Winter Storm Causes Travel Chaos & US TikTok Deal Finalized

0:01Toby Lenk:Recently, I got an ad for the best lawn fertilizer. But here's the thing. I live in an apartment in New York City. I don't have a lawn, let alone need fertilizer. That's why your ad needs the right audience and LinkedIn ads can help. LinkedIn has 130 million decision makers and you can reach the right ones for your business. Target by job title, industry, company, the list goes on. Spend$250 on your first campaign on LinkedIn ads and get a$250 credit for the next one. Just go to LinkedIn.com slash MBD. That's LinkedIn.com slash MBD. Terms and conditions apply. Good morning, Brew Daily Show. I'm Neil Freiman.

0:41And I'm Toby Howell. Today, the winter storm led to more flight cancellations than the pandemic.

0:46Neal Freyman:Then the rise of vibe coding has created a major vibe shift on Wall Street. It's Monday, January 26. Let's ride.

0:59Good morning and welcome back to the week. Tensions are high in the United States and especially in Minneapolis, where federal agents shot and killed 37-year-old Alex Preddy, an ICU nurse, on Saturday morning. Preddy was fatally shot just over a mile away from where another 37-year-old U.S. citizen, Renee Good, was killed by an ICE officer several weeks ago, which sparked widespread protests in Minneapolis against ICE agents throughout January. Videos from the scene, which spread all over social media, contradicted the government's initial claims that Preddy was a domestic terrorist and several Republican lawmakers called for an investigation into the shooting.

1:34In an interview with The Wall Street Journal, President Trump declined to say the officer did the right thing, as top officials claimed, and said they're, quote, reviewing everything.

1:42Neal Freyman:Minnesota CEOs are speaking out too, with over 60 business leaders of Minnesota-based companies from Target to United Health signing an open letter calling for, quote, the immediate de-escalation of tensions and asking state, local, and federal officials to work together to find real solutions. Every local professional sports team also signed the letter, including the Timberwolves, Lynx, Vikings, Wild, and Minnesota United. The pushback from corporate giants comes after hundreds of smaller businesses in the Minneapolis area also shut down as they back protests against ICE in their city. Meanwhile, this has greatly increased the odds of a government shutdown.

2:19Last week, the House passed bipartisan bills that would fund most of the government past the deadline, and it was expected to get through the Senate this week, avoiding a shutdown. But after the shooting, a number of Democratic senators said they wouldn't vote for a funding package that includes money for the Department of Homeland Security, which the House versions do. Republicans need seven Democratic votes to pass the funding legislation, and it looks like those will be impossible to come by after what happened in Minneapolis. on Kalshi, the odds of a partial shutdown went from 11 % before Saturday to 76 % last night.

2:52It's going to be a tense week of deliberations to keep the government running past Friday, but that's looking unlikely as of now. If Toby and I sound a bit different this morning, it's because we're recording the podcast in our homes, our first ever bedroom pod. That's of course due to yesterday's winter storm, which closed our office today and probably changed up your routine too. Weather forecasters said it was going to be the big one, and it delivered. Winter storm Fern unleashed heavy snow, sleet, and freezing rain from the southern Rockies to New England, impacting more than 200 million people.

3:22As of this morning, over 820 ,000 homes and businesses were without power, mostly in the south, as ice weighed down power lines. Travel ground to a halt, literally. Airlines canceled more than 11 ,000 US flights for Sunday, the most for a single day since the start of the pandemic. At Reagan in D.C., all flights were axed on Sunday, nearly 90 % at New York's LaGuardia, and close to half at Atlanta-Hartsfield-Jackson, the world's busiest airport. And if you were stranded over the weekend, it might take a couple days to get back home because already more than 3 ,000 flights have been canceled for Monday.

3:55As for snow totals, at least 17 states got more than one foot. Toronto received 18 inches, nearly a record. And for the first time in more than 10 years, D.C., Baltimore, Philly, New York City and Boston all received at least six inches of snow. Toby, this was a monster and its impacts are going to linger for at least a few days.

4:14Neal Freyman:I was looking at the satellite view of this storm and monster is putting it lightly. It is covering 40 states. The only state that looked like it was totally spared looked to be Florida, which, of course, Florida is spared. But even Florida and Georgia and the Panhandle region were getting temperature and tornado warning. So even the southern states weren't fully spared. I want to dive into where the power industry is kind of how it's facing in this massive storm, because obviously when cold temperatures hit, power demands on the power grid go up dramatically. And who is stepping up to the plate right now?

4:51Neal Freyman:It's mostly traditional fossil fuels like oil and natural gas. The largest grid operators were relying on natural gas for about 30 % of their power yesterday. And that has caused this crazy spike in natural gas prices as well. Futures prices for natural gas jumped 70 % in the US over the last week of trading. And it's only going to get worse as gas producing parts of the United States are facing these really low temperatures and demand is only going to keep spiking. Yeah, everyone was looking at Texas specifically. Five years ago, there was this massive winter storm, Yuri, that knocked out the power grid down in Texas, which is not connected to the grids elsewhere in the United States.

5:31So they had a lot of they did a lot of weatherization efforts in the past five years to beef up their infrastructure. And it seems like for the most part that held steady this time around.

5:40Neal Freyman:I was looking into some natural gas traders were also saying, how can we stay online during this crazy event? They were holing up in hotels to ensure that they still had connection to the intercontinental exchange so they could trade their natural gas future prices. So it was interesting that there was like a weatherization of the actual natural gas grid and the actual electric grid and also the people that were trading on those exact things that were powering the grid as well. So Texas was definitely people were looking, would they be able to handle this a little bit better? And it does seem like they are handling it a little better.

6:13And what was unique about this particular storm is that it did hit the south and it hit certain states and cities that don't typically see a lot of cold weather, nasty weather, ice, snow, the like. So if you were in Nashville, the talk of the town was this new snowplow called Dolly Ploughton, and she was part of a new fleet of snowplows that the city invested in. They have five new trucks. They cost about$350 ,000 a piece. Nashville has been growing like a weed over the past couple decades. There's a lot of Northerners coming down there to move and they feel to live. And, you know, Nashville and other southern cities are not necessarily prepared.

6:54They don't have all the infrastructure that northern cities do to carry away the snow. And so just like, you know, an inch or two can kind of paralyze the city. So Nashville is investing, you know, over millions of dollars here to improve their snow infrastructure. And meanwhile, in northern cities, they're only beefing up their tech to give people more accessibility and transparency into how this snow removal operation is going. I was absolutely glued to this website called PlowNYC. And did you see this, Toby?

7:26Neal Freyman:No, see, this is the difference between you and me. Continue your story and then I have a little anecdote here. Okay. So I was looking at PlowNYC, which is this very intricate map of New York City. And it shows you exactly how many streets have been plowed in the last hour, in the last two hours. And maybe they took New York City took inspiration from Toronto, which has their own snowplow tracker called PlowTO, which has a live map. They also have this vintage design around it that just makes it very pleasant to look at. So these are how cities are sort of beefing up their capabilities, whether it's in the actual physical snowplows or the tech to give people more insight into travel and how their lives are going.

8:02Neal Freyman:here's why I was laughing at you is instead of being glued to plow NYC, I went for a run deal. I just saw the city streets myself and I could report there was a lot of snow to no one's surprise, but it was fascinating to see how New York was handling the situation. They equipped garbage trucks with snow plows and these things were just cooking down the road, just blowing snow everywhere, clearing the roads for everyone. And one last anecdote on this too, about New York City. If you thought you were a kid and you got to sleep in, you had a big snow day coming up, not necessarily the case. The rise of remote learning has made it so that snow days don't really exist as they once did.

8:42Neal Freyman:You don't get the day off. You don't get to stay at home and sip pop cocoa and watch cartoons. You still got to log on because now the infrastructure is there to support remote learning. So Monday, you're not getting a day off from homework kids. You actually are going to have to still go to school, even though it's probably going to be on your couch. Moving on, the rise of vibe coding is bringing back a golden era for apps not seen since the Fruit Ninja and Doodle Jump days. After three years of essentially zero growth, December saw 60 % year-over-year rise in new iOS app releases, according to data from the VC firm A16Z.

9:19Neal Freyman:Vibe-coded apps are sort of a catch-all term for apps created using the assistance of AI agents like Claude Coding. It's how I, despite never coding before, could coax an AI agent using normal language instructions to create the Uber for Dogs app of my dreams. The avalanche of apps has created a trickle-down effect that is being felt on Wall Street too. Software giants like Salesforce, Adobe, and ServiceNow have all dropped more than 30 % over the past year, and an S &P index of small and mid-sized software stocks is also down more than 20 % over that period, according to the Wall Street Journal, who points out that the release of Anthropics Claude Code, the preferred tool of a lot of Vibe coders, was a key inflection point marking the downturn.

10:03Neal Freyman:Neil, your technical friends have probably been blabbering nonstop about the transformational power of these coding assistants. Now we're seeing the impact of this technology from the amount of apps flooding app stores to the software companies these micro solutions are disrupting. In the most bullish scenarios, people say we're looking at the early signs of a new economy, an entrepreneurial boom. We haven't seen the likes of since maybe the PC revolution a few decades ago. Alexander Wang, who leads Meta's super intelligence efforts, he is one of the youngest self-made billionaires ever. He said, actually, the Bill Gates's and the Mark Zuckerberg's of the world are right now, they're teenagers, you know, who are instead of doing their homework on a remote day are actually vibe coding new apps.

10:47So the potential here among people who are proponents of vibe coding is just absolutely revolutionary you're giving coding tools to people who who did not know how to code earlier and you are basically teaching them a new language or allowing them to not learn a new language because that's really what's happening here because me or you or i like we don't know the language of coding so it was very inaccessible to us but now because of vibe coding we can just essentially type in natural language prompts to all of these apps that are flooding the app store and elsewhere to say like, build me a website.

11:20I want X, Y, and Z, build me an app that has this feature. And we can just use English to code instead of using coding languages to code. And among those who say vibe coding is bringing about a revolution, that is what the potential is here.

11:36Neal Freyman:I mean, you mentioned language. Not only do you not have to know the language of computers or the technical language of coding, you don't even need to use grammatically correct English to do it or grammatically correct normal language to do it. So not only is there not a language barrier in a technical sense, it actually has reduced the normal language barrier as well, which is fascinating to watch and hypothetically democratizes this tech for a lot of people around the world. New company formation in the US has been declining for decades. And so a lot of the bullish figures in the tech space are saying this could totally reverse that trend and allow a flood of new ideas to hit the marketplace as we are actually seeing in the app store right now.

12:18There are plenty of people who are pushing back on the potential for vibe coding to saying, hey, this is cool, but it's not actually as revolutionary as its proponents think. They talk about the security flaws of a vibe coding app. Like you're not going to push out a vibe coded app to mass amount of users because they're just huge critical vulnerabilities that come with it. You haven't, you know, there aren't traditional software engineers working on this, building in protections around cybersecurity. They're saying this is less economic revolution and more just shifting where the hard work begins.

12:52And they don't necessarily view the vibe coding as wiping out a class of software engineers because those will still be needed. They say that you're not going to vibe code Slack or you're not going to vibe code Salesforce. You're not going to vibe code these huge software companies that are feeling the pain on wall street right now under competition from vibe coding and chat gbt and other ai tools uh more broadly but that's the main argument here that vibe coding can get you started but the things that really make software flow and and work well will still be left to two software engineers that

13:25Neal Freyman:are human still it's undeniable that ai is adding a layer of risk when you are investing in software companies these days because one, it just does lead to more new competitors hypothetically entering the software markets. And then two, this maybe is an even bigger risk. Companies are building software in-house these days rather than buying it. And again, that's probably not going to, you're not going to in-house build Salesforce unless you are a really high functioning engineering company, which we actually have seen Klarna do. They did build Salesforce in-house, But where it leads to revenue pressure is customers test alternatives and then they refuse to pay for upgrades or add-ons.

14:06Neal Freyman:Like, you know, the smaller features that Salesforce says, hey, you need this. So, like, let's increase your package here. Companies will go, we can actually just build that add-on ourselves, which hypothetically is going to compress margins over time for these giant software companies that have until this point ate the world. They've done very well. They seem to be a bulletproof investment. now it looks like they're not so bulletproof. All right, we're going to take a quick break and come back with my winner of the weekend.

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15:20Toby Lenk:Learn more at ADP.com. That's ADP.com. Neil, do you like paying rent? Is this a serious question? That's like asking if I like having teeth removed. Which you... Do not like, Toby. I don't know your life, but I do know paying rent can feel a little better with Built. Built is the loyalty program for renters that rewards you monthly with points in exclusive benefits in your neighborhood. With Built, every rent payment earns you points that can be used toward flights, hotels, lift rides, Amazon.com purchases, and so much more. Plus, starting in February, Built members can earn points on mortgage payments.

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17:03I won the pre-show sledding race, so I get to go first. And my winner is ByteDance, the Chinese parent company of TikTok. Late last week, a deal was finalized to create a U.S. version of TikTok, resolving the long-running squabble, but if you look under the hood, it's a lot more favorable to ByteDance than initially thought. Let's start with the deal itself, which formally establishes a U.S. TikTok majority owned by a consortium of major investors, including Oracle, Silverlake, and Emirati firm MGX. It caps off a nearly seven-year saga in which the U.S. forced ByteDance to divest its American TikTok operations over concerns that the Chinese government would use the video app to spy on its 200 million American users and influence public opinion.

17:46To assuage those concerns, TikTok says, American tech giant Oracle will protect user data in a secure cloud data environment regularly audited by third-party cybersecurity experts. But here's where critics say ByteDance got one over the White House. TikTok's algorithm, considered the crown jewel of its entire business, will still belong to ByteDance, which is going to license it to the U.S. TikTok. And not only will ByteDance continue to own the algorithm, it will, quote, manage global product interoperability and certain commercial activities, including e-commerce, advertising, and marketing.

18:18Or in other words, they still control the app's core operations. Toby, this isn't as clean of a break that was initially expected.

18:25Neal Freyman:Yeah, the algorithm has always been the crown jewel of TikTok right now. And actually, a lot of creators are very nervous about the USification of the TikTok algorithm. Anecdotally so far, some creators have already seen an algorithmic shift. Trump has joked in the past about wanting to make TikTok quote, 100 % MAGA. And some creators have started posting that they have seen increased censorship immediately upon this transfer into US. It's just one off anecdotes right now. But the algorithmic integrity of the US app is going to be paramount to keeping US users intact, because that's what got them hooked in the first place.

19:05Neal Freyman:And then also, if you are TikTok USA, you kind of just got an annoying amount of security risk offloaded onto your plate. Now, Oracle takes responsibility for US data storage. Oracle takes responsibility for compliance and regulatory assurances. It's whenever something might go amiss on a security front, we can't just blame Beijing, and can't blame ByteDance anymore. Now the buck stops with Oracle, which maybe is more annoying than just having, you know, TikTok be this Chinese owned entity that you could always kind of say, oh, they have security issues. Now the buck stops with Oracle. Now you're at Morning Brew Daily's social media whisperer.

19:46Like where do you see TikTok going from here? What's its business prospects? I mean, actually from a financial perspective, it's absolutely crushing. It has 200 million users just in the US alone. ByteDance more broadly, is going to post a$50 billion profit for 2025. That rivals Meta. So this company is doing really well from a financial perspective. But after this seven-year-long drama, are people still going to be using TikTok? It had this remarkable growth trajectory. And some in the industry are saying, I think Instagram, once again, may have killed another app. Josh Kaplan, who's our friend who used to work at Morning Brew and is now very, very involved in the creator space.