Can Skims Rescue Nike? & Meta Reveals Globe-Spanning Undersea Cable

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0:27Good Morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, how did everyone manage to survive the upside-down plane crash in Toronto? Then a move over, Michael Jordan. Kim Kardashian is Nike's newest partner. It's Wednesday, February 19th. Let's ride.

0:48Remember that asteroid they found that has a very small chance of hitting Earth seven years from now? That very small chance is now a small chance. Yesterday, NASA upgraded the probability of a collision by 2032 to 3.1%, or 1 in 32, up from just 1 % in January. It's the highest probability given to an asteroid strike since 2004. If this thing does impact Earth, still a remote possibility. It could wipe out a city. The asteroid would make impact at 38 ,000 miles per hour with the equivalent of around 8 million tons of TNT or about 500 times the power of the atomic bomb dropped on Hiroshima. 3.1%, Toby.

1:31It keeps climbing. Jeez, Neil, get the heart rates going early in the morning just to put that 3 % in perspective. If we were playing poker, Earth currently has aces. The asteroid has the four or five of spades. And the flop is ace, eight, nine, no spades. So yes, technically a six and a seven could come out next to give the Asteroid a backdoor straight. But more than likely, the set of aces is going to win. That being said, Tom Brady and the Patriots did come back from 28-3 down when the Falcons had a 99.8 % chance of winning based on ESPN's win probability chart. Leicester City did win the Premier League at 5 ,000-1 odds, which is a 0.02 % chance.

2:13So stranger things have happened. Now a word from our sponsor, LinkedIn Ads. I was cooking dinner last night, Neil, and I got a little high on my own supply. Thought I could make a coconut rice curry soup without really looking at the recipe. Let me guess, your broth to rice ratio was way off. Yes, I put way too much rice in. It sucked everything up, and I was left with more of a pilaf dish than an actual brothy soup. Almost made me want to throw it away and start again. Wasteful, wasteful, wasteful. You sound like B2B marketers who don't use LinkedIn ads. Diving headfirst into a campaign without being thoughtful about where you're allocating resources is like lighting your marketing budget on fire.

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3:29Reach sales professionals, not professional sailors. With LinkedIn ads, you can target the right people by industry, job title, and more. Start converting your B2B audience today. Spend$250 on your first campaign and get a free$250 credit for the next one. Get started today at LinkedIn.com slash campaign. Terms and conditions apply. Five years to the month after the first miracle on ice, they just released the sequel. On Monday afternoon, a Delta Airlines regional jet crash landed on the frozen tundra of Toronto's Pearson Airport, clipping a wing, flipping upside down and skidding down the runway to a full stop.

4:05It was a shocking image seeing this plane flipped on its head. But even more shocking was that there were no fatalities among the 80 people on board and 19 of the 21 people sent to the hospital with injuries have been released. Canada's Aviation Safety Agency has begun an investigation into how this plane ended up belly up. The conditions were not good at the airport. Toronto got dumped with a ton of snow over the weekend and wind gusts top 30 miles per hour. However, no other pilots reported problems breaking on the runway. Aviation experts credited the aircraft's design and the training of the crew for getting all the passengers out safely.

4:41The plane, an Embraer CRJ-900 regional jet, was designed with features to be, quote, survivable in case of an accident, such as having seats that lock into tracks that can withstand 16 G's of force. The flight attendants were also hailed by local officials as heroes for their composure under duress. Toby, it's been an ominous start to the year for the U.S. aviation industry. As people pointed out on social media, it's no longer cringe to clap when your plane lands. Yeah, it has been ominous, but also let's just zoom out here in that it is pretty amazing how everyone fared in this accident. The survivability was extremely amazing when you think about the actual accident that occurred.

5:23It looks like the plane touched down maybe with one wheel first, which may have caused the landing gear to collapse, which caused that right wing to hit the runway and then eventually for it to flip over. But let's dive into some of these safety features. You mentioned the seats. The seats not only have that high impact 16 Gs of force that it can withstand, but they also have legs that are allowed to pitch to either side 10 degrees so they don't snap off. That's when things can get really bad. If these seats do snap off, then you end up, you know, falling onto the roof of the plane. So the seats were a big aspect.

5:57it. Also, the way that the plane did eventually break was how it was supposed to break. I know it sounds ridiculous to say this is how planes should break, but wings are designed to snap off so the fuselage, so the body of the airplane doesn't come apart. So everything did kind of go to plan, even though obviously the landing did not go as planned. And the crew, the flight attendants, we think about them as people who serve us peanuts and pretzels and take our drink quarters, but their number one mandate is safety. And they are trained and trained and trained to get people off the plane in an event like this in 90 seconds or less.

6:34They're also trained when panic happens like this, people are in a state of shock and you're supposed to tell them simple instructions like unfasten your seatbelt. And so videos show them shouting simple instructions, which is what people need to hear to get out of the plane safely. They can't handle anything more in a state of shock. So it was an absolute textbook response from this crew as well. And then also the background kind of underlying tension to all this is that a lot of cuts have been affecting the FAA. Transportation Secretary Sean Duffy said that 400 FAA employees were fired recently.

7:10Of those 400, those zero air traffic controllers or critical safety personnel were let go. So it's unlikely that those two instances are related in any way. That being said, though, So while all this is happening, while we're seeing just an increased amount of air incidences, you do see the FAA under scrutiny right now for trimming its workforce. And then the other aspect, too, is that SpaceX, Elon Musk's startup, is also coming in trying to look at how to overhaul the FAA's air traffic control systems. People are seeing that as a conflict of interest. But SpaceX is saying we're trying to modernize these programs.

7:47They've been far too heavily leaned on. that they haven't been staffed up properly. They're working with outdated technology. So that is just kind of the background context to these accidents that we have been seeing pop up. And those accidents, I mean, there's been four this year already in United States and Toronto's just across the border. January 29th, that American Airlines regional jet collided with a US Army helicopter killing 67 people on both aircraft. And then a few days later, there's a medevac plane that crashed in Northeast Philadelphia, killing seven people. And then on February 6th, there was a plane crash in Alaska, killing 10 people.

8:26So this is the fourth major incident. So, you know, obviously amazing, remarkable, very thankful that no one ended up dead on this particular crash, but it's certainly been a spooky few months for air travel. Kim Kardashian is here to save Nike. No, she can't suddenly win a dunk contest or have a VO2 max in the mid 60s, but she does have stretchy, affordable, and fastenable leggings that Nike wants a piece of. Yesterday, this sportswear giant that has been going through a bit of a rough patch recently announced a rare fashion collab with Kim's brand Skims called Nike Skims. The combo marks the first time that Nike has ever joined with an outside existing company to introduce a new brand.

9:08The team up will be geared less towards the everyday wear that Skims currently offers and more towards those sweaty hit sessions or Pilates classes that you drag yourself out of bed for in the morning. The goal is to position Nike to be more competitive in the active wear category that has been taken over by the likes of Lululemon and Aloe. Nike's struggles are well-documented at this point. It reported an 8 % drop in sales in its most recent quarter and recently bought its first Super Bowl commercial in 27 years as it tries to regain its mojo. This collab seems like a step in the right direction, Neil.

9:43I think you missed one word in your intro, Toby. women. This is absolutely key for Nike to get more customers as women right now. 40 % of its client base is women. Most apparel brands want that to be way over 50 % because women shop more, they spend more money. So if you're an apparel brand and you're seeing 40, 60 breakdown and 40 is women, that's not in a position where you want to be. So linking up with Kim Kardashian and Skims is a way to get that over the 50 % mark. And that Super Bowl commercial, their first in decades, was also geared towards women, women's sports, which are having an absolute moment right now.

10:23Nike said they're seeing double-digit growth in that particular area. So this is a bold move into that space by inking a brand partnership that has never done before. And it's also arriving at a moment where women's sports are absolutely popping off right now. And Nike and Skims both recognize this. Skims is actually already the official underwear partner of the WNBA. They're also the official partner of the NBA as well and U.S. basketball. But you are right. It's not just women in general, but it's specifically the apparel business as well because Nike had$8.5 billion in revenue from female apparel last year, $21 billion in male apparel.

11:01But still, their apparel business as a whole is not as big as its shoe business. And if you look at someone like a Lululemon, like an aloe, they are currently the apparel of choice for a lot of men and women. And so therefore you say, where can we, where's our growth opportunity? It is in apparel. And then you look deeper and it is specifically in women's apparel. And we should talk about Skims. This company is absolutely blowing up. Kim Kardashian, I don't know. Don't bet against her. Don't bet against her. She is an incredible entrepreneur. They did$880 million in just direct-to-consumer sales alone last year.

11:37That was up from$725 million a year earlier. They're valued at$4 billion. So what does this Nike partnership mean for them? Looks like maybe they could exit at some point. Kim Kardashian wants to get paid out. She owns 5 % of the company. Maybe it's leading to an acquisition by Nike or another company by getting the strategic partner on board. Or it's an IPO. We could see a SKIM's IPO. The leadership team has hinted at it a little bit. So there's perhaps an endgame in sight by getting Nike on board and doing this particular brand partnership with them and saying, look, we've made it. We are a mature company.

12:11Now it's time to take that next step. Yeah, Skims was valued at$4 billion in 2023. I would imagine after inking this partnership, it's going to be worth a little bit more. SpongeBob and Squidward are about to get a new neighbor, Mark Zuckerberg. On Friday, Meta announced plans to build the world's longest underwater cable, a 31 ,000-mile project that aims to connect the U.S., India, South Africa, and other regions across five continents. For context, 31 ,000 miles of cable is long, longer than the Earth's circumference. Why is Meta building a cable under the sea? Because that is the foundation of the modern internet.

12:47For all the images you might have of cyberspace and digital ones and zeros, there are actual physical cables crisscrossing the globe. Think a really long Ethernet cord that allow you to log on. An estimated 95 % of the world's Internet traffic flows through these undersea data superhighways. For years, telecom companies built these cables in partnership with tech firms, but that power dynamic has shifted. Now it's big tech that's in charge. And this initiative, called Project Waterworth, is the first subsea cable project Meta is developing on its own without any outside help. Toby, the only thing getting in Zuck's way now is bikini bottom zoning laws.

13:24Meta wants more control over how it kind of manages its own services because TechCrunch found that Meta accounted for 10 % of all fixed and 22 % of all mobile web traffic across the world. You guys are scrolling on Instagram way too much. I know. It truly is. I mean, there are billions and billions of users. So that figure does make sense, especially the mobile figure. So of course it wants more control over how that traffic is being ferried undersea across these cables. But there's a lot of issues with undersea cables. Let's be honest. One, there's a lot of damage that can happen. It's the bottom of the ocean.

13:58It's a very unforgiving place. But also geopolitics comes into play a lot more than you'd expect. We already saw Red Sea cables cut last year by Houthi rebels. And then also European officials have said Russia's been sabotaging our cables. Taiwan has said similar things about China damaging its undersea cables. So Meta has thought about this. They're trying to get around those issues by, one, maximizing the amount of cables that they lay in the deep waters. And we're talking really deep waters, 7 ,000 meters deep. And they also think that they've cooked up some new burial techniques that they hope will reduce the faults in high-risk areas, whether it's high risk just from ocean geography or high risk from geopolitics.

14:38So they think they've thought of everything, but still a lot of cable stretching a lot of miles. Yeah, undersea cables have become a vulnerability for tech companies, for countries, and they become flashpoints in geopolitical arenas. I mean, if you look at Tonga, this was not a geopolitical sabotage per se, Batanga is this island in the Pacific that was hit with this massive underwater volcanic eruption and an ensuing tsunami in 2022. It was basically blacked out for five weeks because that eruption underneath the water disrupted a cable that was bringing them Internet and cell service. And they were five weeks.

15:21They were in the dark from the rest of the world. So, you know, it really makes you think when you hear news like this about how much our connectivity in cyberspace, things like that, is actually tied together by these undersea cables that Meta's building right now. And then one final X factor in this announcement is India, actually, because if we go back to last week, Trump had to sit down with India's Prime Minister Narendra Modi. They listed this big list of different areas that the U.S. would collaborate with the United States. And in that announcement, they actually had just kind of a throwaway line about this, you know, Waterworth project.

15:56And I think a big kind of factor that you have to include in this is that AI data centers and cloud services in India is a massively growing industry. Meta is looking at that industry and saying, what if we are the ones that connected India to, you know, the rest of the world, connected all these data centers coming online? So I do think that is kind of something that Mark Zuckerberg is looking ahead in the future and saying, where's the growth capability? It looks like it is positioned in India, which is why you heard this project actually tease last week in a sit down between Trump and Modi.

16:30Up next, we have a surprise edition of Toby's Trends coming your way. Eczema isn't always obvious, but it's real. And so is the relief from EBCLIS. After an initial dosing phase, about 4 in 10 people taking EBCLIS achieved itch relief and clear or almost clear skin at 16 weeks. And most of those people maintained skin that's still more clear at one year with monthly dosing. EBCLIS, LibriKizumab, LBKZ, a 250 milligram per two milliliter injection, is a prescription medicine used to treat adults and children 12 years of age and older who weigh at least 88 pounds or 40 kilograms with moderate to severe eczema.

17:06Also called atopic dermatitis that is not well controlled with prescription therapies used on the skin or topicals or who cannot use topical therapies. EPCLIS can be used with or without topical corticosteroids. Don't use if you're allergic to EPCLIS. Allergic reactions can occur that can be severe. Eye problems can occur. Tell your doctor if you have new or worsening eye problems. You should not receive a live vaccine when treated with EPCLIS. Before starting EPCLIS, tell your doctor if you have a parasitic infection. Searching for real relief? Ask your doctor about EPCLIS and visit ePCLIS.lily.com or call 1-800-LILY-RX or 1-800-545-5979.

17:37Tuesday on NBC, Jimmy Fallon and Bozema St. John hosts the highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea. This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best idea win! On brand with Jimmy Fallon. Series premiere Tuesday on NBC. President's Day on Monday turned this into a shortened week for some, But since I like the sound of my own name, I couldn't let it go by without getting a Toby's trend in.

18:15So my special Wednesday Toby's trend is all about OpenTable's plan to become cool again. If you've gone online to try and snag a reservation at a hot new restaurant, you've likely ended up on Resi. It's owned by American Express and was, at least for the last few years, the preferred place to look for a tough table to book. OpenTable, on the other hand, has far more choices, 60 ,000 compared to Resi's 20 ,000, but it's been around since 1998 and has never quite gotten the sceniest places to bite. That is until recently. It's been luring the coolest restaurants across the country back into its open arms with a combination of newly launched credit card perk programs and some fancy marketing promises.

18:57For Chef Ian Gray, based in Philly, he told the Philly Enquirer that they basically gave the platform to us for free and wrote us a check as well. A tough deal to say no to. Thanks to Hustle Like That, OpenTable is suddenly back in the buzzy restaurant game using cash from a recent Visa deal to lure big names that are helping revamp its image from run-of-the-mill restaurant booker to a platform for more exclusive finds. Neil, it is a brawl out there in the dining industry, an all-out arms race in the two-sided marketplace of restaurants and customers, and OpenTable is making up ground. There are reports that OpenTable paid one restaurant owner a million dollars to move over from Resi to OpenTable.

19:39That's how desperate they want to be cool. And you said it's an arms race, which is very true. I think it's an arms race in one industry in particular, and that is credit cards. The Philadelphia Inquirer had this really nice line. They said it's a dining industry arms race where restaurants are commodities and luxury credit card holders enjoy the spoils of war. So Amex bought Resi in 2019. The idea was to offer its credit card holders, those premium ones who are paying hundreds and hundreds of dollars each year for these gold and platinum cards, access to exclusive reservations, late breaking reservations.

20:17And then OpenTable said, OK, let's probably do the same. and they inked this partnership recently with Visa. So when you go on OpenTable, I just did this morning, the top hit that they're flashing across their site is, you know, this is our Visa sponsorship. You get access to these restaurants with Visa. So Visa and Amex are going toe-to-toe in this war and the arena on which it's fought is OpenTable and Resi. Yeah, and OpenTable also did something called the Icons program, which is they would go to a restaurant and say, hey, do you want better billing? Do you want to not be lost in the sea of other restaurants?

20:51You can be an icon restaurant on our platform. So we also saw you opened up the platform this morning. I don't know how many other people are booking restaurants at 530 in the morning. But the icons program was there. We saw what the icons were in New York City. That being said, though, some chefs have said that in the courting process, when they were trying to get us to move over from Resi to OpenTable, they were very responsive. They were showing up at our door every day. They were ushering us through it. They were giving us huge lumps of cash. But then after we did make the switch, it suddenly became a lot quieter on OpenTable's side.

21:26And sometimes the checks took a while to arrive. So maybe it's not something that they're doing this all-out marketing push to convert people over. But it's whether you can keep them on your platform, whether those tables are being filled by these Visa card holders or they're going empty. That is what will truly come down to what platforms restaurants will kind of, you know, choose going forward. And in the background of all this is just a booming market for restaurant reservations after COVID. Between 2021 and 2022, restaurant reservation searches on Yelp rose more than 100%. It's becoming much more in demand to book these very fancy, you said, sceny restaurants.

22:10restaurants and that's why this turf war has become even more profound because there's just a lot more, there's a lot more attractive customers now that are spending lots of money on these platforms so they want a piece of the pie. It's insane what people do to get reservations these days. Our good friend and founder of the company Austin Reef has told me that he has used LinkedIn before to, you know, message the restaurant host to try to use his clout as morning, Bruce CEO, to say, hey, let me have a seat here. So people go a long ways because it is just this battle to get the best spots in town.

22:45Now let's sprint to the finish with some headlines you may have missed. Up first, Grok3 is here and Elon Musk thinks the latest model out of his startup XAI is the new big man on campus. In an announcement event live streamed on X, Elon claimed that Grok3 outperforms competitors like Google's Gemini, OpenAI's GPT-4-0, an anthropics cloud across various math, science, and coding benchmarks. It also outperforms China's DeepSeek R1 model, which threw everyone into a tizzy last month for its cheap performance that caused a U.S. equities wipeout. Grok3 also ventured into research assistance territory with a new feature called DeepSearch that is XAI's answers to OpenAI's deep research.

23:28It can troll the internet and build you an abstract response to a question you have. Neil Grok 3 shows that XAI is still very much in the thick of the chatbot races. It is, and it's another chapter in the melodrama playing out between Elon Musk and Sam Altman. Remember, earlier this month, Elon Musk submitted a$97 billion bid to buy OpenAI. Sam Altman dismissed that and said, I wish he would just compete by building a better product. Here he is. Maybe he did. Here he is. I also think this is huge for X because remember, Elon Musk has completely changed X's business model to subscription-based.

24:08And one of the things that it folds into the subscription is access to this Grok AI model. So now if you pay$50 a month, you will get access to Grok 3 first. So it is twofold. One, he wants to compete with OpenAI. But also, it's a very nice financial boost if you offer a state-of-the-art model within your X subscription. XAI, this company that really no one ever thinks about, is about to raise money at a$75 billion valuation. Oh, the humanity, humane, the buzzy Sam Altman-backed startup that made an AI pin intended to replace smartphones, is shutting down the project and selling parts of its business to HP for$116 million.