark on "three stripes" to stripes "in any direction"
- Sliced: Papa John's first Shaq-themed location (he's now on the board) opens in Atlanta on Georgia Tech's campus
- iHelp: Apple's expanding its official repair service to 1,000 Best Buy stores
- Ca$hews: Mondelez (aka the Oreo owner) just bought up refrigerated nut-snack icon Perfect Bar
- Hog: Harley-Davidson will make mini-bikes in China to avoid tariffs
Thursday
- Slack shares start trading after its Direct Listing (not an IPO, but similar) on the New York Stock Exchange
- Grocery Outlet IPOs too, with shares tradable for the first time on Nasdaq stock exchange