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Grand Pivots: From Shoes to GPUs · Nonsense with cj little and Jeff Parker

0:00
Welcome to Nonsense Season 4, Episode 25, our big story.
0:02
I'm Jeff Parker. I'm CJ Little this.
0:04
Time we're looking at pivots, the myth of the straight line up
0:07
next. I've been told that every
0:09
straight line is just two drinks away from being an ARC.
0:12
Every straight line secretly aspires one day to be a vector.
0:15
I like when other arcs are just buying those straight lines
0:18
drinks trying to get them to arc up.
0:19
Geometry nerds on parade. OK, from rubber boots to
0:22
ringtones. A corporate identity crisis?
0:24
Let's go What? Are you going to call it the
0:25
geometry nerds? Because that's what we.
0:27
Are I'm pro rhombus and parallogram cedar hydron or in
0:30
the hell deco cedar Octagon? That's where I stop after eight
0:34
sides. Why do they have names?
0:35
And This is why I have a remote music button.
0:54
Success is less a marathon and more a knife fight in a burning
0:57
building. We love the myth of the
0:58
visionary founder with a 50 year map, but the reality is often a
1:02
frantic, sweat soaked scramble for the exit.
1:05
Look, I've stayed in a lot of pretty crappy hotels and motels,
1:08
but I've never seen like even they have like the crappy waffle
1:11
maker thing you make the little crappy waffle in or cereal.
1:14
But the idea of a sweat soaked scramble sounds like a terrible
1:17
breakfast. Like that's just gross.
1:19
Take the Titans of the S&P 500. They aren't just evolved,
1:22
they're reincarnated. A pivot sounds clinical, a
1:24
slight adjustment of a camera lens.
1:26
In truth, it's a desperate shedding of skin.
1:29
Nokia traded rubber boots for ringtones.
1:31
That was probably a mistake to be honest.
1:33
They probably should have stayed with the rubber.
1:34
Boots Nintendo abandoned love hotels for Italian plumbers.
1:38
Why not have? Both.
1:39
OK, Slack rose from the digital corpse of a failing video game.
1:42
That's a little. Pointed you don't say digital
1:44
corpse, but but yes, the Phoenix did rise from their their
1:48
completely failed video game. These aren't linear
1:50
progressions. They're biological mutiny.
1:52
When the environment turns lethal, the corporation doesn't
1:54
just change its mind, it kills its past self to let the future
1:58
breathe. But that's not always true,
1:59
right? There are plenty of examples
2:00
where that didn't happen. Companies didn't pivot, and now
2:03
we don't talk about those companies anymore.
2:04
Sure, sure. Kodak.
2:05
I was going to say the little yellow huts, they all gone.
2:07
Yeah, sure. There's a bunch of examples of
2:09
that. Yeah, I mean, some of the most
2:10
successful companies on the planet looked nothing like their
2:12
original incarnations. Yeah, like I personally love as
2:14
a car guy, I love reminding Lambo owners that Lamborghini
2:18
started by making tractors. Oh yeah, for sure.
2:20
Cars, That's where it came from. Supposedly he owned a Ferrari
2:23
that had like a constant club much problem, which, you know,
2:26
shocking. And he was complaining to Enzo
2:27
Ferrari about it. And Enzo told him to, quote,
2:30
stick to tractors, presumably in Italian and Lamborghini insulted
2:33
and said well, OK, I'm gonna go build my own like luxury grand
2:36
turd to prove that he could do it.
2:37
Better I'm on you, dude. Yeah, exactly.
2:39
And I mean, now they're German at at the end of the day it's
2:41
all owned by VW. So they're they're much better
2:43
than the they're Italian made brethren.
2:45
But yeah, tractors. OK, the impetus for this story,
2:47
of course, was All Birds, the shoe company.
2:50
Yeah, I have a closet full of All Birds shoes.
2:52
You do? Oh, they do.
2:53
They were very popular for a while and I actually really
2:55
liked them. They were.
2:56
Great, you were not in the demo for all birds.
2:58
It started out somebody gave me a gift certificate for a pair or
3:00
something. Somebody that was that somebody
3:02
the AARP, I'm sure. It was.
3:04
Thank you. So I got a pair and I quite
3:06
liked them. And so I after that, I managed
3:08
to buy a bunch of other pairs, and I was giving them as gifts,
3:11
but I don't buy any. Buy them anymore.
3:12
And apparently the whole rest of the world is like me because
3:15
everyone stopped buying them. Yeah.
3:16
And their business shrank up to nothing.
3:18
Yeah. So they scrambled to pivot.
3:21
And what did they? Become.
3:22
I think you and I could both agree on one thing.
3:23
Yeah, those all bird shoes would be better if they had a little
3:26
bit of AI in them, right? That was the big.
3:28
Everything is better with AI. It wasn't the sole.
3:31
It wasn't the, it wasn't the threat, it wasn't the laces, it
3:33
wasn't the the tread pattern. It was they lacked AI and that
3:37
to me was the biggest problem. I would just put the shoes on
3:39
and they wouldn't. They wouldn't give me any
3:40
superpowers. The crazy thing is they are not
3:42
even going to be in the shoe business.
3:44
They are going to no, they're going to own a whole bunch of
3:47
compute that they lease. Out first of all, back the truck
3:49
up. Whole bunch is not the right
3:52
term here. They sold the entire shoe
3:54
business for like 40 million bucks.
3:56
Yeah, Oh yeah, it was worth it. Wasn't worth it.
3:58
Wasn't most of their IP? Was all of their IP?
4:01
Yeah, all of it. Now, for perspective, this
4:03
company was once valued at $4 billion.
4:05
They never made a profit. That was when I was paying full
4:07
retail for the. Shoe Yeah, exactly.
4:09
You personally were keeping them propped.
4:10
Up, I'm sure by. Early this year, 2026, their
4:14
revenue had cratered and they were trading for under 3 bucks,
4:17
which is down 99% from their IPO high.
4:20
But it's. Fashion that's really hard.
4:21
Why was it an upstart fashion brand valued at 4:00 billion
4:25
dollars like well, they had this like tech level valuation
4:28
absolutely crazy on a retail product crazy which made no
4:30
sense to me let's. Look at somebody like Nike.
4:32
Yeah, they're defying gravity. How long they've been?
4:34
Course they've been shoes superstars.
4:36
Yeah. Well, I mean, they've done so
4:37
many great deals and their branding is so good.
4:39
You have to reinvent yourself. You have to reinvent your
4:41
product every single year. That's impossible.
4:44
That's remarkable they've been able to do that.
4:46
Well, yeah, and all. By the way, Nike has managed to
4:48
do that with no AI. They're not even an AI shoe.
4:51
Yes, that's true. It's just a regular old shoe.
4:53
Yet. Yet likely it's coming.
4:55
It's coming. So the imp of this for this show
4:57
was that last week all Birds said, OK, we're we're selling
5:00
off the shoe business for 40 million bucks.
5:02
Yeah. And we are pivoting and we are
5:03
going to become new bird AI and market.
5:07
We have secured $50 million in funding to pivot to AI compute
5:11
infrastructure, specifically renting GPU's to folks.
5:15
Yeah, in this GPU as a service model.
5:17
And why I laugh at this is from what I can tell at best they've
5:21
got 80 million bucks to put to work, right.
5:22
They had no money before. Oh really?
5:23
They've got the 39 million bucks that there that was that they
5:26
sold all the assets for and then 50 million bucks in some some
5:30
note, some sort of capital investment, they've got 80
5:32
million bucks to go buy GPUs with.
5:34
But the stock jumped. How much did the stock jump when
5:37
they announced they were going to be new bird AI it?
5:39
Didn't jump. No, Sir.
5:41
If if that's a jump, then it would have won every Olympics
5:44
ever all stacked up. There's no it went up 876% in
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one day. That's not a jump right now.
5:51
Remember what few assets they had they got rid of?
5:54
Yeah, sure. So now they just had pure
5:56
speculation and not even the name, right?
5:58
It's called Newbird AI, whatever that means.
6:00
And they are saying, oh, we're gonna put 80 million bucks to
6:02
work or that they secured 50. They have 30, I'm presuming 80
6:05
million bucks to work in this GPU's rental model.
6:07
By the way, they want to buy high end GPU's and then lease
6:10
them out to other people. Yeah, good luck buying high end
6:12
GPU. 'S Let's assume they have access
6:14
for 80 million bucks you're gonna.
6:16
Get three of them, yeah. 2 1/2 GPU's like what?
6:18
What what are you gonna, what are you gonna do?
6:20
Who are you gonna rent these two?
6:21
Like it's just, it's comical when you realize how much money
6:24
everyone is spending on building these this out, this
6:26
infrastructure and they're like, Oh yeah, we're going to compete
6:28
with AWS, no problem. I'm sure we're going to beat
6:30
them at their own game. That's the crazy thing.
6:31
Unless you've got as many customers as AWS has, yeah, the
6:34
last thing you want to do is own high end GPUs because next
6:38
year's model is coming. Out.
6:39
Yeah, going to crush those. So I mentioned they had a nearly
6:41
900% increase. They went from from 2 1/2 bucks
6:44
a share to $24.00 in the in the same day in a single session.
6:47
The volume traded was about 280 million shares, OK, which is
6:53
about 3700 times their daily average.
6:56
Oh sure. So I got to believe you had a
6:57
whole lot of speculation. There are people just just
7:00
buying and dumping, right? Buying and dumping as best you
7:02
can to arrive that NYNEX wave that that was there.
7:05
Of course, analysts have been scathing, might not be the
7:08
strong enough word, but many of them have just dropped coverage
7:11
entirely because what is there to cover?
7:13
Like what are you covering now? Oh, sure, what?
7:14
What is this? So yeah, they are no more.
7:17
The sneaker company that you enjoyed previously is now
7:19
renting 6 GPUs. That's a pivot.
7:21
I'm going to predict now where people are going to lose a
7:23
whole. Lot of money.
7:24
Oh yeah, one people I think already have, right?
7:25
You've already. Seen all that money is going to
7:27
be. Gone a pretty big return yeah to
7:29
to to some modicum of normal. So I still think it's
7:31
overpriced, but this feels a lot like the do you remember the
7:33
long blockchain Corp from what was that 2017 or so, sort of the
7:38
height of the crypto bubble, those guys I do.
7:40
But go ahead and explain it 'cause it's a great story.
7:42
It was, it was nuts. These guys made a drink.
7:45
They literally made. Long Island Iced Tea, that's.
7:47
What they did, I don't think it was alcoholic, right?
7:49
Wasn't it just like, no, it was tea.
7:50
It was just a it was just a tea that they put in a can and sold
7:53
ready to drink. Like, OK, Arizona tea I guess
7:56
wasn't covering all their bases. Based in Hicksville, NY which
7:59
tells you everything. It tells you all you need to
8:01
know. So they usually brush in 2017,
8:03
like late 2017, saying they were changing their name to Long
8:06
Blockchain Corp. OK, So you kept long around,
8:09
sure. Their quote strategy, which was
8:11
super vague, was going to shift their focus towards quote, the
8:14
exploration of an investment in opportunities that leverage the
8:17
benefits of blockchain technology.
8:19
That's it. That's what they said.
8:20
All good, nothing wrong with that.
8:21
It's just there's you and a billion other people doing that.
8:23
Well, no, no, no, there is nothing wrong with that.
8:25
They had 0 blockchain products. They had zero employees with
8:28
blockchain expertise. Sure.
8:29
They were still, for all intent purposes, just an iced tea
8:31
company that had added a buzzword to its letterhead.
8:33
That was it. Like.
8:34
That's all they did. Somebody was cashing out.
8:36
I bet you somebody, well somebody, sold their shares when
8:39
everything jumped. The market went, yeah, BA Nanas,
8:42
right? It went up 380%.
8:44
So at one point they were trading like 9 1/2 bucks a share
8:46
and people were plowing in just because they didn't have many
8:48
opportunities to invest in any company that had blockchain in
8:51
the title, which they did. This did not last long.
8:53
Remember, this is December of 17.
8:55
By early 2018, I think by April, NASDAQ delisted them, citing
9:00
that the name change was misleading to investors.
9:03
By July of that year, the SEC had subpoenaed the company and
9:06
the FBI was investigating them. And then a couple years later,
9:09
in 2021, the SEC official revoked the company's stock
9:11
registration. Like just pulled the whole
9:13
thing. Because they had never actually
9:14
completed a single blockchain related transaction or a
9:17
business pivot, it remained a beverage company in a tech
9:21
costume. That's all it was.
9:23
That's crazy. Sane and that was, you know,
9:26
2017. It was a minute ago, but it
9:28
wasn't that long ago. So this Albert's pivot feels a
9:31
lot like that. I can't find a better previous
9:34
depiction of what's happening with Newbird AI than this long
9:37
blockchain Corp. Like that's what it feels like
9:39
to me. Except the long blockchain
9:41
actually had insider trading charges leveled against them.
9:44
They had tipped off friends about the name change before it
9:48
went public, allowing the device shares at 2 bucks and selling
9:50
for a massive profit just hours after the announcement.
9:53
Yeah. I mean, that was ultimately I
9:53
think how they ended up getting them was that was that was the
9:56
thing that they could prove. You know, it's hard to prove
9:58
that they didn't have intent to do blockchain at some point
10:00
except. Nothing ever came out.
10:02
Well, we were about to do it, but then you investigated us and
10:04
all of our capital got sucked out and it was your fault.
10:07
It's like, yeah. OK, so let's go back to what you
10:09
told your buddies you were doing this.
10:10
OK. Yeah, right.
10:10
And you should get them on straight insider trading.
10:12
So yeah, anyway, that's how I think that went down.
10:14
Those are the ones that let's just say didn't work out well,
10:16
or I'm, I'm assuming new word AI is not going to work out well.
10:18
That would be my my personal bet.
10:19
Yeah. I think today we should talk
10:21
about ones that maybe have have been a little more interesting,
10:24
right? Ones that maybe survived a
10:26
little longer. OK, certainly we could pick some
10:27
that had had flamed out, but I think the ones that survived are
10:30
the more interesting stories. A lot of people don't know you
10:32
have a. List and I have a list.
10:33
How do you want to do that? So you want to go back and?
10:34
Forth you get to go first. BF Goodrich, Yeah.
10:36
You're familiar with BF Goodrich tires?
10:38
They're all over the place, Massively successful.
10:41
Oh no, I know them from from their hamburgers.
10:42
Their hamburgers were delicious. Benjamin Franklin Goodrich.
10:45
Yeah. In Akron, OH, The company's
10:47
first major success was not tires.
10:49
Yeah, they made rubberized fire hoses.
10:51
Oh, OK. That makes sense.
10:52
Fire hoses were made of leather, yes, and they ended a crack and
10:55
leak. Leather was probably not a great
10:57
idea for shooting water, you know, high pressure water
10:59
through it. So they invented this cotton
11:00
wrapped rubber hose, which was this huge technological leap
11:03
forward for fire departments. No, but now I'm really
11:05
wondering, like, you know, how like we went from riding horses
11:07
or transportation to now it's like a status symbol.
11:10
I really wonder if, like the private, you know, fire service
11:12
that protects the Kardashians. House they have leather hoses.
11:15
Like leather? Like Louis Vuitton hoses?
11:17
Oh that would be nice. Like we don't use the canvas, we
11:19
have the nice monogram all, that's the canvas.
11:22
Then they branched out because they now had experience in.
11:25
Yeah, in rubber they had a lot of.
11:26
When was this about? Time frame was. 1870 SO.
11:29
They pivoted in 1870. No, they didn't.
11:31
Pivot in 1870. They started in 1870 with
11:33
rubberized fire hoses. Yeah.
11:34
Then they started making belts for machinery and for
11:36
automobiles. Early, early automobiles, yeah.
11:38
Medical tubing. And the big shift began.
11:41
They made started making bicycle tires.
11:43
And then in. 1896 automobile tires Interesting first company
11:47
in the United States to manufacture pneumatic automobile
11:50
tires. Filling an order for the Winton
11:52
Automobile Company. Oh yeah, when's the last time
11:53
you got near Winton and drove? Oh, you know I love my winning.
11:56
Oh, she's fast. In 1903, yeah, they supplied
11:59
tires for the first car to drive across the United States.
12:01
OK. In 1927, they provided tires for
12:04
Charles Lindbergh, Spirit of Saint Louis, for his historic
12:06
transatlantic flight. That's cool.
12:08
In 1947, they developed the first tubeless tire in the
12:10
United States. OK.
12:11
And in 1965, they introduced the first radial tire in America.
12:16
And I'm assuming today the vast majority, if not all of the
12:20
revenue comes from tire sales. The BF Goodrich brand in 1988.
12:24
Yeah, the tire division was sold to Michelin.
12:26
OK, the French company, yes. So they exist, huh?
12:28
As a part of Michelin as a premium tire brand within their
12:32
portfolio. Yeah, famous for their all
12:33
terrain TA line, but the company BF Gerder still existed.
12:37
They just do tires and rank restaurants.
12:39
That's it. That's all they do until.
12:40
Fairly recently doing aerospace and defense, making things like
12:43
landing gear and flight sensors. Oh that's cool.
12:44
And that was sold in 2012 to RTX Raytheon.
12:47
Technologies. Extremely interesting.
12:49
There you go. That's their pivot.
12:50
You are far more thorough on your choices than me.
12:53
I'm just like, oh, look at these guys, guys, they used to sell
12:55
candy well. I have one of those too.
12:57
Oh good, your move. Sir, I did not know this about
12:59
be a good rich. That is super interesting to me.
13:01
I wanted to be a little more nerdy in tech and bring up a
13:04
slack. You know the slack back story.
13:06
I'm assuming yes, I. Do know it, but also it's the
13:08
bane of everyone's existence. No, however, if you need it,
13:11
it's really nice. It's really nice to have.
13:13
I'm pro Slack. So in 2009 Stewart Butterfield,
13:17
who had already Co founded Flickr, the the photo sharing
13:20
site share share share had a little tiny startup called Tiny
13:23
Speck and their mission was to build a massively multiplayer
13:26
online role-playing game or an MMORPG.
13:29
Sure, that's how it's better known and they called it glitch.
13:31
So unlike combat heavy games, glitch was supposed to be a
13:34
surreal, nonviolent world centered on collaboration and
13:37
building things. And I never I've never played
13:39
this game. I've seen it, but never really
13:40
played it came out. Yeah, OK.
13:42
They I don't know if they shipped it.
13:44
I just remember seeing videos of it.
13:46
So anyway, so they had this this game they were working on it was
13:49
this this collaborative game. The problem is most people want
13:51
to kill stuff. That's what they really want to
13:53
do in the game. So it I, I don't think it how
13:55
much traction. Yeah, sure, sure, sure.
13:56
And their team was spread between San Francisco and
13:58
Vancouver. They all hated using e-mail,
14:00
which is something that we pretty much can all agree to.
14:01
And instead the like, they were looking at existing chat tools
14:04
like IRC, but it didn't provide them any search capability.
14:07
Right. So they just built their own,
14:09
like they built this side project.
14:11
It's just helped facilitate making the game.
14:13
So Slack was born out of a need inside this team to to build
14:17
this. And by 2012, it was it was clear
14:19
that glitch was a a commercial failure.
14:20
Yeah. And while the game's art style
14:21
was beloved, the player base was not large enough to sustain
14:24
their business. So November of that year,
14:26
Butterfield had to shut it down, layoff most of the staff.
14:29
But they missed the chat tool. And I thought that was really
14:31
interesting, right? Like, after sort of post game
14:33
development, they're like, oh, wait, there might be something
14:35
to this. They spent the next year just
14:38
polishing the tool, which most people don't know that Slack is
14:41
supposed to stand for searchable log of all conversations and
14:44
knowledge. That's where Slack comes from.
14:46
Yeah. The result was they launched it
14:47
in 2013. They saw 8000 signups in the 1st
14:50
24. Hours.
14:51
Wow. 7:00-ish years later, they exited it to Salesforce for
14:55
nearly $28 billion. It's amazing.
14:57
Which they probably would not have seen even if Glitch
15:00
exceeded their expectations. That was an insane exit.
15:03
The irony was that that Stewart Butterfield had done this
15:06
before, right? He was before Slack.
15:08
He was trying to build a game called Game Never Ending.
15:10
That game failed, but the photo sharing tool he built for it is
15:13
what became Flickr. So he sold that to Yahoo for
15:15
about 25,000,000 bucks. Yeah, not the same as the $28
15:18
billion exit that he had to Salesforce, but.
15:20
Slack is also a perennial think about had the game been
15:23
successful. Yeah, you wouldn't have had it.
15:24
They had not not polished up slack.
15:26
Yeah, they would have had a good year with the game, some good
15:28
sales. Maybe they would have gotten a
15:29
year and a half out of it. Exactly.
15:30
But even Fortnite has has gone quiet.
15:32
They've had to lay off 20% of their stuff.
15:34
That's. The thing right like you got to
15:36
maintain the interest so you're now you didn't buy a game you
15:39
you're you're like buying into this world so you constantly
15:42
need content updates and they're dropping digital content yeah
15:45
you're not it's not set and forget it like software in a box
15:47
for. Sure.
15:47
And Slack, what a goldmine that thing's been.
15:50
And it's just been a perennial. It's.
15:51
Just been a great tool, right? I just think it's added
15:53
certainly more value you to the world, I think, than a game
15:56
would have anyway, That's how Slack got here.
15:58
How about you? What's next?
15:59
American Express? American Express.
16:01
That card that's in your wallet in 1850 in Buffalo, NY.
16:03
American Express originally was a freight forwarding company.
16:07
Oh. Really.
16:07
Hence the name. Yeah, it was a merger of three
16:09
companies owned by Henry Wells, William G Fargo and John
16:12
Butterfield, and in the early decades they were essentially a
16:15
private version of the US Postal Service.
16:17
They use stagecoaches, horses and railroads to transport high
16:20
priority mail, golden currency, valuable freight, stocks and
16:23
bonds. And it functions like a modern
16:25
day armored car service. Oh wow.
16:27
Interesting. They specialized in the rapid,
16:28
secure transport of valuables such as gold, currency,
16:31
securities, and sensitive documents across New York State
16:33
and the Midwest. They were even known for using a
16:35
watchdog as their original logo to symbolize security and
16:39
vigilance. Now I in those names of the the
16:41
roll up for when this was a freight forwarder, yes, you had
16:44
Wells and Fargo, that's true. Is that any relation to the
16:47
Wells Fargo that we know today? They did come out West and they
16:49
started a little bank for minors that you may have heard of
16:52
called Wells. Fargo.
16:53
Interesting. So American.
16:54
Express shifted to financial services.
16:56
As one does. Slowly, yeah, because there were
16:59
some innovations. the US Post Office started doing money
17:02
orders. OK, So Amex introduced their own
17:03
version, which allowed people to send money safely across the
17:06
country without mailing physical cash.
17:07
And then in 1891, they came out with their traveler's checks.
17:11
Wow, interesting. I mean that was the first sort
17:14
of quasi EFT like those in money orders.
17:16
That was the beginning of. Easily being able to travel with
17:19
money safely. In World War One, the US
17:21
government nationalized the express industry into the
17:23
Railway Express agent, which forced American Express to focus
17:27
almost entirely on its travel and banking segments.
17:29
Oh interesting they had to exit from freight in in 1918.
17:32
I always. Assumed that travel in Amex was
17:35
a bolt on to the financial services but actually sounds
17:37
like it was the route like. Travel primary business.
17:40
Wow, that's fascinating to me. I had no idea.
17:42
Then they had a lot of internal debates that having a credit
17:45
card, a general purpose credit card, might cannibalize their
17:47
traveler's check business. Oh yeah.
17:49
And they dithered on that for a while.
17:50
Yeah. In 1958, they finally pulled the
17:53
trigger to compete with the newly formed Diners Club.
17:55
Yeah, that famous purple card. Yeah, to be fair, they have
17:58
completely lost the market on travelers checks, have they?
18:01
I mean, how many are issued a year?
18:02
Four, I don't know. I don't use traveler checks.
18:04
Yeah, no, no one does. The card was a massive success
18:06
with over 1,000,000 cards issued within the first five years.
18:09
Wow. That's amazing.
18:10
I had no idea. Yeah.
18:11
All right. American.
18:11
Express, the most recent financial reports that I have
18:14
are 2025 and the annual revenues were 72 billion to $80 billion.
18:19
Yeah, depending upon the reporting metric you used.
18:21
Their Platinum card remains an industry benchmark, with a
18:23
reported retention rate as high as 99%.
18:27
That's crazy. That's absolutely amazing.
18:29
I wonder if that 1% is literally mostly due to death.
18:32
I mean, it probably is. I think their biggest churn is
18:34
death. If they could right open up a
18:36
third prong of the business. That's just, you know, some
18:38
lifestyle changes to keep you around a gym.
18:40
That's that's really incredible. That's pretty cool.
18:43
I had no idea. That's some pretty cool
18:44
pivoting. That's great.
18:45
I have one for you. That is, this is a company that
18:47
some people might not actually know depending on how old you
18:50
are. Yeah, this is Nokia.
18:51
Candy bar phones. I used to have a Nokia phone.
18:52
Yeah, right. I feel like everybody, at least
18:54
of our age demographic, had multiple Nokia's, right?
18:57
You had their phone was probably one of your first phones,
19:00
probably your first GSM phone since they were, you know,
19:03
European by by start. OK.
19:04
So Nokia begins its life in 1865 as a paper mill in Finland.
19:09
OK, They make paper. And then over the next century,
19:12
they expanded into like, rubber boots, car tires, floor cables,
19:17
Like all of this happened long before they even thought about
19:19
getting into into cell phones. They're just throwing spaghetti
19:21
at the wall to see what would stick.
19:23
Yeah. When it was a paper company and,
19:25
you know, early 20th century there on the verge of
19:26
bankruptcy, it was saved by the finished Rubberworks and then
19:29
later joined with the finished Cableworks to sort of merge
19:32
together into this conglomerate. I don't know why like you would
19:35
think you'd want some overlaps. Don't seem related.
19:37
I don't know what part of paper mill works with rubber boots.
19:39
Maybe they wear a lot of rubber boots in the paper mill, I don't
19:41
really know. But those 3 completely different
19:44
businesses are what merged to form Nokia.
19:46
It was just this like everything store of you had toilet paper
19:49
and napkins from the paper mill you had rubber boots and car
19:52
tires. They made gas masks for the the
19:54
the military, they made TV's and PCs.
19:57
They had electricity and they made cables, like all of the
19:59
stuff. You can feel the trend, though,
20:01
moving toward electronics. Yeah, you could see them getting
20:03
a little more towards the copper.
20:04
Yeah. And a little less from the
20:06
rubber, right. That was the the move.
20:07
By the late 80s, they were pretty bloated.
20:10
They were struggling. And well, the the sad part was
20:13
in 88, the company's CEO took his own life, right, which left
20:16
the firm in a state of crisis. And many expected Nokia to be
20:19
sold off in pieces. Just cut up and and sold off.
20:21
Yeah, they got a new leader in 92.
20:23
Sure. And the move was considered in
20:24
insane at the at the time he decided to sell off every
20:27
profitable legacy division, the rubber, the paper, the tires,
20:31
sold them all off and bet the entire company on a nascent
20:34
technology called GSM, which was the global systems for mobile
20:37
communications in the early 90s. This thing had no legs.
20:40
All the mobile phones that you had were, especially in the US,
20:43
were all proprietary. You had no GSM deployed in the
20:45
USI don't think we got GSM in the US until like 959596 is when
20:50
we got GSM in the USA. Pretty prophetic bet that that
20:54
this was going to work. The result though was they were
20:57
absolutely dominant, right. They had expertise in cables and
21:00
electronics so they could both build the network
21:02
infrastructure, which was what was necessary for the phones and
21:04
the handsets. Yeah.
21:05
So they were the back office provider for for most of the
21:07
equipment as well. Yeah.
21:08
In 1992 they launched the Nokia 1011, the 1011 sure, which was
21:13
the first mass produced GSM phone.
21:14
So they made the first one just six years after the pivot.
21:18
They became the largest mobile phone manufacturer in the world.
21:22
This is 1998. Wow.
21:23
So they were the large they pivoted again when they sold its
21:27
phone vision to Microsoft in 2014.
21:29
And this was Apple and Android just decimated the Nokia phone
21:32
business, right? So it went from like you,
21:33
everyone had a Nokia phone, a little candy bar phone or one of
21:36
the little like flippy phones. And then they sold it off
21:38
because it had been destroyed by by Apple and.
21:41
Google and Microsoft bought it so that they could popularize
21:43
the Windows Phone that we have today.
21:45
Yes, that was the that was the plan was this was going to make
21:48
the world move on to Windows Phones, and we all know how.
21:50
Hugely successful Windows. Phones, Yes.
21:52
That you've never heard of? Yes.
21:54
Oh, you heard of it, but you just see it in the Smithsonian
21:56
is where you see it. So that was that was pretty
21:57
crazy. Today they've circled back to
21:59
like their cable works roots. Yeah, they're no longer a
22:01
consumer brand, but they are AB2B telecom giant.
22:04
I was. Gonna say they still do.
22:05
Yeah they still do. Back end.
22:06
Telecom, 5G infrastructure, private wireless networks,
22:09
industrial AI. Interesting little little fun
22:11
fact, huh? The Nokia tune, which I think
22:13
everybody of a certain age knows this is like the infamous
22:16
singing Nokia. No, I'm not singing this.
22:18
It's actually based on a 19th century Spanish guitar work
22:21
called Grand Vaults. It was chosen because it was old
22:25
enough to be in the public domain, which saved them this
22:27
new tech company. A fortune Sure A.
22:28
Fortune in royalties during its 90s expansion.
22:30
My last one is near and dear to my heart.
22:32
It is a company whose roots go back to 1839.
22:35
OK, with the Valley Falls Company.
22:38
Yeah. And Hathaway Manufacturing
22:40
Company, OK, which was founded in 1888, and they were pure
22:43
textile manufacturers. They produced high quality
22:46
cotton fabrics and fine linens. OK, In 1955, these two companies
22:50
merged to form Berkshire Hathaway Inc.
22:53
Ah, creating a textile giant. Yeah, operated 15 plants and
22:56
employed over 12,000 people. However, the New England textile
22:59
industry was already in steep decline due to cheaper
23:01
competition from the South and overseas.
23:04
In 1962, Warren Buffett began buying shares because the stock
23:07
was trading below the book value of the company's physical assets
23:10
like its mills and machinery, and he was originally intending
23:12
to sell his shares back to the company for a profit.
23:14
He actually had a promise from the head of the company to buy
23:18
his shares back at a certain number, and later the leader of
23:20
the company tried to cheat Buffett out of a few cents per
23:23
share on the buyback. Deal he.
23:24
Launched on his promise of what? He was going to pay them back.
23:27
Yeah. And it pissed off Buffett, of
23:28
course, who instead bought a controlling interest in
23:31
Berkshire Hathaway and fired the guy.
23:33
Be owed. Yeah.
23:34
Love it. Oh, good job early angry Warren.
23:36
Buffett didn't realize textiles were at den in business, So
23:39
instead of pouring more money into the mills, he began using
23:41
the cash the mills generated to buy other businesses.
23:43
And the big breakthrough came in 1967 when he bought the National
23:46
Indemnity Company, an insurance firm which gave him access to
23:50
Float, which is the money the insurance companies hold between
23:53
receiving premiums and paying out claims.
23:55
Using this free capital, he bought iconic brands like GEICO,
23:57
Sees Candy and Dairy Queen. The company officially shut down
24:00
its last tactile operations in 1985.
24:03
Wow, completing a total exit from its founding industry.
24:05
I had no idea it was Lauren that long.
24:07
Market value $1 trillion. In late 2024, it became the
24:10
first non tech company in the US to reach a $1 trillion market
24:13
capitalization that's. Amazing.
24:15
Now you know what they need to do, right?
24:16
This is so obvious to me. They need to be Berkshire AI and
24:19
they could be the first $10 trillion company.
24:22
That would help them with their lack of funds.
24:23
Yeah, 'cause that was. Their their their big funding
24:27
glut that they're in. It's now a holding company that
24:29
has over 60 businesses, including Duracell, Fruit of the
24:31
Loom, BNSF Railway and major stock positions in companies
24:35
like Apple, Coca-Cola and American Express.
24:37
That's amazing. I had no idea today I.
24:39
Learned an amazing business story and I'm not sure how it's
24:41
going to go now that Warren has retired.
24:43
He still goes to work every day he's still the chairman.
24:45
He is no longer the CEO. And so now we're potentially
24:49
facing a world without Warren, which would be a very sad thing.
24:51
He's been, I mean, amazing influence on American business
24:53
all we. Have to do is take their
24:55
speaking gigs, all their written memos and letters, feed him into
24:58
an LLM and then we have Berkshire AI.
25:01
We just have the two of them and they could just make decisions,
25:03
but only on AI companies. I also love by the way, you know
25:06
you got it wrong when they when they're like strong buy on all
25:09
birds AI and you're like, oh, this is not working as planned.
25:12
Pass pass pass. They don't actually issue any
25:13
guidance, they issue nothing like I.
25:15
Don't. I'd love that they're AI agent
25:17
versions issuing guidance. That would be.
25:18
That would be amazing. All right, we have to get out
25:20
every quickly before we do. Have you seen it read anything?
25:22
Good. This last week.
25:23
Well, yeah, I I I'm gonna plug Coachella again because it's a
25:26
big show and there's a lot going on.
25:27
There's 120,000 people there every day.
25:29
Yeah, can't see everything. OK.
25:31
The second weekend they also live streamed the production
25:33
failure I thought was not quite as good.
25:34
I feel like their a game was on weekend one and weekend 2 was
25:36
like, well, that's the weekend to put it on 80 be exactly.
25:39
I feel like it was like 80% is good.
25:40
It wasn't bad, it just wasn't as good. 9 inch nails was great as
25:43
last weekend. It was the same show.
25:45
So nothing new to be learned there.
25:46
I did enjoy. So maybe guilty pleasure Sabrina
25:49
Carpenter. She leaned into that Thelma and
25:51
Louise theme. So from her weekend one
25:53
Coachella appearance, on weekend two, she had Geena Davis reading
25:56
the mid show monologue as an older Aunt Sabrina.
25:58
So that was fun. Seceding last weekend's guest,
26:01
Susan Sarandon. Now, Susan Sarandon's monologue
26:03
was like way, way, way too long. Yeah, the rumor was they're
26:06
having technical difficulties. And they had her like just riff
26:08
it. But it was like, Oh my holy cow.
26:09
It just kept going. But that was that was weekend.
26:11
Why I love Geena Davis then? Sabrina Carpenter has this was
26:14
rumored. Madonna just appear on stage.
26:16
Oh, that's cool. You could kind of see the
26:17
handing of the crown, sort of how I was was seeing it.
26:19
Yeah. And they sang together and it
26:21
was great. And she was.
26:21
She was. They were both lovely when they
26:23
had a Madonna leave the stage because I'm I'm assuming they
26:26
couldn't get her to walk off the stage because she wasn't gonna
26:28
want to. They had her just slowly lower
26:30
through a trap door in the floor which.
26:32
Was kind of awesome while she was still talking.
26:33
She talked the whole way down. Oh, that's.
26:35
Awesome. It was actually pretty amusing.
26:36
That was fun. I watched most of the Carol G
26:39
set, which I've never seen before.
26:40
I was super impressed. Disclosure was great.
26:42
Fat Boy Slim was great. He was just all around an
26:45
exciting show that they put on and I really enjoyed.
26:47
I think it's been the best Coachella in years.
26:48
It's been years since I've enjoyed on this much.
26:50
That's amazing. So it was fun.
26:51
I hate plugging the same thing but it was more than just 9 inch
26:54
nails I think is my is my point. How about you?
26:55
Are you gonna plug the same thing again like me or
26:57
something? New Absolutely not.
26:58
I'm gonna plug the 2016 film. The founder Michael Keaton
27:01
delivers a high voltage performances Ray Kroc.
27:04
Yeah, a struggling salesman suffocating under a straight
27:07
line of failure. When he discovers the McDonald's
27:09
brothers revolutionary burger stand, he sees more than a
27:11
kitchen. He sees a metamorphosis.
27:13
While his wife Ethel, played by Laura Dern, watches his
27:16
obsession dismantle their domestic stability, Croc
27:19
executes a desperate zigzag. Realizing the brothers speedy
27:22
system is an engineering marvel but a financial trap for him, he
27:25
pivots. He stops selling shakes and
27:27
starts buying land. By turning a burger joint into a
27:30
real estate Titan, Croc effectively cannibalizes the
27:33
founder's identity. It's a ruthless tale of
27:35
corporate survival where Croc fleeces his partners to build a
27:38
global empire on a foundation of asphalt and leases.
27:41
Crazy crazy story and a great movie.
27:43
The Founder on Netflix now. And have, but not too far from
27:46
where you and I are sitting right now.
27:47
That's true. Which is pretty cool.
27:48
San Bernardino, CA. But he wasn't making money off
27:51
of the burger side of the business.
27:52
So if you wanted to have a McDonald's franchise, yeah, you
27:54
had to tell where you were going to buy it, and he bought the
27:56
land for you. Now you had to then lease the
27:58
land from him in perpetuity. No, no, that's the golden
28:00
arches. We have the golden arts.
28:03
Love that line from that film. So good.
28:05
I have not seen this, but I've heard great things about it and
28:07
I love Michael Keaton, so I'm going to have to watch.
28:08
That absolutely delightful that is the.
28:10
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28:12
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