In this podcast, Motley Fool analyst Bill Mann and host Dylan Lewis discuss:
- The tragic Francis Scott Key Bridge collapse in Baltimore and how it affects the port and the companies with goods going in and out of it.
- Visa and Mastercard's $30 billion settlement with merchants over interchange fees.
- A curious crypto story with Nilam Resources.
Tech insider Kara Swisher joins Motley Fool host Deidre Woollard to talk about her new bestseller, Burn Book, and how a tech CEO helped her kids use social media a little less.
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.Â
This video was recorded on March 27, 2024.
Dylan Lewis: Soon merchants are going to be happier to see you pull out the plastic. Motley Fool Money starts now. I'm Dylan Lewis, and I'm joined over the airwaves by Motley Fool Senior Analyst Bill Mann. Bill, thanks for joining me.
Bill Mann: Hey, Dylan. How are you? Welcome back.
Dylan Lewis: It's great to be back after taking some time off. It's great to be back with you. We haven't done a show together since my vacation, so it's nice to be back in the seat. We're going to be checking in on some curious stories in crypto today. We're also going to be looking at some thoughts on the tech industry from Kara Swisher. First up though, Bill, a bit of disruption in our own backyard, an absolutely tragic scene in Baltimore this week with the Francis Scott Key Bridge collapsing after being struck by a cargo container in the early hours Tuesday. Bill, I've been on that bridge. I'm guessing you've been on that bridge as well. This is one that hits home for us.
Bill Mann: Many times. This is not just a local thoroughfare, but it is one of the major north-south arteries in the United States, so a very important road and port. The Port of Baltimore is one of the largest transshipment points for cars coming into and out of the United States. It's also a huge coal facility for shipments coming in and out. At the moment, the Port of Baltimore completely cut off. You did start by saying tragedy, and I do want to start by saying it's the loss of life that ultimately is the thing that we should be concerned about, first and foremost. It's very sad what happened.
It's a miracle not more people were on that bridge, not just a miracle but incredible work and foresight by the captain on the ship. That has to be called out. This is going to be a while before it gets cleaned up. Obviously, there's a lot of ways to get from, say, New York to the southern part of the US, but there are not that many ways that are better than Highway 695 for hazmat trucks, for example. The cost to commerce is going to be substantial. The hit to our infrastructure has been substantial.
Dylan Lewis: Bill, I think this is one of those stories that is going to take a very long time for all of the pieces to come out, all the details to come out, and all the consequences to be mapped out, but I think one of the clearest takeaways at this point is it is going to be incredibly disruptive to the local Baltimore area and really anything that passes through it. As you were just saying, so much activity flows through that port.
Bill Mann: There's a book that I read a couple of years ago, and it's a great book. If you're ever talking to someone at a cocktail party, and you'd like to end the conversation, mention that you've been reading the book Box by Marc Levinson, which is the history of the shipping container. It's a fascinating book but doesn't sound so on the surface.
When we think of ports, we tend to think of them as being interchangeable at this point, like, it's a place where a boat can pull up to the side, and there's a crane that pulls things on and off. Ports now are specialized. The Port of Baltimore is specialized for the types of products that flow through that port, particularly cars, gypsum, lumber, coal, things of that nature. While there are other ports that can take that volume, it's not just as simple as saying, now you're going to Norfolk, now you're going to Newark. Those ports are not geared to handle that volume in the same way that Baltimore has.
Dylan Lewis: Bill, that's all we have today. I got to go.
Bill Mann: [LAUGHTER] You got to read the book?
Dylan Lewis: You joke that it was a good way to end the conversation. I'm just kidding. I love it when you go deep, and I love when we get wonky. I think it's a fascinating story, and I love the book recommendation there, Bill. One of the things I'm curious about is, as this clearly is going to disrupt supply chain and logistics, what it means for the companies that wind up flowing a lot of goods through a place like Baltimore. We have seen companies try to tap into interruption insurance in the past. Do you feel like this is something that we are suddenly going to become experts in in the way that people do on Twitter?
Bill Mann: I became a Twitter expert in shipping law. I got my masters yesterday in it. Usually when you talk about these things, you're talking about tragedies. There were a huge amounts of business interruption cases that happened after the 9/11 attacks, there were huge numbers of business interruption insurance claims after Hurricane Katrina, and there will be more here.
Right at the top of the list is the Port of Baltimore, which is a port authority, but it is it operates under concessions. There are companies out there that offer business interruption, and Berkshire Hathaway is one that has been known to do so. There will be claims, and they will be big, but I would assume that many of the claims will be opportunities for companies to perhaps cash in a little bit, and I only say that not pejoratively because that's what's happened every single time in the past.
Dylan Lewis: From the supply chain and cargo world over to the digital toll roads, we have some updates in the credit card landscape. Visa and MasterCard's toll road is about to get a little bit cheaper for merchants, Bill, the two largest credit card companies settling suit with merchants over there interchange fees, which will save about 30 billion in fees over five years for merchants. How big of a deal is this for the credit card companies?
Bill Mann: The credit card companies, there's only a certain part that's really that big of a deal because Visa and Mastercard don't actually get these interchange fees. These are what goes to the banks that underwrite the cards themselves. So Visa and Mastercard, if they were the ones who were negotiating or actually negotiating with somebody else's money, which is a great place to be negotiating from, now one of the big issues is that those swipe fees were somewhat unbound.
One of the agreements though that could impact Visa and Mastercard is that it would allow the merchants to charge different prices to consumers based on which credit cards they use. You might come into a situation where a merchant would say there's a 2% fee if you're using a Visa or Mastercard, there's a 1.2% fee if you are using Discover, and a lot of these fees are things that exist today, but because they are standardized, you don't necessarily see them. In some ways, this is much bigger for the merchants than it is for Visa and Mastercard, and in some ways, it's much bigger for the banks than it is Visa or Mastercard themselves.
Dylan Lewis: If I'm not mistaken, the only way we've really seen that in a consumer-facing way in the past has been, we don't accept American Express. It's been that simple. It hasn't been the negotiated menu of this for this and that for that. It's just we're not going to accept AmEx.
Bill Mann: Does it not feel a little bit like the cable television where, for years, we wanted unbundled pricing, and now that everything's unbundled and we all have 34 different things we have to pay for, man, I wish somebody could just bundle this back up. This feels like that a little bit like, if I pull out a Discover card, do I get a lower overall fee? If I pull out an American Express card, do I get it for free? I think we may be seeing things like that. Although, again, consumers tend to love simplicity, so I'm not sure it's all that big of a deal. But anytime you have one of those friction costs, I think at the end of the day, it's going to be a benefit to consumers, the fact that it seems like it's going to be lower or at least have a bound put upon it.
Dylan Lewis: Are we going to stick with payments for our final story in our news roundup, payments of sorts, more of a stored value, perhaps? The world of crypto, specifically Bitcoin, has had an incredible march, up 20% this month, up over 50% year-to-date. Bill, not surprising that when we see a huge surge in interest in crypto and the price of crypto, the activity of companies hitching their wagon to crypto also goes up.
Bill Mann: Not just companies. We've seen stories about how the North Koreans are suddenly very active, again, trying to hack into some of the lower security crypto projects, and they've stolen several billion dollars from them, probably much more so by the time all is known. There was a fascinating story that came out starting about two days ago. A company that, and I'm not making this up, had a market cap of $925,027. That was it.
Dylan Lewis: We're not used to working in those units.
Bill Mann: No. As I said earlier, please don't go out and buy this. Nilam Resources announced that they were starting a joint venture with a letter of intent to acquire 24,800 Bitcoin. Now I don't know if you're that much of a math guy. I had to take off my shoes so I could count high enough, but that was about 1,700 times higher than the actual market cap of Nilam Resources, so I don't know how they thought they were going to do it.
Dylan Lewis: Where does that money come from? When I saw the story, Bill, so there's the announcement, there's the very predictable share price movement for the business that is just absolutely nuclear. It goes crazy. Then we see that the CEO steps down immediately. This to me, I know we're recording this in late March, had the feeling of someone leaking an April Fool's Day script a couple of days early.
Bill Mann: Honestly.
Dylan Lewis: This is a story we would put out as a news story on April 1st.
Bill Mann: Exactly. Unfortunately, there was a real stock attached to it, and the former CEO had left, and basically called this a classic pump and dump. We can use allegedly all we want to, and so when you ask where the money was going to come from, you're going to be shocked to know that there was a JV that was announced with a country that somewhat lacks security laws and somewhat lacks extradition laws.
I don't know what the game was other than the stock went up about 1500% yesterday and, as of this recording, is only down 95% today. I understand that this was a sub $1 million company, and at the end of the day, it was not even a rounding error in the market, but it is the thing that, as someone who likes to believe that the US markets have integrity, it really concerns me.
Dylan Lewis: Bill Mann, appreciate your takes on crypto, shipping containers, and all things weird in the market.
Bill Mann: Thanks, Dylan.
Dylan Lewis: [MUSIC] Coming up, tech insider Kara Swisher joins Deidre Woollard to talk about her new best-seller, Burn Book. They discuss innovations that she's optimistic about and how a tech CEO helped her kids use social media a little bit less. [MUSIC]
Deidre Woollard: You use this phrase that I like, and I use all the time too, which is, the math wasn't mathing. You talk about that when looking at companies, especially in a before the dotcom bust. We do the same thing here. How does focusing on the numbers help you make sense of these companies because I think a lot of journalists don't do that?
Kara Swisher: No. I actually took an executive accounting course at Wharton because I've needed to understand how spreadsheets worked because I don't think I did awesome. That was when I was a younger press, I took the train up to Philadelphia from DC at Wharton because I thought it was really important to do that. Any opportunity I had to read about accounting because the company I was covering, was a very tricky accounting company.
They would hide the expenses and goose revenues in ways that were tricky, and so it was really important to understand. I think accounting is one of the most creative jobs in any company that were had to make a company look whether they're doing well. Ultimately performance is what matters, but it didn't hit at that time because the stock would take off on just the smallest of things. I really wanted to understand the math, and you had to have a suspension of disbelief because, even if the math didn't work, if it didn't math, it didn't matter with some companies.
Like right now, Tesla's worth 20 million times more than all the car companies put together. Is it going to be that big? I don't think so, but obviously, the market does, so that's what it's worth. Sometimes when people get upset, it's not worth that. I'm, like, that's what it's worth. That's what people think, so that's what people are willing to pay for it, but from a real gravity perspective, much of what was happening was puffy, to say the least.
Deidre Woollard: There was always the [inaudible] that all you needed was a good PowerPoint to raise money.
Kara Swisher: I think we have changed since then. I went into crypto, we had the same thing for a minute. Now, they already put AI, [inaudible] AI on your company, you're an AI company. That's what happens, and then there'll be significant companies in each area. It doesn't mean the area is wrong. It means that everybody rushes to a trend, and that's OK. I don't care. Just buyer beware.
Deidre Woollard: It's like the more thing is changed, the more they stay the same because so little has changed. Your descriptions of like Marc Andreessen and some of the others in the early days, the tech bad boys. We still are seeing some of those tech bad boys. Are we ever going to see.
Kara Swisher: They're just growing up men now. They were bad boys, and now they're really deeply grievously irritating old men is what they are now.
Deidre Woollard: What about the new batch?
Kara Swisher: I like a lot of the newer people more. They have a little more humility, and I don't expect a lot of humility necessarily, but I think they've got more sense. Some of them are more mission-driven in a real way. Before they used to say they're going to change the world, but they was very fuzzy, but they actually wanted to change.
They just wanted to make money and disrupt things, as toddlers are wont to do, but I think a lot of the newer ones that really interesting. I think they're more thoughtful, they're better read, they've seen what happened. Money is important to them, obviously, but it's not the most important thing necessarily. A lot of them, like climate change tech people, I'm really interested in them, or people who are doing healthcare stuff, I'm interested in them. I don't think money is the first and only thing or their stock is. I think it's important, but it's not their only thing.
Deidre Woollard: There's so much like the next Steve Jobs. Do you think that there can be or should be a next Steve Jobs? Obviously, not Elon.
Kara Swisher: No, it's not. It's never was. Now people are saying Samuel Altman, but about I'll know, we'll see. He's got some time to go. Sam leaves a real legacy. He kept having hit after it and the company keeps having hit after hit. They're a little like the rolling stones over there at Apple. They keep going and eventually they'll get too old. But even Tim Cook, he's 10x the company in terms of value and real value, real revenues, real changes in the software and services. No, I don't think you'd need that. I think lots of industries had. You don't know who that out of the electricity world is, but you didn't know Thomas Edison. I think founders have a certain romance at a certain moment in history. Again, who's the insurance guy, who's the head of, Hollywood even has dissipated, approves the big moguls and then I guess Bob Iger, but isn't he that thing?
Deidre Woollard: You've covered entrepreneurs, but you're also an entrepreneur yourself. I'm wondering, what lessons could you have learned only by going through that experience yourself?
Kara Swisher: I thought it was important. I think sometimes business reporters don't know how to run a business. Come on, how accretive you judge that though. Let me tell you about Uber. I was like, I think I'll run a business. I don't run movers business, but I certainly understand P and L. They certainly understand management. I understand month fundraising and things like that and it's so much smaller scale. Media's isn't much smaller scale of everything compared to these companies. But I have a sense of what it's like to be an entrepreneur and I have been one and I've created lots of different companies, not just one but half a dozen.
I've moved into other directions and so you'd have to sort of have a risk profile that media tends not to have had in the past. Now there's lots of new interesting things happening. But I certainly you learn a lot by doing instead of just talking about it. P& L gifts creates a certain kind of discipline in your mind and especially you understand, say they're even their problems or whether they're lying about, oh, no, no. I know I did that that kind of thing.
I think also the role of partnerships too, because you had a great business partner and Walt Mossberg, you probably saw from the inside what can go wrong in partnerships and what we did. We never had a fight our whole time, it 's incredible. Amazing But yeah, the importance of a good partner for sure. Any anytime you have a business you run into toxicity, you run into great things, you run into problems that weren't problems and then become problems every day I run something, although I don't have staff. I uncoupled myself staff CRO have people who work for Vox who then do stuff for me and I guess I'm ultimately the boss, but I don't manage them.
Deidre Woollard: You've got young children, but you've also got older children. I'm wondering, what's the difference between what you're probably going to tell your younger children about technology versus what you told your older children?
Kara Swisher: Neither. No. Nothing. I think I was pretty clear. My older kids other mother was the Chief Technology Officer of the United States of America under Obama and also was an early Google executives so there wasn't a lot we need and I was good at technology, so they didn't really get anything over on us, which was a sad for them. They couldn't go, oh, mommy, you don't understand this would like, oh yeah, we built it or I would call it sometimes when I'm sounds for using too much Snapchat, I ran into, introduce them to the head of the Snapchat and I jokingly said to him, we turn it off if I need to and he was like, absolutely Cara, boys don't use it too much.
Of course he didn't do that but, you know what I mean? My kids are like what? That's like using Santa or something with. Yes, that's correct. He was Santa to them who they were never more thrilled when they met the founder of Snapchat, Evan Spiegel. But no, I trust my kids. I raised them to have a broad outlook on a lot of things. I don't mind if they read online as long as they read. I think people's focus, they'll too much on the thing. I definitely had a talk with the boys, the older boys about porn and about the deleterious effects of that kinda stuff. Because I was aware of it more than probably many parents about what was going on online.
I think with my daughter, I'm going to have a long talk about how you behave and I know it's not just a woman behaves, but things that can come at you that are particular to women, especially young girls about self-esteem. I had talked to my boys a little more about loneliness. You know what I mean? Because there's a lonely and men are suffering in many ways, or boys are. I think one time my son, when in-app purchases started on the iPhone, my son spent $2,000 on things and I did not do that again.
Let me just say yeah, it was on it was on a game that he was buying himself, you know, blinds or whatever the hell you by herself and I live, yanked him out of bed Got kill you. Luckily because it was so hidden and I got them charges from burst because then I got some insight to it because I was like, look at how tricky this was. How would a nine-year-old, why are you letting a nine year old do this? Also, he couldn't tell what was for sale and so they they reversed it pretty quickly, but still I learned a lot from them and like Reddit, my older kids, I new Reddit was going to be where young people are watching stuff and not necessarily other places because my kids used it a lot or watching YouTube and Reddit, which I thought was interesting so it goes both ways.
Deidre Woollard: Are there any companies outside of the text-based you're finding particularly interesting right now?
Kara Swisher: Yeah, I'm really interested in climate change tech. Would put them in a tech thing, but it's really climate change, innovation. I'm fascinated with a lot of the healthcare innovation and you could say tech, but it's innovation around data and AI, and more and cloning and gene folding and all kinds of things. I'm super should in the food area, the innovations in food like urban farming. Farming that's without what would the same water goes through and Bill and office buildings, I have this dream of all the farms being in the cities and then you get fresh vegetables right there. We'll start off expensive like those strawberries that are so delicious and then move down the stack. I'm interested in, obviously desalinization of water, things like that, things that are real. Obviously politics. I live park most of my time in Washington now, after the pandemic long story, I didn't choose it, but there here I am. I spent a lot of time on regulatory issues that's for sure around tech.
Deidre Woollard: Last question for you. We're in another tough spot for media and journalism. We've been there before. Even I've been through a few of these journalist cycles. Does this one feel different, and what's your hope for the future of journalism?
Kara Swisher: It does not feel different. It's the same thing. I just feel like this has been going on for 30 years. The decline. I covered the knows that the Washington Post when it was at its the top time, but then I was covering retail which was dying local retailers so I watched the economic devastation when they lost all those local retailers to Walmart actually. That's what Walmart didn't advertise it, but the local retailers did and then when I saw Craig's list, Tom, there's classified god hit. This was 25 years ago and then free news meant they had to make a product that was worthwhile for people to pay for and before they just one on fund news that was commodity-based essentially.
I think the big problem with media is it said it treats it like it's not a business that's called the news business for a reason as a business and so I think they didn't get costs in line fast enough. They agonized over attack instead of jumping right in. They relied too much on tech as if tech we didn't want to be in the media business the tech is in the media business. They're better at it because they have more money and they have more resources and they don't care so much about accuracy, but they're in the media, but there's no question.
TikTok as a media business as far as I'm concerned. He's got the right-size itself and then try to figure out what they can sell to people that substantive, I've done it with on a smaller level and everybody else has to. It's just, we have a kind of a romantic vision of ourselves in the media that I think we need to shed. We can be important and viable at the same time. You know what I mean? Or the other options are, the government pays for it, like BBC, but that's never happening in this country. Or billionaires, we rely on the kindness of charitable billionaires.
Deidre Woollard: That's been what we've been doing so far.
Kara Swisher: Yes, but let me just tell you, I know them. Don't do it. It's a mistake. Some of them will be good, some really bad. I'm certain their children will be good, so I don't know what to tell you about that. That's not a long-term solution to what is a secular again, a secular problem, just like with commercial real estate, like come up with new ideas to keep your audience and understand the important part you play in democracy. This is like the first-line of the book because it was capitalism after all. It is capitalism after all.
Dylan Lewis: As always, people on the program may own stocks mentioned, and the Motley Fool may have formal recommendations for or against, so don't buy or sell anything based solely on what you hear. I'm Dylan Lewis. Thanks for listening. We'll be back tomorrow.
