Just a Couple of (Has)bros

Quote of the Day

It will probably end up being maybe litigation, maybe not. We’ll see how it all plays out.”

Market Snapshot

• The Dow continued to fall after news that corporate tax cuts might be delayed.
• Most Asian markets fell, despite China relaxing foreign ownership limits.
• Bitcoin crashed after its hard fork was called off, while Bitcoin Cash jumped over 40%.
• Nvidia shares rose 5.27%, hitting a new record after a stellar earnings performance.







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Another UK Beatdown for Uber

Uber’s leaving London with another black eye. A UK employment tribunal affirmed a 2016 decision that Uber drivers are, in fact, entitled to standard labor protections like paid time off and minimum wage.

The ride-hailer, on the other hand, considers its employees “independent contractors” (filling out a 1099 form instead of a W-2).

The Tribunal: A One-Act Play

UBER DRIVER 1: Call a spade a spade. We aren’t “self-employed.” Independent contractors set their own prices...we’re completely subject to your pricing algorithms. You’re not just a platform, you’re providing a service, and we are your employees.

UBER: Wrong. We’re just a Yenta, a matchmaker pairing up drivers with passengers. We don’t even care when our drivers slap that “Lyft” sticker (our biggest competitor) on their car. They’re free to work whenever they want...that’s called working for yourself!

Curtain.

How bad is this for Uber?

Well, it’s certainly not good. To be sure, Uber’s waging similar legal battles all over the world, and settled two class-action lawsuits brought by U.S. drivers last year (it paid $84 million altogether to drivers, but they’re still considered independent contractors).

The most recent decision is more consequential, because it could set a precedent for all of Uber’s 40,000 UK drivers. That could push labor expenses up 20%, potentially putting profitability out of reach...all of this while Uber’s fighting to keep its operating license in London.

But it’s not just Uber who’s keeping tabs

It’s any gig economy company that relies on a similar business model. One that empowers your friendly neighborhood gig economy hero to build a bookcase by day for TaskRabbit and cruise the streets for Lyft at night. It’s almost impossible to say just how many freelancers are out there (estimates range from 5%-40% of the U.S. workforce)...

...but as the gig economy continues to grow, one question lingers: who do these people work for?

Just a Couple of (Has)bros

Hasbro, the creator of Monopoly, is living up to the board game’s namesake with a bid for rival toymaker Mattel (Warning: cheesy puns await).

Although few details have surfaced, the Barbie-GI Joe marriage is a long time coming. Tech’s disrupted the traditional toy market, hurting the industry’s flagship brands (think Hot Wheels, Easy-Bake, Nerf). And while Hasbro weathered the storm just fine (shares up 18% YTD), it’s been a little tougher for the Chief Playtime Officers at Mattel.

Shares have fallen 47% this year, it’s suspended its 7% dividend yield, hired a new CEO, and watched Hasbro surpass its quarterly revenue for the first time. Of course, all that takes a backseat to Toys ‘R’ Us filing for Chapter 11—the toy emporium was a main sales channel for both companies.

So who knows, maybe the two should be working together. After all, there is A LOT Hasbro can teach Mattel about reinventing brands with blockbuster hits. Our favorite? My Little Pony.

“Cash Me Ousside, How Bout Dah”

...or whatever the kids are saying these days. Musical.ly, the lip-syncing app that catapulted your 14-year-old cousin to global stardom, just sold for ~$1 billion to Chinese media company Toutiao. The last social media platform to sell for that much? Instagram.

If you just rushed to Google Musical.ly, basically it mixes the popularity of Vine’s editing style with Dubsmash’s lip-syncing. And if you hit all the right notes with a pretty face to match, you might end up being the next teen sensation. In fact, nearly 60 million users post up to 10 million, 15-second videos on Musical.ly each day.

For more details on the deal, let’s go live to our tween correspondent, Johnny. Johnny?

“Toutiao is China’s top news aggregator with over 120 million users and a $20 billion valuation. This acquisition comes just after Toutiao scooped up video app Flipagram earlier this year. And despite Musical.ly being a Shanghai-based company, it has only scratched the surface of the Chinese market.”

Thanks for the inside scoop, Johnny. Compelling and rich.

Saturdays are for the Baba

ICYMI, Saturday was Alibaba’s Singles Day (Prime Day’s better-looking, Chinese cousin). You might want to sit down for this. These numbers aren’t for the faint of heart.

Smoke: The 24-hour shopping bonanza generated $25.3 billion in sales. That’s a 40% increase from last year.
Fire: This summer, Amazon Prime Day brought in $1 billion (or, what Singles Day hit in the first two minutes).

Smoke: About 500 million people visited an Alibaba-run website on Singles Day.
Fire: The entire population of the U.S. is ~326 million.

Smoke: Alibaba Cloud was put to the test, processing 175k transactions a second—good thing, as Singles Day requires the most computing power in China all year.
Fire: Amazon Web Services (AWS) destroys Alibaba in the all-important “infrastructure as a service” cloud vertical: AWS controls 44% of the market. Alibaba, 3%.

Cheers (or, “Gan Bei!”) to the 33 lucky customers who paid $1,673 for a lifetime supply of grain alcohol, Baijiu. That stuff is nasty, but you got a great deal.

What Else Is Happening…

• The SoftBank-Uber deal is in its final stages, sources say.
• To meet holiday demand, Nintendo is ramping up production of its best-selling console, Switch.
• Netflix will not produce a second stand-up special for comedian Louis C.K. after he disclosed a history of sexual misconduct.
• Lyft is projected to boost its U.S. market share by 61% next year, controlling a third of the market.

Economic Calendar

• Monday     Earnings: Tyson Foods

                    Economic Events: Treasury Budget

• Tuesday    Earnings: Dick’s Sporting Goods, Home Depot

                  Economic Events: PPI

• Wednesday    Earnings: Cisco, Target

                        Economic Events: CPI, Retail Sales

• Thursday   Earnings: Best Buy, Gap, Walmart

                   Economic Events: Jobless Claims, Industrial Production, Housing Market

• Friday       Earnings: Abercrombie & Fitch, Foot Locker

                 Economic Events: No Events

From the Writers

Michael—An enlightening/depressing interview for the ages

I listened to Ezra Klein’s interview with Yuval Harari, author of Sapiens, this week. It’s about an hour long, but the two dive into some crazy ideas, including: the benefits of 30-day meditation retreats and the reality of our economy when AI takes over. And according to Harari…

AI is definitely taking over.

Neal—Taking the “big four” to task

These days, it seems like NYU professor and master-of-snark Scott Galloway is the only one holding Big Tech’s feet to the fire (maybe Congress is coming around, too). Galloway’s book The Four is an important dive into how Apple, Facebook, Google, and Amazon have amassed so much power, and why nobody seems to be worried about it.

Come for the snark, stay for the “Steve Jobs spat on the universe” quotes.

The Breakroom

Question of the Day

There is only one 2-digit number that is both a square and a cube. What is it?

BONUS: There is only one 3-digit number that is both a square and a cube. What is it?

(Answer located at the bottom of newsletter)

Rank by Net Worth

Music artists: Jay-Z, Kanye, Drake, Rihanna

(Answer located at the bottom of newsletter)

Stat of the Day

$15 billion—The market cap of payment company Square, meaning it’s officially surpassed Twitter’s value. We’d call it a win-lose for Jack Dorsey, who is CEO of both companies.

Breakroom Answers

Question of the Day: 1) 64 2) 729
Rank by Net Worth: Jay-Z ($610 million), Rihanna ($230 million), Kanye ($145 million), Drake ($90 million)