🥹 “Adorrrrrable” — AI agent’s cute-washing. Arcteryx vs. Patagonia. Skydance’s megastudio. +Publicly traded poetry

0:28This is Nick. first story, it's Arcteryx. The outdoor gear brand loved by fashionistas is beating Patagonia. Even though no one knows how to pronounce it. We'll tell you how reluctantly Arcteryx became a financial fashion flex. For our second story, Paramount closes its deal to acquire Warner Brothers tomorrow. The name of the merged company? Skydance. Skydance. Here is Skydance's strategy to take over Hollywood. Be the crazy guy. And our third and final story is the top trend in technology right now. Wash away your AI anxiety with cuteness. Oh, besties, if your AI agent doesn't have a cute LaBooBoo mascot, are you even trying?

1:06But besties, before we hit that wonderful mix of stories. Who's a good boy? Who's a good boy? Love the mix, Jack. It is the first Monday of the fourth quarter. Yes, it is. You know what that means, don't you, Jack? Publicly traded poetry. That's right. I wrote a sonnet, a ballad, a special verse of poetry for you about a company. Wait, for me or for the listeners of the show? Because I have not heard this poem yet. It is actually for shareholders, Jack. All right, so you ready for this Q4 publicly traded poetry? Let's go. Okay, here we go. All right, give me a beat. All right. Holy athleisure, you're breaking my heart.

1:36I so want to mend you, but no idea where to start. You gave us just do it. You gave us the swoosh, but Wall Street just did it. A 10 % whoosh. Nike, oh Nike, your numbers sprained a knee. And still, I can't believe you missed Steph Curry. Sales down 4%, profits down too. Would a week with a trainer and an ice bath help you? You tried selling direct. You kicked malls off the team and then crawled back to foot locker like a really bad dream. On running caught up. Then Hoka did too. They stole your first love. The old run club crew. But MJ's been injured. LeBron's broken a toe. Every athlete has faced an uphill battle before.

2:15We like how you're thinking. With crazy ideas. That new mind reading sneaker. More of that please. Every athlete knows that the real games in your head Just practice your earnings each night before bed. You can hit all-time highs from today's all-time lows. We believe in you, Nike, like the 96 bulls. Okay. Snaps? Snaps. Thank you. Dude, thank you. You're dropping the R on like buffo to make it laugh with toe. That was really good. Very Robert Frost. This is like Nike's last six annual earnings reports. Yeah. But put into like iambic pentameter. Phil Knight, if you're listening, tap Jack and I in.

2:55Jack, let's hit our three stars.

3:23Start the show. First, a quick word from our sponsor.

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4:30That's 50 % off your first year at monarch.com with code TBOI. Zip Recruiter. Yetis, maybe you multitask your breakfast making and your newsletter reading. I mean, who doesn't? Or maybe you mow the lawn while listening to the earnings call that your boss had signed. Or maybe you send voicemails all day instead of texting anyone. You're that guy. We all have our own time-saving hacks for the everyday life. But if you're a business owner, how can you save time hiring? ZipRecruiter. ZipRecruiter has a new feature that quickly lets you see the most interested qualified candidates first, so you save time by meeting the right people faster.

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5:29Try it for free at ZipRecruiter.com slash tboy. That's ZipRecruiter.com slash tboy. Meet your match on ZipRecruiter. For our first story, Arcteryx now does more sales than Patagonia. We'll tell you how Arcteryx became an accidental status symbol. Oh, yeti, stash away the Allbirds, put away the barber canvas jacket, and don't even think about the branded banker back. Because the cool new flex in finance, it's an Arcteryx. Arcteryx, you're walking from the subway to the office in tech gear designed for a Kilimanjaro expedition. Arcteryx has become the Hermes of the outdoors. It has, Jack. Bright colors, technical texture, and a fossil that looks like a dinosaur logo.

6:11Arcteryx, it makes you feel like the love child of Indiana Jones and Michaela Schifrin. Perfectly put. Nobody knows how to spell Arcteryx, by the way, or why there's an apostrophe right in the middle of the word. Gets this every time, but we'll tell you in a minute. But every man in finance does know how to drop$650 on. Oh, by the way, each of these Arcteryx jackets, over 150 parts from 35 different suppliers in them. It's like a Ferrari for not freezing. And where's it from exactly, Jack? Well, it's born and based in British Columbia, Canada, but it's part of Amr, a Finnish company that happens to be majority owned by Chinese investors.

6:43Yetis, the heritage of this outdoor gear brand is as confusing as that guy in your MBA program with four passports. Your dad worked at an oil company? I guess that explains it. But despite that international heritage, you can own the stock. Arcteryx is the biggest brand in Amr, a$15 billion publicly traded company focused in sporting gear. And here's the news. Arcteryx's revenue has quadrupled in the last four years to$2 billion. Jack, could you sprinkle on some context, please? That is more than Patagonia's$1.5 billion of annual sales. Now, why don't you zip up even more context for us? Arcteryx's$2 billion in annual revenue is half as much as the North Face and about the same as Solomon.

7:19But besties, Arcteryx's owner plans to keep the growth going and double sales again by 2030. Arcteryx is extinct. Arcteryx's growth is not. But besties, this is what Jack and I find fascinating about this outdoor brand. Arcteryx's brand has become reluctantly rich, and we've seen this before. The original name of this brand is Rock Solid. It was founded by Canadians for climbing gear. On belay, belay on. But like Yvon Chouinard when he founded Patagonia, in which we discussed in an episode of The Best Idea Yet, selling clips and hooks for frugal climbers, you're not going to make that much money, are you, Nick?

7:54It ain't a profit puppy, Jack. So, Rock Solid expanded into jackets and apparel, and they adapted a new name to reflect it. That name is the Archaeopteryx, which is... I guess that's why they put the apostrophe in the middle of the Arcteryx. I'm a little, little rusty in my paleontology, Jack, but yeah. And what exactly is the Archaeopteryx? Well, that's a bird that lived with the dinosaurs and evolved its physical form, just like Arteryx evolved its business model. So they shortened the name and kept evolving that business model in the 2010s when they made a strategic move. They cut the wholesale business.

8:29They cut the wholesale. To control their own prices and keep those prices high, they pivoted to a new business model. From selling just 20 % direct-to-consumer to 80 % direct-to-consumer. And Jack, why was that perfect timing by Architerics? Well, kind of like Ben and Jerry's, Patagonia was founded by hippies. Yeah. And they were kind of upset that they'd been adopted by bankers, like comically so. So in 2019, just as Patagonia ended their custom corporate gear, Arcteryx started launching custom corporate gear. Then during the pandemic, we got the rise of something called Gorpcore. Gorpcore, when you turn mountain wear into street wear, we've seen it before.

9:06Gorpcore explains why Frank Ocean and Vogue supermodels are wearing Arcteryx on the way to brunch in Soho. The result, Arcteryx had become an accidental status symbol. Just like Patagonia, Canada Goose, Montclair, Barber, and even Burberry before it. These are all performance brands that became luxury brands, whether they wanted to or not. It's like Land Rover, Yeti Coolers, or Rivian. Totally. They're all designed for the outdoors, but ended up very much indoors. So Jack, what's the takeaway for our buddies over at Arcteryx? Target customer is not necessarily the bullseye customer. Yeti's funny detail in this whole story.

9:43It's the CEO of Arcteryx. He's not a fan of Gorpcore. Even though Gorpcore is benefiting his business big time. Yeah, the CEO actually said, we don't ever think about serving the Gorpcore community. And yet, as the Wall Street Journal put it, Arcteryx's growth has been fueled by Gorpcore. You see, when high fashion embraces you, some brands pivot toward it, like Burberry did nearly 100 years ago. Burberry invented the trench coat for World War I soldiers in the trenches. But Burberry has clearly turned away from that OG target customer. But Patagonia has done the opposite. They don't like being associated with bankers, so they're turning back to the environmentalists.

10:16They rejected it. And Arcteric, so far, they're kind of rejecting it, too. They're sticking to the outdoorsy roots. Which, ironically, is not evolving. So some brands, they stay focused on the target customer, but others embrace the bullseye one. For our second story, introducing Skydance, David Ellison's incredibly overpriced Hollywood house studio that he bought with a 9 % mortgage. Hollywood's most powerful new studio is crazy on purpose, and that should scare Netflix. Yetis, after two successions and a near margin call, both of which are titles of movies, by the way, Paramount is closing its dramatic acquisition of Warner Brothers Discovery tomorrow.

11:01With unlimited willingness to pay, young David Ellison will soon own two iconic Hollywood studios. And besties, since David Ellison has had a full year to prepare for this epic Hollywood deal. He wasted no time last week to make some big moves. He announced a new co-CEO of the combined company, the Mattel guy who launched the Barbie movie. And that new guy's very first orders? Launch 10 more of those kind of Barbie movies. David Ellison is the other co-CEO. He'll get the glitz, the glamour, and the glory of running his own studio. We actually mean studios plural. And why do we mean studios plural, Jack?

11:32Because this combined company will own eight movie and TV studios, as well as 30 TV networks. And to end the final lawsuit that was stopping in this deal, David Ellison pledged to make 30 movies a year and spend one and a half billion dollars more in the United States. But what about the political part? How is David Ellison going to run CNN and CBS News, two of the four mainstream news networks in America? Well, he asked CNN's CEO to stay on in the role and will not merge it with CBS News, which is run by Barry Weiss. Oh, and the merged company? It's called Skydance. He announced that last week.

12:06The new name, Skydance. Instead of the two names you've heard of, David Ellison chose the one you haven't. And it means we're going to get a new animation whenever you go to a movie to see what's going to play for 10 seconds. Well, Warner Brothers and Paramount will actually remain separate studios under Skydance, operating independently of each other. But besties, before you take an intermission break, this mega studio is really unlike any company we have seen before. Think of this mega studio as a massively overpriced house. Okay. Paid for with just 10 % cash and the rest is a mortgage that carries 9 % interest rate.

12:41Besties, understand what Skydance really is. This Hollywood studio, picture a mansion on Zillow. This mansion is huge. It's got more intellectual property than a child's imagination. I mean, this mansion is huge, Jack. It's got enough TV cables to lasso Krypton. Paramount made their initial bid to acquire Warner Brothers Discovery in 2025 for$19 per share, which was 65 % over the asking price. The asking being Warner Brothers stock at the time. But after a bidding war with Netflix, Paramount ended up paying$31 per share for Warner Brothers, which is 165 % over the initial asking price. What is this Pacific Heights in San Francisco?

13:18That's the only other place with asking that high. Besties, the commas were real. half of this huge down payment was going to be paid for by David's dad and a bunch of Gulf countries like Saudi, Qatar, and UAE. The other half, David Allison was going to borrow for, one of the biggest loans in corporate history. But while the deal was delayed by legal opposition, interest rates were spiking to 24-year highs. So last week, when David Allison finally closed his 14 separate loans to raise$52 billion in debt to acquire this giant mansion. Jack, you're running out of breath. I'll take it from here. Interest rates as high as 9.125 % and a duration of 40 years.

13:59That's what he's paying on these loans. Basically the most painful mortgage you could have imagined at the worst time in 40 years. Add it all up, besties, and the new Skydance studio has$10 billion of equity and$80 billion of debt. If you think of this as a house, it's 10 % paid for with cash, 90 % paid for with debt, and it has a 9 % interest rate it has to pay. And that isn't even the ugly part, is it, Jack? Well, Paramount now plans to find$6 billion of annual savings per year to reduce their crazy high debt levels. Translation, expect huge layoffs, unfortunately, in Hollywood. David Ellison might have to mortgage Hogwarts.

14:36And Harry Potter might become an unpaid intern. So Jack, what's the takeaway for all our buddies looking at the big new studio in Hollywood? In a fight, would you rather be the smart guy or the crazy guy? Yetis, that is the famous question that Masayoshi-san, Masa, asked Adam Newman of WeWork. Masa wanted Adam to be the crazy guy. And we would say that David Ellison is the crazy guy in this example. But unlike Adam, David doesn't need money from anyone. He doesn't have to worry about IPO-ing. His dad is worth$183 billion and will give him as much money as he needs. Which should be very scary for Netflix because Netflix isn't crazy.

15:12Netflix is the smart guy here. Netflix's biggest competitive weakness in its Hollywood battle against Paramount, it's that Netflix is smart, meaning it has to pursue profits. While David Ellis and Skydance is crazy. They can afford to just keep losing money longer than anyone. In this new media world, there's a power-hungry young Nepo CEO who controls half of Hollywood and half of the TV God. So besties, in a fight, we gotta ask, would you rather be the smart guy or the crazy guy? Would Would you rather have Netflix or would you rather have Skydance? Now a quick word from our sponsor. Hims hair.

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16:51You know what's a fun habit? Getting to hang with you guys every day on this show. It's what we do. Another fun habit? Listening to audiobooks about habits. Like Atomic Habits, the legendary piece about building habits that better your life, right? And the Atomic Habits audiobook is on Audible. We're excited to collab with Audible because it's how we find our road trip companion. The written word, spoken. So besties, you can create a habit of enjoying audiobooks while you multitask. Which I believe is chapter three of Atomic Habits. That's right, Jack. Wash pots and pans, awkwardly fold those fitted bed sheets, floss your teeth while you're winding down listening on Audible.

17:23If your hands are full while listening to Audible, then you're doing it right. So summer's not over. Replace doom scrolling by listening to an audiobook that a human put all their thought and effort into. Audible. It's stories that speak to you. And new members can start listening with a 30-day free trial at audible.com slash tboy. That's a 30-day free trial at audible.com slash tboy. Take it from a couple guys with a lot of habits who have become your habit. For our third and final story, Meta and OpenAI both launched adorable, huggable, cute little AI mascots, and they're not the only ones. Is that a Labubu doll?

17:58No, it's cute washing. It's cute washing. But besties, before we tell the story, clearly most memorable mascot of the entire tech industry in all of tech history. What is it, Jack? It was the first mascot of the tech industry. Clippy. Clippy. The animated paperclip debuted with Microsoft Office 1997. A digital thing chose an analog thing as their mascot. They gave it a face. Because in the mid-90s, Microsoft research showed that people instinctively treat their new computers as if they were people. So an anthropomorphic paperclip would ask you questions to teach you about your computer. Like, what would be an example here, Jack?

18:33If you start typing dear blank in a Microsoft Word document. Well, then Clippy would pop out of nowhere and say, hey, it looks like you're writing a letter. Have you ever tried Cap's lock? Middle school me remembers Clippy was cute, but not useful. No, no, no. What does Cap's lock have to do with me writing a letter? Well, by the mid 2000s, America didn't need a cartoon character lecturing us on how to save as. So Clippy was retired in 2007 and now lives in a floppy disk somewhere in your attic. Clippy, you're missed. But besties, in the last month, we've noticed that for the first time in 20 years, there's a grand resurgence of cute tech mascots.

19:09First was Zuckerberg. He launched his AI agents, Muse, and hit 5 million downloads faster than ChatGPT or Claude did. And guess what? Zuck gave Muse a mascot, a fuzzy egg-shaped AI avatar to assist your needs. You've probably seen him twerking on Twitter. The mascot's name is Jolly and he will work for you for free Same role as any AI agent, you know, does the task, responds to your emails, makes reservations, can find you a cute top online But looks like a Pokemon character Like is Jolly Pikachu's cousin? That's what it's giving right now The second example of this was OpenAI They didn't want to be out-adorabled by Zock, so they launched their own AI agent called Dots Dots, and Dots is also crazy cute There's a blue cloud dot, a green frog one, a pink heart with sunglasses, adorable Basically, Meta's AI agents look like Pokemons.

19:56Open AIs look like Pixar characters. It feels like the second coming of Tamagotchi, Jack. But wait, Nick, there's more. A related story broke last week about Anthropik's co-founder. Anthropik, a third AI company. You see Dario's sister, his co-founder, Daniela Amadai, she used to solve office conflicts using, get this, stuffed animals. A stuffed bear doll, a stuffed kitty cat, a fox doll, a stuffed troll. She called them her advisory council to help solve internal conflict. And she gave each plush toy a personality, acting out decisions with them. Yeah, the toys. So even Anthropic is using cuteness to disarm.

20:36Besties add it all up and it looks like Silicon Valley is killing us with cuteness. Every big AI agent now has rosy cheeks. Why the labubufying? Oh, and one sec. Hey Alexa, hey Siri, are you guys jealous? Do you think they're cute? What's going on? I think they're jealous. Do you think Apple's going to give Siri a physical form? Or just acquire Hello Kitty? Who knows, Jack? So Jack, what's the takeaway for our buddies who have booboo-ified AI? The AI industry is cute-washing. Yetis, the biggest business challenge facing AI, it's not access to power, chips, water, or training data. It's trust. It's trust for AI that no marketing, Super Bowl ads, or CEO manifesto can fix.

21:14You see, AI has the worst brand in business. The majority of Americans associate AI with danger job replacement and causing prices of everything to rise. AI's second big challenge, besides mistrust, it's becoming a commodity. Muse and bots do the same thing as GrokBot. And soon Microsoft, Google, and Anthropic will have their own version of Muse or bots. But Bessie's funny thing, there is a go-to playbook for businesses when they face trust issues and become a commodity. And what is it, Jack? They differentiate and they endear with a mascot. Insurance companies use mascots to stand out. Gecko's Geico, Jake from State Farm, even a caveman can do it.

21:51And pharmaceutical companies use mascots for the same reason. Picture the Lunesta butterfly. Or picture Mike Dicka throwing a football through a tire swing for Levitra. And here's the problem, besties. AI's distrust is so big, we'd call their mascot campaign Cute Washing. The mascots are there to distract us from job loss, data harvesting, extinction fears. Look at this fuzzy instead. Look at that old bike who's a good boy. The tech industry's latest move to turn around their brand? Use Lububu doll cuteness to distract you from your fears. Cute washing. Jack, could you whip up the takeaways for us to kick off the week?

22:28Arc'teryx is doing$2 billion in annual sales and it's accidentally becoming high outdoor fashion. The brand's target customer was outdoorsy types, but their bullseye customer is the banker types. For our second story, Skydance is the new Hollywood megachiant. Eight studios, 30 TV networks. It'll pay anything for everything. Netflix versus Skydance. Are you betting on the smart guy or the crazy guy? And our third and final story, AI agent swarms that can hack your computer and steal your data. That's scary. So Zuck gave his AI agent an adorable physical form. That is key washing. But besties, this pod's not over yet.

23:03Here's what else you need to know today. First, the jobs report for September, published last Friday, 29 ,000 new jobs added last month. That's low. And the unemployment rate climbed up to 4.2 % in September. But Wall Street's kind of happy because those weak numbers may cause the Federal Reserve to not raise interest rates at their next meeting. The probability of a Fed rate hike in October fell after the report from 65 % to 21%, according to prediction markets. And stock traders like lower interest rates. And second, we have to report a theft. United Airlines is stealing Delta customers. United just launched an ad campaign focused on miles matching.

23:40Yeah, you tell them how many Delta miles you got, and they'll match your status if you join United instead. The number two airline's going after the number one. Win the business class on the ground. Steal the profits in the air. And finally, Dutch Bros, the drive-thru coffee chain sipping on Starbucks' business. They've got a new old idea. Not drive-thrus, walk-thrus. In a wild plot twist, Dutch Bros will now launch its first walk-up-only location. No car allowed. Strange move though, because they sell energy in a cup. Yeah. But you need energy to walk all the way to your local Dutch bros. I'm not sure this will work for them.

24:17Now time for the best fact yet, which because it's Monday means T-Boy trivia. Jack, what do we got? September is the most popular month of the year for birthdays. Okay, but October is the most popular month for product birthdays. Trivia, which of these products was born in the month of October? You got A, the Apple iPod. B, the Ford Model T. C, Walt Disney World in Florida. Or D, Amazon Prime. So Jack, what's the answer? All of the above. Yeah, it was E, all of the above, which we didn't even tell you. Plus the Nintendo, the PlayStation, Saturday Night Live, all businesses born in October. That's right.

24:49The iPod, she's a Libra. Yetis, you look fantastic over there, Jack. Oh wait, I got breaking news, breaking news. Jack, NVIDIA has just acquired the Teletubbies. Oh, that's their cute washing move. Jensen Wong. Adorable. move right there. I actually feel like that's something Sam Alvin would do. And then not show his children. Tell it to us. Yetis, if you haven't yet, tap to follow us. You get T-Boy every day and drop down to give us five stars of rating and review. We love reading them. It helps grow the show. Nick and I will see you tomorrow. Can't wait.

25:27And before we go, a happy birthday to legendary Yeti, Alan Rosenfeld, a five-year Yeti having a 74th birthday down in Charleston, South Carolina. Happy birthday to Xavier Asmussen, making tackles for the Warriors, celebrating his birthday in Wayland, Mass. And Kevin Dwyer at Columbia Business School is one of the elephants at Cluster E, and according to the latest case study, has the best birthday yet. And happy birthday to Kerry Thomas, living it up downtown in NYC. And Al Aguirre, happy birthday down in Hotlanta. Happy birthday to Mike Brandt in Iowa. And Mauro Leos, just got promoted to senior product manager in San Antonio after two and a half years of work.

26:00Congratulations to Neil Hunt, who's marrying Allison down in Dallas. And Andrew and Trish Mahler, we gave them a shout out on their wedding in Madison, Wisconsin two years ago. Well, guys, we're back two years later. Happy second anniversary. And a big shout out to Rin Ma, who made the leap from doctor to AI builder in San Francisco. Get that girl a crew neck.

26:24This is Jack. I own stock of Netflix, Disney, and Amazon. Nick own stock of Nike and Zillow, and we both own stock of Apple. I actually threw in the not perfect rhyme there to like prove it wasn't AI too. I don't think that proved it wasn't AI, but I think it's hilarious anyway.

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