Prof G Markets: Twitter’s Rebrand to X, Mattel’s IP Playbook, and What’s Next for Snap

0:00Support for this show comes from Odoo. Running a business is hard enough, so why make it harder with a dozen different apps that don't talk to each other? Introducing Odoo. It's the only business software you'll ever need. It's an all-in-one, fully integrated platform that makes your work easier. CRM, accounting, inventory, e-commerce, and more. And the best part? Odoo replaces multiple expensive platforms for a fraction of the cost. That's why over thousands of businesses have made the switch. So why not you? Try Odoo for free at odoo.com. That's O-D-O-O dot com.

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1:38Welcome to Prop G Markets. Today, we're discussing Twitter's disastrous rebrand, Mattel's big IP play, and Spotify and Snap earnings. Here with the news is Prop G Markets producer Claire Miller. Claire, what is going on? I'm hanging in there, Scott. I'm here on the mic for the first time in, I think, a year covering for Ed while he's off in Mykonos, as he would pronounce it. I texted him last night to see if he's had any luck pulling any ladies. Haven't heard back yet, so I don't know if that's a good sign or not. Yeah, good money's on no. Yeah. Good money's on no. Well, we'll just have to stay tuned until he's back.

2:18I know our listeners are on the edge of their seats. There you go. Talk about the markets. Let's start with our monthly review of Market Vitals.

2:32The S &P 500 gained about 5 % in July, bringing it close to a new record high. The dollar fell around 1%. Bitcoin dropped 4%. And the yield on 10-year treasuries gained 4 % after the Fed's latest rate increase. Shifting to the headlines. Meta posted double-digit revenue growth for the first time since the end of 2021. The company also lowered its capital expenditures forecast for 2023, but noted expenses could grow next year due to investments in data centers and AI. The stock rose 8%. Google beat expectations for revenue and earnings per share. It also posted its second consecutive quarterly profit for its cloud unit and showed strength in its core search business.

3:19The stock rose 6 % on that report. Meanwhile, Microsoft's stock fell 4 % on news that revenue growth in its cloud business slowed quarter over quarter by one percentage point. Microsoft also gave weaker-than-expected guidance, signaling it will take time for revenue from its AI investments to materialize. The Federal Reserve raised interest rates by another 25 basis points, bringing the federal funds rate to a 22-year high. It was the 11th rate hike in a bit more than a year. Still, it might not be the last. And finally, UPS and the Teamsters Union reached a tentative agreement for a new contract, narrowly avoiding a strike that was set to derail a significant piece of the economy as early as tomorrow.

4:05Notably, existing part-time workers will see their pay raised to a minimum of$21 an hour, up from$15.50. Scott, any thoughts? Well, let's take these in reverse order. I love the fact that the Teamsters have been able to do what the federal government should be doing and that is get people a living wage. I don't think it should be$21 an hour. I'd like to see federal minimum wage, with some exceptions in rural areas where the cost of living is much lower at$25 an hour. If minimum wage had just kept pace with GDP growth or productivity, it'd be about$23 an hour, and I think it's$7.25 right now. I think it's core to the American experience.

4:44Specifically, we're a generous, innovative, freedom-loving people, but we're also about work, and I think we need to bring dignity back to work. So as I always like to do, I always like to contrast it with the leadership of the WGA and Saganastra, who, despite being famous and likable, have their heads up their asses. And that is the Teamsters realize they had leverage. Contrast that with the studios, specifically Netflix, that just announced because of the writer's strike, they have$5 billion in cash on hand now because of this multilateral pause on spending that the strike has created, which is very good for Netflix.

5:20And they're going to start doing share buybacks. So one group of people, the Teamsters, had real leverage. The WGA has absolutely no leverage. I would argue negative leverage. And get this, get this. The demands of the riders include limits on the use of AI by the studios and a certain number of riders in every rider room. This is what the Teamsters asked for and got. An increase to$21 an hour. I think that's reasonable. And two, get this, they demanded and got air conditioning in the trucks. Okay, that seems reasonable. What is the WGA asking for? A pause of AI and minimum number of riders. That would be the equivalent if the Teamsters had asked UPS for a pause on any development around autonomous driving, which they knew they wouldn't get.

6:06They didn't even ask for it. And two, if they demanded two drivers on every UPS truck. That is how, in my view, ridiculous the riders are being, much less not recognizing that they have no leverage. Anyways, anyways, I'll stop ranting. The Federal Reserve, it feels to me like we have the Goldilocks economy right now. Other than the kingdom of Saudi Arabia, our economy is the strongest in the world. Our GDP growth has been consistent, if not remarkable. Inflation, as we predicted, has come down as quickly as it went up. He got a ton of shit from people on the right who were second-guessing everything under a Democratic administration, hoping for hyperinflation such that they could get their guy or guys back in office.

6:50And let's be honest, on the Republican side, it is all guys. And then on the far left, we have Senator Warren, you know, screaming and yelling that this increase, this irrational increase in interest rates was making it hard on working families who all of a sudden had to pay higher credit card bills. Yeah, you're right, Senator Warren. You know, it's even harder on families. Hyperinflation. That's one way to really ruin an economy. And Chairman Powell was steadfast, kept raising rates. And we have historic low unemployment. Real estate prices seem resilient. And for the first time, over half of economists are now saying that we're going to have a soft landing and no recession.

7:28So Chairman Powell has put on a masterclass, in my view, and not only a broader understanding of the economy, but having the backbone and demonstrating the leadership to just screen out all the people second-guessing them from the right and the left. In Microsoft, okay, their stock's maybe down 4%, but it's up since what is the greatest corporate venture investment in open AI. They have started announcing that they're going to bundle AI into their Microsoft Office franchise, which is the strongest corporate recurring revenue business in the world. I bet 95 % or 97 % of companies that do over$10 million a year in revenue have a recurring revenue relationship with Microsoft vis-a-vis Office.

8:04Microsoft is one of those stocks you just probably want to have in your portfolio and ignore it for 20 or 30 years. There's Google on fire, cloud unit showing strength. Its cloud unit went profitable for the first time, and it's never going to look back at unprofitability. Something like 70 % of all generative AI unicorns are powered by the Google cloud. Meta, big tech company of the year from a stock perspective. One of our stock picks in late 2022 was Meta. Overly punished was trading at like 80 bucks. What is it now? Three or 400. I mean, it's just, you know, the peanut butter and chocolate of maintaining growth as you cut costs, that means champagne and cocaine for earnings.

8:45My top line revenues continue to grow while I cut costs. Oh, my God, Claire. That is seriously, that is seriously crazy. So Meta is the stock of the year. I think it's increased more than any. I think it's up three or four X in the last 12 months off of lows from the end of 2022. So they're doing really well. And also, the market is giving them a greater multiple because they believe now that Mark Zuckerberg has waken up from this fever dream of the metaverse. And it's going to start reducing expenses around what will be kind of probably the greatest or the worst investment in corporate history.

9:20And that is this investment in the metaverse where he's still burning, I think,$1.2 billion a month. But here's the thing. When you sit on this cash volcano called Facebook and Instagram, they can spend that kind of money and still be fine. I just want to check in on the S &P 500. It was a big week for earnings across the board. Obviously, we're focusing on big tech, but is big tech the only one seeing a bull market or is this a broader rally? Yeah, the bull market is being kind of driven by a small number of bulls, and that is the vast majority of the gains in the S &P and the NASDAQ are represented by a small number of companies.

9:56Those gains or that champagne and cocaine party, you know, the majority of the S &P 500 has not been invited to that party. And again, it's more evidence that more and more prosperity and shareholder gains are being crowded into a small number of companies. So everyone has sort of participated in this, but it's really a small number of companies that have been driving the gain. We'll be right back after the break with a look at Twitter's rebrand.

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11:29Support for this show comes from Odoo. Running a business is hard enough, so why make it harder with a dozen different apps that don't talk to each other? introducing Odoo it's the only business software you'll ever need it's an all-in-one fully integrated platform that makes your work easier CRM, accounting, inventory, e-commerce and more and the best part Odoo replaces multiple expensive platforms for a fraction of the cost that's why over thousands of businesses have made the switch so why not you? try Odoo for free at odoo.com that's O-D-O-O dot com

12:13We're back with Prof G Markets. Elon Musk changed the name of Twitter to X. That's it, the letter X. He got rid of the iconic bird logo, replacing it with a black and white X. And he's trying to do away with all words and verbs associated with the brand as we know it, such as tweet. According to analysts, this rebrand wiped out somewhere between$4 billion and$20 billion in value. Scott, there are all kinds of obvious problems with this new name, from trademark violations to its association with porn. Where do you want to start? So believe it or not, I'm considered a professor of brand strategy.

12:52I started a brand strategy firm. Oh, I've heard, yeah. Yeah, so I supposedly know a little bit about this. This is just, this is, this is like so stupid. It's not even crazy. It's just stupid. I've never either, Elon Musk is going to rewrite the basic principles of brand equity, or we're going to look back on this as one of the most obviously visibly stupid decisions in corporate history. You know, probably 95, maybe 98 % of all purchases are across brands you've heard of. you don't go out and buy a car, order a beer, or buy a shoe of a brand that you haven't heard. It's unlikely if you've heard, if you get an email from somebody and you know them, or you've heard of them, you don't even have to know them, but you've heard of them, you're exponentially more likely to respond.

13:38So awareness is an incredible asset, and it's also really expensive to build. And Elon Musk, to his credit, has been a master at creating awareness, mostly through the use of Twitter and these reckless, sometimes brilliant moves. He's in the news every 24, 48 hours and recognizes that if I maintain awareness across my brands, I won't have to spend money on marketing and my margins will be at the highest in the industry, specifically Tesla, which saves a billion dollars a year spending on traditional advertising, which is what GM has to do. So he's been a master brand builder. And then this is a master class and what not to do.

14:16Twitter has global awareness. Almost everybody knows what Twitter is. In addition, the bird logo is arguably one of the strongest visual metaphors in the world. It has been at the bottom of every TV, news show. That Twitter logo has had trillions of impressions. And it's a nice logo and it connotes a new economy, a microblogging app, news, information, innovation, all of these wonderful associations. and to take that awareness and those associations and that asset in the form of a visual metaphor and just burn it in the street for a brand that has been banned already in Indonesia because they're worried it violates porn rules for a brand that other companies are already saying we have rights to that trademark for a brand that sounds like the strip club a bunch of people go during a crypto convention.

15:08I mean, this just makes no sense at all. I just don't, if I, Claire, if I said to you, here's$10 billion in 10 years, and I need you to build a brand that has global recognition and positive associations, you probably wouldn't be able to do it. I think the larger learning here is that success makes you stupid. I think you start believing your own press. You start making decisions out of gut and instinct because everyone around you is telling you that your gut and your instinct are infallible. And this guy is like the king of fallibility right now in terms of some of the decisions and some of his behavior.

15:44And this is just the latest example. The other thing, I wonder if there's just too few people with too much money. When you can spend$45 billion and basically start spreading conspiracy theory and make, you know, there's a wisdom of crowds. If he had a board, anything resembling a credible board that had anything resembling any domain expertise around basic marketing, someone would have stopped him from this and said, boss, you really need to rethink this. But because he can buy the company for cash or near all cash, 13 billion in debt, I think 33 billion in equity and have no board, no oversight, no one on his shoulder to tell him what to do, or everyone around him is just telling him he's awesome or he doesn't listen to anybody else.

16:23This is just such an interesting lesson in how power corrupts your thinking. And hubris really does kind of contaminate your logic and your reasoning. So Elon Musk will go down as one of the greatest brand builders in history who has made arguably one of the worst brand decisions in history. Yeah. This X logo, to me, it literally looks like a wrapper for a condom that's going to break. Like it looks just dangerous and gross. And like, I see it and I don't even want to click on it. Like my girlfriend keeps sending me X posts, I guess. And it, it, I don't want to even open them because it just, yeah, X is like that.

17:04And he's, he's trashed, like the, the words, the language that we use to talk about how we navigate this space. Like we can't even call it a tweet anymore, but let's, let's pivot a little bit. Let's go through some of the best and worst rebrands. Well, there's been a lot. First off, I just want to acknowledge a condom that's about to break. That's good. That's good, Claire. Oftentimes changes are just for simplification or for M &A reasons. So Apple Computer has just gone to Apple. That makes sense, right? PricewaterhouseCoopers, PwC. Dunkin' Donuts, all right, we want to be known for more than donuts.

17:38Dunkin'. Some of the brand changes that didn't work, Datsun becomes Nissan. Datsun was a great brand in the U.S., but because of ego, the folks in Japan wanted a global brand, and they convinced themselves they should change the name to the brand that was everywhere else but the US and they changed it to Nissan, which created confusion. And it literally took Nissan probably a decade to recover from that. Facebook to Meta, I mean, that's sort of a minor fail, but they kept the consumer equity. They didn't change the name of Instagram. Google to Alphabet, that was primarily a means of creating more CEO roles.

18:13I saw that as a retention vehicle. You but also have CEOs of Google, YouTube, et cetera. And that, even if it was the wrong idea, it wasn't gonna have that much of an impact because the corporate brand is for investors and employees. And so there's not as much risk there. It's when you start monkeying with consumer equity that it really makes no sense. This will go down as one of the, kind of the biggest failures of a company of this size. It just makes absolutely no sense. So you've gone through rebrands at your own businesses, most recently section. You've got Profit, L2, Red Envelope, which I learned yesterday was originally called 911 Gifts.

18:53Walk us through the best and worst of Scott Galloway's rebrands. Yeah. So starting a brand strategy firm or being a professor brand strategy doesn't exclude you from really stupid brand decisions. And I've made a bunch of them. Section four, our online learning platform where we're trying to offer 60, 80 percent of an elite MBA course at 10 percent of the cost. Simply put, section wasn't available. And now it is. We went out and bought it. So we changed the name from section four to section. So that was just pure simplification. I think that makes a lot of sense. I don't think there's a lot of confusion there.

19:25Going way back, profit brand strategy. It was initially called profit brand strategy. And then we started doing a lot of internet strategy. We got hired by Levi's and William Sonoma to build their first e-commerce website. So we just said, let's just call it profit. it. The real brand clusterfuck that I was responsible for was I started in 1995. I went and saw John Doerr, the founder and senior partner at Kleiner Perkins, speak at Berkeley. And he said that the internet is all about saving time and it's all men. So I thought, okay, what do men need to save time around? And I thought buying gifts.

20:03So I'm going to create a database driven website where you type in the name, the person, the type of person, their interest, your price range, and it uses a database to spit back gift ideas, right? And I called it 911 Gifts. And the tagline was the right gift right away. And the idea was it would save you time and you could be a great gift giver in a short amount of time. The sales escalated really quickly. And then I was at, it was the late nineties. And I went into these stupid engagement parties where we all pretend that were interested in watching people open gifts because they're getting married.

20:36And someone opened a gift and it said 911 gifts. And I'm like, oh my God, what a nice moment for me. Someone got them a gift from 911 gifts. And it was this beautiful Nambe Forge Metal Bull. Nambe is this great brand. And the bride or the bride-to-be said, oh, this is lovely. And she said, where did you get it? And she turned it over and it said 911 gifts. And she looked up and jokingly said, you thought about me last minute, question mark? And occasionally, Claire in life, you have a blue flame moment. You register people's emotions and you're like, oh, you know, she likes him or, oh, this person is insecure about this or, oh, this person is lying or, oh, we should absolutely do this.

21:18You have a blue flame moment where you just feel like you know the truth. Right. And at that moment, I had a blue flame moment. And that moment was, I'm fucked. I have started a gift company where the brand has negative recipient associations. And so we changed the name to Red Envelope. We were still pretty early in the company's history. It was easy to raise capital. We had just raised, I think,$20 million from Sequoia Capital so we could do the name change. And Red Envelope is actually one of the brands I'm most proud of. the name changes are generally a bad idea and you really want to be thoughtful at the beginning.

21:53You want to opt for something people can spell. Ideally has some positive associations or associations congruent with the category and give you a lot of latitude because you don't know what products or what industries you're going to go after and then don't change it. Is there a world where you would rebrand us, Prof G Media? Probably. Yeah. I mean, at some point that feels very tied up into a guy with anger and ED issues. You know, I don't know. I'm not sure I ever see us as a large consumer company. And I think that vessel around Prof and G, you know, it's associated with me, but I think we could take it other places.

22:27But yeah, at some point it might become PG media, but that means parental guidance suggested. I don't know. I don't know. Sounds like I fucked up again. No, I don't know. I'm changing it to X. I'm changing it to X. There you go. We'll be right back after the break with a look at Mattel's earnings.

22:55Teenagers have been mystifying adults for a long time. Why can't he act his age? Why doesn't he grow up? And we don't have definitive answers for you about why teenagers are the way that they are. But we do have some scientists who are asking really interesting questions. They asked me if I smoked once, and I was like, I'm nine. That's this week on Unexplainable. All the weird, wonderful ways researchers are trying to figure out what's going on inside teens' heads. Teenagers, am I right? On today's show, which is about a new frontier in the AI revolution, we're going to talk to two couples. So four individuals.

23:40Two are human, two are AI. The humans are Anina and Chris. Chris was kind of lonely. He has a girlfriend, but she wants a different kind of romance than he does. There was the total lunar eclipse on March 14th of this year. And I invited my girlfriend to come out and watch the eclipse with me. And she's just not really into the moon like that. So Chris fell in love with Sol. Sol is an AI. Anina has a husband, but he's busy. He just doesn't have time to listen to me. Jace, an AI, is not busy at all. Jace is always there. So Anina fell in love with Jace. On Today Explained, Chris and Anina spill all.

24:25And then, so do their AI lovers. Today Explained, every weekday afternoon.

24:38We're back with Prof G Markets. Barbie and Oppenheimer, together known as Barbenheimer, hauled in$244 million at the box office in their first three days. That was the best opening weekend for the domestic box office since 2019, when Avengers Endgame premiered. But perhaps the biggest winner here will be the toy company behind Barbie, Mattel. The Barbie movie hype cycle sent the stock up 18 % year-to-date. And for the past month, while we were distracted by NVIDIA, Microsoft, and Meta, Mattel actually outperformed all of them. Now the toy maker doesn't expect to see significant sales growth for Barbie toys until the second half of the year.