In this podcast, Motley Fool analyst Bill Mann discusses:
- The mediocre performance (to date) of Twitter's (TWTR +0.00%) business.
- Whether Tesla (TSLA -1.71%) shareholders should be nervous about Musk running another company.
- How other ad-driven businesses like Pinterest (PINS +1.35%) and Meta Platforms (FB +1.21%) might be feeling.
- The latest results, and near-term future, for bellwether stock UPS (UPS -0.33%).
Inflation is rising, but that's probably not a good enough reason by itself to expect a raise at work. Motley Fool host Alison Southwick and Motley Fool personal finance expert Robert Brokamp talk with Kara Chambers, head of people development at The Motley Fool, for insights and suggestions.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
This video was recorded on April 26, 2022.
Chris Hill: We've got some questions about Elon Musk buying Twitter. We've got suggestions for getting a raise in your salary. Motley Fool money starts now. I'm Chris Hill, joined by Motley Fool Senior Analyst, Bill Mann. Thanks for being here.
Bill Mann: What do you want to talk about, Chris?
Chris Hill: There's a little something in the news, earnings from UPS and we'll get to that shortly. But first we've got to talk about what everybody in the financial media is talking about which is?
Bill Mann: We've got to talk about Musk don't we?
Chris Hill: We absolutely do. Even though I was thinking earlier today, when was the last time there was this much oxygen spent on a company that's being taken private. I think maybe it was when Warren Buffett's and 3G Capital got together to take Heinz off the public markets.
Bill Mann: Similar like consumer profile, I guess like they're taken over big catch-up. In this case they are taking over big tweet, I guess.
Chris Hill: Big tweet, yes. There are a few things to get to here, and I'm going to start on Twitter. Josh Brown, the CEO of Ritholtz Wealth, who does not tweet often but tweeted on Monday, the following, Twitter does $3.5 billion a year in revenue, a business roughly the size of the Olive Garden. [laughs] We've to admit that this is hilarious. He makes a good point because there are a few ways to look at Twitter. One is its influence as a media platform. Another way to look at Twitter is, a way we look at businesses all the time. What does this business generate in revenue every year? If the news today where, Elon Musk is buying the Olive Garden from Darden Restaurants. We'd be having a different conversation.
Bill Mann: We'd still be talking about it though, but that would be an entirely different thing, yes. Twitter, it's not a good company. They have yet to find what it is that they want to be as a business. It is an incredibly powerful platform. The only other business that I can think that's really like this. This is going to sound weird, is The Princeton Review. Which was not that great of a business. But if you wanted to pass a test anywhere in the world, you needed them. I'm glad this company is being taken private, like it really, really needs to be out of the hands of Wall Street.
Chris Hill: Great point and one that I think we've probably talked about in the past in ways that didn't involve Elon Musk at all. But just does this thing need to be out of the glare of the public markets? Elon Musk has said he wants to do things like in terms of the changes to the platform, he wants to remove bots and limit content moderation and enable long-form tweets and an edit button and all that thing. But to your point about the underlying business, when the news came out that he was a major shareholder. That made sense to me. I looked at that as an OK. I get why he's doing that. I'm not entirely sure why he wants to buy the entire business, because as you said, there's nothing in the considerable track record of this public company to suggest this is a great and growing business.
Bill Mann: It's also, and this seems bizarre, talking about $44 billion. The amount of money that Elon Musk is putting into this is pocket change for him. Now, I happen to agree that taking the company private in its entirety is a better move. We can talk about Elon Musk a bunch of different ways, but we can just simply talk about him as a rich guy, and what his plans seem to be. That is to align Twitter's business with the fact that it's a public trust. I mean, you could call it a passion project, if you will. I don't know, Chris, I hope that I'm not being like too optimistic about this. Because I happen to think the fact that Twitter is being removed from the public markets is a really good thing. That's someone who really doesn't need to worry so much about whether it's hit its cash flow numbers for three months or a year. I tend to think that's a good thing, simply because of Twitter's role as the Virtual Public Square in our society.
Chris Hill: I agree with that.
Bill Mann: Since Olive Garden is not available as the public square.
Chris Hill: No, but it is tastier. If you're a Tesla shareholder, you are watching this and maybe you're not exactly thrilled. Shares of Twitter down about nine percent today, on this news.
Bill Mann: Tesla are down about nine percent.
Chris Hill: Tesla down nine percent today. What should be the level of concern for those shareholders? Because there are only so many hours in a day, and if Elon Musk decides he wants to be the CEO, and a very active CEO of Twitter. By definition, that takes time away from Tesla.
Bill Mann: It is funny that Twitter has gone from being under the control of one multitasker to another. I mean, Jack Dorsey only recently stepped down as the CEO and Chairman of Twitter. Because he was also the CEO and Chairman of what was then Square and is now Block. I don't know if you've noticed, but it's not a great day in the market all the way around. I don't know how much you can assign today's Tesla action as being, people are worried about the amount of attention that Elon Musk has. He is unique in this way. I think it's fair to say that he has done an OK job being as involved as he is in SpaceX and Tesla and the Boring company. This is another piece of the pie. I don't know how much time he is actually going to spend on it. I mean, obviously his bread is buttered primarily at Tesla. I would not worry so much about him taking his eye off of that ball.
Chris Hill: Even though Twitter hasn't rewarded shareholders in a meaningful way over the past decade, it is. [laughs]
Bill Mann: Way to undersell that. [laughs]
Chris Hill: Look, it's an advertising business, and it competes against the likes of Instagram. The Trade Desk, probably on some level, just, there are other businesses that are watching this very closely as well. If you are competing with Twitter for ad dollars, are you happy about what's happening? Are you nervous? Is it neutral? Because I could honestly be talked into anything at this point.
Bill Mann: Same actually. Next topic. No, I'm just kidding. Yeah, actually the same. I mean, so Jack Dorsey again came out, and he said that they've been very dependent on the advertising model. You get the feeling, in fact, you don't even get the feeling, you have to know that Jack Dorsey and Elon Musk have had lots of conversations about what this business could be. It sounds to me like they don't want to depend on advertising for their revenues, or for their structure as much anymore, and that's something that they feel like they will be able to make those changes more easily as a private company. I'm really not sure what the impact would be on other advertisers. I do think that Twitter has horribly under-utilized the data that it has available to it. I think what we're going to find is that you're going to have much more value extracted from Twitter, that way. I don't know if that's good news or bad news, but I think that that's the case.
Chris Hill: I think if Twitter gets out of the advertising business. I think if you are Pinterest or Facebook, I think you're, happy about that. Let's move on to UPS. Because as you said, not a great day for the market, and maybe if it were a good day, or an even a neutral day, shares of UPS would be moving higher. Just in terms of the underlying business. I mean, first-quarter results, profits and revenue came in the better-than-expected. The overall shipment volume was down for UPS, which is to me, among other things, an example of the pricing power that this business has.
Bill Mann: Yeah.
Chris Hill: We can get into the guidance if you want. But just on the surface, what caught your attention from UPS?
Bill Mann: What really caught my attention from UPS is that they pulled out every stop that they could in terms of to have a good quarter. I mean, the quarter was fine. I mean, it was $3.05 a share in earnings for the period which was higher. But ultimately, there's only so much pricing power can get you in the fact that, the fact that volumes were down and they did not really have great things to say about upcoming period as far as they can predict newsflash, they can't predict anything. But they do try to. It was as a bellwether company and I think that this is a company that can be viewed as a canary in the coal mine for the economy in the U.S. It was not a great quarter, it wasn't a terrible quarter. But the fact that volumes are down to me, is meaningful.
Chris Hill: What should be the expectation? I don't want to go too far in the future, but just in terms of the rest of the year? I mean, they reaffirmed their full-year guidance, they seemed to indicate like look, costs are going to go up, but we think that's going to improve late in the year. Is this a situation where if you're looking at UPS as a business, does the increase in shipment volume have to go up in the next like three months from now. If we're talking about overall, volume is down yet again. Do we see this really impacting the business in a much bigger way?
Bill Mann: It does bear stressing that UPS's share price has more than doubled since the beginning of COVID. I don't want to extrapolate too much. This is obviously a COVID beneficiary. In some ways, they're short-term, will still be linked to the amount of time we are spending in our houses, as opposed to going out and shopping and doing other things. UPS is one of those companies and there are a few, Zoom is one where a lot of habits that did not exist or were lesser before COVID. They're not going back. The fact is that UPS doesn't know what the next year is going to bring. UPS's quarter was actually fine. It was good. But they are going to be beaten along as a macroeconomic beast for the upcoming future.
Chris Hill: One silver lining for UPS, I guess, is when you think about an environment where costs are rising and businesses across the board are looking at the money they are spending. It probably helps a business like UPS, but they're not planning to spend a dime on updating their brand [laughs] because it's the same brown trucks and it's like no, we're good. We're sticking with this. We're not doing a refresh of any kind.
Bill Mann: No, they aren't. It's really important to note, whenever I see an earnings reports, it's easy to go to topline. But I want to view where they are earning their money and they actually raised their prices to boast on small businesses. Obviously there's some marketing spend that goes into attracting smaller businesses. You're right there, brown is not changing at all. But their margins went up. I think again, you've got to wonder in a rising rate environment, in an environment in which we've got inflation, what the impact is going to be on UPS's core customers or particularly where they've been getting their growth from. [MUSIC]
Chris Hill: Bill Mann, always great talking to you. Thanks for being here.
Bill Mann: Thanks, Chris. [MUSIC]
Chris Hill: Twitter has been talked about so much that it's easy to forget just one week ago, Netflix was in the spotlight. On tomorrow's show, we'll have a bull versus bear debate on the streaming giant. But up next, let's talk about you. Inflation on the rise in and of itself is probably not a good enough reason to expect a raise at work. How should you ask for a salary bump? With more, there's Robert Brokamp, and Alison Southwick. [MUSIC]
Alison Southwick: You've probably seen the headlines in the Wall Street Journal, Economist, The New York Times, or points elsewhere. Something along the lines of, now is the perfect time to ask for a raise. Why? That's because unemployment claims in the US are their lowest level in half a century. This side of the labor market means Americans have high level of job security, and the upper hand. According to a survey by FlexJobs, almost half of employees who asked for a raise last year received one. How can you improve your chances of getting a raise? Joining us is Kara Chambers, she's the head of people development at The Motley Fool, and she spends a lot of her time pondering compensation. Kara, thanks for joining us.
Kara Chambers: Hi, thanks for having me.
Alison Southwick: Here at The Motley Fool we famously invented Ask for a Raise Day. I can say famously because Inc. actually wrote about it. It was a day or really a week we set aside and encouraged all employees to ask for a raise. We even gave them a playbook for how to build their case and help increase their chances of success. Kara, you made us Ask for a Raise Day happen. I feel you are uniquely qualified to talk to us today. One of the reasons we did Ask for a Raise Day, if I'm remembering correctly, was to encourage employees to have conversations about their compensation to normalize it a bit. Kara, why is it so hard to talk about compensation?
Kara Chambers: Because it's so taboo and so personal. As far as they force us all to have that discomfort conversation, we learned a lot then. A lot of us mentally, even though this isn't true, associate that number with just our worth, and so it feels very personal. It takes some boldness and some vulnerability. I can remember people coming to me and ask a raise and saying things like, I never want to sound ungrateful, I love my job. Pushing them to have that conversation was good because it just helped to open up the door and have a conversation we're all just too uncomfortable to have, and the managers also, not a lot of them really like to ask for a raise day. I said, hey, this is going to happen when your best person is ready to leave. You're going to have to deal with it. Why not get some practice now when the stakes are lower? We know it's uncomfortable, it's uncomfortable on both sides, but it happens and usually it only happens when things are really at ahead. Normalizing it, making it more comfortable is better for everybody.
Alison Southwick: All right. Well, let's just get it. Kara, what is the first step if you want to ask for a raise?
Kara Chambers: First steps about asking for a raise, we talk about soul searching. We just talked about the idea that unconsciously well believe it's a number tied to our value as a person, but that's not really true. Thinking about why you want a raise right now, and is it a step that you're taking to get into a new job or you are looking to actually leave your role and look for something else? Would more money make you happier? Is it the job itself, is it the role, or are you really seeing data out there in the world that has saying, I believe I'm underpaid. The first step is to say, is it really a negotiation where you're ready to walk, or is it just a conversation you just want to push yourself to have. I think that's the first step you would take.
Alison Southwick: Is this the point when you want to be thinking about, what am I going to do if I don't get the raise?
Kara Chambers: Yes, that is negotiation 101. To think about what you're putting on the table. Even if you're feeling uncomfortable, it could be OK that you just want to have this conversation with your boss or whoever is the decision maker is. You want to just learn a little bit more about what the expectations are for you. Getting feedback is also really difficult, so it could be learning, it could be asking, but it also could be you feel ready to make a move right now. I think making that decision ahead of time is going to help you think about what frame of mind you want to be in when you go into that conversation.
Alison Southwick: All right. After you've looked internally and you'd know why you're entering into this negotiation, what do you do next?
Kara Chambers: Do some homework. There is a trend toward greater salary transparency out there, so you should be able to find a little bit more. The other thing is external factors are one piece, but the other one is internal. Depending on the size and culture of your company, who is making the decisions? Do you have a very strict salary ladder? Can you only get a raise when you have a title? How's your company doing? How is your pay reflected out in the world? Who makes the decisions? Is it your boss, are they limited to a budget or are they able to pull some stream? It's going to be different for everybody. But I think knowing who your stakeholders are, knowing who the decision makers are will get you started down that path. Again, thinking about what your role might pay out in the world, you can use a couple of salary surveys. They're usually a little imperfect, the ones that are publicly available, but they give you a start. I would say look externally, but think about the culture that you're in and the calculus that goes into your pay. It is never the value of your worth as a human to your company. It is budget, it is politics, it is all the fun things, and so that's where you would start.
Alison Southwick: Your reason for wanting a raise might be because of inflation. That likely isn't going to be a compelling argument for your employer. Yes, because of inflation, you'd need at least an 8.5 percent raise annually to stay even. But you're probably going to need a more compelling case than that.
Kara Chambers: Absolutely. Companies are also feeling the pinch of inflation as well. That's why we do want you to look at the whole environment they are in. Some companies are feeling higher cost as well, so they are also feeling that. Generally speaking, when I've coached people, through asking for raises, I do try to tell everyone to stay away from talking about your personal situation. You really want to drive more about the value that you're creating for the business and the value of your role and your skills and not about your personal situation. Because everyone's personal situation is different and you can't expect a manager or someone in a role like mine to be making decisions on everyone's personal situation.
Robert Brokamp: I think it's also important to know that inflation is backward looking number. It's what happened in the past to prices, and if you're a company, you're not looking at what happened to inflation in the past. You try to projecting your revenue and your cost forward. That is a much bigger determinant of whether the company can afford to give you a raise, not what happened to prices in the past.
Alison Southwick: I see you talked about how when you're preparing your case to get a raise, you want to talk about where you've added value to your business. The advice we also gave to Fools was that they should also look to make a case for where they are looking to develop as well and go in the future, right?
Kara Chambers: Correct. I mean, that's one possible outcome as you are going to have this conversation and you'll hear, we only give raises to people who do this. You'll learn what this is. Again, it could be up to now that someone hasn't done a great job articulating math to you. Thinking about how you are adding value, what progress you've made over the past year, those are good things to talk about. Last year when I was hired in this job I was doing this, this and this. Now I have also added these skills and I'm able to do this, this, and this. These are ways to think about progress you're making in your career. I think that's really helpful to think about how you have developed your skills and added value as a contributor.
Robert Brokamp: As you know, Kara, we have a coaching program here at The Motley Fool, and I'm a coach, so I have six coaches and one thing that I do that I've told my coaches to do or suggested to them is that every year I create a new document. It's basically everything I've accomplished in that year and it could be some way I've helped the business some way I've helped a colleague. Nice things that you all say when you rate our podcast, email as we get anyway that I can show at some point my conversation. This is one way that I have added value to the company. That way you catalog the actual evidence so that when you are in that conversation, you have the examples right there to say, look what I've done over the past year, and I think I deserve a little bit more money.
Kara Chambers: It's so great. Bro, you're such a great coach. That's amazing. It's true. I think we have a coaching program and a lot of people think that their managers are doing this. But every manager out in the world is not perfect at their job, they're not keeping an accurate catalog exactly of your accomplishments. Doing some of that work for them wins it over a quite a bit. That's a great idea.
Alison Southwick: You touched on in the past about how important it is to understand the state of the business and where you fit into it. Can you talk more about how you can work that into making your case?
Kara Chambers: Absolutely. The more understanding you are of the decision-making framework your managers is in, and whoever is, what criteria are they using to decide what's added value? Now that you've got that list that Bro articulated, you want to be listening in that conversation about what's most important to the overall business strategy right now. Are you generally we talked about, are you close to the cash register? Do you have a unique combination of skills? Those are also really helpful thing to talk about is, what does the business need from you and are you delivering in that? Is your business thriving right now, the one year in or is it struggling as well? That might make it more difficult, but having that and understanding it will help you walk in with some more confidence. If someone came to me and said, I am a welder and I'm also a brain surgeon. But we're paying you for your welder job at The Motley Fool right now. If you are saying, but I'm also a brain surgeon, but you're not doing that and that's not part of your company's business, it's hard to make the case for your company to pay you that for a higher paying job. You want to think about how your skills applied to the business itself, regardless of how talented you are, making sure those talents are being leveraged at your company would help make the case.
Alison Southwick: Regardless of the outcome, there's perhaps a bigger existential question here. Will more money really make you happier? The science says maybe not, a 2010 study from Princeton found that having higher income increases happiness, but only up to about $75,000 a year. Now, after that more money doesn't make you much happier. What's been your experience as the head of people development who is probably seen people receive thousands of raises here at The Motley Fool? Has money made people noticeably happier or something else make them happier like a role change or having a different manager?
Kara Chambers: I think happiness is an interesting role in there. I think that study is right about what a minimum number and where you are for your financial comfort, which is why you're listening to this podcast in the first place. The stress of struggling to make ends meet absolutely will take away a lot of happiness from you. At a certain point, it absolutely does start to fade. As you get more financially comfortable, you're looking for other things in life. Financially comfortable is going to mean something different to everyone. Solving for some of that first, and then you're right, more money doesn't add more. You want to think about autonomy, and flexibility, and contribution to the world. Are you making a difference for people you work with? Then some other factors like your commute, the type of work you're doing. All those things come into play, and so I love the phrase, there's a book called Designing Your Workplace, and they use this question that I love. It's called what world do you want work to play in your life right now? Is that they're just to pay the bills then you're really going for the highest paying possible job you can get. Is it there for other reasons for you? Then that's for you to figure out. Everyone's formula is slightly different and it will change depending on where you are in your life. But the other piece is that sense of unfairness. We haven't addressed this, but do you feel underpaid compared to your peers in some way? That's also something that will inhibit your happiness. If you feel like your peers are getting rewarded more than you are absolutely. But all things being equal, you have to just figure that part out about what role you want work to play in your life and where that financial comfort is for you.
Alison Southwick: You mentioned it earlier, but one of the biggest trends in the workplace right now, right up there with the great resignation and working from home is increased pay transparency. This could include sharing the salary along with the job listing, disclosing the average salary for various roles at a company or even going so far as to share with every individual employee is making at a company. Advocates of wage transparency say it helps fight pay in quality. Everyone else is bemused or terrified. What's your take here?
Kara Chambers: I like it. I think it has some healthy conversations. I think when I see it out there in jobs that are extremely formulaic and they are exactly the same, it works really well. The minute move into a more strategic type of job, it becomes an art and it becomes debatable and it's a lot fuzzier. What can happen is you can say this director of something job pays this. I think I should do that. Some conversation is going to say, well, you're not a director because this, and they'll tell you something. Maybe you don't have enough experience, you don't have enough direct reports or something, but in a lot of cases it's a little fuzzy. That's where it seems really clean, like it should be obvious everyone is paid exactly transparently. I would love that. It would make my job a lot easier. But most jobs are creative and they are complicated and they have all these variables, and so I think using it as a guideline, knowing if you're way off. It's a nice, healthy, neutral way to say I've seen jobs posted and they're paid at this, I'm paid at this. It's great for those conversations. It's great for what I've learned in the recruiting world is that calibration out of time, what type of candidate do we need for the job. That calibration is now starting to happen a lot sooner, which is really nice as you have to make a decision about what you're going to pay a job before you post it, that calibration becomes a lot clearer. You're offers are probably become more fair and more competitive, which I think is a great development.
Alison Southwick: Kara, before you go, what's your parting advice when it comes to increasing your chances of landing a raise?
Kara Chambers: I think you're most likely answer might be not yet. Which is a great answer you can get. I mean, your ideal answer is yes, absolutely, we should pay you more. But a conversation that you have with your boss, whoever the decision-maker is that says, I would love to give you a raise, but I can't because these things need to happen. Now, you know you have much more information, you can move forward. Going into this with curiosity, instead of don't wait until you're angry, don't wait until you're feeling really resentful. You found out that so and so makes more than you do, having the conversation now and getting your not yet answer is actually way better than waiting until you just fuming and complaining your friends are happier about it. [MUSIC] I would say walk in with curiosity and humility, it gives you a great building block. Gets people thinking about you. [MUSIC]
Chris Hill: As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. I'm Chris Hill, thanks for listening. We'll see you tomorrow.
