The Liquidity Event Podcast: Episode 63
Episode 63: Rising Tides Sink all SPACS
Join Shane and Veronica AJ as they cover the culture-shaking EU decision to adopt a universal charger requirement for smartphones, a recap of this week's XY Planning Network conference, and Lufthansa's new pseudo-ban on AirTags. Also on deck are the not-great Q3 IPO review, some hopeful prospects for Q4, and Warren Mason's definitely-happening Taco Hell SPAC. Parting thought is to look up and look forward to SkyNet and the inevitable fall of the semiconductor industry. Think happy thoughts, listeners!
Read the Full Transcript:
Announcer:
This podcast is for informational purposes only and should not be considered tax or investment advice. Welcome to the Liquidity Event, a show about all things personal finance with a laser focus on equity compensation, hosted by AJ and Shane of Brooklyn FI. Each episode will take you through the week's news on FinTech, IPOs, facts, founder wins and fails, crypto, and whatever else these nerds think is interesting. Learn more and subscribe today at brooklynfi.com.
Shane Mason:
Hello. Hello, hello and welcome to the Liquidity Event. We are your hosts, Shane Mason.
AJ:
And I'm Veronica.
Shane Mason:
Come on now. We have guests on the show sometimes. Who are you really?
AJ:
Oh, this is AJ, obviously, but Veronica's my fake name.
Shane Mason:
Okay. All right.
AJ:
Sorry. Sorry to rail you there.
Shane Mason:
Off to a great start today.
AJ:
Please proceed with your intro.
Shane Mason:
Our first day back in the office in 10 business days and AJ's throwing curve balls, y'all. On this week's episode, we have Apple AirTags causing a stir over in Europe. We have one charger to rule them all, also from Europe, and a Q3 IPO recap. Now that we're in Q4, we're going to look back on Q3 and take a look at how the initial public offering market performed. Hint, not very well. Not very well.
AJ:
Happy Q4, Shane. Also, this is episode 63, by the way, being recorded on October 12th, airing on October 14th.
Shane Mason:
So our first topic here-
AJ:
Which is-
Shane Mason:
... is talking about the conference that we just went to, XYPN, where we talked to a lot of other business owners and one business owner ... And to your point about happy Q4, I never used to think in quarters when I was the first, I don't know, 27 years of my life. Somebody was asking me how much money it would take for me to sell XYPN. We went around a circle and were like, or how to sell Brooklyn FI. And it's like, "I don't know," but it does get me back to the question that it raises for me is identity. Do you identify as a financial planner or a CPA? And if you do, you should probably never sell your company and do it until you die, because that's your entire identity.
AJ:
Otherwise your entire identity and self worth is going to be sold for a measly sum or a great sum or a life changing sum to let you do something else.
Shane Mason:
Yeah, yeah, perhaps, to start a new identity.
AJ:
Potentially.
Shane Mason:
But there will obviously be an identity crisis if you stop doing whatever it is that you are doing or switch careers. Do you have any commentary on that as a career switcher from music journalism and PR and tech to now financial planning? I know you hate when I say PR because you didn't really do PR but.
AJ:
Yep. Yes, I do have commentary. I did want to point out that talking to other business owners is our favorite thing to do just because business owners, every decision you make is so impactful. We make what, like 50 decisions every single day. So a decision like what is the direction of our company, that can change with one article read or one good piece of advice from a business coach, our entire business can change. But to your question about identity, yeah, I mean for the first two years of doing Brooklyn FI, I went from ...
AJ:
You know what it's like? It's like when you go from middle school to high school. It's like when you leave middle school, you're like an eighth grader. You're like, "I'm on top of the world. I'm the top dog here." And then you go to high school and then you're a freshman all over again. You have to start all over. You have to make new friends. You have to establish yourself. And then you've got to do it again when you go to college, if you go to college, if that's in the cards. It's like, "Hey, I was top of my class in high school. I had all of my great friends. Now I moved in and now I'm at the way bottom of the food chain and I've got to meet all these people and reestablish my entire identity," which I think some people adapt well to and others don't. So if you're a business owner and you want to reinvent yourself, think of it like starting college all over again.
Shane Mason:
Cool. Yeah, I hear you. So, are you a financial planner?
AJ:
Am I a financial planner or a business owner? What's my choice? What's my identity?
Shane Mason:
Even after you're done with this?
AJ:
I'm a cancer with a aquarius-
Shane Mason:
There we go. There it is. You're a triple fire sign?
AJ:
I'm a water, or no, I'm a fire dragon in the Chinese zodiac.
Shane Mason:
Okay, got it.
AJ:
I think for the first time, I identify as an entrepreneur.
Shane Mason:
There it is. Yeah. Cool.
AJ:
Yeah, for sure, because we are so much more than financial. Yes, I am capable of delivering financial planning advice and I'm good at it and I enjoy it, but most of my time right now is spent on entrepreneurial decisions, not direct financial planning endeavors. We have a great team that does that.
Shane Mason:
Yeah, I agree. You can still put that hat on when you need to. What else do you want to talk about-
AJ:
I can put on my Taco Bell hat.
Shane Mason:
I didn't even notice you're wearing a Taco Bell hat.
AJ:
When I worked at Taco Bell.
Shane Mason:
That's a great vintage Taco Bell hat.
AJ:
It's not vintage actually. This was a birthday present from my wonderful husband a couple years ago.
Shane Mason:
You are a Taco Bell fiend.
AJ:
It is not the only piece of Taco Bell merch I own. Anyway, this conference, the XYPN-
Shane Mason:
Stands for XY Planning Network, which is a network of advisors that focus on people aged, I don't know, 22 to 45-ish, 50-ish.
AJ:
Yeah, I was going to say conferences are back. It was an awesome conference. Great chance for us to see old friends, make new friends, talk to other people who are going through the same successes and struggles that we are. So if you are a financial advisor and you're listening and you're thinking about XYPN or thinking about going, just one of our favorite experiences throughout the year every time. So, shout out to the team there for pulling off a great conference.
Shane Mason:
Right on. Cool. What else is going on?
AJ:
What? I feel like they got a lot ... Anyway. Q4. I'm having a very positive Q4 just in case. I'm only going to be positive from now until December 31st.
Shane Mason:
Okay, listener, note that for when AJ-
AJ:
Inevitably in the next three minutes.
Shane Mason:
... explodes on some billionaire that gets a sexual assault charge in October 25th. Yeah, what else is going on? Should we hop into the articles now?
AJ:
Yeah, let's do it up.
Shane Mason:
All right.
AJ:
We don't have a deep dive for you in IPO space folks, but we'll talk about why that is in a little bit. I don't have a good segue. Speaking of conferences-
Shane Mason:
Well, we've been doing a lot of traveling lately at conferences and you need to charge your devices almost constantly, and you reach into your bag and you have the wrong charger, because there are five different chargers out there.
AJ:
I literally travel with five chargers.
Shane Mason:
Really?
AJ:
Like five different.
Shane Mason:
Oh, yeah, because You've got your ... But yeah, the article is-
AJ:
I've got all kinds of gadgets.
Shane Mason:
... that EU lawmakers imposed single charger for all smartphones. In the EU, they have the team of countries get together in Brussels, I guess.
AJ:
The team gets together?
Shane Mason:
Countries, assemble. Germany, France.
AJ:
Wait, isn't it in the Hague? Germany. Italy. Espania.
Shane Mason:
Which country would be fire, which country would be water and which country would be wind?
AJ:
Wind, England, fire, Spain, water, France.
Shane Mason:
And Earth?
AJ:
Italy.
Shane Mason:
All right. Why Italy?
AJ:
I don't know. Oh, like soil, like good grapes. Wine, pizza. Good things come from the Earth.
Shane Mason:
Got it. So when the powers combined, they have decided that Apple ... Well, I'm sorry, this isn't Apple specific, but of course Apple will be largely impacted here. All cell phones will require a USBC plugin adapter. So the lightning cable that Apple has been pushing and resisting losing for, gee I don't know what reason, profits, will have to use the USBC charger in Europe. So that is what, only a good thing. So this so-called Brussels effect is in effect here wherein if Europe requires some sort of consolidation or legislative update, then that's going to impact the United States because they're not going to make two different types of iPhones, one for Europe and then one for the United States with two different chargers. So in 2024, is that when this is going into effect?
AJ:
Yeah, they have one year for smartphones to adapt and then laptops and other devices have another two years.
Shane Mason:
Yeah.
AJ:
Pretty cool.
Shane Mason:
So instead of a USBA, a USBB, a USB micro and a USBC and then a lightning port, you won't need to jam, well, at least for your cell phones. You can use essentially your laptop charger for your cell phone charger at this point, which is going to be amazing. How many chargers do you have at that house that you're currently in right now?
AJ:
I don't know, at least 16. Not exaggerating. Well you're right, because when you fly on the airplane, you need to bring your regular USB port because USBC doesn't work on airplanes yet. Then you need to bring, I have this microphone, I've got my laptop. I mean, literally I travel with eight chargers and then in my houses I have another eight for backup.
Shane Mason:
Yeah. And just at our presentation over the weekend, we couldn't use a clicker to go through the slides because somebody's Apple laptop didn't have a USBA port.
AJ:
Just doesn't have a USB port.
Shane Mason:
So let's get this over with. There should only be one way to move electricity from the wall to your device. Let's get over it.
AJ:
Oh my God. Yeah. I mean, look, yeah. So Apple's holding onto, we invented this kind of charging port that you have to buy all these accessories. We're going to sell you those accessories. And further, remember earlier this year when Apple's like, "We're no longer including chargers in the box at all"?
Shane Mason:
Of course, for environmental reasons.
AJ:
As an environmentally friendly reason. It's like, oh, the friendly environmental reason, which means I then have to drive to the store to purchase another charger in a different, completely separate package in order to charge my phone. Cool. Cool story, bro.
Shane Mason:
Yeah, it's a bummer. It does seem like innovation, at least in the iPhone space, is starting to head towards diminishing returns. But I'm excited for the USBC update.
AJ:
What is the lifetime value of Shane Mason charging devices left in hotel rooms estimated?
Shane Mason:
I don't know. I do lose a lot of things, which we're going to talk about AirTags here in a bit. So I don't know, probably over $1000. More?
AJ:
Yeah, I'm going to go with $1,200.
Shane Mason:
With me specifically? Yeah. Well I mean, I've lost AirPods.
AJ:
But I would say you're probably 20% higher than me, but not much. So you plug in your phone next to the bed, you forget your charger because you're leaving. You don't even think about it.
Shane Mason:
Nothing gives me more guilt than losing things ever since I was a kid. It's just not my skill set. It's not there.
AJ:
Speaking of losing things, Lufthansa, the German airline bans AirTags in luggage after passengers publicly shame the airline on the internet. So AirTags are those Bluetooth activated tags you could put on any object and your phone will receive the location of that object. So passengers have been sticking AirTags in their luggage so when airlines lose their luggage, they can say, "My AirTag tells me that my bag is sitting in terminal seven over there, so could you please go get it?" And Lufthansa did not take kindly to that public shaming on the interwebs. So Lufthansa is basically like-
Shane Mason:
So they rage quit.
AJ:
... "Fuck you." Yeah, they rage quit. They're like, "You can't use that anymore. You can't sit with us."
Shane Mason:
But they can't actually enforce that. You can't sit at this table anymore.
AJ:
You can't sit with us. But yeah, I mean the funny thing is the FAA is like, "Yeah, AirTags are fine." You have to put your cell phone on airplane mode because the radio could ostensibly interfere with the navigation system of the airplane, but AirTags work on Bluetooth, so there's not actually a threat. Basically the regulatory agencies were like, "Yeah, it's fine. Just use your AirTags. The plane's going to be fine."
Shane Mason:
Yeah, it's pretty hilarious. I mean, get the fuck out of here, Lufthansa. How are you guys going to enforce this? You're going to throw out every AirTag when they do a random inspection of people's bags and just toss them? They're like 40 bucks apiece or 30 bucks apiece if they don't have any-
AJ:
Yeah.
Shane Mason:
Yeah. I mean, so AirTags are awesome and terrible. It's a double edged sword for sure. Remember all the articles about stalking that came out around AirTags?
AJ:
Oh yeah. The reporter who stealth stalked her husband to write about it and all the feelings that they had about it. Yeah, ugh, I don't know.
Shane Mason:
Yeah, it's a nightmare for women. I mean, what, are 99% of stalking situations from male to female?
AJ:
Yeah.
Shane Mason:
Yeah. And we're just trying to stalk our own luggage here at this point. Lufthansa says no.
AJ:
Yeah, I've got a party to go to tomorrow and I want to know where my outfit is, is really all-
Shane Mason:
You put an AirTag in every outfit. That would be funny.
AJ:
Oh my god, AirTags would actually, yeah. I mean really everything that you own with a microchip. AirTags are too big, but I'm looking at my sunglasses over here, which I've been looking for for the past two hours and I just found that I placed at the back of a dresser, which is a random place for me to put them.
Shane Mason:
I know. I can't wait for this technology to be much cheaper.
AJ:
Yeah, ADHD, one of the symptoms is that you start doing something and then you forget about where you put the thing. So losing your keys or forgetting your sunglasses at home or whatever, that's just literally living with ADHD. But what if I had my like, "Oh, it's time to go kids. I need my sunglasses, my keys, my wallet, my phone. I'm good to go."
Shane Mason:
Yeah, I mean Christmas is coming up, AJ, just in case you're wondering.
AJ:
You want some AirTags?
Shane Mason:
Just in case you're wondering. They do sell them with an Hermes case, just a heads up. You guys, do you remember Tile, the competitor, the first to market?
AJ:
Of course. Yeah. Didn't you use Tile?
Shane Mason:
I loved them.
AJ:
Didn't you like them?
Shane Mason:
Yeah, I used Tile. The only downside with Tile was it didn't have the polish that Apple has. I don't know if Apple has a wallet version of an AirTag where you slide it into your wallet, but I used to have an AirTag on wallet and keys. That way if you lose one of those three, you can press a button on any of the other ones and it plays a sound on the iPhone or it plays a sound on the wallet from your iPhone. So you'll always have those three things as long as you have one of them. But they had this really annoying feature where if it was in your wallet, it would go off randomly. So I would be on an airplane or whatever and I would sit down and the corner of the Tile would blink and then my phone would just start screaming because it thought that I had lost my phone. So it was really embarrassing. It happened at least once a week. So anyway, I think Apple will probably solve that functionality issue.
AJ:
So Tile was first to market and then Apple was like, "Well that technology is cool. We've been developing something similar. Maybe we're inspired by you a little bit and now we're going to completely crush you." So Tile is to AirTags as Snapchat is to Instagram stories.
Shane Mason:
Yeah, great analogy. I was trying to think of one myself. Yeah. They borrowed some innovation from another company that was ... I wonder if there was an offer put on the table to purchase them or if they were like, "You know what? We can easily roll out hardware attached to a smartphone that directly integrates."
AJ:
Yeah.
Shane Mason:
Yeah.
AJ:
We'll never know until we read the Tile tell all.
Shane Mason:
They either didn't accept an offer or they thought they had a moat bigger than they did.
AJ:
Yep. It's a bummer. Speaking of moats not being so big, we've got our Q3-
Shane Mason:
Explain that one.
AJ:
... US IPO-
Shane Mason:
Explain that one to me.
AJ:
I don't know.
Shane Mason:
Explain this segue.
AJ:
So in a year of a lot of IPOs, there'd be a nice big moat around ... Anyway. No, I know that was a terrible segue. That didn't make any sense at all. Anyway, we've got Renaissance Capital, a great source of IPO news and analysis that we love, has their Q3 US IPO market review was just published. Just some highlights there. It was the worst third quarter for new issuers in over a decade with 25 IPOs raising 2.4 billion as the 2022 US IPO market remains on track to raise the lowest proceeds of any year in our firm's 30 plus year history. How you doing, Shane? You okay? Worst quarter ever in a 30 year history for a company called Brooklyn FI that we have said our focus is pre IPO companies.
Shane Mason:
Yeah. Yeah. Well, two things. I'm looking out my window as you read this off to me and I have a beautiful view of Manhattan and they're literally building a six story luxury condo building right in front of it. They're on the fourth story and I can see that the fifth story is going to block it all. So, bummer there. Also bummer that-
AJ:
So right now you're sitting in Q1 2022 looking out on the beautiful skyline. Fast forward to now, not looking so good.
Shane Mason:
Yes, 2021 was the beautiful view of Manhattan. 2023 is this looking into empty condos with shitty furniture and only one of the 50 of them will be occupied because the rest of them will have been purchased by a Russian oligarch. Yeah. So yeah, tough-
AJ:
Former Russian oligarch.
Shane Mason:
Tough year for IPOs. Another tough quarter in a tough year for sure. We only had, what, one company, how much was raised? Two and a half billion dollars was raised during the quarter and-
AJ:
2.4 billion, yep, during the quarter.
Shane Mason:
1.7 billion of that was by one to company.
AJ:
And most of that was, yeah.
Shane Mason:
There's an AIG carve out. So, that insurance company carved out cold ... I don't understand why they do these carve outs. I guess this is what happened if AWS spun out of Amazon and went public on its own. We do have a list of companies to watch for Q4, which I'd like to highlight here in a minute, but yeah, you've got some commentary here. SPACs have effectively disappeared for a number of reasons. The jig is kind of up for SPACs. Would you say that the jig is up for SPACs?
AJ:
It's up, yeah. It's definitely up.
Shane Mason:
Do you think that's just a function of the market or do you think that's a function of the structure of how SPACs work? We have since moved on. We're getting back to normal IPOs. I mean, we're obviously not getting back to normal IPOs. We're down 90% this year. We did 1000 last year, which was a special item, a special thing. It's the most amount of IPOs of all time, and that's typically when the big companies want to IPO, when we're in a state of exuberance within the economy and valuations are high. Price to earnings ratios are quite high, high prices compared to their earnings. I was listening to an old Barry Ritholtz podcast on Masters In Business and he said, "Generally whenever a company IPOs, that's when it's overpriced," which I found very funny and true, I think. What percentage of our IPOs are still up from their pricing in Q3? I think 8%.
AJ:
It's like 8%, yeah.
Shane Mason:
Yeah, of the 25 IPOs. For reference, we have 100 IPOs so far this year. Most of them are small. Most of them are around the 100 million of money raised. These are small companies that you probably haven't ever heard of that are looking to raise capital. I guess they're not as afraid of valuations right now as the big companies are, the ones that are trying to raise 2 billion, 5 billion, $10 billion in their massive IPOs, at Uber and Lyft, et cetera, Peloton, all the ones that we saw throughout 2019, 2021 when we are at a high state of valuations. Yeah. Anyway, sorry, that was a question supposedly. There was a question in there.
AJ:
A question, right. There was a question. The question was, are SPACs dead because of the structure, the way they're set up or because of the market? I think the answer is both. The answer is because of the way they're structured with the way that when you file to go public as a SPAC, a time bomb, it starts ticking. We have a certain amount of time, typically it's two years, to find a company to acquire. I think what we're seeing right now is that sometimes markets will go through a correction or a recession that could take two or more years. So I think by the function of that short time window, SPACs may be dead because everyone's getting really spooked, like that's not enough time to go find a company that's ready to go public because most of those companies that would've typically been a good SPAC target are saying, "Hey, this market is terrible. I'm going to wait for the market to come back up. I don't want take my company public during this depressed cycle." So the answer is yes.
Shane Mason:
If you could raise 100 billion, or I'm sorry, if you could raise $1 billion now or wait a year and raise $3 billion when valuations change, it's probably best to wait a year, even though you could use that money now. You could pull the future forward, as people say, by raising some funds, hiring some more engineers, whatever you need to build your company faster. You're just going to wait because maybe if you get a higher valuation, you can pull the company forward even faster because you'll have more capital in order to do that.
AJ:
Right. And who wins most in a SPAC are the initial investors who believed the person who is ... Shane and I could today launch the Taco Bell SPAC. We'd probably get sued for copyright infringement. Let's call it the Taco Hell SPAC, with the goal of acquiring the next great taco chain. But if there's not a taco chain that's available for us, that SPAC is going to be unsuccessful and we'll have to return all the money to our investors.
Shane Mason:
Yeah. So-
AJ:
Taco hell, hello.
Shane Mason:
That was my dad's favorite joke. Driving through town and Taco Bell is there, "More like Taco Hell." Got it, dad.
AJ:
Oh really? Aww.
Shane Mason:
That was funny the first few hundred times.
AJ:
I just made it a Warren Mason dad joke.
Shane Mason:
Yeah.
AJ:
That's great.
Shane Mason:
Yeah, exactly.
AJ:
Amazing.
Shane Mason:
Looking forward to Q4, Renaissance Capital has a list of notable private companies that could seek IPO and estimated valuations. We've got Mobileye on here, which we've already talking about, which has actually already filed an S1, so shout out to Mobileye, an Intel self-driving vehicle technology business. Databricks, Enterprise AI, estimated valuation of 38 billion. Epic Games, we've got Instacart on here, so we've heard of these two.
AJ:
Rats.
Shane Mason:
Yeah. Arm is the UK based chip designer, which I've seen competing with US and China based chip designers over the past 10, 15 years. Very interesting. blockchain.com. Reddit, of course. Shout out to Reddit, shout out to Serena. I hope she gets her payday there pretty soon. Here's a fun one on the list, AJ, Suntex Marinas.
AJ:
Ooh, we were just talking about this this morning as we were shooting the shit over coffee. No way.
Shane Mason:
Estimated valuation, $3 billion.
AJ:
Really? You want to tell our listeners what Suntex Marinas are or is?
Shane Mason:
Yeah. Well, listeners know I have a crummy old sailboat that I like to take out and it used to be in a marina.
AJ:
Shane just wants everyone to know that yes, he owns a sailboat, but his sailboat costs about as much as a 2002 Camry.
Shane Mason:
Yes, it's very fun to go sailing around.
AJ:
And about as much to maintain it as a 1967 Jaguar Speedster.
Shane Mason:
Much more than that actually, yeah. It costs about the price of it every year to maintain it. Anyway, it used to be in a marina that was acquired under a private equity deal or via Suntex Marinas, which is a consolidator and an aggregator of marinas. There is no business that is safe from consolidation. I think they're based out of China and it looks like they might make a ... And they send out the typical email that anyone gets whenever an acquisition happens. My favorite. No matter what industry it is. "Nothing's changing. Everything's going to stay the same." And then within two months, every time without a doubt, prices go up, features go down. Management starts to shift. People aren't as invested as they used to be. Service levels drop off. Everything's going to change.
AJ:
Do you think it'll be a splashy IPO or do you think it'll be dead in the water?
Shane Mason:
Excellent. Finally, finally.
AJ:
I was not listening to anything you said for the past three minutes.
Shane Mason:
I saw you drifting away.
AJ:
I was just thinking of my joke. I'll have to roll that tape back to hear your take on whatever the fuck you were just talking about.
Shane Mason:
It doesn't matter. The listeners weren't listening either. Speaking of chip manufacturing, Micron has pledged to invest up to a $100 billion for a semiconductor factory in New York. Huge.
AJ:
Wow. Huge. Huge.
Shane Mason:
Over the next 20 years, by the way. So not all in one year. That is a giant amount of investment, especially for Clay, New York, which I looked up. It is a six hour drive north of here, close to Rochester, close to the Canadian border.
AJ:
Yeah, only two and a half hours west of Skidmore College in Saratoga Springs, New York.
Shane Mason:
There you are. I didn't look at the Wikipedia, but the population of Clay, New York looks to be south of 10,000, so I think this $100 billion invested into their community, it's like when Mercedes-Benz decides to invest a car manufacturing plant in a small town in Alabama. It's going to create a ton of jobs. It's going to onshore chip manufacturing. So it's a mixture of onshoring and securing our chip delivery, production, distribution facilities within the United States. And I think that, what do you have to ... The stock is down, by the way, for Micron.
AJ:
Well, yeah, I was going to say, stock is down.
Shane Mason:
At 44% year to date, despite this announcement.
AJ:
The CHIPS Act, the aptly named CHIPS Act, C-H-I-P-S, Chips and Science Act 2022, basically provides government funding for that onshoring. So, grants to open up your job creating factories. They're going to require obviously a ton of investment in infrastructure, building the factory, moving the people there, creating a town that can sustain 50,000 workers and their families. So that's why we're starting to see ... And I think this is the first biggest project that we've seen as a direct result of the CHIPS Act that was passed earlier this year.
Shane Mason:
Yeah, I read something that it's like-
AJ:
Question for you.
Shane Mason:
Oh, go ahead.
AJ:
So, you used the example of Mercedes-Benz coming to Alabama, or we could just think about anytime a big new factory comes to a town, that's exciting news. That's great. Except we've seen the opposite of that with factories leaving. What happens when the plant shuts down? Coal factories, steel factories, et cetera. I don't know enough about chip technology to think about the obsolescence of the technology in a few years, but I have a little bit of fear that this is just another coal factory or plant that there's going to be all this investment and then it's only going to last for two decades, three decades, four decades. So that's a question for a scientist, but maybe you have some insight there about, is chip technology ... We're manufacturing these chips, which are currently between this big and this big. Is there a future where we don't need those things at all? And is that future soon?
Shane Mason:
So, you're already worried about disruption of the summit conductor industry and the negative externalities around the construction of this factory onshoring?
AJ:
Yes, this factory ... Yeah, I'm thinking three decades ahead.
Shane Mason:
Wow. I thought we were being positive for the next 30 days, AJ, all the way through Q4.
AJ:
Sorry.
Shane Mason:
And you're already talking about Skynet activating-
AJ:
You didn't read my asterisk.
Shane Mason:
What the hell? That lasted six minutes. What the fuck? Yeah, sure. I guess there could be another hollowing out of Clay, New York in the year 2050 and then everyone can get addicted to future heroin. But sure, let's focus on that. What the fuck? Moving on.
AJ:
I should have gone into city planning, urban planning.
Shane Mason:
So chips are heavily used in self-driving cars, all cars at this point. That's why it's so hard to get a used car. And speaking of cars, looks like Uber, DoorDash are under attack thanks to a Labor Department proposal to change all gig worker classification federally from 1099 to employees. So that is a very progressive approach to worker classification. Once that announcement ... It is a proposed rule. Other legislation that we've seen in this space was within California. California makes it very difficult to classify a employee as an independent contractor if they check certain boxes. There was a carve out of the proposition that passed for Uber and Lyft so that we can still have our cheap Uber rides. The people voted to keep health insurance off of our Uber drivers' plates.
AJ:
Off the table, yeah.
Shane Mason:
Yeah. So once this announcement was made, obviously one of the biggest expenses of Uber is their employees, or will be their employees if everyone is classified as such. What are your takes?
AJ:
Yeah. My takes are, I'm just going to steal your take, in that we need it. This is a big gray area. You are a worker, you are an employee. Your employer can control your schedule, when you work, where you work. And then there's a gig worker or a freelancer who the employer cannot control them. So therefore the employer's not required to provide benefits. They're paid as a 1099 employee as opposed to W2. I agree. I think we need a third class of workers, somewhere in between. Maybe like a guild or something where yes, you have control over your schedule, when you work, where you work, but you are a step above just someone who punches in your hours. Your entire livelihood is dependent on this mothership employer.
AJ:
That is going to be something that Congress will probably take a long time to figure out how to do. So, my take here is this probably won't change much. In fact, Lyft said the rule just simply reverts back to a law from the Obama administration and it likely won't actually impact them and they'll continue to be able to pay drivers as 1099 workers.
Shane Mason:
What did Travis say the most expensive thing? The biggest problem on Uber is the guy in the front seat driving the car. Here it is, it's still a problem. And Travis is still an asshole. Thank you for listening to this week's episode of the Liquidity Event. You can email us at liquidityevent@brooklynfi.com. You can leave us a voicemail and we will play it on the air. We are working on making that process easier for listeners. Show notes can be found at brooklynfi.com/episode63, and you BK FI fans can leave us a review if you want to be weird about it. Thanks, team.
AJ:
Thanks for listening. Bye.
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