👠 “Devil Wears Gap” — The Gap’s fashion-tainment. Spotify’s fitness play. BYOPower. +2016 stocks.

0:28This is Nick. to me in the mail. But in the meantime, we've got three fantastic pop business stories for today's show. Jack, what do we got on the pod? For our first story, Spotify is popping prices again. Many of you listeners will have to pay Spotify$1 more per month starting next month. And Spotify stock is all time high and because of it. But their next big opportunity, it's actually in fitness. For our second story, the newest hire at the Gap is a new CEO, Chief Entertainment Officer. Because every cool brand out there is building their own Hollywood studio. And our third and final story is the hottest abbreviation in this economy.

1:06BYOP. BYOP. Bring your own power. And the winner of the BYOP trend, it's GE Vernova, which has a four-year wait list for their power products. But yetis, before we hit that wonderful mix of stories. Oh, the mix. Love the mix to kick off the four-day week. The year 2016 went viral last week. 2016, everyone's posting pics of themselves back from 2016, 10 years ago. The jeans were skinnier, the avocados were toastier, and Rihanna found love in hopeless places. Because 10 years ago, life was less crazy, wasn't it? 2016 was kind of the last year of normalcy, if you think about it. But what about the business world of 2016?

1:45Let's dive in T-boy style, Jack. Back in 2016, the S &P 500 was at 2 ,000 points. Today, it's at 7 ,000 points. Wow. Stocks have tripled, more than tripled in 10 years. Okay, back in 2016, zero companies were worth$1 trillion. Today, 11 companies are worth a trillion dollars. Jack, back in 2016, NVIDIA stock was just one single buck. Today, it's$187. Wow. It's up 18 ,000%. Besties, a decade ago, Sam Altman was still going through puberty. Abercrombie was still canceled. And AI still stood for alcohol included. But most importantly, over the last 10 years, it paid to have money in the market. That's our takeaway from the year 2016.

2:31Yetis, this is financial advice. Yes, it is. Don't get rich quick. Get rich in 10 years. By putting your money in the market, taking a risk, owning some companies, and watching it grow. As Snoop Dogg said, mo markets, mo money. If you know, you know. Snoop talks a lot. He didn't say that, but yet. Jack, let's hit our three stories. 15 years before this song Two boys from the northeast met in a dorm They had an idea to cause a cultural storm It's the best one yet, but the best is the norm Jack Nick, that's it I don't even think they need to practice 50%, that's a fat tip T-Boy City on your at list If you know, you know, cause we ready to go We can't wait no more, so just start the show

3:17Start the show First, a quick word from our sponsor.

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5:13For our first story, Spotify is raising prices for the third time in four years, because Spotify, pretty much a monopoly. And it's using AI music to pad its profits. But Spotify's next venture should be fitness. Okay, Yetis, before we go any further, Jack and I actually have a great trivia stat about Spotify, but we're going to save it for the end of the pod. But in the meantime, funny little observation Jack and I had. For a decade, Spotify complained that Apple was abusing its monopoly status. Because Apple was annoyingly charging these exorbitant app store fees to all the tech apps out there.

5:49But guess who's charging exorbitant fees now? Here's the news! Spotify just raised the price of their subscription for the third time in four years. Why are they doing it? Because they can! That's the best reason. Spotify is so ahead of Apple Music and streaming that Apple stopped sharing numbers years ago. It was too embarrassing. Yeah, but Jack, Spotify, they still humble brag about the numbers. They've got 713 million humans using Spotify every single month now. Sure, Pandora, SiriusXM, Amazon Music, and YouTube, they all offer music streaming too. But all of those brands Jack just mentioned are like the backup dancers of the industry.

6:26But Spotify is the one and only share level star. Literally all my friends have Spotify accounts except my little brother, Teddy, who's still diehard title. Which is why, Yeti, starting in February, Spotify Premium will now cost you$13. That's up 30 % in just four years. And subscriber growth has actually remained strong despite all those price hikes. Again, because Spotify is pretty much a monopoly in music streaming. As a customer of Spotify, I feel tormentedly frustrated as a shareholder. So Yetis, on the revenue side, things are looking Grammy-worthy for Spotify. How about the cost side, Nick?

7:02Well, I'm glad you asked, Jack. Because in a wild report from Morgan Stanley last week, we got a survey on our music listening habits. Basically, our ear habits. And for the first time this year, Morgan Stanley asked 18 to 44-year-olds whether they listened to AI-generated music. And guess what? Yeah? We do. Yeah, you do. 50 to 60 % of people 18 to 44 years old, basically all of our listeners, reported listening to 2.5 to 3 hours per week of AI music. Voluntarily, not like it was sneakily put into our playlist, we're going out and looking for two and a half to three hours of AI-generated music per week.

7:39That's crazy. You're not listening to Beyonce, you're listening to Beyonce. And for Spotify, that data is a green light to start adding AI music into the Spotify playlist. Here's the key reason. Most music listening on Spotify is their curated playlists, and it's music that you listen to in the background. It's background listening. And this Morgan Stanley report suggests that Spotify could start putting an AI song into every fourth track on one of those playlists, and you won't mind. And why does Spotify want to do that? Well, when music is AI-generated instead of human-generated, Spotify doesn't have to pay royalties to anyone.

8:14Boom, Spotify would lower their costs because AI had replaced every fourth Ariana Grande song in that playlist. As a content creator, that's kind of frustrating. But as a shareholder of Spotify, it's kind of exciting. Again, we're conflicted. So on the revenue side, Spotify is raising prices, but on the cost side, AI is also lowering royalties. Add it all up, Spotify's profits are all-time high, and the stock is up 4x in three years. Jack, those are Jay-Z numbers. So what's the takeaway for our buddies over at Spotify? Spotify can become what Peloton couldn't, the music and fitness app. Yetis.

8:52Bloomberg's Ashley Carman interviewed Spotify's co-CEOs over in Sweden and found that Spotify had actually become a fitness platform by accident. Because much like people upload fitness videos on YouTube, people are now uploading fitness videos onto Spotify. So Spotify's video podcast initiative accidentally resulted in fitness videos in Sweden. Because what's the technical difference between a fitness video and a video podcast? Nothing. They're video files. And this is a huge opportunity because what has Spotify mastered that YouTube has not? Music. Playlists. Fitness playlists. Spotify's next initiative should be to allow fitness creators to pair their workout videos with Spotify music.

9:38I mean, Jack, how many burpees do you have to do to realize that music is what matters the most to workouts? And Spotify playlists are the best playlists. Call it Spotify sweat. It could hugely increase the amount of time spent on Spotify. It could add new users, and it could enable future price hikes from Spotify. I mean, I hate saying this because we're also Peloton shareholders, but Jack, Spotify could become what Peloton could not, the music and fitness app. For our second story, The Gap created a whole new position last week, chief entertainment officer, and invented a whole new word, fashion-tainment.

10:17But it's not just The Gap. Nope. Every cool brand is trying to bring Hollywood in-house. Oh, Yetis, for the three-day weekend, Jack and I did a little weekend magazine binge. And Jack, full disclosure, this was you, not me. I did not read Vogue with you. Well, I whipped open Vogue, and what is the top headline? Does your brand need a chief entertainment officer? I'm still waiting for your gift subscription to be sent to my house. It's coming. But Yetis, The Gap did just that. Last week, The Gap hired a former Paramount executive, Pam Kaufman, to be the inaugural chief entertainment officer. The Gap is opening a Los Angeles office for this whole new role, and what's the purpose, Jack?

10:56Scale The Gap's IP across music, TV, film, sports, and gaming, aka fashion-tainment. Or as Gap's CEO, who has the best hair in the industry, said, fashion is entertainment. Picture original movies that weave in The Gap's brands like silk. I mean, Jack, if The Devil Wears Prada gets another sequel, The Gap could insert itself into the script early, and Miranda Priestly, she'd be into it. You think she'd be into The Gap? No, she would hate it. Yeah, that's a little too pedestrian for her. I think if you pay her enough, Miranda's into it. Oh, Jack, how about a Jerry Garcia biopic? True, because as my sweatshirt I used to wear proudly proclaimed on the chest, The Gap was founded in San Francisco in 1969.

11:36So picture a Gap movie about the Grateful Dead with a scene at the original Gap store. Having a Hollywood executive and a Hollywood office lets the Gap do these things from the inside, from the script level onward. Because besties, remember that viral Gap cat's eye commercial we covered over the summer? It got hit up in their earnings report. It was so big. This whole entertainment initiative is a result of that commercial success. But besties, this is what Jack and I find fascinating about this story. It ain't just the Gap. As society tolerates brands showing up more in film and culture. Every brand is becoming entertainment.

12:12If you listened to yesterday's episode of our pod, you heard the Elf Beauty CEO say that they're actually an entertainment company. Because Roblox, a video game company, is a huge source of new sales growth for Elf Beauty, a makeup company. Your avatar wears Elf makeup in Roblox. And it's not just Elf makeup. How about Starbucks Studios? We covered it on the pod last year. They're doing a documentary with Keanu Reeves about a Latina chess prodigy. It's totally unclear to us how the Starbucks brand is going to be sprinkled into that plot. It's not a latte love story, but this is made by Starbucks' new studio.

12:45Mattel, of course, hit it big with a$1 billion box office hit in the Barbie film, but they have 19 more movies planned based on their famous toys. Bet you didn't know that Uno, Hot Wheels, the American Girl doll, they're all getting Mattel full movies in the next few years. And last week, Ralph Lauren added an NBC executive to the board to focus on the word that The Gap just came up with, fashiontainment. Jack, remember last year we predicted the Ralph Lauren bear was an undervalued form of IP? Get that teddy bear TV show on Peacock. Ralph, we know you're listening. Make it happen. So Jack, what's the takeaway for our buddies over at The Gap?

13:24It's not product placement. It's plot placement. Yetis. It's actually Red Bull who pioneered this brand content strategy decades ago. Extreme videos that didn't directly sell you their energy drinks. Indirectly, they did. But what's different now is that the ambition is bigger. This is bringing whole Hollywood studios in-house. Because if HBO can turn Game of Thrones into a dozen different spinoff shows, why can't The Gap with their hoodie? The Gap sweatshirt is valuable IP, just like Barbie is. It could have a star role or a supporting role Or a barely there in the background But subconsciously get you to buy A two hour movie about a WNBA prospect Who learns basketball on the street In a gap hoodie Ads get skipped, movies get shared So toys, coffee, and now fashion want in Besties, while traditional Hollywood studios Are struggling, brands are bringing them In-house instead It's not product placement, it's plot placement One brand woven throughout Now a quick word from our sponsor Top hats, baseball hats, Von Dutch hats.

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16:22The celebrity of economic reports. Everyone pays attention to this guy. Prices in this economy are up 2.7 % from last year, according to the CPI report. See, when people want prices to come down, prices rising 2.7 % is just way too much out there. But the price you're most noticing going up right now is probably electricity. It's up 6.7 % on average from last year. And what's the reason for that, Jack? AI data centers, which consume more juice than entire states do. Get this. In places near data centers, electricity prices have more than doubled in just the last few years. Last week, we covered Meta's new data center in Louisiana.

17:00It's going to consume the same amount of electricity as five Vermont's. Which is why the president, eager to show action on affordability, is telling tech companies to BYOP. If you're going to build the data center, you got to bring your own power. In other words, stop hogging our electricity and driving up prices for everybody else. BYO. Bring your own or build your own, as in entire power plant. And Microsoft just announced they'd voluntarily do this by paying for new plants and upgrades themselves. And just about every state is considering their own bill to require that tech companies do this.

17:35But besties, there is a deeper story here Jack and I discovered. Because our demand as a country for power hasn't spiked this much in 70 years. You'd have to go back to the 1960s to see a period where our demand for electricity has risen by as much as it is right now. Okay, and Jack, let's go back to that period 70 years ago. What happened in that moment that caused electricity to spike? The air conditioner became mainstream. Air conditioner was the new product, and it caused electricity use to rise 7 % per year in the 1960s. Today, AI is the cool new product, and it will soon eclipse electricity growth rates from 70 years ago with the air conditioner.

18:13Because remember, every time you push enter on ChatGPT, a data center somewhere starts humming. And uses 10 times the power of a normal Google search. Basically, every time Jack asked ChatGPT how to microwave a burrito, an entire lake vanishes. Okay, that's a bit of an embellishment, and you just made me feel really bad. Jack was researching his new trip to Italy on ChatGPT, and the Mediterranean Sea actually got lower. This is called gallows humor. I appreciate it, but you're still making me feel bad. That's exactly what a guilty person would say, Jack. Back to BYOP. The winner of this build-your-own-power trend isn't nuclear, at least not yet.

18:53It's actually General Electric. So Jack, what's the takeaway for our shocking buddies over at GE? The one company that's in as high demand as NVIDIA right now is GE Vernova. Look, Yetis, there are a lot of bottlenecks out there in our race to beat China in the race for AI. There's a bottleneck in tech workers, in rare earth metals, in GPUs from NVIDIA, and in electricity. Reviving nuclear power, yeah, that is one promising option to power all this, but building a nuke takes like five to ten years. Today, the fastest way to get new electricity is to burn natural gas with GE turbines. And General Electric Vernova has 135 billion bucks worth of orders for new turbines on the books.

19:36That is four years worth of orders. And when you have too much demand and not enough supply, that means that GE, just like NVIDIA, can jack up the price for the turbines that they sell. And that's exactly what General Electric has done. GE Vernova's profits, they've been booming lately. Since GE Vernova spun off from the rest of GE in 2024, the stock has quintupled. Besties, the one company that's in as high demand right now as NVIDIA, it's randomly GE Vernova. Jack, can you whip up the takeaways for us for the four-day work week? Spotify is increasing prices$1 per month for the third time in four years.

20:15And AI can lower their music cost too. But what about Spotify Sweat? Their next initiative? Let fitness creators use Spotify music in their videos. For our second story, The Gap has a chief entertainment officer focused on fashion-tainment. The new hoodie movie, or what we hope will be a new hoodie movie, won't be product placement. that will be plot placement. And our third and final story, as tech companies are forced to bring their own power, in the short term, they'll need GE turbines. And that is why GE Vrnova stock has quintupled since just last year. But besties, this pod's not over yet.

20:49Here's what else you need to know today. First, advertisements have entered the chat. No, literally, ads are coming to Chat GPT. OpenAI just announced it on Friday. And they're going to be personalized by default based on your chat history. So they could be targeted even better than like Instagram ads are targeted. Ads though, we should find out are only for free users. If you pay 20 bucks a month, you won't get ads on ChatGPT. And we know what you're thinking. Are the answers you get from ChatGPT going to be sponsored answers? Well, OpenAI says no, but that is what OpenAI would say. And second, we got a new biggest landowner in the world.

21:23For a long time, it was Ted Turner, by the way, Jack. Ted Turner famously had a goal to buy enough land to be able to ride on his horse from the southern border of America to the northern border of America. But now, the owner of the NFL's Los Angeles Rams has the most land of any American after buying nearly one million acres in New Mexico. Stan Kroenke owns more acres of land than Yellowstone National Park. And finally, Verizon will officially pay you 20 bucks if you were affected by last week's epic outage. Full disclosure, I was affected by that Verizon outage. And Jack, cha-ching? No, I got a text message about it this morning and I assumed it was a scam.

22:04Like who texts me saying, click this link for$20? Oh, a scammer does, a scammer does, Jack. And yet I think it was legitimate and I missed my chance to collect$20. This is bogus. Verizon should have been much more clear that this is like not a scam. Jack, it sounds like you would like to speak to a manager and we will do so on another pod. Now time for the best fact yet, which because we're kicking off the week means some T-boy trivia. Jack, what do we got for T-Boy Tuesday? It's about Spotify. Daniel Ek is no longer the CEO of Spotify. Last year, he appointed two co-CEOs to succeed him. Alex Nordstrom and Gustav Soderstrom.

22:39Now, do you notice the similarity in their last names? Yeah, I'm strumming on some strums over here, Jack. They both end with strom. Here's the trivia. What does strom mean in Swedish? No Googling this one, Yetis. Here's the hint. Strom means something extremely on brand, considering the companies these two work for. Drop your guess in the comments, and Jack and I will reveal the answer in tomorrow's pod. Oh, and shout out to the one Yeti who told us this in the comments. Although I forgot, I honestly forgot who commented this. Yetis, you're looking fantastic. And so are our live shows this year.

23:12We already sold out two of them, Jack. We have a couple of legendary surprises that we just built into the run of show. These are good. You're gonna wanna be there. You're gonna wanna be there in person. Very on brand considering we're calling it the IPO tour. The Austin Show is sold out. The Los Angeles show is showled out, but New York, D.C., still available. We got some tickets left. Snag them while you can. Links are in the episode description. We'd love to see you there. In the meantime, lights, camera, Jack and I, we'll see you tomorrow.

23:44And before we go, a happy birthday to legendary Yeti, Matthew Cipriani, turning 10 years old over in Eastchester, New York. And happy birthday to Tushar Gupta in Seattle, Washington. And Vinatia Longo over in Montgomery, New Jersey, celebrate the best birthday yet. Happy birthday to Gabrielle Woods in Frankfurt, Germany, who's going skiing in Austria. And Jack, legendary Eddie John, a Michigan Ross MBA alum, is shouting. Go Blue. Is shouting out his wife, Jenny Wood. The ex-Googler is now a best-selling author of Wild Courage. And to anyone else who's celebrating something today, make it a T-boy.

24:18Celebrate the wins. This is Jack. Nick and I both own stock in Apple, Spotify, Peloton, and ETFs of the S &P 500.

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