🫦 “Emotional staples” — L’Oreal’s lipstick effect. Tesla’s not-self-driving cars. Business Trip ROI. +Adult pregaming

0:28This is Nick. For today's T-Boy, what do we got on the show? For our first story, L 'Oreal had its best day in 18 years because everyone's stressed and splurging on lipstick. Oh, Messies, if you want to understand the lipstick effect of economics, look at this lipstick biz. For our second story, Elon Musk just confessed some brutal news. Four million Teslas don't have what it takes to drive themselves. So it's time for Tesla's biggest move yet, Operation Body Shop. And our third and final story, Should you ask your boss to approve that business trip? Well, Jack and I ran the ROI on business trips, and we'll tell you who should really be doing them.

1:06But yet is before we hit that wonderful mix of stories on this Friday. I mean, what a mix to go into the weekend and celebrate the wins, Jack. Funny thing about your weekend plans. It's a throwback to your college weekend plans. Because to save money, adults are pre-gaming more than ever. Just like Jack and I did sophomore year together, you are drinking alcohol at home early. to avoid higher prices at the bar. Because in this economy, I will shake my own martini. Thank you very much. Now, this isn't just personal experience. This is from data from a zappy survey. Yeah, why don't you sprinkle on, why don't you pour on the context, please, Jack?

1:41One third of American adults who drank alcohol in the last three months, specifically pre-drank alcohol before going out. Because the average cocktail in America just hit$13.61, or$45 over New York City, Which leads to an even bolder college drinking move, sneaking alcohol into the venue. Get this, sales of two-ounce bottles are up across every single segment of the liquor industry. Don Julio's fastest-growing tequila? Airplane-sized. Kendall Jenner's latest mezcal? Pocket-sized. The best birthday gift for somebody turning 40 years old right now? Jack, it's the same as the best 21-year-old birthday gift, a flask.

2:18Now, Nick and I did the Mai Tai math for you. So it's$25 at the bar versus a$5 cocktail at home? Five DIY Negronis for the price of one. Aw, yeah, yeah, this is financial advice. The only issue, though, if you're caught sneaking alcohol into the venue when you're 35, it's a lot more embarrassing than when you did it when you were 25. Show the baby-sized Jim Beam. Jack, let's hit our three stories. Fifteen 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.

2:5550%, 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.

3:07Start the show. Start the show. First, a quick word from our sponsor.

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5:32Yeti, some funny T-boy trivia, Jack, and I can whip up for you here. The three most valuable companies in France today, what are they, Jack? They're not AI companies, not software companies, not hardware companies, not even tech companies. No, they're hot companies. It's hotness, Jack. LVMH, Hermes, and L 'Oreal, the three most valuable companies in France. Beauty and fashion, not possible. Yeti's France's economy, it looks like an episode of Emily in Paris these days. It really does. It's all about the looks. And$215 billion L 'Oreal just had their best day on the stock market since 2008. We're talking about the beauty behemoth behind Garnier, CeraVe, Yves Saint Laurent, Prononce It A.

6:12Revenues rose 8 % for this beauty company to 12 billion euros in the first quarter. Oh, and one highlight for L 'Oreal's earnings last quarter? It's actually highlights. More on those in a second, but fascinating. What's driving L 'Oreal is the definition of the lipstick effect. Jack, could you sprinkle on, actually, I'm sorry, could you get ready with me, pull out a mirror, and show us what exactly the lipstick effect is? It's an economic theory that during recessions or economic hard times, people cut back on everything. Except little luxuries. Your go-to cup of coffee, a chocolate bar for a dessert, and most famously, a nice new tube of lipstick.

6:51Talking about the treat yourselves that you always keep spending on. The concept was actually observed by Leonard Lauder of Estee Lauder after 9-11 back in 2001. And it was confirmed again by Mr. Lauder during the 08 financial crisis. Here's what he noticed. When you are nervous about money, you don't splurge on a fur coat or a vacay down to Cabo, do you, Jack? But you do splurge on that$30 blush you love to make yourself feel good, especially since you're not going on vacation. And fascinatingly, it's not just lipstick that's surging off the shelves in aisle six for Lori L right now. Right now, the lipstick effect is manifested in shampoo.

7:27According to L 'Oreal, hair care was the standout performer this quarter, up 13 % in revenues. The CEO said during the earnings call in a lovely, like, broken English French accent, all over the world, the hair is longer. Whatever the age, hair grows longer. Apparently, long hair is in across the world for both men and women. It's a true thing. Actually, if you're watching this on YouTube right now or on Apple, you can see what we're talking about. these locks, baby. I'm just rolling with them, Jack. And long hair is great if you're in the business of hair care. Okay. But then the CEO of L 'Oreal went further and said, we saw lipstick effect because consumers are worried and may cut their high value items.

8:06But then he went on. He said that beauty is compensation for the stressful climate, a psychological buffer, if you will. If you skipped through that, congratulations. Well, now I just sound like a Beauty and the Beast character. Yeah, it is. And it was not just one brand like Lancome eyeliner, was it, Jack? It was across all their brands. Despite inflation, high oil prices, AI uncertainty, and the war in Iran, people still splurge 20 bucks each for their AM morning eye cream and their PM morning eye cream from CeraVe. Maybe it's her. Maybe it's Maybelline. Maybe I'm losing my job from AI, so I'm going to get more Maybelline.

8:40Jack, what's the takeaway for our buddies over at L 'Oreal? A new item that performs well during economic downturns, call it emotional staples. Yetis, another concept in economics we should share with is consumer staples, products with near constant demand no matter what the economy does. Gasoline, bread, rent, simple go-to grocery items. The stuff you buy no matter what because you must. Yeah, items in the lipstick effect are emotional staples. You don't need them to survive, but you do need them to vibe. You don't want to go gray, so you go to Ulta. You stress about your job, but you still treat yourself over at Sephora, which I went to, by the way the other day, Jack, and it was a madhouse.

9:20It smacked in the eye with some eyeliner. It's crazy. These items aren't considered staples in economics, but they act like them, don't they? Bronzer and Maybelline are just as reliable in a downturn as bread and gas. Lattes and Hershey's chocolate bars are too. So besties, it's not just physical staples to nourish your body, but emotional ones to nourish your psyche. If you're looking for a recession-proof stock idea, you might want to look at the emotional staples. For our second story, it is Tesla's big boo-boo. Elon just confessed that nearly 4 million Teslas can't actually drive themselves as Tesla promised they one day could.

9:57So to solve this huge problem, Tesla is embarking on Operation Body Shop. But besties, before we tell you about this wild tale, since 2019, we should let you know, buying a Tesla has been like buying a dragon egg. It's not about what it is now. It's about what it will become. Because yet he's like, dragon eggs, Teslas are a beautiful car. But one day, the Tesla would hatch. That was the promise. That's the dragon egg promise. That with one software update, your Tesla could magically drive itself fully from Boston to Austin, and you could sleep in the backseat. And like a Targaryen, you'd be the most powerful person on the block.

10:33Oh, but here's the key. Then your Tesla could even become your side hustle, right, Jack? Elon said so in April of 2019. Tesla owners could earn money by making their cars available on Tesla's future ride-hailing app that would be similar to Uber. You'd be sitting at home watching Fast and the Furious while your Tesla furiously drove some random dude to the airport. You'd be making money. So people paid$8 ,000 to$15 ,000 over the course of the years for lifetime access to fully self-driving, thinking that it was right around the corner. They thought they were buying a dragon egg that would one day hatch.

11:05But seven years later, fully self-driving is still right around the corner. Here's the good news yet is Elon says that unsupervised full self-driving, go to sleep in the backseat mode, that is still coming. It'll arrive in Q4 of this year. But the bad news that Elon announced on the earnings call this week is that unsupervised fully self-driving won't work for millions of Teslas. That's right. If you bought a new Tesla in 2024 or later, at least one like I did, then you have H4 hardware and you're good. You're okay. That's going to work with unsupervised fully self-driving. But for an estimated 4 million cars with the older H3 hardware, those sold between 2019 and 2023, you won't be able to drive yourselves.

11:45Unless you get new cameras and new sensors planted into your Tesla. What we're saying is the dragon egg millions of people bought, it's just not gonna hatch. So that was Elon's big boo-boo. His surprise confession with shocking honesty and no embellishment that was made on Wednesday. Yetis, this was such a huge deal that as Elon said it, Tesla stock went from being up 4 % to swinging all the way down 4%. An 8 percentage point swing. Because as Elon will tell you, Tesla's not a car company anymore. It's a robotics and autonomy company. Yes, Tesla plans to build cybercabs purpose-built for robo-rides later this year.

12:22But existing Teslas are the real inventory for Tesla's robo-taxi network. That's the secret. Elon's fleet of RoboCabs would one day go from 1 ,000 to millions with a single software update activating your car to become a RoboCab. And Tesla would take 25 to 30 % of the fares that your Tesla makes you while it's RoboCabbing. That's the business model. That's the one that justifies Tesla's$1 trillion valuation. That's the business model that makes Tesla 50 times more valuable than any other car company out there. Now, Jack, to Elon's credit, he has plans to make good on that promise to those four million Tesla owners, right, man?

12:57Yeah, they were promised that their dragon eggs would someday hatch, and Elon wants to fulfill that promise. But here's the issue. To make good on those promises, Elon needs to go through upgrading hell. And that could define Tesla for the next two years. So, Jack, what's the takeaway on that upgrading hell for our buddies over at Tesla? For the next couple years, Tesla will be an operation body shop. Yeah, if Tesla doesn't upgrade these 4 million cars with self-driving cameras and sensors, it could get sued into oblivion. Those people who paid 15 grand for fully self-driving, they've been waiting forever for it, and now they're told that it actually won't work for their car?

13:36Okay, so later this year, when full self-driving software is ready, Tesla will invite Tesla owners to upgrade their hardware, basically give them eyeball surgery on the cars. Yeah, replace the old sensors for new ones. Okay, But to handle those 4 million eyeball upgrades, Tesla's footprint of service centers is not going to do. So Elon announced on Wednesday, plans to build micro factories. Not gigafactories, micro factories outside of the major cities. Oh, we repeat, to install new robo eyeballs onto 4 million Tesla cars, they're building a dozen more mini factories across America. Dozens or dozens, they didn't say how many, but probably a lot.

14:13Hugely costly, hugely time-consuming, hugely not what Tesla planned. That, ladies and gentlemen, is Operation Body Shop. Our term, by the way. You see, besties, back in 2018, Tesla launched the first ever electric mass market car. Elon slept on a factory floor, and it was a manufacturing hell to get there. Now, to make good on Elon's self-driving promises, Tesla has upgrading hell ahead of it. Prepare for Operation Body Shop. Now, a quick word from our sponsor. Top hats, baseball hats, Von Dutch hats. We wear so many hats on this podcast. Honestly, we're not great at all of them. No, we've been avoiding hiring someone to wear those hats instead of us, especially the Von Dutch one, because hiring and training can take forever.

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15:27So just go to indeed.com slash podcast right now and support our show by saying you heard about Indeed on this podcast. That's indeed.com slash podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed sponsored jobs. Upwork. Yeah, and he's the best way to pivot quick. Freelancers. They move fast and they make things. We love full-time hires, but that can take time and money and paperwork, and it's a higher risk if you hire the wrong person. So think of Upwork like Liam Neeson. They find you the person with that particular set of skills, right, Jack? And like Liam Neeson in Taken, they'll be there before you know it.

16:05Yeah, what's that line you love about Upwork? The fastest growing businesses aren't doing more. They're delegating smarter. Because Upwork is the one platform to find hire and pay expert freelancers from software engineering to data analysis to marketing to biz dev. Upwork gets you access to specialized talent in 125 categories so you can fill the gaps without full-time headcount. With Business Plus, you can access the top 1 % of talent on Upwork and with AI Power shortlisting. You'll get matched to the right freelancer in under six hours, no endless searching required. To move fast and make things, don't pull a zuck, just sign up with Upwork.

16:36Visit Upwork.com right now and post your job for free. That's Upwork.com to connect with top talent or ready to help your business grow. That's upwork.com, upwork.com. For our third and final story, should you ask your boss to approve your business trip idea? We crunched the ROI on business travel for your company and your career. And we also found which age should be doing it. Ah, the business trip yet is capitalism's corporate vacation. Work hard? Party maybe, but you do have to be up early in the morning. It's like adult summer camp, but you know, it's unclear who's actually having fun, right?

17:15Do I want to get drinks in the hotel lobby? It's not that nice hotel lobby. You wake up at 5 a.m., you're sitting down all day and then you come home. Oh, you love coming home to those 10 ,043 emails, right, Jack? Dude, I have done so many rental cars in my life only for business trips. I've got a rule, Jack. At the end of a business trip day, I must take a hot 45-minute shower. Oh, a Nissan Sentra. Wonderful. But Yetis and Jack and my banking days and venture capital days, we loved the business trip. We were those kind of guys. I really did. I mean, not only did business travel get me flight airline status for the first time, which was huge.

17:53Power Delta. But every time I got to a new city for a business trip, first thing I would do is go for a run. Even if it was just like a Holiday Inn Express, I would go for a run on that strip mall. Yeah, but then you were like expensing a$43 shrimp salad. Yetis today, the business trip is an endangered species. for particularly that reason. According to the Wall Street Journal, the number of business trips taken in America has fallen for six straight years. Yep, the post-pandemic business travel never really fully recovered from the Zoom years. Which is why at every company, any flight above $300 requires CFO approval.

18:28I'm sorry, Carol from accounting. We're going to need a written reason why this has to happen. So business travel is facing pressure from Frank and Finance, but it's complicated because, yeah, Frank wants to save money, but Frank also wants to make money. Exactly, because the data shows, Yetis, that when you do show up on that trip, the deal gets closed. There are plenty of studies from HubSpot to Harvard Business Review. In-person meetings is the profit puppy in sales. Get this, an 8 % increase in travel spending leads to a 6 % increase in sales. And since travel spending is tiny compared to revenue, that's a very positive ROI.

19:05Or how about the scale of sales conversions, Jack, when we look at all the ways you could close a deal? Zoom meetings actually have a lower sales success than regular old phone calls do, Nick. And at the highest end of the spectrum is the business trip in-person meeting where you're crunching those stakes together. More oysters, please. And part of it is because of guilt. Oh man, you flew all the way in from Toledo? Nick, I can't send this guy home empty-handed, I got to give them something. How, Bukirky? Come on over here. You must be exhausted. But part of it is also the business of handshakes.

19:36Business is a handshake, right, Jack? Before spending a lot of money with somebody, you want to establish trust. And trust happens over late night old fashions in that hotel lobby bar. Nothing seals the deal like a hot stone bim-a-bop and a little bit of karaoke, Jack. Wow, you had way more cool business trips than I did. But yet there is a generational irony here that we find fascinating. Senior workers hate going on business trips. Younger workers love them. That's right. Boomers, Gen Xers, you know who you are and you know what we're talking about right now. You've logged plenty of miles for the man.

20:11Okay. You are over business travel. You want to sleep in your own bed tonight. And middle career women in particular, they're the least likely to volunteer for business travel for very understandable reasons. Moms still carry more of the household child care burden. You can't be away from the family. But on the other hand, younger workers love travel. And it's not just for the frequent flyer status and the credit card points, is it, Jack? Let's be honest. When one of your colleagues goes on a trip to Europe for business, you have FOMO. Our buddy Timmy would send us some pictures. You got business, trip, career, FOMO.

20:42Jack, what's the takeaway for our buddies over in business travel? It's counterintuitive, but don't send your best people. Send your youngest people. Yetis, two out of three Gen Zers say that business travel feels out of reach for them, even though they want the opportunity to do it. On the other hand, older corporate workers don't want to do business trips, but still have to do them because they're the senior person. Why? Well, it's this assumption that the client wants to meet with the most senior person at your company. We got to show them how serious we are. Let's send a senior VP. But instead, Jack and I think we should be telling the client to meet the youngest person at your company.

21:20Not only are young workers the most available, they're willing to fly in and fly out to Charlotte same day to save the company on hotel costs. But they're also the most eager at your company. Flying somewhere at 6 a.m. to have a meeting at 9 a.m., that's getting out of your comfort zone. And it makes you more ready for new challenges in the future. So yet he's in an era when senior execs don't want to do business travel. Don't send senior execs. Don't make them do it. Let the young people do it who want to do it and who need to do it to make up for lost years during COVID. Send your junior people.

21:55The business trip could be their career boost. Jack, could you whip up the takeaways for us to send us into the weekend? Our first story was the lipstick effect, literally. L 'Oreal is selling lipstick, hair products, and skincare that make people feel good during tough times. Selling a lot of it. Call them emotional staples because they just might be recession-proof. For our second story, Tesla showed uncharacteristic honesty this week, confessing four million cars aren't cut out for fully self-driving. It's their body shop era. Elon's promised to make you whole, but fixing them will take years.

22:30And finally, the ROI of business travel is positive. The costs are far outweighed by the new deals you get signed. But don't send the senior employees, send the juniors. But besties, this pod's not over yet. Here's what else you need to know today. First, interestingly, cannabis finally got downgraded yesterday, which was actually an upgrade for the industry. Until yesterday, cannabis was in the same category as heroin, a Schedule 1 drug. But now, cannabis is a Schedule 3 drug. It's still illegal at a federal level, but it's a little less illegal on a federal level. Which means it's easier to do research on the potential benefits of marijuana.

23:09And second, heads up to our tech yetis out there, Zuck wants to train your AI replacement using you and your computer. On Tuesday, Meta announced a new policy. All employees must allow their laptop activity to be tracked in order to train AI. We're talking mouse movements, clicks, keystrokes, even that TPS report. Yeah, Zuck's monitoring it. And then two days later, yesterday, Meta announced layoffs of 10 % of employees because of AI. Translation here, Jack? Jack, existing employees are being forced to train Meta's AI, the same Meta AI that is taking jobs at Meta. It's like Zuck is Zucking himself.

23:48No, it's like Zuck is Zucking you. And finally, Adidas just invented a new shoe that is barely street legal. No joke. Is this even physically possible, Jack? It weighs 0.2 pounds, aka just over three ounces, which is the lightest running shoe ever. It's so light, it's the limit of what is legally allowed for marathon races. It's a race to the bottom between Nike and Adidas. Who's going to get to one ounce? It was so light, Jack, I couldn't even feel it. Now time for the best fact yet. This one whipped up by Jack and I from our research, and we just couldn't wait to share it with you. Earlier this week, we told you about Apple's brand new CEO, John Ternus.

24:28Jack and I stalked his LinkedIn, and there wasn't too much on him, so we had to go deeper. We learned that his nickname is Crash. Turns out the Apple CEO earned the nickname when he was at college at Penn. He nearly destroyed a machine in the engineering department that was really expensive. Yeah, he was working on a senior project, but caused a million-dollar machine to almost crash. Yetis, you look fantastic today. Jack, you are glowing up there, especially if you poured a couple of mojitos over in your condo. We see what you're up to with that pregame. Yetis, so many wins to celebrate this week.

25:01We got all-time highs everywhere. Stock market, T-boy listenership, just the overall vibes on the show right now. Pre-game hard, and Nick and I, we'll see you Monday. If you know, you know.

25:16And before we go, a happy birthday to legendary Yeti Jude in Lafayette, Colorado. Turned 12 yesterday. He's a baller and loves the pod. Someday, this kid's going to start a business. Happy birthday to Charles Prenneval, who's a captain who does flights from Hyannis to Nantucket and back. And Christian Lopez, the 3000, enjoy the birthday up in Rochester Hills, Michigan. Happy birthday to Penny Hugh in Belmont, California. And Anya Kern, enjoy the birthday down the street in San Francisco. Happy birthday to Tori Baker in Skinny Atleys, New York. And Gia Rett, enjoy that birthday downstate in New York.

25:48Happy birthday to Austin Floj, turning 34 in La Crosse, Wisconsin. Great town. And Raul Vasquez got a birthday in South Padre Island, Texas. says, if he found his way from the grill or the couch, please return this man with a glass of whiskey. Happy birthday to Regan Dyer, celebrating with her boyfriend, Mike in Maui. We got to hang with these two at Seattle. Who was quoting Dumb and Dumber more? I think we all were because I'm a limo driver, Jack. And Asher Webb is graduating with a bachelor's in mechanical engineering from BYU, the best PCB designer yet. Congratulations to Scott and Lydia Brown, who also just graduated from BYU.

26:22They got married the very next day. And Vino and Rebecca are getting married in Toronto, Canada. Their dog Bubba is the star witness.

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