Is Amazon's BigCommerce Deal a Threat to Shopify? | 7investing
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Is Amazon’s BigCommerce Deal a Threat to Shopify?

July 9, 2021

The facilitator of online retail has made a deal with the internet retail giant to make faster back-end services available to its customers. This is clearly an attempt by BigC to offer services that rival those offered by Shopify. The question remains — and it’s a really big question — is will BigCommerce’s customers want Amazon to have access to their data? The answer has been a resounding “no” in other cases where Amazon tried to offer direct merchant services, but it could be different this time.

Transcript

Sam Bailey  0:14

Welcome to 7investing Now, a show that teaches you how to take a long term view on investing by better understanding what’s happening in the market now.

Dan Kline  0:24

Good afternoon 7Investors and welcome to a sunny a humid edition of 7investing Now live from Davenport, Florida about 15 minutes down the road from Disney World. My name of course is Daniel Brooks Kline. I’m the host of the program. I am being joined today from Florida as well though from inside, not from outside like me, Matt Cochrane and of course, from Houston, Texas, home of the 0 and 16. Houston Texans, I’ll just call in advance, Simon Erickson said I’m sorry to dig you there. But

Simon Erickson  0:56

It’s gonna be true. Dan, you’re totally right. Nostradamus predicts that one as well.

Dan Kline  1:00

You have one of the better quarterbacks in the league, and he doesn’t know how massage works. I’m gonna leave it at that. Matt Cochrane things looking a little more hopeful for your Miami Dolphins here.

Matt Cochrane  1:11

Yeah, no, I think there’s a lot of cautious optimism down here in Miami for this. So we’ll see how the season goes.

Dan Kline  1:19

Got a little bit echo there. I’m not sure what is going on. Or if if somebody has a feedback loop going, we are going to stick today, we’re going to talk about Amazon. And Amazon (NASDAQ: AMZN) has made a deal with BigCommerce (NASDAQ: BIGC). I blinked out a bit there. Hopefully everyone can still hear me. They have made a deal with BigCommerce. And we’re going to talk about whether that is a threat to Shopify (NYSE: SHOP). Simon, why don’t you set the table with the bullet points about what is happening in this deal here?

Simon Erickson  1:49

Sure, yeah. Great. Thanks, Dan. So you know, we saw Amazon’s got a fulfillment deal now with BigCommerce, because BigCommerce is putting the online storefronts out there for people to create online shops. But then a lot of fulfillment takes a lot of work, right? A lot of infrastructure in place to get those deliveries out the door. You know, we all want one day, two days shipping. So how do you actually do the fulfillment of that? And that’s the role that Amazon is playing, even for other shops that are not Amazon.com?

Dan Kline  2:16

Yeah, this is an interesting deal, because BigCommerce is basically Shopify, without any of the back end, it’s it’s the store. And that’s appealing for certain businesses. When I was in the toy store business. We did all our own fulfillment, an order came in, we boxed it up, we mailed it, we brought our we didn’t bring it to the post office, the post office or UPS picked it up. But Matt, am I right in saying that this is really just a BigCommerce trying to be Shopify without spending all the money? And in the long run that seems like a really bad idea. But Matt, I’ll let you weigh in first, then we’ll go to Simon.

Matt Cochrane  2:46

Well, the thing is, I don’t know if BigCommerce had a choice, Dan. You know, BigCommerce. The barrier to entry in this industry is the backend stuff, all that expensive, like warehouses and distribution facilities and logistics and fulfillment, all that stuff. That’s expensive. A lot of companies can throw up a website and help merchants with web building tools and marketing, online marketing hacks and things like that. But the expensive stuff, the really expensive stuff, the barriers to entry in this industry is all this fulfillment with Shopify and Amazon like taking that to the next level, it’s gonna be hard for these other players to keep up. So I don’t know if BigCommerce had much of a choice in this. Now that being said, like it’s, it’s, to me, it’s a it’s a huge win for Amazon. But it just kind of shows like BigCommerce, there’s, like weak position in this field.

Dan Kline  3:37

Yeah, I look at this as Shopify, Amazon, Target, maybe one or two others, maybe not even one or two others are so lightyears ahead. But if I’m BigCommerce, I make this deal. But I don’t stop investing in logistics – you have to have this deal, because Amazon is like a pro wrestling tag team. You know, at some point, they’re going to turn on you, they’re going to put a knife in your back.

I will point out, Matt and I are both in an area. We’re about three hours apart, but there are hurricanes rolling through. So I apologize if I have any weather related internet glitches. We would love your questions and comments and happy, happy to take them happy to talk about them. BY79 says NWO. Oh, yeah, it’s very much if you work with Amazon. There’s a little bit of evil to that. But Simon, I’m gonna let you weigh in on this before we get to sort of the whole working with Amazon question.

Simon Erickson  4:25

Dan, if you go flying out the window and a gust of wind. I’m worried for you, man. Watch out for the hurricanes out there in Florida. I agree with what Matt said. I think that you know, this is the industry in e commerce that is now demanded instead of very high bar that it wants one or two days shipping. Right? And this is why six years ago, Amazon goes out and it requires Kiva Robotics and it puts that into all of its warehouses, right. We’ve got to find a way to do this much more efficiently. That cost a lot of money, I believe was $750 million up front. Plus, who knows how many billions of dollars it took to coordinate all those logistics. But that was necessary, right and everyone else doesn’t have a balance sheet that’s a strong enough and as deep pocketed enough, as Amazon’s is to afford to be able to do something like that.

So you kind of got the ones at the top, just like you mentioned, I got to be able to adjust as this ecommerce industry gets more and more demanding, everyone else is gonna have to build on top of those tools, like we see BigCommerce using Amazon for the fulfillment of that. But I agree with Matt, this is a really, really big win for Amazon, and puts the smaller players in a difficult competitive position.

Dan Kline  5:27

And Simon, if you could see how much Amazon spends on robot chow every month, it is believably high. That being said, so I’m going to push back here. Amazon has gone into various spaces like this before, where they’ve tried to, you know, they’ve tried to, to work with merchants directly. And stores have said, I don’t want Amazon having my info. So technically, as a store, you may not have as much awareness that Amazon is providing fulfillment, because it’s going through BigCommerce, but you probably are aware, Simon, I’ll let you go first here, do you think there’s gonna be some hesitation? I don’t know why you would ever not use Shopify and you choose to give Amazon your information. And this just seems like another way to do it.

Simon Erickson  6:11

I mean, it depends. Again, at the end of the day, it’s like if you want to use BigCommerce, or you want to use any other digital store, that it’s not called Amazon or doesn’t rhyme with Amazon, you’re still giving the fulfillment to that, right? They’re still taking a handsome cut of everyone the orders just for doing all the logistics for it. And so I think that Amazon doesn’t care at the end of the day, if it’s if it’s got the Amazon van that’s dropping off the package at your doorstep after one day delivery. Does Amazon really care if you’ve got a smaller platform for them to build their stores upon? I don’t think it does. I still think this is a win for them, even if there’s hesitation with the data.

Dan Kline  6:46

Oh, no, it’s it. This is great for Amazon. Because what Amazon does is they can take the data and say, Hey, I noticed a lot of people in this zip code are ordering sweatpants. Why don’t we private label Amazon sweatpants that are cheaper than whatever this business makes. And that sounds really evil. But that’s like a big part of the Amazon business model. Matt, I’ll let you weigh in here and feel free folks ask us questions. It doesn’t have to just be about this. We would love your questions and comments. Matt?

Matt Cochrane  7:11

Yeah, so I mean, right now there’s 10 million 3rd party sellers on Amazon. So I think this will, there will not be a lot of hesitation, especially with this small and medium sized entrepreneurs and businesses that like are the dropshippers, the third parties that sell that have built up an online business – I don’t think there’s gonna be much hesitation. Now look. Now, of course, we’ve seen things like a Walmart or Target, they Home Depot, they’re not going to ever use AWS, which is Amazon’s cloud services. They’re never going to use like Amazon’s fulfillment capabilities. So you’re gonna see all the big retailers stay away, of course. But like this smaller merchants, they don’t have much of a choice. Right now it’s either Shopify or Amazon. And, you know, for all the fears that Amazon might take your data, they also have a lot of customers that go to the their website every day. So I don’t think this will be too much of a, I think there will always be some uneasiness there with merchants. But again, there’s already 10 million 3rd party sellers on Amazon. So I don’t think like, especially for the smaller merchants. No, I don’t think you’re gonna see too much hesitation.

Dan Kline  8:19

There’s also the third option. And I actually think this is where the customer growth comes from. An awful lot of stores are just using UPS and the US Postal Service. Maybe they’re using something like Stamps.com to manage some of that postal flow. But I actually think that’s why a BigCommerce or say a Wix can even exist, that a lot of retailers simply don’t understand that someday, I’m going to need this muscle of Shopify, to have these warehouses all over the country and be able to say, Okay, I’m selling my custom headbands, mostly in Texas. Wouldn’t it be great if I could send a load of them to a warehouse in Texas and have shipping be faster? That’s what Shopify is doing. That’s what Amazon is doing. I’ll ask Matt, this question first. Is this the beginning of Amazon buying BigCommerce?

Matt Cochrane  9:05

Well, so what’s interesting is like, my immediate reaction is no, but earlier this year, Amazon did acquire Selz, which is kind of the Australian equivalent to BigCommerce. But I think they really acquired Selz one for the capabilities they offered and as a gateway to capture more of the Australian market. And not to mention that a larger acquisition such as BigCommerce, that that’s going to certainly draw more antitrust scrutiny. I think the real endgame for Amazon here is to build up its third party logistics and fulfillment services as sort of a fourth pillar to its business. I mean, they have ecommerce, they have the cloud and they have advertising. And I think they want logistics to be a fourth pillar. And they’re not going to do that by gobbling up companies like BigCommerce, or you know, others like Wix. They’re going to do that by winning their business and by offering these services, so I don’t think so.

Dan Kline  9:57

I’m actually pretty surprised that FedEx and UPS aren’t going more into this. Simon thoughts here?

Simon Erickson  10:02

Yeah, I think I agree with that. I mean, it’s just kind of Roblox for e commerce, right. You know, nobody wants to go out and hire a ton of developers to build an online storefront. They just want to hire Wix, or they want to hire BigCommerce or somebody else like that to sell their custom headbands. If you’re building, if you’re making custom headbands in Texas, you’re probably not making them with the Houston Texans design on them. If you’re making custom sweat pants, you’re probably not selling them in Florida, because I know in the winter, it gets down to 80 degrees out there for you guys. But if you want to sell things, you want to focus on getting the conversion funnel as optimized as possible. You don’t want to do all the developer work that costs money. So I say, Hey, give me some tools that are low code, no code to do this.

So there’s a place for these companies to help with that, to move through the conversion funnel of e commerce more efficiently. But again, I just think it’s a tough, competitive place to be in. It’s not like there’s a whole lot of proprietary or IP in this, I mean, it is efficient. And you get kind of a sufficient user base after a while. But when you sign something like Amazon, or you work with somebody like Shopify or somebody else that’s still doing the fulfillment, when people are demanding today’s shipping, I mean, you’re kind of at their mercy, of giving them a cut of every one of the transactions, not to mention everybody else offering similar tools. So I’m not really interested in acquisition of BigCommerce by Amazon. I also am personally not that interested in big commerce as an investment opportunity. Because it seems like it’s a tough space for me, at least for them to compete in.

Dan Kline  11:26

Now, I agree. There’s a clear winner here. And that clear winner is Shopify. But let me ask the question we posted in the tease document and Max Lucas, we’ll get to your comment, Rashid, we’ll get to your comment when we switch over segments. But is this any threat to Shopify? Matt, I’ll let you start here.

Matt Cochrane  11:44

Look on some level. Yes, but no, I mean, not really. Look, I mean, sure, like now BigCommerce can offer like when they’re after customers, they can offer like the same like delivery needs like that Amazon can. I think that is big, and for them winning customers. Um, so on some level, is that a threat to Shopify? Yes. But Shopify is doing the hard work of building out their back end, they started that investment years ago. And look right now. I mean, I think there’s two great players in this space. There, Amazon and Shopify, BigCommerce and others like Wix. I mean, to me, they’re just the, they’re just the lesser players in the field. And I don’t think deals like this are going to get them up to that upper echelon.

Dan Kline  12:25

Yeah. And I’ll go on the record and say, don’t invest in second tier players. Like, I think we see this in the electric vehicle space. Oh, this new company is going to do it is really hard to go from idea to reality. And obviously, BigCommerce is a reality. This is not a company with no customers and no revenue. But they are fighting a very uphill battle. Because look, Walmart could do what Amazon’s doing, too. So there are a handful of players in the space. And the reality is, if you have ups if you have the US Postal Service, if you have FedEx, Shopify, Amazon, Walmart, how many more options do you need? So I’m not even sure there’s a need, even if BigCommerce could borrow the money or raise the money to spend the 10s of billions, maybe even hundreds of billions? This would require Simon, I’ll give you the last word. Is this any threat to Shopify?

Simon Erickson  13:09

I mean, just putting it all together, Dan. I mean, like, at the end of the day, if you were trying to build this out separately, like back to your point you made about the hesitation of working with Amazon. Yeah, Amazon, you know, takes data and they develop things themselves. They do with the Web Services Group, too. That’s kind of how Amazon works. Because they have so much. It’s an organization that’s entirely built upon data through its entire history. And so I can see how there might be if there was a threat to Amazon or Shopify, you go out there and you say, Hey, we are really really user focused. You we are we prioritize customer satisfaction, you’re looking at the testimonials, like how much better it is to sell on BigCommerce than it is on Amazon.

But even if you do that, and even if that part is a threat, you can’t put the billions of dollars in new logistical infrastructure, you’re still dependent and you’re still using Amazon anyway. So do you want to be frenemies with Amazon? Where you’re bad mouthing on the front end of the you’re using on the back end? I don’t think so. I think that at the end of the day, they’re just kind of stuck to say, hey, we’ve got a more efficient way or alternative if you don’t want to use Amazon’s platform use us. But other than that, I think it’s hard. It’s kind of limited market growth, I think for that company.

Dan Kline  14:14

Yeah. I’m more worried about Santa as a threat to Shopify has given away stuff and his his labor’s free. It is magic. I’m not sure how all of that works. Martin Barry West says glad to own Amazon and Shopify. We thank you for watching the program. We’re gonna close out this segment with Max Lucas’s comment if you want to read that one, Simon, as we’ve said many times your vision is better than mine in this case.

Simon Erickson  14:35

Yeah, sure, Maxx. Thanks again for watching. I know. He says, I know people criticize Amazon from selling Amazon labeled products on their platform. And is that not the same thing as what Costco is doing with the Kirkland brand, Dan maybe this one’s the best question for you to answer.

Dan Kline  14:49

Yeah, I think that’s a fair thing to say because here’s the reality Target (NYSE: TGT) or any retailer looks at like how much Tylenol they’re selling and goes well, let’s make a generic house. brand. And we consider that an acceptable practice. Amazon goes, wow, I’m selling a lot of iPhone chargers, like we could make those in China and sell them cheaper and nicer and Amazon gets gets sort of critiqued for it. I think the problem is long been considered acceptable in medicine in, you know, certain, like haircare products or whatever. It hasn’t generally been considered accessible, acceptable in apparel or other areas.

And, look, if you’re doing business with a retailer, that retailer is going to use the info from that business, and it might get them. Target has done exactly that. They ended some of their deals with third party merchandise providers, and they have their own house brands that are maybe nicer maybe the same. So if I’m Levi’s, which has a big deal with Target, am I a little bit worried that at some point, they’re gonna come out with you know, Bullseye jeans or whatever it is, and, and kick me out? Yeah, I think that’s a reality. We saw Nike do that basically, any retailer that didn’t a differentiated Nike experience kicked out Nike. And that actually put a lot of smaller companies out of business. Matt, you do want to weigh in on this one?

Matt Cochrane  16:06

Yeah, I think it’s the exact same thing like Walmart, I think they have like dozens of brands like private brands that they that do over a billion dollars in business every year. Target does the same thing. Costco does the same thing. I mean, down here, we have Publix, they have their their brands. Kroger has their brands. All these large retailers have their own private brands. For some reason, when Amazon does it and put it on their website, they they get dinged for it by regulators or you know, or called out by regulators anyway. So yeah, I think it’s the exact same thing, though. It’s an acceptable practice for probably 100 years now. And but now all of a sudden, you know, and they’ll say, like, well, Amazon places it on their website in a place where customers will see it first. What do you think retailers do it when they place it on the shelves? I mean, it’s just, to me, it’s just so silly that to target Amazon, but not to Target, like other retailers. It’s an acceptable practice. And of course, they’re going to do it. And of course, Walmart has data on the brands they sell in store. It’s the same thing. Amazon has data on the products they sell on their website. To me, it’s the exact same thing.

Dan Kline  17:13

Yeah, and it doesn’t always work. If you’ve ever perused the cereal aisle, I don’t think they’re selling a lot of like crazy puffs or magical charms, or, you know, whatever some of those are, because there is some value in brand name. So if your brand is strong enough, you don’t need it now. Can Amazon tilt the deck? Yeah. But can I, you know, could Simon and I start a pancake mix company, you know, and then pay for endcaps in Target and buy our way into market share? Yeah, that’s actually how it’s done for the most part. It’s not usually I have a great product that target wants, it’s I have a product that meets Target standards, and I’m willing to pay them for shelf space.

So this is kind of a corrupt industry. I was shocked when I had my first book out that books pay for book companies, publishers pay for space at Barnes and Noble on those like special tables. And when my book, which I won’t even share the title because it’s I don’t get any money when it when it when it sells. But my first book, when it was on those displays, it sold 1000s and 1000s of books. And when it wasn’t on those displays, it stopped selling 1000s of 1000s of books.

We are going to talk SPACs as an alternative to IPOs. Before we do that, I want to take the comment from Rashid. The first one Sam, Matt, if you want to read that that would be great.

Matt Cochrane  18:24

Off topic, how do you guys keep track of so many stocks you recommend every month? Do you let go slash trim old non conviction stocks?

Dan Kline  18:34

Simon, I’ll let you take that one. It’s probably one you’ve thought about as much as anyone.

Simon Erickson  18:37

We don’t let Steve Symington sleep? That’s the answer, isn’t it? Sleep is for the weak when you’ve got stocks that you need to cover out there. We do you know, we don’t tend to the second part. First of the question. Rashid is that we know we do not let go over trim non conviction stocks, we let everything and ride on the scorecard. If you visit 7investing.com/recommendations, you’ll see our overall returns compared to the broader S&P 500 index. That return is an absolute return since the inception of the pick. So Matt and Dan’s pick from this past month, which just went live, what are we at the ninth today, so eight days ago, is factored into that. And then also, our Matt and Dan’s pitch from the very first month that they recommended a company for 7Investing are factored into that number. But the point is, it’s a consolidated return. It’s all on there. We haven’t sold any of those positions. We’re keeping conviction in them because we put a lot of thought upfront of buying and holding long, long term for each of these. And we’re putting our own future to the fire that we’re not just trying to jump in and out of stocks we’re holding for the long term.

Dan Kline  19:41

Yeah, and the stocks we personally recommend. We also generally, you know, obviously feel really strong about and I know I go through my stocks that I picked to check to see if there’s something I should update for members. So one of the stocks I picked had sort of a major milestone It was more like the major celebratory milestone than the actual result. So I wrote, hey, here’s what what happened. And here’s why this matters. And I think we all do that. And does that become overwhelming at times? Yes. If there’s an earning season where 10 different companies you recommended all have big news, well, that becomes a busy week. But the reality is, we also all support each other. So like, maybe I have a really busy month. And I say to Matt, Hey, I know you really like this company I picked, could you write this update? So, you know, I don’t have everything that’s happened. But that could happen at some point in the future.

Simon Erickson  20:30

And I’ll add to that, too, Dan. That, you know, sometimes we make very high risk picks, you know, even though we’re buying and holding, we’re not just recommending low risk, $200 billion market cap companies. We’re going after the small caps. Several recommendation, that’s several recommendations on the scorecard had been less than $1 billion in market cap. And when you have a company that’s small, we think that we have a responsibility for giving updates on those saying, Hey, what’s going on? You know, what about those risks you mentioned in the original recommendation, you don’t want to just buy it and forget about it for a company like that. So I think that’s one of the reasons as to why this entire team, every advisor on the team is providing at least if not more than two company updates for subscribers, every single one. So you’ve got at least 14 that are that you’re able to review on previous recommendations as well as the new recommendations we roll out every month.

Dan Kline  21:23

And most months it’s well more than that. Yes. Is there a month? I think there are months where Maxx has written 14 recommendations.

Simon Erickson  21:31

Last month by himself, yes.

Dan Kline  21:33

He’s picking in a space where there’s a lot of development. I’m largely picking more stable long term I mean all of our stocks are long term but established companies so it’s not that likely. And you know I’ll Best Buy has never been a pic of mine, but let’s pretend it was and major changes aren’t happening at Best Buy it a week to week basis, the way they might be at a pre revenue company or a company that has all these de risking events to come.

We have a bunch of good comments. We’re gonna take Broadway79’s comment and Dig Your Fortunes comment after we do what we’re watching. Before we do what we’re watching. So you mentioned Simon it’s the ninth of the month that actually surprised me because Fourth of July was yesterday in my in my brain. Time is blending. On the first of the month, our new picks came out. So if you’re a member of 7Investing on the first of the month, you get a huge write up, 1500 words is the minimum. But you know, which tells you all of what, what, why and how we like the stock. So you get the key takeaway. Some people just read the key takeaway, some people really care about management or valuation, some people read every word. You also get to watch our pitch video, we each make a slide deck, and we do a PowerPoint presentation to everyone else on the team and everyone could push back. So we have overlapping expertise. I just mentioned Matt night, cover some of the same things. Simon and I, Simon was particularly interested in my pick this month. So he had questions about it, we have Dana and Maxx who can push back at each other. So you not only get to see why we like it, you get to see how the rest of the team feels about it. Simon, if someone wants to subscribe to 7Investing, and it is a great time to do that. How would they go about doing it and what will it cost them?

Simon Erickson  23:14

7investing.com/subscribe is the link that you would go to sign up for a services that immediately unlocks our seven monthly recommendations and then also all of our previous recommendations we’ve launched, or we’ve released since we launched in March of 2020. So you get access to everything and see all of the reports right off the bat. Dan, you mentioned several of them this month, you know, we don’t disclose the course or recommendations publicly but

Dan Kline  23:39

Just notice how good I was that not right.

Simon Erickson  23:42

But I love your pick, I love the fact that you made this month it’s it’s it’s in my mind, like the perfect Dan Kline pick. And then Matt and I both actually had kind of two companies this month that were kind of similar in so some ways, but also very different in some ways, too. So it’s kind of interesting for me to read Matt’s report and compare it against the company that I recommended. So that said, you know, we’ve got not only the reports, we’ve also got this company updates image and we follow along with them over time. And one of my favorite parts every month is a subscriber call on the third Friday of the month, where we actually interact directly live with anyone who wants to attend, they can ask us questions and really get into the nitty gritty in the in the trenches. It’s not just you know, we were released a report and then we disappear. It’s you get to ask us in real time, anything that you want to know that you didn’t learn from the reports. And I always enjoyed that every month as well.

Dan Kline  24:31

And Simon not that this is something we promised to do. But you know, this morning, I answered email about one of the pics from a member which is a really good question. And it was something that we were closer to the subscriber, I probably would have pushed into the subscriber call. But the person you know was really on the fence about it. So I answered the question. And on Thursday morning, I actually well, Wednesday night, I got an email from one of our subscribers who had my email because I’d given it out on air. And he said hey, I followed you over from your previous job? I see on Twitter that you’re in Miami. So am I, I see where your event is you want to grab a drink or have a coffee? And I said, Yeah, tomorrow morning, like so, you know, I’m out and about in the world, if you see where I am, I’m not hiding that I am happy to have a drink. Now, obviously, we can’t do that with everyone. But if it works out, and I happen to be in your neck of the woods, instead of having breakfast alone, I got to have breakfast and talk stocks with one of our members. And it was a lot of fun. So once again, 7investing.com/subscribe, that is $49 a month or $399 a year. We also have our special program if you’re an active student, Simon, that’s 87 if I remember correctly?

Simon Erickson  25:42

$84

Dan Kline  25:43

Yeah pay me $87.

Simon Erickson  25:47

And by the way, you can meet with everybody for coffee, I think if there’s anyone in the whole planet challenge that you, you would be the one that can actually meet everybody for coffee every single day,

Dan Kline  25:56

Hey, I’ll put out there if you see I share the dates when I’m traveling. If you want to jump on a cruise that I’m on and come hang out, I’m a very social person who has spent 16 months locked in a cage where. Matt is one of the few people I’ve seen in person during much of this for the last few weeks with things getting more normal have been great.

Simon Erickson  26:16

I will add one more thing too, if I can, is at $49 a month, we crunched the numbers on this. And you say when you put seven lead advisors, and the amount of time we’re putting on a daily, weekly and monthly basis into the picks and finding most innovative stocks out there, you’re basically at $49 a month hiring each of us for less than five cents an hour to go and find out the stock market’s greatest opportunities, I still think 7Investing is the best deal on the internet. Disclaimer, I might still be biased about this.

Dan Kline  26:42

I would agree with you on that. And I’ve seen a lot of other services that are not faulting them. But we’ve packed a tremendous amount of value. You know, every time you put a name out there, like this is the person who’s gonna be joining us. It’s kind of been like your you know, and I hate to keep referencing pro wrestling, but it’s like the surprise, we’re like, the guy comes in who’s a big star someplace else, and you didn’t know he was gonna be there. Like, you know, when you announced Dana or Anirban, or I’m sure me, but I wasn’t at that call back when those things happen. It’s an OH MY GOD, drop your mouth moment.

So we’ve talked enough about us. We are going to talk Simon – SPACs as an alternative to IPOs. Why don’t you give sort of the the overview. And then I want to talk about a little bit about how this has led some pretty questionable companies raised public money.

Simon Erickson  27:24

Yeah, perfect. And one last thing in the last I won’t belabor this, but you did mention the student rate at $84 a year. We’re just getting started with that. We’ll have more news about that next week. Really excited about that program as well.

Let’s talk about SPACs though. These are special purpose acquisition companies. And this has been a craze lately. Everyone seems to want to talk about SPACs and no one want to talk about him two years ago. In 2019, there were 59 SPACs that came public through an IPO. And this year, there was already more than 360 companies that have come public through a SPAC IPO. So a six fold increase in just two years. Kind of the most high profile. One of these was Virgin Galactic, right, Richard Branson said, Hey, I want to bring this company public, I don’t really like going through all these hoops that I have to for a traditional IPO. And he liked the idea of working with Chamath Palihapitiya, with Social Capital to bring it public more quickly and in a more capital efficient way, then the traditional IPO route.

And Steve and I have been really digging into this the past couple of days. Yesterday’s podcast, we actually give a lot of the background about SPACS. And I might divert people to to read or watch that rather than going through it again here today to save time. But you know, we’re learning more about what SPACs are. And now it’s time to get into the nitty gritty of the investment returns on it. It’s not just a craze, it’s not just a fad. A six fold increase in two years now we need to start being more objective about the returns. And when you see 363 SPAC IPOs year to date already another 300 that have raised money that are looking for a target, there’s going to be some useful objective data that comes out of this. And so as the next step of this one research project that Steve and I are working on right now is quantifying first of all, what is correlated to SPAC investment returns. What do the particulars of the deal mean for investors, there are warrants, there are other excuse me, factors at play that will return that will affect your returns, and in who’s doing really, really well and is that reproducible over time? So we’re getting into the nitty gritty of SPACs it’s time to take a closer look at this new investment vehicle and what it could really mean for us as individual investors

Dan Kline  29:35

So Simon, let me throw correct me if I’m wrong, but it’s much easier to go public with a SPAC than with an IPO. And I haven’t followed a ton of these but I followed say the DraftKings SPAC, and that’s not a company I in any way recommend. By the way, I’m pretty negative on DraftKings just so people understand. But basically instead of getting a traditional S1, and we know an s one is kind of like the documents you give your mortgage company it’s the rosiest picture of the financial future. But the DraftKings S1 basically said, we’re a gambling company, we might go out of business. We don’t have any money like that. That was it. Like, there’s not a lot of info there. So is this a risk reward thing for investors where Yes, it will allow some good companies like Virgin Galactic, which I think we can all argue is a well financed, well thought out company, whether you own it or not, I do own a very small amount, which I’ve said on the show before. But that being said, it also lets you know, some pretty sketchy media companies that don’t have a big upside, like, you know, you can like BuzzFeed all you want, I’m not so sure you want to be an investor in it. And I don’t think people understand that. Is there a lot of risk for investors here?

Simon Erickson  30:45

There is, and there’s too many SPACs that are out there right now. But there are some good opportunities that are taking advantage of this as a way to raise capital more efficiently. And so let’s walk through an example to kind of give this make this a little bit more real here Dan. Let’s walk about what’s walk through how a SPAC would work. Okay. So you are a financial sponsor, you are going to go out and raise a whole bunch of money and your expertise is in wrestling companies.

Dan Kline  31:10

A bad idea.

Simon Erickson  31:10

But you’ve got the outfits, you’ve got the terminology, you’ve got everything figured out in pro wrestling. And so you say hey, I’m going to go and I’m going to raise $100 million. Okay, and this is going to be publicly traded, I can buy into. I say, great, okay. I don’t know what companies Dan is going to look forward to merge with. But I trust Dan. So Dan, I’m going to give you a million dollars, I’m gonna put it into your SPAC IPO that you launch out there. And we don’t have any clarification yet on what you want to merge with what the final company’s gonna look like, I just trust you, because I know that you know, your stuff.

And meanwhile, Matt Cochrane has got a pro wrestling company that is privately traded, he’s been running it for a long time. I don’t know a whole lot about pro wrestling, but I can assume I can pretend that he’s got an arena. He’s got some wrestlers. He’s got, you know, the marketing figured out, he’s done all the operations, and you approach him and say, Hey, Matt, I would love to bring your company public. So now you can start issuing shares to the public market and raise more money. You can expand and you can do pro wrestling even better. So you merge with Matt’s company. Matt’s company was privately traded before now it’s publicly traded, because you had all the funds that you injected into Matt’s pro wrestling company.

And then I as an investor originally gave my money to you, because I had faith in you and pro wrestling. Now I own the combined entity, which is publicly traded under a new ticker, which is Matt doing the operations of the business. And so kind of full circle to your question of, you know, what are the risks? And what do we need to be keeping an eye on? We should be keeping an eye on first of all, Dan, are you making good deals? Every time you make these? Are you are you returning 20, 50% for investors, or all of them losing 10 or 20 or 50%? And then also, what are the terms also that you have with Matt, for that deal that you just did? Are you going to award yourself a lot of shares, because you completed the deal? Is Matt saying his company is worth $100 billion, and you agreed to that kind of valuation? I mean, things like this is what we really, really need to get into the nitty gritty of SPACs. It isn’t uniform and cookie cutter, every single one of those is an individual opportunity, which could be bad, which could be good or bad for investors.

Dan Kline  33:12

Yeah. And the challenge here as an investor is I’ll give an example of a SPAC looking for an investment. The guys at the the the Fenway group, the owners of the Red Sox, partnered with a guy forgetting his name, the gentlemen a Billy Beane, who is the GM of the A’s, who is the subject of Moneyball, and they’re sitting on a half billion dollars to go buy sports properties. And that might be stakes in teams that might be whole teams. And you can look at those guys in their track record and go, Wow, they really know what they’re doing. I’ll buy in based on that. In my case, invest don’t buy something because it’s a SPAC that is not, you know, nobody buys things because it’s an IPO. I mean, you shouldn’t people do. In this case, the only way I would buy a SPAC at launch is if it’s a company I’ve been tracking as a private company. Simon am I correct in remembering Palantir was a SPAC.

Simon Erickson  34:02

No, no. Palantir was a direct listing. But palantir is actually putting a lot of money into specs. It’s kind of becoming a holding company,

Dan Kline  34:08

A direct listing a similar type of reporting, but Palantir was a very public facing private company where you could follow them. In most cases with a SPAC just like an IPO. I would argue you should wait a couple of quarters until you have SEC documents and can actually see what their operations are. Right. So I mean, is that me being too cautious? I’m the cautious one on the team.

Simon Erickson  34:29

It’s interesting. There’s a lot of risk upfront with with SPACs before you land the merger. So the way that it works again, back to your pro wrestling example is Dan, we typically like we’ll give you a timer of two years to go out and land a deal. And so what happens if you get to a year and a half and you still haven’t found the right company to merge with? Are you more incentivized to go out and make a bad deal on my behalf? Knowing that you’re not going to get your warrants and your benefits for not closing the deal? Maybe that’s the case. You know, or maybe Matt on the other hand is saying oh gosh, you know, should I should I be pressured into doing this deal with Dan, knowing that Dan has got this much money, and this is going to really bring me into the limelight maybe I should just go ahead and do this deal with him anyway, though.

There’s a lot of personal people aspects to these kinds of deals. And to your point, the the SEC filings, the financials, the the quantitative factors are going to tell the truth of what’s going on out there. It’s subjective right now that it’s going to become a lot more objective in the near future. And that’s kind of the part that I’m excited about as an investor.

Dan Kline  35:29

Yeah. And there’s certain people look, if if John Legere, former CEO of TMobile came out and said, he’s got a $2 billion dollars SPAC and he’s gonna lead the combined company, I would be here have my money I trust you. That is, I think, pretty rare. So remember, you’re investing in an underlying company.

There’s a couple of comments on this from Sandeep, David, I’m not gonna put the comments up. But because we don’t know the companies, and I appreciate that you telling us about them. But I think this is where you need to be wary. It’s that you’re going to see a lot of names that have really exciting sounding businesses that never would have made it through a traditional underwritten, you know, banking system. So I think this is an area where you have to do your homework, more so than you know, you should do your homework for an IPO. But the SEC isn’t doing a lot of work for you, and you have to do it. Simon I’m gonna let you close out before we talk about McDonald’s and loyalty.

Simon Erickson  36:21

And I’ll take the other side of that coin to Dan is that yes, there is less regulatory requirements for the paperwork for a SPAC IPO than a than a traditional IPO. And that might be muddying the waters a little bit, you might have some less quality businesses that are going to cut corners and do the SPAC route because it’s easier for them. On the other hand, every time when I say capital efficiency, which is something you hear me talk about all the time in SPACs, that is a huge advantage. If you have a really good business. If you go out and you have an underwriter right your traditional IPO, and you get $10 a share from them. But then on the first day, this this, this shares go up to $30, you left a lot of money on the table on something like that. If you could just give get a whole lot of money directly into your business, from someone who’s got direct access to public funds, like a SPAC financial sponsor, that is a much more capital efficient way to raise money. So if you’re a really good business, do you want to do that that way rather than a traditional IPO? Yes, possibly. And this is an option that’s now on the table. So it’s going to cut both ways. And yes, do your homework. There’s a lot more risks. But I have a lot of interest in this as an investor, I think is really good companies are gonna do this to.

Mike Fee, appreciate your comment. Yeah, I do think the SEC is going to get a little more involved here. Because it’s going to be rare, but you are going to see some companies that should not be going public going public as a way to cash people out. Matt, we talked about you as a pro wrestler. Here’s my idea. Mr. Mediocre Matt Cochrane, a wrestler who’s he’s pretty good. He’s not that full of themselves. That’s, you know that that is a huge contrast to you know, Mr. Wonderful, or Captain Perfect or whatever else you would traditionally be. But that you want to talk about something that if we didn’t cover this space, I almost think we wouldn’t know. But McDonald’s is launching its first ever loyalty program. As a lifelong fan of Grimace, you know, and a member of his fan club, I find it hard to believe McDonald’s (NYSE: MCD) has not had a loyalty program. Tell us what’s happening here.

Matt Cochrane  38:18

Right Dan so I almost feel like it’s like Walmart saying they’re gonna announce their website in 2015. It just feels like they’re, they’re very late to the party here. It’s going to be called mind McDonald’s rewards and customers are going to be able to earn points for making purchases via McDonald’s apps. And to juice it up and honor McDonald’s 66th anniversary this year, they’re going to be giving 66 customers, 1 million reward points and one grand prize winner, which who’s going to score free fries for the rest of their life.

So look, why is McDonald’s doing this? So according to Square 42% of restaurants plan to invest in loyalty programs this year. And when customers are a part of loyalty programs, they spend a lot more money at those places. So according to Paytronix, the average restaurant customer used reward programs spent 92% more than those who did not use rewards programs. And if they ordered takeout from those restaurants, they are more than twice the amount of customers who didn’t use loyalty programs. So the gold standard for loyalty programs in the restaurant industry today. It’s Domino’s Pizza, which launched this program in 2015. And now has 27 million members and Starbucks, which has 23 million members and that number dipped during COVID but it’s rising back up now. Wendy’s was just launched its own reward program last year now has 13 million members, which really shocked me and to be honest, Dan, like Wendy’s has 13 million loyalty members. But like, they did poach one of Domino’s leading digital engineers last year to lead that program. So I guess the question is, Dan, is my McDonald’s going to compete with these numbers from these other players?

Dan Kline  39:58

So I don’t think so. I did a podcast it’s gonna air in a couple of weeks with the managing director of the American Customer Satisfaction Index on their restaurant report. And year after year, and I probably interviewed David Ben Alber, six years in a row about this report. And McDonald’s is always the lowest rated. This isn’t a report that includes Subway where I wouldn’t eat with with Matt’s mouth, and Arby’s a place I’ve never heard of anyone who likes. So there is a customer sort of emnity to McDonald’s. And when I asked him to dig into that, he said, people go to McDonald’s because of their kids, or because it’s convenient. So I wonder if people have loyalty. Now will parents join because they’re regularly going to McDonald’s? Probably, but I actually think they are kinda late to the party here.

Matt Cochrane  40:44

So, but isn’t it it’s almost like that old Jim Gaffigan the comedian had had a routine about this, like where he says like, McDonald’s serves a kajillion burgers every year but nobody says they go to McDonald’s, you know? And he’s like, yeah, if you run into someone, you know, McDonald’s, like, you could kind of just put your, your head down and like, I’m just, I’m just here, ironically, you know, or something like that. But they serve a kajillion burgers a year. So somebody is doing this. I mean, can’t all be kids? I don’t think.

You know, I actually, I think there’s a lot of people go there for their breakfast stop. Every day. I think there’s, I know they’re pushing that coffee, and they’re there. They’re like, trying to do pushed fancy coffee drinks like Starbucks now. I mean, those aren’t kids? Um, so yeah, I actually think we’ll see. But I think there’s potential here. And one thing McDonald’s does very well, we’ll see how they do with the rewards. But like these prizes, they do like, I mean, you can always go back to McDonald’s Monopoly campaign from a decade ago, or however long ago that was I know, it’s a while ago, but you know, they offer some big prizes to people. You know, I would up it from fries for life. But if they keep offering these kinds of prizes to get people on their app, like I don’t know, I think it has potential Dan.

Dan Kline  41:54

So it does have potential people go to McDonald’s because it’s convenient. We’ve had this discussion about Dominos (NYSE: DPZ). Dominos is just really makes it really, really easy. I had to send someone a pizza the other day, and I wasn’t eating it. So it was easiest to send them to Domino’s. And I do think and Simon, I’m gonna let you weigh in here. I’m not any adding any more loyalty apps to my phone, unless it’s a place I really really go to a lot. I go to Panera Bread occasionally, and I have their app, and it never works well at payout. So I just don’t use it. I don’t care about the rewards that much. Whereas Starbucks, I use the rewards religiously, because I go there all the time. Do you think there’s kind of a burnout factor here?

Simon Erickson  42:34

Probably there is but my only commentary for this Dan is am I the only one on the show that likes Arby’s?

Dan Kline  42:42

Yes, the the old one of the planets who likes Arby’s.

Simon Erickson  42:44

Were we at an Arby’s? I think it was curly fries are amazing.

Dan Kline  42:48

Oh, the curly fries. Fine, but their roast tastes like tastes like wax paper. I would rather eat the thing a slice of American cheese comes in than the roast beef at Arby’s.

Simon Erickson  42:56

Dan that I think are a lot of supervisors purposely cutting you out as you’re dissing on Arby’s right here. It’s fantastic isn’t it? The roast beef and cheese is great.

Matt Cochrane  43:05

Oh, whenever I think of Arby’s, there’s an old Simpsons clip where the all the kids from the school bus get stranded on an island. And they’re sitting around the campfire that night, and one of them goes, I’m so hungry. I could eat at Arby’s and all the other kids go, oh, my goodness!

Simon Erickson  43:20

I stand alone. What can I say?

Dan Kline  43:22

Simon, I’m going to fly you up to Boston. And we’re going to go to Kelly’s roast beef on revere beach and then you will never eat at Arby’s again.

Simon Erickson  43:30

I don’t think Arby’s has a rewards program Dan I at least I haven’t seen one yet.

Matt Cochrane  43:33

That’s where they’re missing out.

Dan Kline  43:35

And I don’t understand the hat either. But, or calling your sauce horsey sauce that that cast calls into question all of your meats. There are a lot of great questions and comments. So we’re going to skip the homestretch. And we’re going to get to some of those questions and comments.

Bway79. This is a little bit of a ways back, Sam, so might take you a bit to find it says How much do you think people would pay for Amazon Prime membership? I think it could go way up. Matt, I have some thoughts here. But I’m guessing you do too.

Matt Cochrane  44:03

I think Amazon has incredible pricing power with Amazon Prime. No doubt, in fact, of all the subscriptions like I subscribe to like I can’t; Amazon prime would have to jack up their price so much for me to cancel. I think it’s the last subscription I cancelled. So yeah, I think incredible pricing power there.

Dan Kline  44:23

I think it could go to 299. I think at some point there’s gonna be resistance. It also can’t go there quickly. It is every time they send me the renewal notice. It is like oh, like that’s 180 bucks all at once. And I know there’s a monthly option. So yes, they have pricing Look, I ordered from Amazon like four or five times a day sometimes like it’s just and I can – Target four tenths of a mile from my house. I’m not at my house at the moment. There’s a Publix like a mile from here. So Amazon is incredibly useful. And as much as I don’t think people subscribe for Amazon Prime. Boy, I want to see the next season of The Boys. We’re going to take the comment from digyourfortune. Matt, I’ll let you read that one out loud.

Matt Cochrane  45:03

Walmart has a store in every nook and corner in the country. So building a last mile delivery should have been a cakewalk. Yet they have not innovated fast enough to challenge Amazon. Walmart can do this is very different from Walmart did this. Dan, can I? Can I chime in on that one?

Dan Kline  45:17

Yeah, absolutely.

Matt Cochrane  45:19

So I actually think Walmart’s done a good job with it. I’ve got to be honest. I think, yes, they were late to it. I think you could definitely make the argument there. But I think they’re, they’re moving now in that direction. I think they’re doing a good job. Their online sales have improved dramatically the last several years. And, and I actually think Walmart’s doing a pretty good job. I don’t, I don’t, if somebody was going to tell me. I mean, I haven’t I have not recommended Walmart. I do not own Walmart stock. But if a friend came up to me and said, I’m thinking about buying Walmart stock, I’m not going to talk them out of it.

Dan Kline  45:50

Yeah, I actually think Mark Laurie did a great job running digital. He’s just a consultant there now. He was the Jet.com guy. And basically, when Walmart first announced free two day shipping, it was a disaster. I wrote many articles about it. In about six months, it got markedly better. And right now it’s not Amazon good, but it’s good. It’s good enough, good. And I’ll say target delivery has gotten too good enough. Good. Especially same day with Shipt. So I think they were a little premature. They maybe should have done a soft launch. But I do think. And Simon we got a comment backing you if you want to share that one. Sam, I actually can’t see it on my screen because I’m I’m trying to go in order here.

Simon Erickson  46:31

Roman’s got my back Dan, says I like Arby’s horserace in the curly fries too. I’m with you, Roman. I hate Arby’s. By the way, I know I’m getting more and more fond of it.

Dan Kline  46:39

I’ll eat the curly fries. I’ll drink a Jamoca shake. I haven’t done any of those things in a decade. But the meats stay away from the meats.

Matt Cochrane  46:48

I don’t think I’ve eaten at Arby’s in 20 years. So don’t take my word for it.

Simon Erickson  46:53

I did want to chime in about the Walmart comment that I think that there is utility in retail locations, that that is going to be healthcare. I think that that Walmart and CVS have both taken advantage of the opportunity to you know, CVS, minuteclinic. And Walmart’s got, you know, kind of things where they can check for for basic visits. And I think that continues, you know, we’re getting more and more patient focus for health care. Those locations are already built out and they’ve got traffic, right by neighborhoods and where people are living. So I think that that Walmart has a big opportunity to do that, too. Yeah, I think you can’t do everything online as exactly the same way that you can do in person. I think that could be a big opportunity.

Matt Cochrane  47:30

That’s a good point Simon. I mean, like the other thing I’ll say too, is five years ago, I think we spent as a family very little money at Walmart. Now the majority of our grocery shopping is there. Their curbside pickup is, is pretty good. As far as convenience goes for grocery shopping for a family of six. It’s it’s affordable, and it’s pretty efficient.

Dan Kline  47:50

We are dedicated Publix shoppers. I personally do most of my shopping at Whole Foods. That is not a snobbish comment that is Whole Foods is the closest grocery store to my house. And I’m often going grocery shopping, like between a meeting and a show. And we’ve talked about this on air. The fact that Whole Foods offers same day delivery, as does Walmart, as does Target but Whole Foods has, in my opinion, the nicest selection of stuff. There are countless times or we’ve been recording things or having meetings, and I’m placing a Whole Foods order while we’re talking because I know I want to cook dinner that that you know that night.

We’ve come a real long way. John Hinz, a regular has a question about our site. He wants to know if it’s possible to sort by market cap. Simon, that’s a tab on our site, isn’t it?

Simon Erickson  48:35

Well, it’s I think he’s might be referring to the recommendations page, john, you know, which is we’ve got limited real estate on that it’s kind of hard to figure out. Okay, you know, how much do we want to present data wise? And plus? The other challenge we found with this is we do kind of disclose in the recommendations, is this a small cap stock? Is this a mid cap stock? Is this a large cap? Or is this an Uber cap stock? And a lot of those kind of change over time, too, which is the challenge of the of the dynamic nature of the recommendations page, which is, you know, is this a small cap now or but it’s now a kind of a mid mid cap and is it going up? So that one’s challenging one thing we are going to be adding to the recommendations page, which by the way is 7investing.com/recommendations is something about dividend yield. We asked we have a lot of people that ask us about income, they want to be income investors they want to know are you are you recommending companies that pay dividends? And we realized in response to those questions we got we weren’t doing a real good job of making it obvious what kind of yield you could you could receive from dividends. So where are you we are going to be adding that I know that doesn’t answer your question about the market cap but that is something we’re improving about the recommendations page.

Dan Kline  49:38

To see our recommendations you have to be a member if you would like to join 7Investing and why wouldn’t you want to join 7Investing, you get more access to the seven of us. I don’t think I’m speaking at a school here Simon saying we all like each other, which is actually pretty unique for well, any job I’ve ever know.

Matt Cochrane  49:56

I mean, there’s Maxx, other than max

Dan Kline  50:00

There’s a loving feud between Matt and Maxx. That’s certainly true. But we are all eager to see each other. And I think that comes through in our ability to challenge each other in a way that maybe other places can’t do that. Because I know if Simon has questions about my pick, it’s questions about my pick, like, and I really think and again, I’m not speaking about any specific place, I’m really speaking about TV more so than then. But when you see us interact, we’re not trying to one up each other for airtime. And that’s absolutely what’s happening on CNBC or Bloomberg or the other places. So there’s a challenge to you know, to you, if any of those people want to call me out, I’d be happy to show up and tout sound investing on any of your platforms. I’m teasing a little bit.

That being said, we’re going to go to one last comment here. I will point out we’re gonna have a crazy interesting week on this show next week. So I’ll be doing Monday show from West Palm Beach. I’ll be doing Wednesday’s show from Cherokee North Carolina. I will be doing Friday show from Birmingham, Alabama. I am really eager for when we could do these shows like from a bar or a coffee shop, and we could have members around. At some point, I promise you that will happen. There’s an audio logistics we have to figure out for that.

I want to take one last comment from Mike Fee. If you want to pull Mike’s first comment up, Sam, we appreciate that. Oh, no, that’s actually not the one I wanted. I’m sorry. But Simon, you could actually speak to this one a little bit.

Simon Erickson  51:28

Okay, yeah. Mike says here, the SPACs have some legal protections regarding their often lofty and ambitious growth projections that they pitch. Let’s hope the SEC cracks down on this loophole. Be careful. Mike has a good point, I think you’re referring to that you can actually put projections in place into their prospectus for a SPAC IPO. That’s the legal document that gets filed with the SEC and presented to investors, that’s a little bit less conservative than the reporting that goes along with a traditional IPO. So it’s a good point. But it is different prospectus.

Dan Kline  51:58

Business projections are all a little bit silly. Like I’ve written multiple business plans. And when you’re projecting out like your seven from a zero revenue startup, you’re just making up numbers. And I think it’s, it’s fair to say you see that in the SPAC world. I actually wanted to take the comment on Walmart towards the end. If you see that one, Sam, my apologies. I never pay attention. But does Walmart often buy online and pickup in store like Target does? What about drive up? Matt? You can answer this one.

Matt Cochrane  52:25

Yeah, well, so I actually don’t know about Target. But Walmart, they have a great curbside service for groceries, which I’ve been hyping a lot lately. In fact, like Dan, I think they ran a Superbowl ads right before COVID which was like great timing for it. But like, and we probably you started using it the year before that. But it’s it’s, it’s really convenient. I gotta say my wife loves the app. This used to be you know, for we’re a family of six her grocery shopping every week, I used to be two to three hours. And now it’s down to like, you know, she spent a little time on the app giving the list ready, but like she’s there for 15 minutes, and they load the groceries right in the trunk. And she leaves in it’s a great time saver. Like, I don’t know what Target offers, so I can’t really compare.

Dan Kline  53:06

I get offers, they offer both the same thing as does Whole Foods. Simon, I know you have to go, why don’t we tell us a little bit about where you’re going? Because it’s another amazing service of us here at 7Investing?

Simon Erickson  53:17

Well, we’re talking with CryptoEQ, you know, I’m going to be chatting with their advisors and their their founders over CryptoEQ, which is cryptoeq.io is their website. They’ve really impressed me for several years now, with their coverage of cryptocurrencies. And this is not something that we shy away with, you know, as equity investors. I’m not calling this a fad. A lot of people kind of scoff at Bitcoin. I am not one of those people. I think this is a developing trend that we really should be paying attention to. And so every month, part of the perks of both of our organizations, they have a subscription product that focuses on individual cryptocurrencies, we chat about where is this collision between cryptocurrencies and equities. You know, which companies are ahead of the game in adopting Bitcoin? And which stocks are companies that we should consider for that. And then on the other hand, if they say, you know, well, you know, what is this going to mean for the volume of trading for these cryptocurrencies that they’re recommending? And so we publish shows, those are advisor updates, I go out on the 15th of the month, every single month, and we’re gonna be chatting within here a couple minutes. I’m pretty excited to talk about a bunch of stuff. Especially how companies are how countries are now accepting Bitcoin as legal tender. It’s very interesting.

Dan Kline  54:25

We will let you go and have you back on the program. I think we’ll have the entire team next Friday. So we will see you then. Sam Bailey, it is time to hit our finisher. We are nearing the end of the program. Which industry will have changed the most in the long term due to the pandemic? 41% of you think it’s retail, 11.6% said restaurants, 22.5% said Entertainment, 24.6 said travel. I actually think overwhelmingly it’s entertainment. And Simon you’re still here. There you go. I think it’s an Entertainment because we hastened not the death of the movie theater, but the blockbusteization of the movie theater. We are not going to see small movies released to movie theaters anymore. We’re going to see a lot more thoughtful consumption of entertainment. Television and movies have been pushed to the home. Matt, what’s your thought on this one?

Matt Cochrane  55:18

Yeah, so I kind of think retail is already changing long term. I mean, I think it accelerated the change in retail, but I think retail is going there anyway. Entertainment I definitely think has has changed. And I definitely agree with you about your thoughts about movie theaters. But also restaurants too, I think we’re seeing like, I think it really accelerated like these deliveries and like pickup options and things like that. But yeah, I think entertainment in the restaurant industry, probably,

Dan Kline  55:46

You mentioned it with with retail that Walmart had started curbside pickup before this. Target bought Shipt before this. So I actually think we saw a change in usage patterns, but we’re actually going to see a pretty big change back and everyone assumes that digital is going to become this giant thing. Digital topped out at under 20% of sales during the worst of the pandemic for retail sales. And it’s actually not forecast in the next decade to get that much higher than that. So you know, people still like going to stores and I get it and your situation with six kids and a big grocery list. Why it’s a time saver. I cook, I want to go to the store and see the piece of chicken I’m buying see the the salmon I’m gonna cook that night. So I do order a lot from delivery services because of my work schedule. But but I do think I still go to the mall, I still go to Target, I still go to the outlets and most people are going to, but a lot of entertainment that we used to consume out of the house is now just easier to do at home. But any of these are good answers.

That brings us to the end of 7Investing Now. If you’d like to get in touch with us, that is info at 7investing.com. If you want to interact with us on Twitter, and we are fun people on Twitter, that is @7seven

Matt Cochrane  57:00

Much more than real life.

Dan Kline  57:02

Yes, probably well, I’m a fun person in real life. Matt is a lot of fun to just perhaps not at the volume. He is on Twitter. And we’re out there. We’re sharing it. We’re interacting with members if you you know tag us on something we’ll answer most of the time again, I don’t have my phone in my hand. 24 seven, but I am on maybe I don’t know 18 six like it’s a lot. So for Sam Bailey, for Simon Erickson, for Matt Cochrane. I am Dan Kline. I will be back Monday from West Palm, Wednesday from North Carolina ,Friday from Alabama. We will see you Monday.

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