Labubu Dolls, Record-High Corporate Bankruptcies, & Chamath's $250M SPAC

0:00Xena.com presents the Rich Habits Radar. A new Friday episode of the Rich Habits Podcast, where every Friday morning, we're coming at you with the biggest headlines impacting you and your money. My name is Austin Hinkwitz, and I'm joined by my co-host, Robert Croke. The three things sitting at the top of our Rich Habits radar this week are, one, Pop Mark's profits soaring by 400 % thanks to Labubus. Two, corporate bankruptcies hitting a five-year high. And three, Chamath Palahapitiya filing for a$250 million SPAC. And be sure to stick around to the end of the episode where we help a listener figure out if they should open a Mexican restaurant or not.

0:40That'll be a fun conversation. So, Robert, why don't we dig into our first story? PopMart profits soared 400 % during the first six months of 2025. Pop Mart is a Chinese company that has taken the world by storm because of their LeBouBou plush dolls. Pop Mart sells all sorts of trending collectibles from keychains to figurines and all other accessories for kids. And the company is publicly traded on the Hong Kong Stock Exchange. And it's crazy because their shares are up 240 % year to date, all because of the LeBouBou craze. Their revenue tripled to almost$2 billion during the quarter, with the majority of that being these Lububu plush doll sales.

1:22It's crazy to think that people are buying these plush dolls hand over fist for$30 to$200 each, while the average American in credit card debt carries a balance of over$7 ,000. Now, here's why it matters, right? Robert and I, we always talk about how important it is to own stock in the companies that you're a customer of. to not just be a consumer, but to also be an owner, right? So if you shop at Amazon, you also have stock in Amazon. If you ride in Ubers, you have Uber stock. If you're watching this right now on Spotify, you have Spotify stock. The only way you'll ever be able to retire is if you are an owner and not just a consumer.

2:00As you look around and you see people get excited about these Lububu dolls or anything else, if it's Lululemon leggings, if it's, you know, Hoka shoes, whatever's going on, on running, whatever you see going on around you, Go ask yourself, wait a second, are they a publicly traded company? Can I own a part of this trend? Can I profit from this beyond just maybe investing in the broad-based index funds, right? How do I look at a trend and get excited about it as an investor? That is what's important. I think that's the biggest takeaway from this crazy LaBubu doll craze that we've seen so far in 2025.

2:35And that takes us into the next story, which is a little more serious. July corporate bankruptcies hit a five-year high. July U.S. corporate bankruptcies filings hit the highest monthly total in five years. So the U.S. has now seen 446 large bankruptcy filings in 2025, officially up 12 % above pandemic levels in 2020. Several once popular brands from the 1990s and 2000s are included in this list of bankruptcies. Forever 21, Joann's, Rite Aid, Party City, and most recently, and I'm surprised by this one, Claire's have all filed for bankruptcy in 2025. Now, bankruptcies have been heavily skewed toward industrials and consumer discretionary at 70 and 61 year-to-date, respectively.

3:26This is well above that third-place industry of healthcare sitting at just 32 bankruptcies. And last place, actually, is energy. Only four energy bankruptcies have taken place so far in 2025. Now, tariffs, in our opinion, are what's pressuring these key industries. It's reasonable now as we look around and say, hold on, look at all these bankruptcies that are happening. It's reasonable to expect that unemployment could possibly surge because of it. In July, 11 % of small businesses said that poor sales were their most important problem. The highest percentage since 2020, right? is a prominent leading indicator for U.S.

4:03unemployment. Small businesses, Robert, employ 62 million workers, making up 46 % of all American employees. They are the backbone of this country. In late 2024, the percentage of unprofitable Russell 2000 companies rose to 43%, the most since 2020. This even exceeds the 41 % seen in 2008. Interest expense as a percent of total debt of Russell 2000 companies hits 7.1 percent, and this is the most since 2003. Meanwhile, inflation is back on the rise. Wholesale inflation just rose 0.9 percent month over month, its largest monthly jump since 2022. And core CPI inflation is officially back over the 3 percent level.

4:50This makes cutting rates even more difficult for the Fed, even as Trump calls for cuts. Yes, let's walk through this and talk about a little bit why it matters. You know, the Federal Reserve is in a very tough spot right now, right? The Fed's only job is to balance unemployment and inflation, keep unemployment as low as possible while keeping inflation as low as possible. And over the last couple weeks, maybe a month or two now, we've been flirting with the idea of rate cuts starting in September because we saw the 250 ,000 job revision that was for May and June. And, you know, inflation hadn't yet reinvigorated, but it is now.

5:28I mean, we saw just last week core and wholesale inflation, right? PPI is up to your point, Robert, almost 1 % month over month. That's crazy. It's going to be really interesting, Robert, to see what way the Fed decides to go here. Well, now we see jobs contracting, inflation's rising, and nothing is going the way Jerome Powell wants. Just one week ago, the Fed CME watch tool priced in a 95 % chance of a rate cut in September. But now after inflation is back on the rise, we're only seeing a 64 % chance. So that's a huge drop just in one week. And all I can say, people, is buckle up. The stock market is going to have some wild swings as the Fed navigates all of this information and what to do coming in September.

6:12Most definitely. We're already seeing some volatility that took place this week. That was from an MIT report saying that AI is just some heebie-jeebie stuff. And then even Sam Altman, right, the CEO of OpenAI, said in an interview that the AI bubble could be among us. So that's what's caused a little bit of the jitters this week. But let's talk about our last story here, which is Chamath Palahapitiya filing for a$250 million special purpose acquisition company. So you all might remember from 2020 and 2021, SPACs were all the rage. If you're unfamiliar, SPAC, S-P-A-C, is an acronym for Special Purpose Acquisition Company.

6:51Essentially what happens is investors pool together hundreds of millions of dollars, park that money on the balance sheet of a company, and then they IPO that company. So now the company doesn't do anything. They're essentially a shell company, but they have hundreds of millions of dollars on their balance sheet. Then that now publicly traded company merges with a privately held company, making the privately held company now a publicly traded company. Austin, why did they do this? Why didn't they just IPO? Because if you are a privately held company and you want to go down the IPO process, it normally takes 12 to 18 months.

7:26It's a long process, lots of meetings, lots of, you know, got to get investors excited. It's a lot of money. That's right. It's a very, very, you know, long, strenuous process here where a SPAC, you can do that in three months, six months. And so if you are a company that needs money, you need funding, you need to rock and roll, SPACs could make sense. And this is how countless unprofitable, privately held companies, especially during 2020 and 2021, began trading on the stock market. And literally 95 % of them either went bankrupt or their stock price went down 90 % or more after trading on the stock market.

8:02Some examples of this, and you guys are all going to remember these, Tattooed Chef, Money Lion, Nikola, Clover Health, Lucid, and even open door technologies, just go look at some of these companies' stock prices today and you'll see what we mean. But on the flip side, there have been some really successful SPACs as well. Hims and Hers Health obviously has done really, really well. DraftKings, Rocket Labs, and SoFi all went through the SPAC process and go look at their stock prices because they're all up like crazy. So it's not that SPACs themselves are bad, but it's what company they're merging with that matters the most.

8:40Now, speaking of SPAC, what did Chamath do? Chamath has a SPAC now. He just filed for it. It's called the American Exceptionalism Acquisition Corp. A, and it's seeking to raise$250 million via an IPO by selling 25 million shares at$10 each. According to the filing on Monday, the SPAC will mainly focus on energy, artificial intelligence, decentralized finance, and defense. Now, in a letter accompanying the filing, Chamath wrote, and this is a quote, I believe the biggest gains in the future will come from companies that are involved in fixing the fundamental risks that come from our interconnected global order while reinforcing American exceptionalism.

9:24Here's our short take. Be careful, please. In the moment, it might feel fun and smart to own stock in a random private company, but just know that if the company was really trying to succeed over the long term, why would they not just do the IPO process on their own rather than getting rolled up in a SPAC? So just keep that in mind. All right, Robert, now that we've talked through the biggest headlines at the top of our Rich Habits radar this week, I got to give my rapid fire, my top three little headlines I'm over here seeing on the side. My top three headlines personally is Meta's AI hiring freeze, the FanDuel and CME group partnership, and then Walmart now starting to feel some pressure from these tariffs.

10:06So let's kick it off with this Meta AI hiring freeze. Meta has implemented a hiring freeze within their AI division, ending a period of significant recruitment for AI researchers and engineers. Meta has reorganized their AI operations into four distinct teams, now under this Meta Super Intelligence Labs business segment. The restructuring also follows Meta's substantial investment in AI talent. I think we all saw those headlines where they were paying$100 million as a signing bonus to some of their new employees, including Alexander Wang, the founder of Scale AI. However, Meta's hiring freeze emerges while the broader concerns about the rapid pace of AI investments are maybe not paying off.

10:51We saw this MIT study come out. It's caused the markets to jitter a little bit. And even Sam Altman, the CEO of OpenAI, recently commented in an interview that he believes AI is in a bubble. So it's interesting to see how quickly Mark Zuckerberg is flipping the switch on their hiring. The next callout I want to share is FanDuel and CME Group's partnership. So FanDuel, which I think we all know what FanDuel is, it's one of these online sports betting apps, they've entered into a strategic partnership with the CME Group to create a platform that allows retail investors to bet on the outcomes of financial market events.

11:25Think about this as to what Robinhood and Calci did recently themselves. And now that we've got Robinhood and Calci together, we now see FanDuel and CME Group. Maybe we'll see BetNGM and DraftKings maybe come together on some of this stuff, right? It's a lot to unpack when it comes to that. But the reason for the partnership, as I understand it, why they're really doing this is it allows them to generate revenue from customers in places like California, Texas, and Florida where sports betting is not yet legal. So I'm definitely going to keep an eye on this one. And again, FanDuel stock, I think it's FLUT is the ticker on that one.

12:01Now let's wrap up my top three here, Robert, with Walmart. Walmart just came out with earnings and we've got some quotes from their CEO and their CFO. CEO says tariff costs are continuing to rise. We're managing this on an item by item and category by category basis. There's certainly areas where we have fully absorbed the impact of these higher tariff costs, while other areas we've had to pass some of those costs along. Now, their CFO says that these tariff related cost pressures will persist into Q3 and in Q4 with per week cost increases as inventory is replenished at higher price levels and noticeable unit level moderation across discretionary categories among those middle and lower income shoppers.

12:44So it's crazy to see here, you know, I think it was in Q1, they talked about how they're not yet passing on anything yet. They're still trying to figure it out. Well, now we see here in Q2, Walmart will be passing on some of these tariff related costs to their consumers. And unfortunately, it will hit the middle and lower income shoppers. Well, we are definitely seeing some cracks in the markets and some information that's surfacing now that really sheds light on where are things going with AI, where are things going with the economy, how is it going to affect consumer spending, all of the above.

13:15That's why these Friday episodes are so fun to film and so important for our listeners. So I want to jump into my three rapid fire headlines for today's episode. Number one for me is Intel and the fact that SoftBank invested$2.5 billion this past week into the company. But more importantly was the interview that I watched with the CEO of Intel, where he clearly in the interview point blank said, we missed the boat. We were late to the party in AI. So we are going to focus on edge AI. So what does this mean for all of us? We're keeping an eye on Intel. It's a big chip maker in the United States and why is all of this important?

13:57To me, it really revolves around the fact that Edge AI is still a huge part of AI and the chip business. When you think Edge AI, think of offline really quick processing power. So if you were thinking about autonomous driving cars, you would think using Edge AI type products because it has to be millisecond decision making that can be done. But Edge AI is going to be a big sector. Many of the companies we talk about all the time are in this sector like NVIDIA, Palantir, Micron, but also Intel. So I want to make sure everyone's keeping an eye on that because I do think Intel benefits a lot by being a US chip manufacturer.

14:38They've had their bumps for the last couple of years, but things are looking really good, especially with Trump announcing the 100 % tariff on all imported chips. So that's an important takeaway for the future of Intel, and we'll be keeping an eye on that. Number two, and this is kind of important to me and special in a headline that I wanted to share. You know, I've been in the restaurant and bar business for many, many decades, is Americans stop drinking alcohol. According to a Gallup poll, only 54 % of Americans say they're still drinking alcohol. And this is the lowest percentage in over 90 years, 9-0.

15:17That is a very, very long time. And it's just crazy to think that people are getting away from alcohol after hundreds of years of drinking it. The findings in the poll, which was conducted in July, indicate that after years of many believing that moderate drinking was harmless or even beneficial, worries about alcohol consumption are finally taking hold. According to Gallup's data, even those who consume alcohol are drinking less. In response, names like Constellation Brands and other alcohol-related publicly traded companies are seeing their stock prices trend lower. This is the opposite of a secular growth trend, maybe a secular growth demise.

15:57During COVID, after COVID, people started drinking less. They're doing run clubs. They're doing social meetups. There's a lot of seltzers out there that are non-alcohol. just a big trend going away from alcohol. So as we're always sharing with you guys, picks and shovels, make sure you know where markets are going so you don't get caught up in hype and understand these secular growth demises in different parts of the stock market. And my last headline today is U.S. manufacturing is rebounding. However, we saw last week from the producer price index that tariffs are fueling inflation in wholesale prices.

16:35The manufacturing sector as a whole recovered to a 39-month high in activity coming close to the threshold that divides contraction from expansion. Fingers crossed we're able to cross the threshold and definitely continue to grow U.S. manufacturing again. I know that's everything that the Trump campaign is pushing, and I would love to see it as well because we need to take control of manufacturing in the U.S. and become the powerhouse we once were. Yeah, I mean, Robert, back to the alcohol thing. I find myself drinking less. Maybe it's because I'm getting older, but I know like a ton of my friends like just don't drink at all.

17:09I've even seen like a lot of these different types of beverages that are more focused on CBD or even THC. And it's like it's a completely different way to think about drinking or enjoying yourself. I find myself now, if I do drink, I like to drink something that has I don't like to drink too much beer. I feel really bloated after I drink a lot of beer. So I'm finding myself drinking the seltzers, the surf sides. I'll even drink, you know, red wine more. I feel like that is like how I'll drink. But I agree. Like I'm not doing the cocktails like I used to. I'm not doing any of that stuff. It's different.

17:41It's weird. All my friends are in run clubs, like you were saying. A lot of my friends have got these. They're outside more. I see the Strava runs posted to their Instagram stories. It's been pretty interesting to observe that trend. Yeah, I definitely see. And it's really cool to watch it unfold in front of us is that the younger generations are really getting outside, being more active and caring about their health and wellness. You see it in the supplement category where more and more people, you know, when I grew up and I was in my 20s and 30s, we didn't take supplements. We didn't even know what those were.

18:12And now there are people that have full on regimens of what they have to do and take every day. So I think it's great for longevity and health and wellness in our society for sure. So let's now jump into of the Q &A section of this episode. As you guys know, the Q &A section of our Friday episodes are exclusive for small business owners. We know a lot of you out there. I've got the side hustle, the small business. Maybe you're trying to figure out how to make your first dollar on the internet. Whatever you have a question about as it relates to being an entrepreneur, ask it to us. Go email us at richhabitspodcast at gmail.com.

18:46Put like Friday episode or business question or something in the subject line so we know to identify it or DM us on Instagram at richhabitspodcast. So our first question was actually asked to us on Spotify. Go leave us a comment on this episode if you got a little question to ask. But it's coming from Hector Yu. Hector says, Austin, Robert, what are your thoughts on opening a Mexican restaurant in Christianburg, Virginia? I have a W-2 job that pays me six figures, and the restaurant I'm thinking about is more of a specific menu. Others offer a plentiful menu that complicates the management. What is your advice and how do you think I should do my due diligence on this kind of a business?

19:23Robert, you are the restaurant guy. I'd love to get your perspective on Mexican restaurants as a whole if you have any perspective on them. And then also, what's your take on a more specific menu in a restaurant versus a more, you know, cheesecake factory type menu? This is a fantastic question how you posed it. I have a huge issue with going into restaurants where the menu is a book, where there's four or five pages. Think of Cheesecake Factory, TGI Fridays, those kind of restaurants. Because you have to know that if there's that many items on the menu, like Hector alluded to, it's really hard to manage.

19:58But also they must have a massive freezer because you know they're not making anything homemade because the menu is so extensive. So I love the fact and the concept of restaurants being more farm to table, having lesser items and really focusing on quality and not quantity. So in Hector's instance, I love this concept, but I do fear, Hector, if you've never had restaurant experience, you've never opened a business on your own and you just really want to do this, be careful. So many first-time restaurateurs fail in the first year to 18 months. It's very expensive to get up and running. And I would strongly suggest for anyone that's thinking about getting in the restaurant business, try to buy an existing failing restaurant that was poorly managed that you can retrofit your concept in and do the research.

20:51Because building out a restaurant from scratch can take two years, and it's going to cost hundreds and hundreds of thousands, if not millions of dollars. buying an existing restaurant for pennies on the dollar or taking over a lease of an existing restaurant can get you in the door for a lot less money and investment capital up front. Now, let's talk about specificity of the menu. Hector, I think you're spot on. I love Mexican food. Everyone loves tacos. I'm glad to see there are more and more places that are focusing on this farm-to-table concept for their menu rather than the same stuff over and over.

21:28because in Toledo, Ohio, where I'm from, there are probably 15 large Mexican restaurants that all use the same beans, the same chicken, the same pre-cut tomatoes. Nothing is made fresh. To me, that's not real food and not how I'd want to own a restaurant. So I love the concept. Be careful and just make sure you really do the research on the location, how much money it's going to take. And just please, please find an operating partner if you don't have the restaurant own experience because we don't want to see you lose money. I think this is a great response here from Robert. I don't really have too much to share.

22:03The only thing I would share as it relates to this is to make sure that you are finding that operating partner, right? Like make sure that there's that person there that loves hospitality. They love serving people. They love to create that environment where people want to keep coming back, right? There's a Mexican place here right down the I read from my house that, oh my gosh, it is literally lying out the door every Thursday, Friday, and Saturday night. Like people, I've had their Mexican food plenty of times. It's amazing, right? Just the vibes are great. The food is fresh. It's reasonably priced, right?

22:36But like it is a place people want to be. And I don't know the secret sauce to that. I've never ran a restaurant myself. But, you know, reach out to people who are already doing this. Maybe you have some mentors in your life that can help guide you. Obviously, take Robert's advice as well. But not bad. Obviously. Oh, wait. Actually now, Robert, let's take a step back. He has a six-figure W-2 job. Should he quit that job to go do this restaurant stuff? I wouldn't quit my job until I have hundreds of thousands of dollars invested. I've got a clear, I'm going to try this. I'm going to make sure that it either fails or doesn't fail.

23:11And then if it fails or doesn't, like there's a date, there's a clear goal in mind. If I don't hit that goal, I'm back to my job. Do not find yourself in a situation where you're having to consistently come back and say, okay, well, if I just got$10 ,000 more to put into this, or I'll just have another 50K that I can go borrow from this bank or just another 100 grand to go, oh man, if I just get another 15 ,000 to renovate the bar, another 10 ,000, do not do that. Say, my name's Hector. I got this awesome opportunity over here with my job. I want to go start a Mexican restaurant. I understand what it takes.

23:40And if I do not hit these goals, I gave it my best try. It failed. I'm going back to my job. Do not fall for that cycle of just always trying and trying and trying and trying and trying. Exactly what I did when I took over our family's restaurant out of probate court because my grandmother passed away. It needed a full renovation, but I did not quit my finance job at the car dealership. I went to the owner of the car dealership. I said, hey, I bought this building out of probate. I'm going to open our keep our family's restaurant open, hopefully for decades to come. It's still open today. I was 23 years old when I took it over, but I did exactly that.

24:16I repositioned my job. I took a demotion from finance manager back to a salesperson. I got special hours so I could do both. So Hector Austin nailed it. Do not quit the six-figure job to go do this. Do both if you can. Get an operations manager. Align yourself with a good team. And then when your income in the restaurant maybe surpasses the income in the W-2 job, then you can consider quitting. But do not fall in that cycle of which Austin alluded to. You don't want to be there. So our next question comes from Sam I. Sam says, hi, Austin and Robert. My name is Sam, and I love your podcast. Three years ago, my wife and I started a healthcare practice from the ground up.

24:58Today, it generates$250 ,000 annually and is run entirely by the two of us. We've implemented systems that utilize AI, allowing us to operate a four - or five-person company, managing everything from administrative to patient care without needing extra staff. However, since it is a healthcare service, it's naturally limited by the location and available time. That's why we've decided to move into building an online education business where we can share our expertise globally and not be bound by geography or time. The system that you've built with the Rich Habits podcast is incredible. You have your podcast, you have your community, you've got your video coursework and everything in between, and it all works so seamlessly.