Microsoft and Alphabet Ready to Spend Big on AI & Parents Dropping $4k on Sorority Consultants?

0:28AI tools are everywhere these days, but let's be real. slash podcast. That's superhuman.com slash podcast. Good morning, Brew Daily Show. I am Neil Freiman. And I'm Toby Howell. On today's pod, there's at least one devastating strike we won't have to worry about after the Teamsters and UPS agreed to a new contract. And we'll head to the Red Sea where a dramatic operation is underway to prevent a massive oil spill from a crumbling tanker. Then we're back with another hefty helping of big tech earnings, where we'll see who is riding the AI wave like prime Kelly Slater and who just wiped out. Then I found a new dream job, Neil, that I'm unfortunately not qualified for, sorority consultant.

1:10It's Wednesday, July 26. Let's ride.

1:17All right, so Messi played his second game for Inter Miami last night. two goals easy i know the big question is like is he gonna score 100 in mls this is exactly what everyone predicted and i'm so glad we're seeing it happen because there's nothing better than messy scoring goals do you think he's gonna get bored because he's playing with children i know but there's nothing more fun in the world than scoring goals and like just the pure joy on his face i think he loves america by the way like he really doesn't he's having a great time there so And I think the players playing with him are just on cloud nine.

1:51They're like, I went from being last in the MLS to playing with the greatest player of all time. So, God, I love Messi. And then in more soccer news, the U.S. women's national team plays against the Netherlands tonight in their second game at the Women's World Cup. So that'll be fun to watch. That's a rematch from last World Cup's final. So some bad blood there. So, yeah, I'll be watching. And the final note is Toby and I are definitely on the bad side of the Jamaican Soccer Federation after we did that story on how the Jamaicans women team has had to crowdfund themselves because they're not getting support from the Federation.

2:21Our clip on Twitter kind of went viral with everyone tagging the Jamaican Football Federation, saying how pissed they were at that. Yeah, hundreds and hundreds. We went viral on Jamaican soccer Twitter. And yeah, people are really mad. They're very disappointed in the Federation. So maybe we'll affect some change. All right, Neil, let's jump into our first story where it's that time of year where earnings are pouring in as thick and fast as fresh honey on a sunny summer Sunday. Yesterday, we got a healthy dollop of big tech earnings with Snap, Microsoft, and Google's parent company, Alphabet, all reporting.

2:54The big theme of this earnings cycle was how each company's AI investments would shake out. And boy, did it go well for some and not so well for others. First, for the good, Microsoft had a solid quarter beating revenue expectations by around a billion, while also promising that they are going to continue to plow money into building out its AI infrastructure. Alphabet also proved that reports of its search business demise were greatly exaggerated. Search advertising sales grew to$42.6 billion, topping projections and showing that Microsoft's AI-powered Bing isn't a true foe right now. Then finally, there is the problem child.

3:33Snap's stock fell 18 % after it reported its second consecutive quarterly drop in revenue. The good news is that it said that over 150 million users have sent over 10 billion messages to the weird AI chatbot it rolled out. But the bad news is that it doesn't seem that advertisers actually care. Neil, dealer's choice here. Where do you want to talk about first? My takeaway from these was that these companies, especially Microsoft and Google, we can talk about Snap later, have such strong existing core products that they're still printing money on that they can use to funnel into AI investments.

4:09Yeah, absolutely. I mean, Microsoft alone had its highest capital expenditure since at least 2016. So they jumped from$7.8 billion last year to$10.7 billion this year. And pretty much all of that jump can be attributed to plowing money into building out these data centers for AI work. They're just basically, yeah, they have almost an infinite money generator from all their other business lines. So they're like, sure, we'll build out AI infrastructure. And then Google, you mentioned search revenue. Everyone was a little worried about whether, you know, everyone would switch to ChatGPT as their default search engine.

4:44That clearly hasn't happened. I mean, even Google was afraid of it. They declared what they called a code red late last year as Bing and ChatGPT came on the scene. That hasn't panned out. And then YouTube returned to growth, which was very important for them because YouTube had kind of stagnated when the digital ad market slumped. And now YouTube's back growing. And so things are looking good for the bread and butter of Google. And they can use all of the money that they're making on their core products to spend on AI. And investors are loving it. Yeah, it is interesting though, because Google is a litmus test for the broader ad market, but not actually their search business because that tends to do well no matter what the macro environment is.

5:26But YouTube is much more fickle and much more reactive to, yeah, the broader market. And if interest rates are rising, then advertisers are pulling back spending. So to see advertising sales climb 4 % at YouTube, that's a good news. And that's a good sign for the rest of the ad market. Another stat that stood out to me was that Alphabet's headcount was actually 5 % higher last quarter than a year before. And imagine all the headlines that we were talking about, which was, oh, big tech is slashing workers. they're laying off people and mass which was true but they're actually that was just the underperforming divisions and they're hiring in ai and you see that they actually have more workers last quarter than a year before which kind of is surprising given all of the headlines about mass layoffs at these big tech companies yeah definitely surprising okay but we got to talk about our problem child all right we will it's so funny to me i mean neil you've been in the content game for a long time and you've noticed this pattern that every single time after snap reports earnings it seems like their stock drops double digits and then eventually like climbs back and then we go through it all over again and that happened again like it fell 18 again it's crazy they are they are the small fish in a really big pond i mean they're competing for the same ad dollars that you know morning brew is but also that's also a very small fish but tiktok and facebook and instagram and And all these other social media companies.

6:51And Snap has to make a compelling pitch that their ad product is going to be better than someone else's. And that's just not working out. So they always kind of disappoint when it comes to ad sales. And this was the second declining quarter of revenue, which is not something you want to see. And, yeah, the stock plunged, as it always does. Yeah. Although there are some signs of life. So Snapchat Plus, which is their subscription program, has more than 4 million subscribers, which is kind of crazy to me that 4 million people are paying to use Snapchat. And then also their AI chatbot, which again, a lot of people hated when they rolled out because you can't get rid of it.

7:27It's at the top of your snap screen. They're saying that they're testing some advertising links there where they use your chat history to serve you relevant ads. That feels a little invasive to me. But again, you got to kind of ride the AI wave and say you're using it to grow your core business. So you kind of have to say that, But I don't know if users are actually going to like that. It doesn't seem like they do, but it does seem like it could be a potential moneymaker for Snap, and it needs that. If you want more big tech earnings, there's Meta today and then Apple and Amazon next week. You're going to hear AI so many times it's going to lose all meaning.

8:03All right, we have to move on. Everyone can breathe a big sigh of relief because a potentially disastrous strike by 340 ,000 UPS workers that could have happened next week seems like it's been averted. The Teamsters union representing those workers in UPS reached a tentative agreement yesterday that the Teamsters boss Sean O 'Brien was super hyped about. He called it the best contract in the history of UPS. So what did Brown do for them? Wage bumps, particularly for part-time workers, existing part-time and full-time UPS Teamsters got a$2.75 pay increase this year, rising to$7.50 over five years.

8:41And then this is a big sticking point. They're getting air conditioning and cargo ventilation in most vehicles bought after this year. Some UPS workers were working in 120 degree heat with no AC in their cars. Just a major safety hazard. UPS called this a win win win agreement. And I'm not exactly sure who the third win is for, but let's go with the economy because it was in for a world of pain if this strike were to happen. it was expected to lose$7 billion over just a 10-day strike. And who knows if it would have been that short. Yeah, that's my big takeaway is this would have been so, so bad.

9:18UPS moves approximately 5 % of the nation's GDP every single day. So they're moving roughly$3.8 billion of goods every single day. So yeah, any amount of strike. This isn't exactly the Hollywood. I mean, I don't want to diminish any strike, But this has massive, massive economic repercussions. So, yeah, we kind of were saved by the bell. Although the union itself actually has to approve it. And there has been a little bit of like, oh, there's always some people that said, oh, we wanted bigger price or salary increases. So it's still just a preliminary agreement. But, yeah. That's why this is like a full-out marketing effort by the Teamsters guy to sell it to the constituents, to the members.

10:04and he's just like, yeah, UPS put$30 billion more on the table and he's now selling it back to the members being like, you guys need to vote for this. I just secured this amazing negotiation. You know, the art of the deal, baby. Yeah, I actually do have a theory about who the last win was. You said it was a win-win-win. This is a big win for the White House too because we're going into an election cycle and so you definitely don't want the economy shutting down for 10 days because the UPS drivers are on strike. And then also there was rumblings that certain business associations like the Chamber of Commerce wanted Biden to intervene to end the strike because it would just be so bad for business.

10:47And Biden really didn't want to do that because you do not want to be seen as like anti-union, anti-labor. So I think the White House is our third win in this. So I wish we could say that this hot labor summer might not, you know, might get through without another strike. But there is one that could happen. The United Auto Workers Union, there's almost 200 ,000 of them. And they have four-year contract cycles. And this one is coming up on September 14th. So they need to negotiate new contracts with GM, Ford, and Stellantis. And yesterday, GM reported earnings. And CEO Mary Barrow was like, hey, we are doing really good right now.

11:24But if this strike happens, it could be really bad. The last one, they did strike during the last contract negotiations in 2019. And GM lost$3.6 billion from a 40-day strike. The workers there, one of the main sticking points, like we're seeing with, you know, actors and AI, is about these new electric vehicle battery factories that automakers are building. And they want assurances that they will be able to transition and get a foothold in those new plants. Yeah, big strike summer, baby. All right, Neil, let's move on to our third story. We are officially three days into Elon's X experiment, and honestly, the rollout has gone about how you'd expect.

12:05So remember, Elon ditched the bird logo on Monday and officially renamed Twitter as X, complete with a brand new logo. He did all this within a span of 48 hours and even leaned on Twitter users to help design the new logo. Well, the problem with doing all that on the fly is that he didn't exactly dot his I's and crosses T's when it comes to the legal side of things. First, everyone and their mother own some sort of trademark when it comes to the letter X. A trademark attorney counted nearly 900 active US trademark registrations that already covered the letter X in some range of industries. That includes Microsoft and Meta who own X trademarks related to video games and social media respectively.

12:45Neil, I feel like we saw this coming, right? You can't just change your name to a one letter. It's the one letter thing. Yeah, and get away with it. The whole point is your logo has to be differentiated and unique that ties it to your particular company and is a signifier of what you stand for and what people associate with you. So when you change it to a letter, a single letter, it's pretty much the dumbest move you can possibly make because someone out there has a single letter logo or branding. And people in the future will make that as well. And they can challenge you and you will have a very tough time defending it, especially if you're Twitter slash X.

13:20Yeah, and then right now on the site, it's just a brutally confusing time to actually use Twitter because while it says X in the corner where the Twitter logo used to be, you still see search Twitter or you still press a blue button in order to tweet. So there's all kinds of mixed messages. And then I think this is the funniest wrinkle is that Twitter didn't actually reach out to the person who owns the X handle. So on Twitter, you have a username, which you can change, but then you also have a Twitter handle, which you can't really change. And so someone owns the at X handle and he talked to TechCrunch and he was like, I'm a photographer.

13:57Like no one reached out to me. Like I'm open to giving up the handle. But Twitter didn't even attempt or Elon didn't even attempt to reach out to him. So just a very classic Elon moment. And he said, I would sell it for the right price. Right. Which I'm wondering what that would be. I think like Instagram handles go for multi thousand dollars, like desirable Instagram handles. So I could see him holding out for. But clearly Twitter doesn't seem interested in getting the X handle. This is such a to-do list. The other funny story about this is that in Twitter's San Francisco headquarters, they have this big Twitter sign.

14:30And I guess Elon called in the crews to take it down because they don't want to be associated with Twitter anymore. They got five letters in before the city came and showed up and were like, what are you guys doing? You don't have permits to do this. So they made them stop. And right now, if you go to downtown San Francisco, you will just see the Twitter building with just an ER because that's where they had to stop. And they can't continue the construction or taking down the sign until they get the permits to take down the ER. Classic, classic. OK, and this was just a rumor I saw, but apparently a tech reporter was talking to some friends that were on the ground.

15:04And they said that the crane that Elon was using to take down the letters was confusing self-driving cars driving around San Francisco. So there were all these self-driving autonomous vehicles that were stopped and being confused, which is just the most 2023 San Francisco thing you can ever imagine. I think they were sent in just want to watch the show. Yeah, exactly. All right, Neil, before we jump into our next story, we're going to take a quick break.

15:32All right, Toby, Tom Cruise might not have to wait long for inspiration for his next stunt because there's a real life Mission Impossible playing out right now in the Red Sea. Yesterday, a UN-led crew began a dramatic rescue operation that aims to prevent an oil spill four times the size of the Exxon Valdez disaster in Alaska in 1989. Here is what's going on. So there's this massive oil tanker, the FSO Safar, anchored in the Red Sea off the coast of Yemen. The problem is that it's carrying over one million barrels of oil, and because of the civil war in Yemen, it hasn't had any maintenance in eight years.

16:07So it's all rusted, it's falling apart, and at any moment could leak oil or explode, which would be a total economic, environmental, and humanitarian catastrophe. 1.1 million barrels of oil spilling into the sea, crushing marine ecosystems, contaminating desalination plants that provide water to 1 million people, and disrupting a heavily trafficked shipping lane. It'd be the ever-given times 100, but they think they can prevent it. The UN bought a$55 million ship, pulled it up next to the software, and yesterday began pumping the oil from the other ship to the UN ship in a process that should take about two weeks.

16:46Toby, I need a live cam on this like Philly did with I-95. I'm so nervous for this because basically the UN officials have been saying that this has been a ticking time bomb and that they're surprised through a mixture of luck and just like good fortune. It hasn't blown up already yet. And so now they're going in. And the problem is, is that oil sitting in tanks create all these toxic gases that are very dangerous. So they have to go in and kind of balance the levels of gas by like neutralizing it with other gas. It's this crazy operation. They had to test every valve or and pipe to make sure that it was safe to carry oil because many of them aren't.

17:22Imagine sitting in saltwater for eight years. I know. I've seen. In the sun, in like the 100 degree sun over there. I cannot believe this tanker is still in one piece. It's actually crazy. One of my favorite, there's so many different aspects of this operation that are so exciting. First of all, they have like a water balloon around the tankers to make sure that they don't hit each other while they're doing the transfer. Because I feel like if you touch this ship, it's going to explode. And then do you know what they're calling the very large crude carrier that they're pulling up alongside the existing oil tanker?

17:55No. They're calling it the VLCC, the very large crude carrier. Really? That's the technical name for the ship that they're transferring the oil to. So I just love every part of this, and I really hope it goes off without a hitch. It might, but it might not, which is why this is one of my favorite details. They've contracted with 13 different insurers to make sure, you know, if anything happens, they have this backstop, which seems like a lot. Then there's the question of once you have the oil, what do you do with it? And that's a whole other disputed thing. I mean, 90 % belongs to this Yemeni company, but it's$75 million worth of oil.

18:30And I guess oil doesn't go bad if it's sitting in this tanker because it's still usable. They could sell it on the open market. Right. They're planning on selling it and returning the profits to Yemen. But oh my gosh, UN, I hope it goes well. I'll be looking. I'm telling you, they need a live cam. But to close out, I think we need a win over the oceans this year because we've had the orcas biting. We've had shark attacks. You know, we've had the submersible. Yeah. Like, we need a win. I hope this is the win because, yeah, we definitely do need it. All right. We have to move on. MBD listeners, I'm addressing you right now.

19:06Have you ever decided to buy something with cash because you're a little embarrassed about it and won't have to confront it on a credit card statement later? Yes, we have all been there. But now there's proof that people opt for cash over a card when they know they're making a regrettable purchase. a study published by Stanford Business School researchers earlier this month, found conclusive evidence that people dip into paper cash for guilty pleasures. It's consistent with the concept of motivated memory that people make decisions based on what their future self will recollect. So the researchers devised a few experiments to test this hypothesis.

19:40I'll just touch on one. They went to the Stanford bookstore and coded all of the items on how guilty shoppers would feel about buying them. Sure enough, across 118 ,000 real-world purchases, people were more likely to pay in cash for those harder to justify items like Christmas ornaments are a foam hand for a football game. These things are so expensive at university bookstores. I would never buy one, but if I did, I guess I would pay in cash. And they would more likely use a card for useful things like books or items for class. This makes sense, Toby, but it's interesting to see how our brains were kind of behind the scenes.

20:13Yeah, absolutely. I think the funniest part of this study, which comes from these Stanford researchers, is they got the idea from it from a comedian. So there's this skit from Mitch Hedberg that goes, I bought a donut and they gave me a receipt for the donut. I don't need a receipt for the donut. I'll just give you the money and you give me the donut. End of transaction. We don't need to bring ink and paper into this. And that's just a true psychological phenomenon is that people don't want a paper trail when they make a purchase that they think can come back and like it feels uh incriminating or they feel guilty about it so oh i've been there i've been there also it's not another finding through one of the experiments was it's not just cash it could be a prepaid debit card or any sort of alternative payment mechanism where you're not really confronted with what you just bought and crypto is actually the new cash because not a lot of people carry crash cash anymore so they did find in another experiment that people were more likely to gamble away Bitcoin that they earned versus cash that they earned.

21:12So this is just another advancement of crypto is coming in as the new cash. I will tell you, when I bought the Taylor Swift tickets, I bought it using a credit card that I can't log into because I forgot the password. And just it auto pays at the end of every month because that is something I just did not need to see again. So is the equivalent of cash because I was like, here, take it. I'm going to do it. I kind of want to forget about it afterwards. Taylor Swift is your donut. That makes sense. Well, at those prices, yes. Yeah. All right, Neil, let's move on to our final story of the day where I stumbled across a new business I want to tell our listeners about.

21:52We're heading into the beginning of rush season where hordes of young ladies tried to get into sororities of their choosing. Well, apparently an industry has popped up in recent years for sorority consulting services. Because getting into a sorority can be as competitive as getting into college itself. Parents have been hiring consultants to help their daughters land a bid. Neil, wait until you hear what some of these firms are charging. So Recruitment Ready in Atlanta has a bid day package that costs$1 ,000, while the$2 ,000 Fabulous and Chic package from Greek Chic in Manhattan will help you with everything from wardrobe to social media.

22:30I'm not finished. Georgia-based sorority consulting firm, It's All Greek to Me, offers a$3 ,500 all-access package, but the most expensive one comes from a firm called Hiking in Heels, whose top tier will run you four grand. Insane, right? These prices. Yeah, I mean, I read this blog by this economist, Tyler Cowan, and whenever these stories pop up, he has a phrase, and it's called markets and everything. And if there's inefficiencies in a market, in this case, there's untapped demand for sorority consultants are people, you know, helping you get into a sorority, which is a very big deal for a lot of people, then others will come in and make money off of it.

23:09Yeah. Markets, markets all the way down. Markets and everything. Yeah. Okay. But I do want to talk about some of the advice that the sorority consultants are passing out. So there's this quote from Hiking in Heels, the one that charges four grand. It says, be trendy, but not too trendy, modest, but not too modest. Fit in, but be unique. The trick is blending in and standing out. If that doesn't sum up the plight of just like the modern woman in society, I don't know what does. It reminds me of that scene in, no, the one where they go to Hawaii, forgetting Sarah Marshall, where Paul Rudd is the surf instructor.

23:45And he's like, stand up, sit down, stand up, sit down, don't do anything, do something. It sounds extremely stressful and it's only made more heightened by TikTok talk over the past few summers, Bama Rush talk has kind of blown up and shown how high stress intense this culture is, especially in the South of getting into a sorority. You have to submit 30 letters of recommendations. You have to have all of these different outfits. You have to scrub your social media of anything that would show you binge drinking. Yeah, anything that shows you're a real human being and not just like someone who volunteers for charity every single day.

24:26But yeah, it's crazy. I mean, yeah, the biggest thing, actually one of the biggest things they're saying that the consultants are focusing on is a lot of modern women entering college aren't as good conversationally as they were in the past because of like things like social media and just texting. And so a lot of the conversations with these girls just is how to make conversation, how to make eye contact, how to make small talk, because that's a big part of just like being well-liked. So I don't think we'd make it in the sorority world. No, but if anyone, maybe I'll start an acapella consulting business.

25:00If you need to get into, you know, a mildly low tier acapella group in college, I don't think I can charge$4 ,000, but maybe like$30 or something. All right, that's all the time we have. We'll have to wrap it up there. I hope everyone has a wonderful Wednesday. If you want to write in and let us know what purchases you make in cash, Our email is morningbrewdaily at morningbrew.com. Emily Milliron is our editor and producer. Samantha Veles and Raymond Liu are associate producers. Yuchenawa Ogu is our technical director. Billy Menino is on audio. Hair and makeup is ditching us to become a sorority consultant, and I don't blame them.