In this Motley Fool Money podcast, host Chris Hill and Motley Fool senior analyst Bill Mann discuss:

  • Uber's first-quarter results and CEO Dara Khosrowshahi's declaration that it will be profitable in 2023.
  • Pfizer's results beating expectations despite falling demand for its COVID-19 vaccine.

Also, Motley Fool Answers co-host Alison Southwick and Motley Fool personal finance expert Robert Brokamp continue their conversation with Motley Fool senior analyst Bill Mann about how the "new normal" is affecting the tech industry in Silicon Valley.

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.

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This video was recorded on May 2, 2023.

Chris Hill: Uber shares are revving up and we're taking a closer look at Silicon Valley. Motley Fool Money starts now. I'm Chris Hill. Joining me in the studio today, Motley Fool senior analyst Bill Mann. Thanks for being here.

Bill Mann: Hey Chris, how are you?

Chris Hill: I'm doing all right. Let's talk a little Uber, shall we? First-quarter revenue 29% higher than a year ago. CEO Dara Khosrowshahi says that Uber is going to be GAAP profitable by the end of the year. And I think investors believe him because that plus the results has shares of Uber up 8%. He has set financial targets for this business in the past, and they have met them either on time or early. It's going to be pretty interesting to see if they deliver on this one.

Bill Mann: Obviously, this was a better quarter for them than they had last year. It is still a company that has negative EBITDA. And I know that acronyms are really great radio -- that is, "earnings before interest, taxes, depreciation, and amortization," still negative. This is a company that is showing some promise as a platform to deliver people and goods and services. They talked a lot about IT efficiencies. I still wonder on a very base level how all that is worth at this moment $71 billion?

Chris Hill: That was going to be my next question. Because this is a business that is stronger in pretty much every way than it was five years ago.

Bill Mann: Undoubtedly true.

Chris Hill: Yet the size of it -- and that was, worth remembering: When Uber went public, they were coming public at such a size, that was part of the conversation when Uber first went public. It was just sort of like, "Wait a minute, how big is this company going to be on day 1 of being public?"

So, where do you think the conversation goes from here? Because obviously, he's put out there -- this is the financial target we're trying to hit by the end of the year. If they hit that, I think we're left with the same question: Is this company still worth $70-plus billion?

Bill Mann: Yeah. Obviously, we don't know the answer because you're talking about a fact that has yet to happen, or at least, an eventuality that has yet to happen. But obviously, it was a strong start for them, and they say they have a global scale, and they have a significant data advantage over -- most of? all of? -- their competitors. But it still feels like a mature business to me. When you talk about a platform, they're delivering people to places. They're delivering food to people. They have a couple of different divisions, all of whom feel like Lord of the Flies-type industries. So maybe you can roll up four or five bad businesses and turn them into a good business. That's what the stock market is telling you is going to happen. I've never looked at Uber and have understood exactly why people were so excited for it as a business. I understand exactly from a service perspective why you might like Uber, but as a business, not $71 billion.

Chris Hill: It's a great point because I do think that is baked into the stock price, and it's the thing that really doesn't get talked about. It's the idea that the financial metrics of Uber aside, this is a business that people who have used it and had good experiences with it -- and I think most people who have used it have had good experiences with it -- they want it to exist. There's a wish fulfillment aspect to Uber that ... as much as I love Starbucks, if, in the blink of an eye, Starbucks went away, I'm going to get coffee somewhere else. Whereas Uber is one of those businesses that if it went away, there are some people who would light their hair on fire.

Bill Mann: What are you going to do? Take a taxi? The nerve. No, I think that's exactly right. We've always had sort of a joke/non-joke about companies that become verbs. Uber is near the top of that list. Even if you're in a Lyft, even if you are in some other version of ride-sharing, people call it Uber. They call it Ubering. I think that there is obviously a huge amount of brand equity that they have, and it is all potential. But I just don't see how that potential for what are not great businesses, although they're very big, equals $71 billion.

Chris Hill: Let's move on to Pfizer. First-quarter results were better than expected despite the fact that demand for Pfizer's COVID vaccine is lower for all the obvious reasons. Along the same lines -- and I realize we're talking about two completely different businesses, and Pfizer is much more mature and established than Uber -- part of me is surprised that Pfizer is a $220 billion company. I know I shouldn't be because it's been around for so long.

Bill Mann: And have you met Americans and our love of prescription drugs?

Chris Hill: Well, there's that as well. What do you see when you look at Pfizer as an investor? Because I see an established business that I'm not particularly compelled to buy shares of.

Bill Mann: The pharmaceutical industry is very interesting because a lot of the biggest pharma companies -- and I think that by almost any measure, you would put Pfizer at or near the top of that list -- have gotten away from research and development a little bit. They're allowing the single-molecule companies, the small biotech companies, to do a lot of that research for them. Then when they see promise, they're just spending money to go in and buy it. In the case of Pfizer, so obviously ... it's odd actually. It just occurred to me that Uber's revenues are up 29% and Pfizer's are down 29%. Pfizer, maybe we found your revenues. That's not how that works. But whatever -- the balance is good.

Obviously, most of that drop has come because we are out of the worst of -- or maybe from Pfizer's perspective, the best of -- the pandemic. When I look at these companies, I think you have to view them as being portfolios of big drugs. So they have ones that are at early stage. They have ones that are just sort of cash flow dynamics moving forward. They're not putting a penny into them anymore. They're not even necessarily marketing them anymore. If I were to own drug companies, I think it would probably be a Pfizer or a Merck almost over any other one because they do have economies of scale than they do have the capacity to go and outbid almost anyone for those promising and up-and-coming drugs.

Chris Hill: Do you look at Pfizer in terms of portfolio allocation, as being one of those businesses not unlike a Johnson & Johnson, that is "ballast"? Does it check the box for you for, "Hey, part of my reason for buying shares of a company like Pfizer is, it's not going to light the world on fire, but it does pay a dividend, it is going to be steady through good times and bad"?

Bill Mann: That's how I would view it, and I would take it a step farther. And this may be unorthodox, but if you are viewing your portfolio as an asset allocation exercise, a company like Merck or Pfizer could actually play the role of all of your pharmaceutical allocation. And pharmaceuticals are huge business in this country. They actually make up a percentage of GDP that is well above the integer level. It is a massive business in this country. But the way that they are going about now, you could almost view a Pfizer or Merck as being a mutual fund of pharmaceuticals.

Chris Hill: Real quick. I want to spot you up with three things that are happening between now and the end of the week. We've got the Fed meeting Wednesday afternoon. Apple reports after the closing bell on Thursday, and Friday morning, we're going to get the jobs report for April. Which of those three interests you the most as an investor?

Bill Mann: The answer has to be the Fed number, although honestly, I'm not quite sure why. I also think it's interesting that the Fed is putting out their number two days before the jobs report comes out. Now, when it comes to data, I know they have the good stuff. I know they are not dependent upon the same data that we are eventually getting. But it is a little bit interesting to me, that timing, if for nothing else, because in the fact that you can see today, the market is down pretty substantially, and nothing bad has happened. People are just worried about whatever the Fed is going to say. In fact, I think they know what the Fed is going to say. We could conceivably find ourselves pretty whipsawed between today and Friday when the jobs number comes out.

Chris Hill: Bill Mann, always great talking to you. Thanks for being here.

Bill Mann: Hey, thanks, Chris. 


Chris Hill: As loans get more expensive, what are the ripple effects for start-up companies in the tech industry? Bill Mann continues his conversation with Allison Southwick and Robert Brokamp, about new normals after the pandemic with a focus on Silicon Valley. 


Allison Southwick: Right, in our third and final episode of "The New Normal," we have Bill Mann back. Today we're going to talk about the new normal in start-up land. There was probably a point in time where I could have put my hair up into a high ponytail, waltzed into Silicon Valley with nothing but an investor deck about "Uber for, like, literally any noun," and walked out with seed money.

Bill Mann: Uber for clowns! I'm in! You want to know my idea?

Allison Southwick: Yeah, I want to know your idea.

Bill Mann: I wanted Uber, but you only get picked up in fire trucks. It's going to be called Fuber. [laughs] You're in, right?

Allison Southwick: Absolutely. Take my money, please. Bro, did you have an "Uber for something" idea?

Robert Brokamp: No, but now I'll think about it.

Allison Southwick: My idea was "Uber for laundry," but someone else also came up with it.

Bill Mann: The other thing that I thought would be great is with autonomous vehicles, like something that would just, an autonomous vehicle that would drive your dogs around -- because dogs love car rides.

Chris Hill: Or your kid can't fall asleep, so someone pulls up, and you put the kid in: "Come back in 30 minutes, please, when the kid's asleep." There you go.

Bill Mann: A billion dollars.

Alison Southwick: In Old Town, it would work. [laughs] This is the kind of town where people would absolutely, absolutely pay for that for their dog. Bron's idea is to start a paw-reading business where you can read... Paw reading. But instead of palm reading, it's paw reading. I think that could actually do well here in Old Town.

Bill Mann: Yeah. "You like meat." Next one. "You also like meat."

Alison Southwick: "You're a very good boy."

Bill Mann: "You're a very good boy."

Alison Southwick: "You're such a good boy. Yes you are."

So those are ideas that we could have, at one point in time, just headed over to Silicon Valley, get some investors, and they would just throw money.

Bill Mann: "This segment brought to you by Fuber."

Alison Southwick: Fuber. So, Uber for clowns, we could have got money for it at one point in time. But now, according to The New York Times, roughly a week ago, they wrote about how faking it is out and having a legitimately viable start-up is the new normal in Silicon Valley.

So you might be thinking Elizabeth Holmes and that WeWork guy are to blame. But the article actually points to at least a half dozen other start-up founders who have recently been found guilty of fraud and lying about the state of their business. So Bill, what do you think: Is stuff like a strong balance sheet, having a viable business plan -- is that the new normal for getting funding?

Bill Mann: You remember that old line from St. Augustine: "Lord, make me pure -- but not yet"?

Alison Southwick: Not yet.

Bill Mann: That's Silicon Valley. That's venture capital. In fact, as a counter-example -- the answer to your question is "yes, but." But as a counter-example, ChatGPT, which really can't do much really well, has a $30 billion valuation on it. And it, at least, is out there in the world. You have artificial intelligence ideas right now, and you can get checks for a couple of million dollars to go try an approach, and even get at something that may at some point be a deck.

So there is wild money out there still. Obviously, the rise in interest rates, and particularly bank funding rates, has hurt venture capital, or at least gotten it just to say, "Maybe "Fuber' isn't as great of an idea if you have neither the technology nor the fire trucks."

So I actually am on the other side of that. I think that probably we will go through a period of time in which there's a bit of purity. But the next big idea is coming. It may be AI now, but I don't see a place that is as financially competitive as the venture capital industry as suddenly saying, "We need full business plans and we need profitability on the table before we invest with you."

Robert Brokamp: I'm rereading Thinking, Fast and Slow by Daniel Kahneman. He talks a lot about how basically, we make snap decisions based on all kinds of things that we don't recognize. Some of it is charisma and confidence, and some of it is just the size of a font or something like that. I think that it's clear that a lot of investors and people in Silicon Valley, but even just regular investors, and people in the media frankly, sometimes some of us here at The Motley Fool, we're wowed by flashy people with flashy presentations. It'll be interesting to see if people decide not to do that. But frankly, I think we're hardwired to fall for confidence and charisma. I don't think it's going to be changed. I think it's always going to be that way.

Bill Mann: Yeah, go back and watch the monorail episode from The Simpsons. It's not new.

Alison Southwick: Monorail, monorail, monorail.

Robert Brokamp: Written by ... Conan O'Brien.

Alison Southwick: Oh, did he write that one?

Robert Brokamp: He wrote that episode, yeah.

Alison Southwick: Well, and the monorail episode is based on The Music Man. It's like there's nothing new under the sun. I guess there is something with these new normals where it's like, well, how long does a "new normal" last? A new normal could actually only last a few months, a year, not really that long, and ultimately, we're going to revert back to our old habits of believing the hype and getting excited about ChatGPT and just throwing money at ... Fubar?

Bill Mann: Not Fubar. No, no, those people have a really strong copyright.

Alison Southwick: You've already got a naming problem, so we're going to have to workshop that. Going back to paw reading.

Bill Mann: Well, I think what's really important to point out is that people are in fact going to jail, including Elizabeth Holmes, for having gone beyond promising something to moving on into the realm of fraud. What it should tell you is that there's no such bright line as fraud versus fanciful "I'm planning on doing this." But the fraud tends to come up when it seems like what they're promising is impossible. And in the case, of Elizabeth Holmes, the thing that they were promising and actually putting out into the market was actually dangerous.

So I don't know that the law really wants to be in the role of legislating or determining what is a hopeful statement and what is actual fraud. Until the period of time in which we all turn our back on hopeful statements, fraud is going to be a part of our existence for as long as that's not the case.

Alison Southwick: Who doesn't love a hopeful statement? It's just human nature.

Bill Mann: Yeah. You want to ride in a fire truck?

Robert Brokamp: He said that to all the boys. 

Alison Southwick: Before we go, we cannot help but share our own irresponsible predictions for the new normal. Bill, what is the new normal that you're tracking?

Bill Mann: I think that there are certain cities that have really, really, really enjoyed having a lack of international tourism during the pandemic. And so I predict that cities like Barcelona and Venice are going to limit the number of people who are able to come in during any period of time.

Alison Southwick: Like you'll have to get tickets? You'll have to get fast passes?

Bill Mann: You'll have to get a Barcelona FastPass.

Alison Southwick: You're gonna see the Sagrada Familia, you're going to have to wake up at seven in the morning to get your FastPass?

Bill Mann: Yeah.

Alison Southwick: Oy.

Bill Mann: Was that not fun enough? Can I get back to the...

Alison Southwick: No. That's fun.

Robert Brokamp: I want to know more about it.

Alison Southwick: So Barcelona, for example, had on average 20 million tourists per year coming and visiting. It's like that old thing where it's impossible to observe something without changing it. There are cities in Europe right now that are completely given over to Airbnbs at this point, and I think that there is a logical limit to the amount of people who can come visit. But I also think that the local residents enjoyed the peace and quiet, and they're the ones who get to vote. So I think this is coming. That's my response.

Alison Southwick: If it's going to be hard to visit places like Venice, Barcelona, the big names. Bill, you're a big world traveler. Where should our listeners go?

Bill Mann: You should go to Montenegro.

Alison Southwick: OK.

Bill Mann: Yeah.

Alison Southwick: You want to say why we should go?

Bill Mann: No, no. Just, that's it. While they've got good ham.

Alison Southwick: Sold.

Bill Mann: There are a couple of towns on the coast of Montenegro. One's called Kotor, one's called Tivat, and they are absolutely, spectacularly beautiful, and there are fewer tourists there than in Croatia.

Robert Brokamp: And Croatia is beautiful too.

Bill Mann: Yeah.

Alison Southwick: Alright, Bro, how about you? What's your irresponsible -- or maybe not -- new normal prediction?

Robert Brokamp: Well, I'm going to say that 10 to 20 years from now, people will work longer and retire later, but not necessarily work full-time all the time. Nowadays, the average retirement age is between 62 and 65, depending on your source and other factors, like women tend to retire sooner than men. But we can't retire in our early 60s if there's a strong possibility that at some point we're going to live to our 90s and even 100. And yes, life expectancy did go down over the last few years due to COVID, but most experts say that that's just a blip. And it's going to continue. Financial advisor Rick Adelman of Edelman Financial Engines has been talking a lot about this for years, and on a podcast over the weekend, he said that there's a good chance that if you're alive in 2030, you're going to make it to 100, and maybe 120 to 150. Most people have not saved enough money to be able to be retired for that long.

Alison Southwick: Those aren't the good years.

Bill Mann: Noted medical expert Rick Adelman?

Robert Brokamp: Yes. Exactly. Well, so, he's done his research. He's got the internet. Come on.

Alison Southwick: He went to WebMD a few times. Man, my joints are already angry enough at me. I don't need another extra 50 years of this.

Robert Brokamp: But here's the deal.

Bill Mann: Who else do we need to apologize to?

Alison Southwick: We're not done yet.

Robert Brokamp: So what I think will happen, and what I hope happens, actually, is that people will work full-time up to a point in their lives, and then work part-time from then on. It might be because they have caregiving responsibilities, taking care of kids or parents or spouses. But also, they just drop out of the workforce, go back to school, and then they begin a whole new career that they're happy to do well into their 70s or 80s. A lot of companies have not caught onto this yet, but that is changing, in terms of allowing older workers to have phased retirement, seasonal retirement. But I think that is also coming. So that where you're basically able to work part-time sooner, which means you're retired part-time sooner, and you can enjoy that for decades.

Alison Southwick: Well, I took the brief seriously, and so my irresponsible new normal prediction is that a Shen Yun performance is going to be happening in your house at all times. You're going to wake up, make a cup of coffee, and a scarf is going to land in your Sanka as a dancer floats by. Welcome to your mesmerizing new normal.

Robert Brokamp: Very nice.

Bill Mann: I love the thought of remote-work performances.

Alison Southwick: We can combine it! You take a... what's the name? Fuber? You take a Fuber. Fuber for remote performances. Fuber for Shen Yun! Shen Yun Fuber! Plus paw reading. We're going to be rich!

Bill Mann: We need to workshop this a little bit, but you're on to something!

Chris Hill: As always, people on the program may have interests 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.