#57 - Corona Business Ideas, Stock Buybacks & Recession Proof Businesses

Episode Summary

Executive Summary: A remote special-edition episode centers on COVID-19’s immediate human and business impact, mixing personal quarantine reactions with a broader analysis of market disruption. The hosts argue that crises create both hardship and opportunity, then explore practical business ideas—from local commerce and coupon models to billboards and performance tools—while warning that corporate buybacks and debt have left many firms vulnerable and likely to need bailouts.

Main Topics: Quarantine life, social behavior, and emotional reactions (Priority: 5/5): The hosts discuss shelter-in-place restrictions, frustration with people ignoring distancing rules, and the psychological strain of isolation, comparing coronavirus to 9/11 and quoting Pascal on people’s inability to sit alone quietly. Crisis as business opportunity vs. exploitation (Priority: 5/5): They distinguish predatory behavior from legitimate opportunity: the pandemic exposes new problems that businesses can solve, and resilient operators should help consumers and communities rather than exploit shortages. Corporate bailouts and stock buybacks (Priority: 5/5): A major segment explains why airlines and other industries may need bailouts, then traces the history and consequences of stock buybacks, arguing that buyback-heavy firms are now cash-strapped and morally questionable bailout candidates. Consumer and local-business opportunity ideas (Priority: 4/5): The discussion explores hyperlocal offers, gift cards, buying clubs, local boxes, and a revived Groupon-style model as ways to support struggling small businesses and capture new consumer demand during lockdown. Glucose-monitor weight-loss challenge as a product experiment (Priority: 4/5): The hosts analyze Justin Mares’s glucose-monitor challenge as a behavioral product combining money, measurement, and social accountability, debating feasibility, liability, and whether it could scale commercially. Market winners, portfolio strategy, and recession timing (Priority: 4/5): They note that usage for platforms like Twitch is rising while advertising may weaken, and they discuss buying blue-chip stocks and other assets on sale if the downturn deepens, emphasizing dry powder and timing. Entrepreneurship, culture shifts, and remote startup opportunities (Priority: 3/5): The conversation closes with reflections on identifying cultural changes first, examples from Native and Method, and a desire to review Y Combinator startups remotely, suggesting crises create fertile ground for new ventures.

Key Arguments: Coronavirus is not just a health crisis; it is also unmasking weak business models and creating new market needs. The proper response to a downturn is not exploitation but solving newly created or newly visible problems. People and firms with cash, flexibility, and strong product-market fit can gain share while weaker competitors fail. Corporate buybacks distorted incentives, enriched executives, and left many companies undercapitalized going into the shock. If governments bail out industries that spent profits on buybacks, they may reward irresponsible capital allocation. Hyperlocal commerce, gift cards, buying clubs, and community support tools can help local businesses survive temporary shutdowns. Behavior-change products work best when they combine measurement, financial stakes, and social pressure. Some digital platforms may benefit from increased usage during quarantine, even if ad spend temporarily declines. Crisis periods often create strong startup formation windows because people have time, motivation, and shifting habits.

Data Points: Quarantine duration/peak projection: 45 days - New York governor projection for when the COVID curve could peak Potential stimulus/bailout package: $850 billion - Discussed as a possible federal stimulus package for regular people Direct payment idea: $1,000 - Referenced as a possible stipend or Andrew Yang-style payment Glucose challenge fee: $900 - Participants Venmo Justin Mares to join the 28-day challenge Glucose challenge organizer fee: $100 - Justin keeps $100 from each participant as his fee Glucose challenge participant stake: $800 - Amount participants can earn back if they meet the rules Glucose threshold: 140 mg/dL - If participants exceed this level they lose that day’s money Alternative threshold mentioned: 110 mg/dL - Early description of the glucose limit before later correction to 140 Challenge group size: 20-30 participants - Described as a beta test / WhatsApp group of roughly this size Abbott device reimbursement detail: $400/month - Mentioned as approximate out-of-pocket cost if not covered Stock buyback spending at some airlines: 80% / 66% / 50% of profits - Examples cited for United, Southwest, and Delta buyback intensity Overall buyback share of profits: 77% (2008); 65% (current) - Portion of corporate profits used for buybacks in the U.S. after buybacks returned Corporate tax rate change: 37% to 21% - Referenced Trump corporate tax cut and its intended effect on wages/investment Wage growth after tax cut: 1.2% - Cited as limited wage improvement after the tax reduction Announced stock buybacks after tax cut: $1 trillion - Used to argue that tax savings flowed into buybacks instead of wages Casper share price drop: $13.50 to $4.50 - Illustrated pandemic pressure on public companies Groupon share price: $0.65 - Used to show severe valuation decline Groupon market cap: $358 million - Current valuation discussed in contrast with earlier billion-dollar scale Entertainment.com prior revenue: $100 million - Revenue level in 2012-2014 for the coupon-book business Entertainment.com sale price: $135 million cash - Private equity acquisition price mentioned Entertainment.com assets/liabilities at shutdown: $13 million assets / $50 million liabilities - Used to show the business was mismanaged despite viable economics Twitch usage: Higher than ever - Example of a platform benefiting from quarantine behavior CEO-to-worker pay ratio: 15x to 220x - Described as rising as stock-price-based compensation became dominant

Pivotal Quotes: "All of humanity's problems stem from man's inability to sit quietly in a room alone." — Sean: Used to frame why quarantine is psychologically difficult and why people struggle with inactivity "Where there's tragedy and where there's a downturn, there's opportunity." — Sam: Central thesis of the episode’s business discussion, distinguishing useful opportunity from exploitation "The coronavirus thing is so different... we have an invisible enemy... and the best course of action is inaction." — Sean: Explanation of why this crisis feels more unsettling than 9/11

Implications: Listeners are urged to support local businesses, expect industry bailouts and deeper scrutiny of buybacks, and look for new startup opportunities in changed consumer behavior. The episode frames quarantine as both an economic reset and a chance to build more resilient companies.