Earnings Roundup: Disney, Dutch Bros, Unity Software, and More

In this podcast, Motley Fool analysts Jason Moser and Maria Gallagher discuss:

• Historical numbers to put the current market into perspective.
• Disney's (DIS -0.55%) better-than-you-might-think results.
• Rough times for coffee chain Dutch Bros (BROS -3.90%).
• Unity Software's (U) drive for profitability.
• Signs of life from Affirm Holdings (AFRM 3.08%).
• The latest from Roblox (RBLX -1.07%), The Trade Desk (TTD 0.70%), and Peloton (PTON 0.66%).

Motley Fool analyst Bill Mann talks with Okta (OKTA 1.31%) co-founder Frederic Kerrest about lessons from his new book, Zero to IPO: Over $1 Trillion of Actionable Advice from the World's Most Successful Entrepreneurs.

Maria analyzes Airbnb's (ABNB 1.03%) platform enhancements, then she and Jason share two stocks on their radar: Airbnb and Home Depot (HD 0.22%).

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 May 13, 2022.

MALE_1: [MUSIC] Everybody needs money. That's why they call it money. [MUSIC]

MALE_2: From Fool Global headquarters, this is Motley Fool Money.

Chris Hill: It's the Motley Fool Money radio show. I'm Chris Hill and I am joined by Motley Fool Senior Analyst Maria Gallagher and Jason Moser. Good to see you both.

Jason Moser: Hey.

Maria Gallagher: Nice to see you.

Chris Hill: We've got the latest headlines from Wall Street. Okta co-founder, Frederic Kerrest is our guest, and as always, we've got a couple of stocks on our radar. But we begin with a question from listener Chris McCullough who writes, "Can you please do an episode where you just say that everything is going to be all right over and over and over again." [laughs] We could, but I think that would get old quickly. Jason, I understand the sentiment because it's been a rough six months for investors. A lot of stocks that we focus on have had big pullbacks and sometimes you just want reassurance from an old guy like me to say, we've been through this before. It's going to take some time, but we are going to get through this.

Jason Moser: Yeah. I mean, I would put myself in that same old guy like you category and having been through stretches like this before. I am confident in saying if things eventually, I don't know when the things will get better. It obviously is a very tough stretch for investors. I was reading earlier in the week that this is the worst year-to-date for the S&P in six decades. I know that sounds really bad. But honestly to me, I feel like that should make you feel better about things right now in that, this is a once in a blue moon, but kicking. The market is handing everybody, nobody is immune to this. If you can stay invested and keep investing, I think that you'll look back at this time as one of the men's emotional value. I speak from experience. I mean, the bear markets in the recessions that I've gone through as an investor, they just make you better as long as you can stay in the course. I'm not saying you'll execute perfectly throughout them all, but you'll learn a lot of lessons along the way that will help you the next time that comes around. Now, I can read you all data regarding bear markets.

I can tell you that stocks lose 36 percent on average in a bear market. I can tell you that half of the S&P 500 index's strongest days in the last 20 years, actually occurred during a bear market. Those are actual facts, that's true. I don't know that it makes you feel very good right now, but I do think those are things worth keeping in mind. In one of my favorite quotes, a quote that I always come back to during times like this, Shelby Davis. He said, "You make the most of your money in a bear market. You just don't realize it at the time." There's a lot of wisdom in that, in that you really are taking advantage of a situation here where there is a lot of pessimism market. We're finding a lot of assets with proven track records of long-term appreciation that are far cheaper today than they were several months ago. Even if it's just a matter of keeping that paycheck, keeping that contribution from your paycheck, going into your retirement plan and just investing in an index fund, just keep that ball rolling because this will get better and it will make you a better investor for it.

Chris Hill: Maria, I know you're not old like me and Jason, but I'm sure you have thoughts on this.

Maria Gallagher: Well, I would just say, in addition to all of the wise words Jason said, I think it's important to know that the average time of bear markets since 1957 is about 1.7 years. Over the last 15 bear markets, the average downturn is a loss of 30 percent, lasting. Just under a year to reach the bottom, taking a little more than a year-and-a-half to break even. Eight out of 15 of those broke even in under a year. Again, I don't know that will help people feel better right now, but I think it's always helpful for me to help soothe me to say, these things have happened before. We have come out of them, and here's why we learned from last time. If you like stocks, I feel like evaluation person, small and mid-cap stocks are now cheaper than they were during the 2018 bear market. They are approaching levels of March of 2020 base on Forward P/E. There are opportunities to be had, I think, in this market, but I know that we are all looking at these numbers with you and understanding that as well.

Chris Hill: Let's move to some of the companies making headlines this week. Disney's second-quarter report was highlighted by more subscribers for Disney Plus. The parks in Asia were affected by closures due to COVID. I don't know, Jason, it seems like one of those reports that had something for bulls and bears.

Jason Moser: Yeah, it does. It does feel like the market seems to really be judging Disney fully on its streaming aspirations first and foremost these days. I feel like that's a very shortsighted view on things. I mean, they certainly are transforming the business and investing a ton into this direct-to-consumer offering. But the core business itself is really performing well, especially considering the current state of things going on around the world. If you look at parks' revenue, that better than doubled for the quarter from a year-ago, $6.7 billion in revenue, $1.8 billion in operating income. You go back to the same quarter of 2019, those numbers were 6.2 billion and $1.5 billion respectively. We can see some improvement there from a time ago when things were a bit more normal. Per capita guest spending at domestic parks was up 40 percent from the same quarter in 2019 and up 20 percent versus 2021. That's very encouraging. The media and entertainment revenue up nine percent.

They're still chalking up tremendous operating losses due to expenses in the build-out with all the content. Speaking of subscribers, they ended the quarter with more than 205 million total subscriptions, added 9.2 million for the quarter. Now that includes 7.9 million Disney Plus subscribers. They reiterated McCall again, that keeps us on track to reach their 230 million to 260 million Disney Plus subscriber goal by fiscal 2024. It's worth noting. I mean, there are 138 million global paid Disney Plus subs today. They've got some work to do to hit those targets, I think, as well as getting Disney Plus to profitability by 2024, like they're targeting. With that said, they are opening up an ad tiered model. That probably will work to their favorite. They're going to spend $32 billion on content they share. We've been very critical of the content. It seems that they are really expanding that library for all demographics. I think that works out well in their favor, and when you consider the whole of this business, all of VIP, the parks business, everything that they do in totality, it really does feel like the market is not giving this businesses enough credit today.

Chris Hill: On Thursday, Dutch Bros, the drive-through coffee chain warned of slowing sales growth, saying that inflation is keeping younger customers from taking afternoon coffee breaks. Shares of Dutch Bros fell 26 percent, putting this stuff well below its price when the company went public last fall. Maria, I'd take a back seat to no one in my love of coffee, should I be taking advantage of the sale on Dutch Bros stock?

Maria Gallagher: It's pretty interesting. Their revenue was up 54 percent to 152.2 million. They had systemwide same-store sales growth of six percent. They have about almost 600 shops. They're guiding for about 30 new shops in the next quarter. But they are planning for flat to slightly negative same-shop sales growth. They had spoken on a previous quarter about how they had only raised prices about three percent since the beginning of the pandemic, but due to a rising labor costs and unforeseen 25 percent spike in dairy prices, they're considering another three percent raise in prices. They're working on energy drink offerings, rewards programs. They're expanding in Texas and Oklahoma, belting out a footprint in Southern California.

For me, what my problem is with this company is that, it lives in this space. It's not as big, established, well-known as Starbucks, but it's still considered a chain, so it doesn't have the loyalty of your small cafe right near your house, and it is a drive through, so it's just a one in and out transactional opportunity. You're not really building that type of loyalty, I think with customers that way you do when you have an in-person sit-down place. I think it's living in unprofitable space where it's not a well-enough known chain that people say how it will always be the same, but it's not quite small enough to have that loyal following, even though I am on the East Coast and maybe people on the West Coast will correct me on that.

Chris Hill: Clearly, it's all about the coffee. if this is not a place you're going into and soaking in the ambiance. But I do consider the fact that on their latest call, Starbucks talked about most of the new locations they plan to open. They're focusing on those drive-through lanes.

Maria Gallagher: Yeah. I think that's a good point. I think that Starbucks is trying to have it both, right? They're trying to have you go in and use it, and then also, if you want the option, you can drive-through. I wonder if Dutch Bros will be able to have the opposite of, you know them for drive-through, and they're saying and now you can come sit, I wonder if that works the same way in the opposite direction.

Chris Hill: Unity Software posted a loss in the first-quarter and shares of the video games software development company fell nearly 40 percent on Wednesday. CEO, John Riccitiello, says he expects Unity to be profitable in the fourth-quarter, Jason?

Jason Moser: Yeah, a bit of a crazy week. I mean, down what's close to 40 percent and then up 15 percent the next. This is a very knotty week for a lot of these businesses. Let's be clear, this wasn't a bad quarter. This was actually a pretty good quarter. There was an outlier event though at a bid, and ultimately they incorporated some bad data from a large customer which ultimately corrupted one of their algorithms and the Unity monetize business that's part of their operates segment. That put the business behind the proverbial lay ball as the management needs to fix this mistake. There's time and there's money that comes with this that ultimately resulted in downward guidance, which probably is what really ultimately spooked the market. But there are plenty of signs that they're making a lot of progress and fulfilling the thesis of expanding their business into new verticals and used cases well beyond its core gaming expertise.

You look at the numbers. I mean, revenue, $320 million, that was up 36 percent from a year ago. That was at the top of their guidance. The create segment of the business that outperformed, that's the subscription side. Revenue was up 65 percent, the operate underperformed, and that's what I was talking about a little bit earlier, that revenue was up just 26 percent. But they ended the quarter. They have 1,083 customers each generating more than $100,000 of revenue in the trailing 12 months. That was 837 just a year ago and dollar base net expansion rate of 135 percent remains in their target range. Ultimately, as I mentioned, going into new verticals, I mean, there are a lot of good examples here, the digital twin business continues to expand.

They entered 2022 with nearly 3,000 customers in this space and for the quarter, they closed 34 deals above $100,000. It was up 126 percent from a year ago. That I think is a lot of competition out there for folks who have been paying attention to Matterport, because that's ultimately what Matterport does as well. Then you look at just big customers beyond that core gaming Lockheed Martin, I think is a model example, good example of that in action. They just first project with them started in 2017. They bought a few seats for design visualization, but you look five years later, and Lockheed now has 500 licenses across nine business units for multiple use cases including simulation, training, guidance, collaboration. I feel like this is working out, but there was a valuation thing and the revision in the guidance is really what I think sent people selling.

Chris Hill: Signs of life for Affirm Holdings, third-quarter revenue for the buy-now-pay-later company came in higher-than-expected. The loss for the quarter was smaller than expected and shares of Affirm moving higher later in the week. What do you think, Maria?

Maria Gallagher: I think that the buy-now-pay-later space is pretty fascinating. Affirm specifically, their revenue was up 54 percent to 354.8 million. Their active merchants increased from 12,000 to 207,000. That's driven primarily by the adoption of Shop Pay Installments with merchants on Shopify platform, so that's a huge growth for that one quarter. Their active consumers were up 137 percent, their total transactions were up 162 percent. I think Affirm is really executing well, but I'm really interested in following this space and more elements of it because we're seeing increased regulation for these buy-now-pay-later spaces in the UK. You have Klarna that's now going to start impacting credit scores.

They're going to start reporting customers data to their credit bureaus in the UK, which will impact about 16 million people. Afterpay was facing lawsuits about not adequately representing their heading costs. About 43 percent of Gen Z users have missed payments, so talking about how this is the new layaway, this is the new increasing debt. I think there's questions about the ethics of these payment plans, and I think that the next probably couple of quarters, next couple of years is really going to see a shakeout between buy-now-pay-later and see if it's a sustainable type of system or if it isn't working as well as it's selling itself.

Chris Hill: After the break, we've got more gaming, entertainment and more, so stay right here. This is Motley Fool Money. [MUSIC] Welcome back to Motley Fool Money. Chris Hill here with Jason Moser and Maria Gallagher. Roblox's first quarter loss was bigger than Wall Street was expecting. The CEO, David Baszucki says that bookings in April are improving for the video game developer. Maria, when you look at Roblox, what stands out to you?

Maria Gallagher: What I always like to look at with Roblox are things like their daily active users and their hours engaged. Daily active users is up 28 percent to 54.1 million, which is an all-time high. Their hours engaged were up 22 percent to 11.8 billion. They have a lot of notable innovations on the platform, including different voice innovations allowing users to communicate directly via speech. There are more choices in expressions of Avatar with layered clothing. But two positive trends that I really wanted to highlight here with Roblox is that percentage of users that are over 13 are growing in all geographies, which is really important to keep people engaged for longer, and they're growing within monetization of users and working with these new advertising plans within Roblox. I think that these are the two questions is, how can they grow with their older demographic as we were leaving COVID? How can they fully monetize all of their cohorts in the next couple of quarters? Those metrics so far are looking pretty positive to me.

Chris Hill: Trade Desk's first quarter revenue grew 43 percent. CEO Jeff Green says he's optimistic the Trade Desk can partner with every major streaming company, including Netflix. I don't know, Jason. Seems like that would be a win for the business if they can get involve with Netflix's plans to sell ads on their platform.

Jason Moser: It feels like a world of opportunity can potentially be opening up for this business because the tailwinds that connected TV and ad-supported video on demand are only gaining strength. It was a good quarter. Management exceeded guidance they set on both fronts with revenue of $315 million up 43 percent, adjusted EBITDA of $121 million, and ultimately non-GAAP earnings per share up 50 percent. Customer retention remains over 95 percent during the quarter as it has for the past eight consecutive years now. When you look at the growth estimates in the digital advertising space for the year, those estimates range anywhere from 8-14 percent. But any which way you cut it, I mean, clearly the Trade Desk is gaining share and it looks like they could be poised to gain more.

You mentioned Netflix, Chris. The word Netflix was used 35 times on their earnings call this quarter. A year ago, Zippy, Zero, Bagel, goose egg, knot, and that all really points back to this ad-supported model that Netflix is talking about. Remember Disney talking about the same thing here. Jeff Green is very optimistic they will be able to work with Netflix in some capacity. You remember David Wells, former CFO of Netflix, sits on The Trade Desk's board. They developed a very good relationship during that time. The company is calling for 30 percent revenue growth here for the current quarter, so a good business that seems to be poised to keep on doing good things.

Chris Hill: Peloton's new CEO, Barry McCarthy was brought into turnaround the company, and that turnaround cannot come soon enough. Peloton's third-quarter report this week highlighted how much cash the company is burning through, leaving the business, as McCarthy described it, thinly capitalized. Maria, you tell me, how bad is it?

Maria Gallagher: It's not good. [laughs] For any CEO. Sorry, this shareholder letter with the phrase turnarounds aren't easy and then it just got more depressing from their revenue was down 24 percent. They had larger losses than expected. They had $200 million in write-downs, 30 million covering inventory. The company thinks that can't sell. Membership was up about five percent. Connected Fitness revenue was down 42 percent, gross profit was down 59 percent. Operating expenses were up 101 percent. Everything is trending in the exact opposite direction in which you would want it to be trending. The only positive thing, the only thing that I would say I am always impressed by Peloton and I have to give them props is that third churn is super-low, consistently below one percent. People are really loyal to the platform. But there has been a year-over-year decline in the average monthly workouts per fitness subscription. They spoke of how, like you said, thinly capitalized. They are working on $750 million loan with JPMorgan and Goldman Sachs. There are plans to steer Peloton in a clear direction, but it's not looking great from where I'm sitting.

Chris Hill: That's truly impressive that their churn is that low. If, as some have suggested, Peloton is increasingly a candidate to be bought by a larger company, you have to figure that is part of the selling point, isn't it? I mean, it's not as many people as they would like, but the people who use Peloton really seem to like it.

Maria Gallagher: Yeah, people really love them. There's one instructor that everyone loves on TikTok. There are people who are really into the platform once they get onto it, but I think it's just not as many people as Peloton wants you to think it is.

Jason Moser: It feels like that thinly capitalized thing, that could put you in a little bit of a tough spot or a little bit more of a desperate seller. Potential buyers, potential suitors, catch onto that thinly capitalized. They could use that for some leverage. [laughs]

Chris Hill: All right, guys. We'll see you later in the show. Up next, advice for entrepreneurs from Okta Co-founder Frederic Kerrest. Stay right here, this is Motley Fool Money. [MUSIC] Welcome back to Motley Fool Money, I'm Chris Hill. One of the biggest trends of the past two years has been more and more people starting their own businesses. Someone who is familiar with the path of an entrepreneur is Okta co-founder and Chief Operating Officer, Frederic Kerrest. He's written a new book, Zero to IPO: Over $1 Trillion of Actionable Advice from the World's Most Successful Entrepreneurs, and he recently shared some of the ideas and advice from the book with my colleague Bill Mann.

Bill Mann: Who is this book for, Freddie, and what made you want to write a guideline for people who are entrepreneurs?

Frederick Kerrest: Well, this is the field guide, Bill, that I wish I had had when we started 13 years ago. Look, I think entrepreneurship is the best career out there. Certainly from a personal perspective, I think it gives a lot of agency, it allows people to really determine their future, take it into their own hands. Certainly, in terms of moving the world forward, if you look at net job creation over the last 50 years in the western world, it's all come from net new companies and start-ups that have not only created all these jobs but actually replaced all the jobs that are gone from the giants of Yesteryear. But there's a lot of hidden secrets, there is a lot of tips and tricks in there in building successful companies.

Frankly, a lot of them are tractable problems, you just need to know how to do them. As I went along, we were very fortunate, Todd McKinnon, my co-founder at Okta, and I, we got a lot of help from the generation of entrepreneurs ahead of us and I wanted to pay it back. Over the last few years, I've been fortunate to help a number of very good CEOs and founders, and I just started taking a lot of notes on the questions they would ask, which were a lot of times very basic ones. The CEO of Yesteryear was a salesperson, CEO of today and tomorrow's technologies. A lot of our technology, they don't know a lot about sales, about GNA of our go-to-market, and so they'd have basic questions on how do you hire salespeople or how do you raise financing? Again, these are tractable problems, so I figured, I'd put them on a book, put them in one place, making easy-to-use. Again, just a field guide that people can use as they go through building companies and building a better future for tomorrow for all of us.

Bill Mann: You're describing a path for entrepreneurs that for a lot of people it really might seem that you're describing a strategy for how to win the lottery. Let me talk about you for a moment, you and I were the right color or the right gender and you would just stand hard in the Sloan School, the MIT for your MBA. Your dad is the CFO of multiple companies, so you have and had networks. You are a member of networks that are really difficult to crack and so your book says it has a trillion dollars, whereas we advised on it, but you rightly call out then an entrepreneur can come from anywhere. But how do people who do not have those legs up get square one?

Frederick Kerrest: Well, that's a very important point and is actually one of the reasons I wrote the book is to demystify this concept. First of all, if you are one of the folks out there who dreams are building a company, you'll read the news and there's a very barbell story that's produced, it's either massive success, Elon Musk or Arianna Huffington, you go down the news or massive failures, where people lost a billion-dollars and everyone's going to jail. What people will talk about is what happens to 99 percent entrepreneurs, 99 percent of the time. Which is, you just get up and you work really hard, you put one pant leg on at a time and it's 16-hour days. We're in our 13th-year business and I'm still working just as hard as I did in year one. The first thing is just understanding that there's no magic to it, it's a lot of hard work.

Now, you bring up a very important point, which is, we are the right skin color, we went to the right schools, all these things. You brought up my dad, he did, he was an immigrant from France, he showed up with $500 and as UK's didn't speak the language, and from there he built an amazing professional career. He was a six-time public company CFO, as you said, but that was actually a very big guiding light in in my life. Of course, I was very fortunate, I got to go to the right schools, I got to meet the right people, but that was a very good example that I saw every day. You just get up early, you got to get lucky, there's luck to it, but you also got to work very hard and do a lot of the things. We do talk in the book about some of those specific situations, though, networks is a great example of them. Unless you live in Silicon Valley, unless you went to Stanford, unless you are in all these groups, you're not going to get to meet some of these investors, but there are other networks out there.

First of all, you can build your company anywhere now. If you look at the pandemic situation that we're all coming out of now after two years, it certainly has made it very easy for anyone to build a company anywhere, number one. Number two, we do talk a lot about networks, and we talked about specifically how you can optimize on whatever group you're in, so there are whisper networks for female founders, there are whisper networks for black founders, there are actually venture capital funds now that focus on funding only black founders or founders of color. I think that is great innovation and that's something I'm very excited about, frankly demystifying that and allowing everyone to have the inside edge from what I learned. That was one of the points of writing the book.

Bill Mann: I also want to make this point that you make in the book which I really like. It's called Zero to IPO, which is a process that most companies never make it to. When we talk about being an entrepreneur, you're not necessarily talking about a company that is starting from ground zero and is going to end up a $40 billion company with a ticker in it, you're talking about people who are creating jobs and creating something at whatever level, in whatever business where they have their passion and their idea.

Frederick Kerrest: Yeah, you're absolutely right. Look, my expertise without a doubt is enterprise software. I got to Computer Science degree, I started working in enterprise software 25 years ago. I consciously thought in writing the book about emphasizing. It wasn't just for enterprise software people that we're building the new SaaS companies, software-as-a-service companies in Silicon Valley. It was really for any type of entrepreneur, and it's organized the chapters generally by the type of operate challenges, but opportunities you are going to be able to take advantage of as you go through building that company, so it starts with, you just need to have other co-founders. That's something that the data is very clear, and we got a bunch of data from Professor Ed Roberts at MIT who studied this. Having two to four co-founders is important in any business, by the way.

You think about how you're going to build up business. We talked about, look, if you're going to raise venture capital for high-growth, that's one path, but certainly cash flow, just getting businesses that are cash flow businesses, getting businesses that you are going to fund for a while and then sell to an acquirer, those are totally acceptable means and goals for entrepreneurs today. We talked about all those in the book as well. Sales is one of those, it's a little bit trickier because sales is really in this case, focused on business-to-business sales, so I do admit that. But we again put some caveats and they're saying, look, if your consumer or you're selling on a retail might be a little bit different, but there are still some tips and tricks you can have in here.

The other thing that I think is very important, just closing out on the last question you asked me about. Not everyone has the advantage of these networks is, one of the things is all the profits from the book, I'm actually giving to two organizations BUILD, which is a national one, and The Hidden Genius Project, which is here in Oakland in my backyard. Both groups use entrepreneurship and leadership skills to help black kids and kids from underrepresented minorities and communities stay in school using some of those entrepreneurship and leadership skills and hopefully become entrepreneurs down the road. It's also about making sure that we're sharing the information, that we're contributing as best as we can frankly to the communities that world in which we live.

Bill Mann: One of the stories side love in the book, and again, thinking about entrepreneurial and as you said, what we generally hear about today are the huge successes or the huge blowups, and huge blowups generally start out as some form of a huge success. But most of them, even among people who end up being successful, there are missed steps along the way, and one of my favorite stories that's in this book, and I thought maybe you could help recount it was the Stewart Butterfield story with the business that he started.

Frederick Kerrest: It's called Tiny Speck.

Bill Mann: Tiny Speck. Yes, the real death of putting up of Tiny Speck was the chapter.

Frederic Kerrest: Yeah. I mean, that's a great point. Those are called pivots. I think that's very important. Look, one thing that I really tried to do in the book is I went and found a lot of very successful entrepreneurs, but I told them upfront, this is not going to be some glory stories. I think a lot of problems, frankly, with the entrepreneurial literature that's out there today is it glorifies and lionizes one person's life. Here's the life of Bill Mann. Here's how he went through it, let's ask few questions about your life, Bill. One of the great examples I love to use is Steve Madden shoes. I love Steve Madden shoes, are very comfortable. Turns out, Steve Madden went to federal penitentiary for three years for trafficking in illicit substances before he started the shoe company.

Now if I'm an entrepreneur and I'm listening to that interview, what's the message there is probably not the right one. What I said, number 1, number 2, if you look at this from the outside, like you said, a lot of times it's like look how amazing these companies are. They were destined for greatness. Madden was destined for greatness, Amazon was destined for greatness. That's not true. Many times these companies could have died and so bringing that back and opening that up is very important. I went to all of these entrepreneurs and I said, you've been very successful, congratulations. But I want you to come and tell the story where it didn't go right.

That's what we're going to try and clarify and illuminate for everyone and went actually, Todd, my co-founder, read the book, said, "well there's all sorts of stories here and they're all true" I said, well, that's the point, Todd is like, things didn't always go amazingly for us. But you have to open up the kimono. The example that you are bringing up is Stewart Butterfield, fantastic, professional, and even better person, candidly. Gotten to know him a little bit. Very successful. Founder, CEO, company called Slack. They sold to Salesforce.com, May 12, 18 months ago for, I think $27 billion. You can keep me honest. I don't remember the exact number. But he was an entrepreneur before. He had a photo company that he sold to Yahoo and it went fine. Then he started second company which was called Tiny Speck and it was a gaming company and it wasn't going very well. Now it turns out, incidentally, as part of the internal tools at the company, what they've done is they've built a messaging system which became Slack, that they were using themselves just to communicate and it was better than what was out there today.

They were going to wind the company down and Tiny Speck was running out of runway. Stuart went and talked to a few of his investors, Marc Andreessen Horowitz, for two of them, incidentally that I know about, but I know there were others as well and he said, "Hey, this is what's going on time, Speck it's not going to work, but I have an idea for what I'm going to do and how to take this internal tool and I want to just see if there's something there" And they're like, yeah, sure, you know what? Keep the funds that we have given you, roll them into this new thing, and see how it works. Lo and behold, that thing took off, it became Slack, which is now the standard and enterprise messaging that I use in all my organizations, incidentally, every single day they've got a great mobile app and all the rest of it. But that's a good example of, in that case of business pivot. Look a much smaller scale.

We had pivoted our business at Okta. We started focused on small and medium businesses. It almost cost us our lives since 2011, company almost went bankrupt until we pivoted and started focusing on much larger organizations that actually had a series identity management problem, and then things took off from there. This is a very real situations they happen in all companies at least once, if not multiple times. Again, I think just opening up that process in demystifying it for entrepreneurs hopefully makes them feel like what they're going through every day. Hard work, things aren't going the way you want, you can't hire who you want. You're not selling the software or the products you want. You're not building the way you want. These things happen to everyone and that's OK, that's part of the process and it's human and you're going to be all right.

Bill Mann: Somebody has an idea, what is your best next step advice? What do they go to learn from this book that gets them from what they think is a good idea to be enough and running?

Frederic Kerrest: The first thing is go talk to people about it, like number 1. Not just to find co-founders which is important as the sole founder, the odds are really stacked against you because there's just too much up and downs unique of analogists is a co-founder which is great, but just share the idea with a lot of people.

Bill Mann: That is counterintuitive, isn't it?

Frederic Kerrest: It's counterintuitive. But here's why people like I don't want to share my idea.

Bill Mann: You're going to take it.

Frederic Kerrest: First of all, I'm going to assume that you have done so much work and know so much about this that you sharing your idea with me if immediately I can take it and roll with it means you haven't done that much work on it, number 1. Number 2, it would mean there's no sustainable competitive differentiators and barriers to entry in your business, which is also a big problem. You should share that idea as quickly and as broadly with his many smart people as you can. You might find someone wants to work on with you, you might find someone who wants to finance it. You might find someone who knows a customer. You might find someone's going to give you a bunch of feedback on it. Whatever you're doing, write it down, think it through research it, study it, but go out and talk to other people and get that feedback because nothing amazing was ever built in some ivory tower by one person without anyone ever talking to anyone else like it just doesn't happen.

Chris Hill: You can pick up a copy of Zero to IPO wherever you find books. Up next, Maria Gallagher and Jason Moser return with a couple of stocks on their radar. You're listening to Motley Fool Money. [MUSIC]

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 and sell stocks based solely on what you hear. Welcome back to Motley Fool Money. Chris Hill here once again with Jason Moser and Maria Gallagher. Airbnb has been seeing more people booking longer trips. In response to company just introduced a new feature on its platform to enable people to divide the longer stays between two different homes. CEO Brian Chesky calls that the biggest change to Airbnb in a decade. Maria, I think shareholders want to know if this is going to lead to more business.

Maria Gallagher: Personally, as a user, very excited. This new feature, it's called Split Stay. Once you book a trip for weaker longer, it divides it between two different homes and if anyone's booked an Airbnb for multiple days, the amount of times I have to go back and forth and make sure I'm not missing a day if I'm going away for like 10 or 11 days or multiple different places, guests are now going to see about 40 percent more listings when searching for longer stays. This is continuing the trend that we're seeing with Airbnb as more people are staying for longer, as people are living and working remotely, nearly half of the nights booked for this last quarter were for stays of a weaker or longer, one in five nights booked are about a month or longer, stays up 28 days or more are making up about 21 percent of bookings. I think that this is a really smart feature to add and I think that it will really help people who are saying, OK, I'm just going to do all week or two in each place and really plan out of vacation pretty far in advance.

Chris Hill: Let's get to the stocks on our radar. Our man behind the glass, Dan Boyd is going to hit you with a question. Jason Moser, you're up first. What are you looking at this week?

Jason Moser: Yeah. Keeping my eye on The Home Depot, ticker is HD. They've got earnings on Tuesday, May 17th before the market opens. Honestly, this is really one of the best Omnichannel retailers out there. It feels like, I mean, they're getting the consumer wherever the consumer wants and I think that's really important for retailers these days. We will pay attention to the ticket size, will pay attention to transactions. Actually last quarter saw a little gross margin compression, that's going to be worth paying attention to their take, I think on inflation and supply chain through this quarter and how that sets up with the rest of the year. I will just conclude with this. Chris, Dan, Maria, I opened a position in Home Depot myself this week, finally, add it to my retirement portfolio, part of that dividend dynasty I told you about before Chris excited to be a shareholder.

Chris Hill: Dan, question about Home Depot?

Dan Boyd: I don't know about you all, but I live in a pretty high residential density area and going to Home Depot because of that is like just the worst thing on the planet. I hate it. I mean, you go on the weekday rather it's fuller contractors. You go on the weekend and you can't even get into parking lot. Like, what is going on here Home Depot?

Chris Hill: Hey, listen, I mean, it as a massive market. We've got a huge inventory house's out that there and they all need fixing up, Dan. Everybody's out there trying, that's the beauty of this model. Rain or shine, winter or summer. There's always something they're selling for you.

Jason Moser: It sounds like a good situation for shareholders if Home Depot is that busy. Maria Gallagher, what are you looking at this week?

Maria Gallagher: Continuing the trend, I'm going to be looking more at Airbnb. At the end of April, they had 30 percent more nights booked for the summer than the same time in 2019. Last quarter, they had gross nights booked up 32 percent, they're up above pre-pandemic levels most cases. I also really like it from a sustainability lens. Guests spending in the community is that Airbnb supports, has supported over 300,000 jobs, and Airbnb itself had collected and remitted more than four billion in tourism taxes to local governments around the world. I think it's a really interesting company from multiple different lenses, both as an investor and a user. That's what I am going to be spending more time on.

Chris Hill: Dan, question about Airbnb.

Dan Boyd: Sure. Chris, Maria. Airbnb seems like it's everywhere these days and just about every city, just about all over the world. Where do you want to go? Whereas the next stop for Maria Gallagher.

Maria Gallagher: Well, thank you so much for asking. I'm currently bucking a trip to London in the fall and then I'm thinking of another European city, but I am taking suggestions for a city that I can get to easily from London that will be very fun for a couple of days to travel on my own.

Chris Hill: Dan. What do you want to add to your watch list?

Dan Boyd: Oh, well, I mean, this is a tough one because as much as I hate going on Home Depot, you have to go there and Airbnb is such a great service. I really am torn here, but because I'm taking a break from mowing the lawn to record this program with you all, I think I have to go Home Depot.

Chris Hill: Alright, Maria and Jason, thanks for being here.

Maria Gallagher: Thanks for having us.

Chris Hill: That's going to do it for this week's Motley Fool Money radio show. Show's mixed by Dan Boyd. I'm Chris Hill. Thanks for listening. We'll see you next time. [MUSIC]