Valuetainment - July 09, 2020


Episode 488： Zoom - The Future Of Pandemic Proof Companies


Episode Stats

Length

12 minutes

Words per Minute

175.49107

Word Count

2,171

Sentence Count

200

Misogynist Sentences

3


Summary


Transcript

00:00:00.000 I'm Patrick, made to be your host of Value Tim, and today we're going to talk about Zoom.
00:00:24.900 How this founder built a company less than a decade ago, and all of a sudden it went from being a small company to worth more than the top seven airlines combined.
00:00:35.100 Zoom is worth $40.70 billion.
00:00:37.160 The top seven airlines, Southwest, Delta, United, IAG, Lufthansa, American Airlines, Air France, are worth $46.21 billion.
00:00:45.500 One company that got started April 21st of 2011, nine years ago, in nine years, this company went from $0 to $48.70 billion.
00:00:57.020 Now watch this number here.
00:00:58.460 Here's an interesting stat.
00:01:00.100 December of 2019, 10 million people a day used Zoom.
00:01:04.460 10 million people a day used Zoom.
00:01:06.600 Four months later, it's 200 million a day.
00:01:08.740 That's March.
00:01:09.320 April was 300 million people a day used Zoom.
00:01:14.920 That means in December, just six months ago, they can only reach the city of New York.
00:01:20.380 That's it.
00:01:20.920 Only New York City knows about this one product.
00:01:23.680 Fast forward six months later, all of America uses Zoom.
00:01:28.180 If we were to put things into perspective, that's insanity.
00:01:31.100 But we've got to look at some other data here.
00:01:33.220 How did this company become who they are today?
00:01:36.080 Did the guy who started it know what he was doing?
00:01:38.280 Did he get lucky?
00:01:39.620 The founder's name is Eric Wan.
00:01:41.980 Okay?
00:01:42.780 He's today worth $7.8 billion.
00:01:45.660 Mario, if you can Zoom in here, 7.8.
00:01:47.480 He owns 22% of Zoom.
00:01:50.280 Here's the most interesting part to read about him.
00:01:53.800 Eric Wan worked in Japan for four years after graduation, inspired by Bill Gates, who worked
00:01:57.940 in Japan in 1994.
00:01:59.360 He moved to Silicon Valley in 1997, joined the tech boom.
00:02:02.440 At the time, Wan spoke very little English, applied nine times to be granted a visa from the
00:02:07.420 United States, upon arriving in this country, joined WebEx, which is a company that doesn't
00:02:12.440 do well right now.
00:02:13.420 They, I don't know how many webinars I did with them that absolutely crashed in March.
00:02:19.340 And I said, we were on the calls with their executive who said, we can't use you anymore
00:02:22.960 because so many times it crashed.
00:02:25.720 Now watch what happens.
00:02:26.960 He joins WebEx, a video conferencing startup.
00:02:29.380 The company acquired by Cisco Systems in 2007, which I think for like $3.2 billion.
00:02:33.820 At the time when she became the vice president of engineering, in 2011, Wan pitched a new
00:02:38.560 smartphone-friendly video conferencing system to Cisco management.
00:02:42.960 The idea was rejected.
00:02:45.060 Wan left Cisco to start Zoom.
00:02:48.140 Zoom is a publicly traded company and now Wan is a billionaire, thanks to WebEx.
00:02:55.040 Now, what's the moral of the story here?
00:02:56.620 Here's what the moral of the story is.
00:02:57.760 A couple things about Zoom, then we're going to look at airlines.
00:03:00.280 Number one, luck, you've heard a quote, luck is where preparation meets opportunity, right?
00:03:05.480 You always hear this stuff, well, luck is where preparation meets opportunity.
00:03:08.940 So often, opportunity comes up where people can get lucky and have the biggest change in
00:03:14.960 their lives, but they're not ready for it.
00:03:17.240 You know, Brady was ready for Bledsoe.
00:03:19.820 Young was ready when Montana got hurt.
00:03:22.260 Eric Wan was ready when the pandemic came in.
00:03:25.100 Boom!
00:03:25.400 They went from 10 million users a day to 300 million users a day.
00:03:29.540 Now, watch the airline industry.
00:03:31.080 Let's look at some data here.
00:03:32.700 Here's the airline industry.
00:03:34.960 According to TSA, if you want to come up, they can see the website.
00:03:38.280 According to TSA, okay, on March 1st, okay, we had 2.28 million people traveling every day.
00:03:45.880 March of 2019, it was 2.3 million people traveling.
00:03:49.080 So, not a big difference.
00:03:50.640 It's a drop off of 20,000 people, right?
00:03:52.520 If we go higher, you notice we went from 2.2 to 1.7 to 1.6 to 1.485 to 9.53.
00:04:01.400 We cracked a million, less than a million on March 17th.
00:04:04.660 So, now people are traveling less.
00:04:06.200 People are scared.
00:04:07.280 1.99.
00:04:08.540 We're going lower, lower, lower.
00:04:09.820 1.18.
00:04:10.600 We're going lower, lower.
00:04:11.540 1.94.
00:04:12.320 We're going lower, lower.
00:04:13.320 87,000 people traveling a day.
00:04:16.520 The airline industry went from 2.2, 2.3 million people traveling on a daily basis all the way
00:04:24.100 down to 87.
00:04:25.180 Watch this.
00:04:26.120 The 87,000 people that traveled in a day, look what it was a year prior to that.
00:04:30.460 2.208 million, okay?
00:04:32.400 2.208 million people traveling.
00:04:36.040 And then you come up and you notice we went from that 84, 87 number to now, as of yesterday,
00:04:42.300 230,000 people traveled, which is good, but it's not yet back to the million or 500,000
00:04:48.020 or 1.5 million or 2 million.
00:04:49.580 We are still 2.2 million travelers behind last year.
00:04:55.260 So now, when you see numbers like this, where it went from 10 to 1, from 2 million to 200,000,
00:05:02.540 that's a drop-off of 90%.
00:05:05.520 That's a massive drop-off.
00:05:06.800 Watch what happens with the stock prices of these companies.
00:05:09.980 Let's take a look at this.
00:05:11.340 American Airlines, the last six months, it was hovering around $27, you know, just a couple
00:05:18.420 months ago, right before March 20, around $29 to $30.
00:05:21.060 It went all the way down to, right now, you can buy a share of American Airlines for what?
00:05:24.860 9.994.
00:05:26.300 $9.94 today, you can buy it, right?
00:05:29.420 Market cap dropped all the way down to $4.21 billion.
00:05:33.000 Let's go to the next one.
00:05:33.840 Stay here.
00:05:35.100 Southwest was $29.9, 20, no, actually $56 a share just a couple months ago, if you want
00:05:41.920 to buy a share, 55, 58, to now you can buy it for $29.15.
00:05:46.380 So it's not that big of a drop-off, right?
00:05:48.200 Watch this, United went from, same thing, around $88, $87, $85, $79, down to $25.
00:05:55.680 You can buy a share right now for $26, give or take, of United.
00:05:59.300 And then take a look at Delta.
00:06:00.540 Delta was around $60, if you look at where they were at three months ago.
00:06:04.440 They are right now hovering around $23.
00:06:06.740 So now, you look at that data, right?
00:06:08.660 Here's what you think about.
00:06:09.880 I say to myself, at least, I say, so let me get this straight.
00:06:13.240 They were having 2.2 million people traveling per day to now only 200,000 people traveling
00:06:19.020 per day, but the stock prices have only dropped 50%, and Warren Buffett, who owned shares on
00:06:25.260 four of them, 10% minimum, he sold all four of them.
00:06:30.200 Why?
00:06:31.000 Is he thinking it's going to go lower?
00:06:32.520 Then it's because if we do basic math, you know how some companies, let's just say you
00:06:36.320 run a business, and you have a restaurant, they shut you down, you can't have people
00:06:41.100 coming in, you're taking a big hit.
00:06:43.120 You can pivot.
00:06:44.300 How do you pivot?
00:06:45.340 You deliver more.
00:06:46.500 You bring food to people, right?
00:06:48.080 Maybe you do different kind of services.
00:06:50.180 You can still pivot and have some kind of money coming in.
00:06:53.280 How do airlines pivot?
00:06:55.920 What do they do?
00:06:56.640 Do airlines say, I got 50 planes sitting right here, why don't you come and rent one of them
00:07:01.360 for 40 grand and put a party in there?
00:07:03.400 I can't.
00:07:04.040 How do airlines pivot, okay?
00:07:06.780 You know, we got these people that like to take pictures and post it on Instagram.
00:07:11.220 Why don't you come and take a picture saying, I'm running this airline, look at me, I'm
00:07:14.460 by myself for $6,000.
00:07:16.520 No one's doing that today.
00:07:18.260 No one cares about that stuff.
00:07:19.640 How do airlines pivot?
00:07:20.820 Actually, think about that.
00:07:22.240 How do airlines pivot?
00:07:23.660 Uber just announced they're letting go of another 4,000 people.
00:07:26.180 How are they going to pivot if there's not a lot of transportation taking place?
00:07:29.320 Here's the moral of the story.
00:07:30.400 The airline industry right now is a bit overvalued right now based on some of the data that you're
00:07:37.360 seeing.
00:07:37.640 Now, don't get me wrong.
00:07:38.340 The market's going to recover once we go back to traveling.
00:07:40.840 I don't know if we're going to go back to 2.2 million people traveling every day anytime
00:07:45.140 soon.
00:07:45.440 I don't even think it's going to happen that quickly in the next 30, 60, 90 days.
00:07:48.420 I think it may take a little longer than that.
00:07:50.140 But we're eventually going to go there.
00:07:51.620 They still have taken a hit.
00:07:53.280 Government keeps bailing them out.
00:07:54.540 It's fake money.
00:07:55.640 If the government doesn't bail out these guys and give them money, you better believe this
00:08:00.480 wouldn't be down 50%.
00:08:01.760 This would be down 90%.
00:08:03.860 That means the real price without a bailout of Delta, instead of $60, it should be $6 today,
00:08:10.140 not $23.
00:08:11.500 That means an American Airlines that was at $30 pre-pandemic, $28 pre-pandemic, it should
00:08:18.400 really be $3 today.
00:08:20.080 It's not worth $3 because of the bailout, not because what its value is today.
00:08:24.580 They were bailed out.
00:08:25.500 This should be a $3 stock.
00:08:27.660 So that's the true value.
00:08:29.020 But the bailout has made it look better than what it really is.
00:08:32.080 And Powell making the rates constantly go lower and figuring out every way to bail everybody
00:08:36.020 out.
00:08:36.280 We understand what they're doing.
00:08:37.220 They're playing the whole socialism on capitalism and companies and taking care of these guys,
00:08:41.060 which it is what it is.
00:08:42.160 I'm not a fan of it, but they're doing what they're doing.
00:08:43.960 Here's the moral of the story.
00:08:45.120 The moral of the story is the following.
00:08:46.860 No matter what business you're running, people keep asking me, Powell, what should I be doing?
00:08:50.000 Look at Zoom.
00:08:50.540 Oh my gosh, Zoom is killing it.
00:08:52.340 Hotels are not killing it.
00:08:54.060 Hotels are getting crushed.
00:08:55.180 Airlines are not killing it.
00:08:56.040 They're getting crushed.
00:08:56.980 Uber's not killing it.
00:08:57.860 They're getting crushed, right?
00:08:59.360 Whatever business you're doing, you have to assume your business model is set up in a
00:09:04.760 way where you are pandemic proof.
00:09:07.940 What do I mean by pandemic proof?
00:09:09.580 Now watch this.
00:09:10.820 We've had pandemics in the past before.
00:09:12.500 When the AIDS crisis took place, nobody shut down the government.
00:09:15.940 Everybody was just more careful having sex with somebody that they just met for the first
00:09:19.880 time.
00:09:20.180 AIDS didn't stop people from going to work.
00:09:22.860 We haven't done this in eight years, but there's a couple things that's changed in the last
00:09:27.120 few years.
00:09:27.720 And here's what it is.
00:09:28.540 Let me explain it to you.
00:09:30.040 We are learning in the last two months the power of media and the power of politicians.
00:09:35.500 Why?
00:09:36.080 Media manipulates and puts panic into us.
00:09:38.820 What do they do?
00:09:39.580 They control.
00:09:40.820 Politicians enforce their power.
00:09:42.860 They can tell you, California can say, if you go outside, somebody you know that's working,
00:09:48.980 snitch on them, we'll tell them off and we'll go arrest and pay a $1,000 fine.
00:09:52.140 The lady in Salem, they find her a couple thousand dollars and they threaten to find her $75,000
00:09:56.920 who runs a salon.
00:09:58.640 Or the lady here in Dallas who's not an essential business and somebody determines if you're
00:10:02.620 an essential business or not.
00:10:03.880 The reality is assume, assume if this were to happen again and you're not an essential
00:10:09.580 business, how are you going to survive during another time when the media can dictate what
00:10:14.060 to do and politicians can dictate what to do.
00:10:17.240 And so if there's ever been a time where this word's more powerful, freedom, it's today.
00:10:22.920 And the way you get this freedom to choose how you live is by you and your family getting
00:10:28.360 your millions.
00:10:29.080 Not the millions for the Lambos and the Ferraris and the Rolls and the watches and the homes.
00:10:33.880 And the $6,000 suits and the $80,000 watches and the $2,000 shoes.
00:10:38.200 I'm not talking that kind of millionaire.
00:10:40.040 I'm talking about free to choose type of millionaire.
00:10:44.660 Freedom is what I'm talking about.
00:10:47.380 Not all this other stuff.
00:10:49.040 So if you're not sitting around with your board, with your leadership team, with your
00:10:52.500 wife, with your husband, with your friends, with your peers, with your siblings, and you're
00:10:56.280 not figuring out a way to be pandemic proof, you may also very soon be looking at stats
00:11:02.680 like this where your customers may go from $2.2 million a day to $84,000 just because of
00:11:10.620 the media's control and politicians' control to enforce laws that you have no control over.
00:11:16.780 You don't vote for it.
00:11:17.900 They told you you better do it or else.
00:11:20.580 You also go make your own money so they can't tell you what to do because you get to be free
00:11:25.400 to choose what you want to do.
00:11:27.660 Thanks, everybody, for listening.
00:11:29.300 And by the way, if you haven't already subscribed to Valuetainment on iTunes, please do so.
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00:11:49.460 With that being said, have a great day today.
00:11:51.280 Take care, everybody.
00:11:52.020 Bye-bye.
00:11:52.280 Bye-bye.