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šŸŸ The French Fry Economy

And the man who gave away $8B

This is Nick. This is Jack. And weā€™re still shocked by the daily scenes coming from Israel. The latest: ā€œA trail of terrorā€ (NYT) left by Hamas, the terrorist organization that runs the Gaza Strip. This has been Israelā€™s Pearl Harbor. To our Israeli Yetis, weā€™re thinking of you. And weā€™ll make todayā€™s newsletter & show a TBOY.

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1) The French Fry Index: You Say Potato, We Say Economic Confidence

North Americaā€™s biggest french fry maker is $15B potato legend, Lamb Weston. And the carbo king says a ā€œyesā€ to ā€œdo you want fries with thatā€ means good things ahead for the economy.

The reason? Itā€™s officially called the Fry Attachment Rate, but we like the unofficial French Fry Index. This economic phenom suggests that the share of diners who order a side of fries at fast food joints moves with economic sentiment: more fries = better feelings about $$$. These days, that rate is holding steady above pre-pandemic levels, suggesting economic confidence from fry consumers everywhere. Recession fears who?

It sounds wild, but you can trust the source: Lamb Weston, Idahoā€™s finest potato giant, has built a $15B empire on your sodium intake.

  • šŸŸ Most of the worldā€™s top fast food restaurants use Lamb Weston taters (10% of its sales are to McDonaldā€™s).

  • šŸŸ The co produced 8B pounds of potatoes on 4 different continents last year.

The Takeaway ā†’

The best way to measure consumer confidence? Whether you ordered fries or not. A yes-to-fries economy is full of treat-yo-self vibes. You wouldn't say yes to the little extra treat unless you were sure the direct deposit was poppinā€™. Traditionally, economists ask consumers how they feel about the economy to gauge confidenceā€”but responses can be politicized. Instead, french fries feel like a purer signal.

2) Birkenstockā€™s Big Moment, 249 Years in the Making

Birkenstock will IPO today with an almost $9B valuation. After 249 years in business, itā€™s about time.

Welcome to the NYSE: $BIRK, the company to thank for the sandal universally loved from German cobblers to Justin Biebers. The big number is $9Bā€”the valuation:

  • šŸ©“ Birkenstock's $9B valuation is nearly double that of fellow comfort queen Crocs

  • šŸ©“ But funny thing: Birk brings in ā…“ the revenue Crocs does (itā€™s the arch support).

  • šŸ©“ Birkenstockā€™s bankers think Birk has higher growth potential than Crocs. Today, when stock begins trading, weā€™ll see if investors agree.

We jumped into the IPO paperwork and these numbers stood out ā†’

  • šŸ‘£ A lot of talk: 90% of customers hear about Birks via word-of-mouth. The Barbie movie and Gigi Hadid are doing the heavy lifting for the marketing department.

  • šŸ‘£ No one stops at 1: The average US customer owns 3.6 pairs of Birks. šŸ™‹šŸ™‹šŸ»

  • šŸ‘£ But they all prefer 1: Birkā€™s open-toe ā€œArizonaā€ model makes up ā…“ of all sales.

The Takeaway ā†’

Birkenstock is the poster child for the Lindy Effect. Whatā€™s that? The concept that the longer something has been around, the longer it will last (shoutout to Trung Phanā€™s newsletter for the idea). Thatā€™s why Birkenstock doesnā€™t hide its age: Its IPO paperwork highlights words like ā€œheritageā€ 19x, ā€œcenturyā€ 21x, and ā€œtraditionā€ 41x. Hereā€™s to 249 more years.

3) Warren Buffettā€™s Hero Gave it All Awayā€”$8B of it

Billionaire Charles Feeney, who gave away his entire $8B fortune to charity, passed away this week with about $0 to his name. Warren Buffet says ā€œ[heā€™s] my hero and Bill Gatesā€™s heroā€”he should be everybodyā€™s hero.ā€

Hereā€™s the story on the iconā€™s icon.

His claim to fame: He cofounded Duty Free Shoppers, the airport stores to browse 12 lb Godiva bars during your layover (for servicemen in the ā€˜50s, it was Marlboros and booze). All the goods are 100% tax free (aka duty free). The Duty Free biz went gangbusters and Feeneyā€™s net worth did the same.

Wake up call: After a couple decades of counting commas in his bank balance, Feeney had a change of heart on the entire idea of mega-wealth. He started taking the subway, rented a modest apartment, and lived minimallyā€”and gave all his money away. His beneficiaries included Haiti earthquake relief, AIDS clinics in South Africa, and tons of colleges and universities. By 2016, he'd donated away all but $2M, saving that to live out the rest of his life.

And because we know youā€™re wondering: Feeneyā€™s five kids got ā€œdecent but unextravagant provisions.ā€

The Takeaway ā†’

Something everyone (not just billionaires) can learn from Feeney: Itā€™s not just about your success, itā€™s about what you do with your success. Getting ultra rich is Americansā€™ idea of glory these days. And while money and success are great, whatā€™s really the point if itā€™s not doing anything?

 

šŸ”‰ President Biden addressed the nation following the events in Israel. He described Hamasā€™ actions as terrorism and ā€œpure unadulterated evil.ā€ Biden vowed to stand with Israel as they begin a siege in Gaza.

šŸ’Š Hot strike fall is in session: Walgreens pharmacists and technicians are walking out over harsh work conditions.

šŸŽƒ Skittles is launching the biggest candy innovation in years: ā€œLittles.ā€ Theyā€™re exactly what you think they are.

šŸ§“ Boomers are the secret to keeping the economy booming. The 65+ crowd accounted for 22% of spending last year. Now they are saying yes to fries.

šŸ˜Ž Cipriani, the celeb-faved restaurant in NYC, has raised $526M to go global. The price of access worldwide? $5,000.

šŸ… The Nobel Prize in Economics was awarded to Claudia Goldin for her research on gender gaps in labor force participation and earnings. Sheā€™s the third woman to win the prize.

šŸ‘½ Amazonā€™s Ring is offering $1M to anyone who captures alien footage with their doorbell cameraā€¦so are we.

šŸŒ“ Maui reopened to tourists this week, just 2 months after the devastating wildfires. Reactions from locals are mixed.

šŸ“ŗ On the pod today: Roku, the smart TV device, has a bold new play to win in streamingā€”the MoneyBall Strategy.

 

 

ā

The worldā€™s largest seller of cashews is Costco. It sells Ā½ of the worldā€™s cashews, which means about $300k/week in cashew sales.

From Mike and Cassie Gurzadas in St Louis, Missouri. 

 

And one more thing. Like we said on the pod, weā€™re thinking of our Israeli Yetis out there as events have gotten even worse.

ā€”Nick & Jack

FYI, the writers of this newsletter own stock of Amazon and Crocs.

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