We've got a big announcement

MARKETS

• Trade: The U.S. imported less stuff from other countries in November, causing its trade deficit to fall for the first time in six months. If you’re wondering why we’re still talking about what happened in November, it’s because the partial government shutdown delayed the report.
• World Bank: President Trump nominated David Malpass, a Treasury Department official and World Bank critic, to lead the World Bank.

MEDIA

Spotify Bets Big on Podcasts

Up next on your Spotify Discover Weekly...Crimetown.

No, not some Seattle-based indie rock trio with an axe to grind. It’s the much-loved podcast from Gimlet Media, one of two podcasting companies music-streamer Spotify (-2.83%) just acquired.

Gimlet, along with podcast creation/distribution startup Anchor, will join Spotify as the music streamer spreads its wings beyond its core service. And Spotify’s drooling for two reasons:

• One: The acquisitions could lead to more content on-platform without relying on (or paying high licensing fees to) major record labels. Hello, increased margins.
• Two: Adding to its podcast repertoire allows Spotify to keep listeners captive for longer.

The next chapter

Spotify already dominates the music-streaming market—it has 96 million monthly paid subscribers, nearly double Apple Music’s tally.

But Spotify still trails Apple as a podcast platform. Early last year, Apple reportedly celebrated 50 billion all-time podcast episode downloads and streams. It was working with 13.7 billion in 2017.

Since when did podcasts achieve Drake-level business opportunity for these streamers?

• Serial changed the game in 2014, audiences grew, and advertisers started taking
• And podcast penetration is strongest in the 18-34 cohort—aka the toughest (and most important) for advertisers to reach.
• Reality check: Podcast ad spend ($314 million in 2017) represents less than 1% of the total U.S. digital ad market.

But Spotify’s going all-in

According to CEO Daniel Ek, about 20% of all Spotify listening will eventually involve something other than music, like podcasts and Maroon 5.

• How to get there? Looks like that $500 million Spotify earmarked for deals this year (plus the ~$230 million it spent on Gimlet) will keep its M&A team busy.

“Ultimately, if we are successful, we will begin competing more broadly for time against all forms of entertainment and informational services, and not just music streaming services,” Ek said.

WORKFORCE

Bad Tips Sink Ships

And Instacart will be the first to tell you. After facing backlash over its controversial worker compensation policy, the delivery startup has announced a change to how its couriers get paid.

• Under the old system...Instacart would put customer tips toward workers’ minimum pay guarantees, “in effect using them to subsidize their own payouts,” per the NYT.
• Under the new system...Instacart workers will get full tips from customers, which will be calculated separately from Instacart’s own contribution to employee compensation. Workers who lost out on tips under the old system can get back pay, too.

It was more than just Reddit outrage that drove Instacart to make the change, though. We hear class action lawsuits can be quite persuasive—and Instacart was facing one alleging it “intentionally and maliciously misappropriated gratuities.”

Zoom out: Workers in the gig economy have faced uncertainty over their compensation, “coping with opaque policies, dizzying technology changes, and black-box algorithms,” the NYT wrote. Now, those workers are pushing back.

ANTITRUST

Margrethe Vestager Strikes Again

The EU antitrust chief took a break from dropping fines on Zuck, Cook, & Co. to wage a battle closer to home—she blocked a pending rail merger between France’s Alstom and the transportation unit of German conglomerate Siemens.

And did you catch the reaction videos?

Here’s France and Germany...

There had been hopes this merger would create the “Airbus for rail,” a European transportation giant with an annual revenue of $17 billion. But the EU ruled a tie-up would reduce competition, raise prices, and harm consumers.

• Alstom said, “This is a clear setback for industry in Europe,” while some French and German authorities are pressuring the EU to revise its guidelines and allow more large cross-border deals.

Of course, it’s all about China: The railway execs warned a blocked merger would lead to China’s state-owned CRRC running them over like a freight train (it works).

Bottom line: Vestager thinks those fears are overblown, saying, “We don’t see the Chinese coming. The Chinese are nowhere, not at all in Europe."

VENTURE CAPITAL

Trying to Get Your Startup Funded by SoftBank?

Better get that pitch deck together fast. There’s only *checks notes* around $50 billion left in its Vision Fund, roughly half the amount it started with.

“Ha, good one Morning Brew,” you say, but at the rate SoftBank CEO Masayoshi Son has been spending money ($7 billion per quarter), the fund will dry up in a year and a half, the WSJ calculated.

Where’d the money go?

• To companies many of us use every day: Uber, WeWork, Slack, and other innovative tech startups.
• What isn’t a part of the portfolio anymore: Nvidia. SoftBank shed its 4.9% stake in the struggling chipmaker last month.

The future of the Vision Fund

Masa Son has said a Vision Fund 2: The Second Part is a matter of when, not if. Still, it may not be that simple.

• Remember: Saudi Arabia contributed $45 billion to the OG Vision Fund, but that was before its crown prince was accused of ordering the murder of a dissident journalist.

WELLNESS

You Know the Saying...

“If it’s worth $1 billion, it must be on to something.” And meditation app Calm is definitely on to something following an $88 million TPG-led funding round that values it at $1 billion.

What does the newly minted unicorn do? Calm guides people through relaxation exercises, breathing techniques, and more—all with the goal of confronting mental health issues from insomnia to anxiety.

It’s part of the ballooning wellness industry, which consists of more than just Goop-loving moondust aficionados.

• The meditation market alone is worth $1.2 billion.
• And the national meditation rate has tripled over the past five years. The number of U.S. adults meditating will surpass those practicing yoga in two years, per the CDC.

That makes meditation a lucrative business. Among Calm’s proudest moments since its 2012 founding? Winning Apple’s 2017 iPhone App of the Year, topping 40 million downloads, surpassing 1 million paying subscribers, and becoming profitable (must have taken a lot of affirmative thinking).

COMMUNITY

BREAKING: Morning Brew Hits 1 Million Subscribers

What does it mean? If all Morning Brew subscribers agreed to pick up their things and move to a random town in Vermont, we’d instantly create the 11th largest city in the United States by population.

We’re amped about this milestone, which wouldn’t have been possible without support from our friends, families, and advisors. Major kudos to the entire team as well, from the founders to growth/tech to brand partnerships to our exciting new hires to all our amazing interns.

What they say is true: It takes a village to send an email to the 11th largest city in the United States.

Which brings us to you

Thanks for starting your day with the Brew. Thanks for sharing it with your friends and colleagues, for applying our stories in your classrooms (both as teachers and students), and for using the newsletter to learn more about the business world.

Bottom line: Forbes wrote a piece about us. Be sure to check it out and make sure you spread the word to everyone you know. You can say you knew us before we went on “Dancing With the Stars.”

WHAT ELSE IS BREWING

• General Motors (+1.55%) said Q4 operating profit was down 8%, citing weaker sales in China. In better news, North American customers are paying more for trucks.
• Chipotle surged around 10% after hours following an earnings beat. Investors are loving new CEO Brian Niccol’s turnaround strategy.
• U.S. farmers are filing for chapter 12 bankruptcy protection at the highest levels in at least a decade, per the WSJ.
• The New York Times (+10.33%) has quite the comeback for those forecasting the death of legacy media: its Q4 earnings topped expectations thanks to a surge in digital
• J.C. Penney (-2.22%) will stop selling major appliances at the end of this month, a big change in strategy from CEO Jill Soltau.

BREAKROOM

Valentine's Day Trivia
When was the earliest booking on OpenTable for Valentine’s Day 2018?

Breakroom Answers