🌈 “N-E-T-F-L-I-X” — Sesame Street’s Savior. The Startup-Burying Startup. America’s AAA Downgrade Situationship.
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This is Nick. This is Jack. It is Tuesday, T-Boy, Tuesday, May 20th. And today's pod is the best one yet. This is a T-Boy. The top three pop business news stories you need to know today. I mean, Jack, I'm feeling the vibes. You're looking the vibes. Should we just hit this bad boy? I'm on it. All right, today's T-Boy. What do we got on the show? Three stories, Jack. For our first story, Sesame Street has been saved by Netflix. Why is Netflix adding Sesame Street? Well, because when you're first, you gotta think like yourself.

like your last. For our second story, America's credit rating was just downgraded. We're officially no longer a triple A country. So Jack and I will tell you how the economy gets punished for bringing home bad grades. And our third and final story is the fastest growing startup right now.

It's a startup to wind down other startups. Yeah, it's actually a whole new industry we discovered. Funeral homes for startups. But yetis, before we hit that wonderful mix of stories. Oh, what a mix of stories, Jack. Love the mix. Nick and I did a thing. We invented a game. A new game. Here's the game. Here's the game. Here's the game. It's called Flavor or Faker LaCroix Edition. Basically, is this a real LaCroix flavor?

or a fake flavor. Because yetis, when it comes to LaCroix sparkling water, Jack is a LaCroix connoisseur, a LaCroix sommelier, if you will. So Jack, why don't you ask me the questions for flavor or faker? May I interest you in a can of coconut cola LaCroix? Okay, coconut cola, that smells like sunscreen. I'm going to say this is a real flavor. That's correct. It is real. How about basil bellini? All right, basil bellini, that tastes like pesto. I'm going to say that's a

fake flavor. Correct. Okay. Beach plum. I'm going to go fake on that because I'm pretty sure you can't grow plums in the sand on a beach, Jack. That's incorrect. Beach plum is real, so apparently you can grow plums on the beach. We've got a lot to learn. How about this? Would you like a can of hint of hummus, LaCroix? Hint of hummus? You know what? I'm going to say real because I think everybody likes garlic. Yeah, it's their Middle Eastern play. Nope. False. False.

I was close. All right, Nick. I was close. Sunshine. Real or fake? That's it. Sunshine. That's all you're going to give me? That's the one. Sunshine. Sunshine. Is that a real LaCroix flavor? It makes so little sense, it makes too much sense. I'm going to say real LaCroix flavor. It is real. Yes, it is. What does sunshine taste like? Apparently zero calories, Jack. Okay.

How about this? Last one. Essence of everything bagel, LaCroix. Well, Jack, essence of everything bagel definitely is a fake LaCroix flavor, but they definitely should make that. Yetis, few know that LaCroix is actually a $4 billion publicly traded stock. We've been covering on this pod for years. Or that LaCroix actually started as a beer business in the Midwest. Or how they landed on a can design that Nick and I can only describe as LaCroix.

Lisa Frank's recycling bin. Yeah, this thing should be in the Guggenheim. Well, LaCroix is this week's episode of our weekly show, The Best Idea Yet. Yes, it is. LaCroix, they didn't invent sparkling water. Mother Nature did. But they did invent our modern obsession with sparkling water.

That's right. LaCroix is who made it go viral. And Nick is who got four out of six questions correct. So, besties, we will tell you how LaCroix pulled all of this off in our 45-minute deep dive on LaCroix. Link in this episode description. Now, Nick, can you do your best can opening sound? That is a high-class onomatopoeia right there. Never gets old. But, Jack, today's show is fantastic. What do you say we do this?

First, a quick word from our sponsor.

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Airbnb. Nick, can you share that wonderful quote about hospitality we heard recently? Jack, I think I read this in the Danny Meyer book, but he said something like hospitality is anticipating someone's needs beyond expectations. I love that quote. When I have a guest booked to stay at my place, I try to meet that hospitality standard, and I do so by letting them know ahead of time events happening in the area. Pro tip, your favorite jam band is playing at your favorite burger place Wednesday night.

Probably let your guests know about that one. I also completed a full travel guide within my Airbnb listing, sharing my personal favorite recommendations and secret spots. What kind of stuff's in that travel guide, Jack? That swimming hole is so remote, you can definitely swim in the nude and you won't get any issues. Yeah, I know George Costanza shrinkage that we know of. Yetis, your actual house, your apartment, your condo is just one part of the Airbnb hosting experience.

I've really enjoyed the soft parts of hospitality, anticipating my guests' needs beyond their expectations. If this sounds your style and you enjoy a naked jump into a stream, you can become an Airbnb host too, as long as you got a place. I'm proud of my 4.92 rating, and my wife is proud of the revenue we're generating with that rating. Yeah, it is. Your home might be worth more than you think. Find out how much at airbnb.com slash host.

For our first story, hold on to your vowels because Netflix just saved Sesame Street. Why is Netflix doing this? Because in any industry, when you're in the lead, you still go as fast as you can.

Now, Jack, can you please tell me how to get, how to get to Sesame Street? Like, I actually don't know how to get there right now. Where are we going these days? Just say Netflix into your remote. Because yetis, after a 10-year stint on HBO, Sesame Street is moving on up to Netflix. Even Oscars, punk.

Yeah, and that guy, man, he is hard to please, man. Now, Sesame Street will still air on PBS over the broadcast and cable networks, but it's also going to stream alongside Stranger Things starting sometime later this year. So the next episode will be brought to you by the letter T for...

True. Now, there's no word yet on how much Netflix is paying Sesame Street, but the nonprofit behind Sesame Street must feel so relieved right now. Because the government has been trying to cut funding for PBS, and that could harm Sesame Street. Elmo need GoFundMe. Elmo need lobbyist.

Well, they don't need a lobbyist anymore because the $500 billion Netflix is becoming the sugar daddy that's going to keep sending paychecks to Big Bird. Now, yetis, this is what Jack and I got curious about. What exactly is the value of a single show, Sesame Street, to Netflix? We think it's the family factor. Netflix is for families with kids. It will keep them subscribed. And here's the interesting detail. That happens.

That actually explains why Max just changed its name back to HBO. These stories are connected, we'll explain. Yes, we will. Because when Warner Brothers merged with Discovery years ago, they tried to create one super streaming app to rule them all. HBO was the star content-wise at this new merged company.

But HBO is known for NC-17 content. Have you seen Euphoria, Jack? I'm like too intimidated to pick up the dial. The trailer had me schvitzing. It was intense, man. Well, Warner Bros. Discovery wanted their new streaming app to appeal to everyone like Netflix does. And they signaled that by calling it Max. Well, years later after that name change, it looks like...

the name change didn't work. Well, the whole strategy hasn't worked because Max only has 122 million subscribers. That's less than half as many as Disney Plus or Netflix. So add it all up, besties. And Max's decision to drop Sesame Street is actually consistent with their decision to rename to HBO. It's all consistent with the strategy of focusing on adults. Exactly. They're done trying to get kids to stream.

They want people who watch GOT, not OTG. Translation, Game of Thrones, not Oscar the Grouch. Euphoria passed over with bedtime. You gave it a good shot, Jack. You gave it a good shot. We'll workshop it after the pod. So Jack, what's the takeaway for our buddies over at Netflix? When you have the lead, step on the accelerator. Now, Yetis, the real value of kids' content is that it actually eliminates churn at a very low cost. Because cord pausing is a big issue for streamers.

Chord pausing is when people subscribe just to watch the White Lotus and then unsubscribe when the season's over. But interestingly, it's not the case if your kids watch the programming. For millions of families, they stay subscribed to Disney Plus because it's a low-cost digital babysitter. Your four-year-old doesn't care which season of Bluey they're on. They just want to watch Bluey all the time, mommy, daddy, all the time. But here's the thing.

Netflix's content is so good and so vast, they already have the lowest churn in the industry. Get this, just two to 3% of Netflix subscribers unsubscribe each month. That's it. On the other hand, Disney's churn rate is two times that and Apple's is triple that. So even though Netflix is in the lead, it doesn't matter. They want to make their churn even lower.

And that is why Netflix recently snagged the rights to Cocomelon, Miss Rachel, and now Sesame Street. Netflix could relax, save some money on content to boost their profit margin. But Jack, in a market where Spotify, Disney, TikTok, and YouTube are all competing, you can't just go on cruise control. It's not a lesson Bert and Ernie would teach you. No, it's not. But in business, when you have the lead, go even faster.

For our second story, it's official. America's AAA credit rating has now been downgraded by every single agency. America is addicted to debt. We are. We'll tell you the one thing that could actually change that. Now, Yeti's fun little scenario here Jack and I are playing with. Let's say you're a bond, a financial bond.

and you go out on a dinner date with- With an investor. Yeah, if you go out with an investor and you're a bond and you like, you know, you kind of, you want to hook up. The investor is going to ask you, the bond, what's your fiscal situation? Well, America's answer is a huge beige flag. There are $36 trillion of debt.

That's our fiscal situation. It's actually a red flag now that I think about it, Jack. Which is why for the first time, Moody's, the credit rating agency, downgraded the United States of America. America's debt is the dating equivalent of, I still actually live with my ex and I owe her money. The most awkward situationship you can imagine. Well, Moody's stripped us of our AAA credit score that they initially granted, 103%.

26 years ago back in 1919. To sprinkle on some historical context, the other two ratings agencies already downgraded the U.S. back in 2011 and 2023. And to sprinkle on some geographical context, Canada, Germany, the EU, Singapore, and seven other nations still have their perfect AAA ratings. But the United States does not. That's right. You can't point to Luxembourg on a map, but that little country still got a AAA rating, and we don't.

So we know what you're thinking, besties. Why did the United States just get downgraded? We already told you. We got $36 trillion worth of skeletons in our closet. That's right. We are addicted to debt. We're so addicted, we need more closets for our debt. Get this. Since 2009, the United States has run up budget deficits of more than a trillion dollars nine different times. Democratic presidents increase spending. Republican presidents cut taxes.

The math isn't mathing. So our budget gap gets bigger and bigger no matter who happens to be in office. The debt gets higher and higher and higher. The latest is Donald Trump's big, beautiful bill, which is about to be voted by the House. Tax cuts without funding? That's expensive.

Now, the logical response to all this fiscal irresponsibility? What is it, Jack? Well, since the U.S. is less likely to pay you back, holders of U.S. debt deserve a higher interest rate. But here's the interesting thing, besties. What Jack just said, that hasn't happened.

happened. So far, investors have not punished the US with higher interest rates. It's almost like if we splurged on our credit card and just blew through the limit of that Amex jack, like instead of canceling our card and demanding repayment, Amex just keeps increasing the credit limit. That's basically what the United States is experiencing right now. We keep splurging, but no one's holding us accountable. There have been so few consequences to the United States

for our addiction to debt so far. Which is why voters have stopped caring about debt and politicians, yeah, they just ignore it too. But on Monday, we're starting to see the first signs that all of that could be changing. And that sign is our takeaway. So Jack, what's the takeaway for our buddies who are everyone in America? The one thing that could fix our debt problem is if the world starts making us pay for it.

Yeti's wild thing. On Monday, the markets did something they never do. They penalized America with higher interest rates. The interest rate on the 30-year U.S. government bond hit 5%. That's up from just 4% in September.

which means it'll now cost us more to borrow money through bonds. To sprinkle on some more context, 5% for the U.S., that's nearly twice as much as what investors charge Germany for their debt. So Jack, how about we go back to our credit card analogy with American Express for a second? Investors are still raising America's credit limit, but this time they're charging a higher interest rate. Now, besties, if these interest rates continue rising on our bonds...

Just paying our interest that we owe could require spending cuts and tax increases from Congress. Investors are treating the U.S. as no longer the most credit-worthy country in the world. So the one thing that could actually fix our debt addiction, what is it, Jack? If the world starts making us pay for it. Now, a quick word from our sponsor.

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The best one yet is sponsored by BetterHelp. All right, Jack, let me set the scene for you. My birthday dinner, we did a pizza party. I rented out a whole spot called the Dough Room in San Francisco. You mess with the pizza dough while you make it. I know. And then what comes next is the most San Francisco thing ever. Basically, group therapy over dinner. So all three people on my side of the table were in therapy, and all of us were talking about each other's therapy. You know, like one person was saying how their therapist helped them through a coworker battle. Another was talking about like the future of

fatherhood with their therapist. They're stressed about becoming a dad. It's not just San Francisco. Society's views on therapy have changed across the world. True. It's evolved to the point where you had a birthday dinner learning from each other's therapy session. Well, BetterHelp is an easy way to take that leap and find the therapist for you. Because BetterHelp has over 10 years of experience matching people like your friends with therapists. As the largest online therapy provider in the world, BetterHelp can provide access to mental health professionals with a diverse variety of expertise. Talk it out with BetterHelp. All

Our listeners get 10% off their first month at BetterHelp.com slash T-Boy. That's BetterHelp, H-E-L-P dot com slash T-Boy. For our third and final story, the fastest growing startup right now specializes in shutting down startups. Because get this, for every 10 new startups formed, nine startups fail. Which is an opportunity for another startup. Yeah, that's the story.

We'll explain, but yet he's to sprinkle on some initial context. 10 years ago, the WeWork era, masa. What were we seeing, Jack? Free kombucha, three meals a day catered, free kombucha for your dog, who also gets health benefits. It was a venture-backed party for your puppies. But today, it is a different world out there for startups, isn't it, Jack? You have to have a budget. You have to have

profit targets, profit deadlines, no more free sushi Fridays. It's now BYO Sushi. Oh, honey, get the salmon out of the fridge. But yetis, there is one startup that ironically we notice does better as every other startup does worse. It's called Simple Closure. And they're basically thinking of themselves as the TurboTax of shutting down. And they just raised 15 million bucks to shut down startups. Here's the business model. They take a fee to help that direct-to-consumer diaper business that was launched in college and didn't work out

So their software handles the regulatory process, the legal filings, the investor communications of dissolving a company. It's like a divorce lawyer or a funeral home. It's an undertaker that lets the business pass away with dignity.

Because, besties, you can't just bury that balance sheet. The assets must be given a proper distribution ceremony. And if you screw up the dissolving of a company... Lawsuit! You might get a letter in the mail that you don't want to open. Honey, put the sushi back in the fridge. Besties, here's what Jack and I find fascinating. There's actually a bigger economic story here, isn't there, Jack? That story is that it's a tough time for startups...

I mean, Jack, remember back in 2022, layoffs.fyi, the website? We would track the number of people who'd been laid off in the tech and startup industry. Well, that was three years ago. And now we're still in year three of high interest rates. Money from venture capital is still very tight. So it's a tough time for startups. Get this, the number of series A fundraisers is actually down 79% from 2022, according to Carta. So if your startup hasn't closed yet, it's probably taking a down round.

It's a tough time for startups. Which leads us to this story. We can actually see all of that in Simple Closures numbers. It's on pace to fold 1,500 startups this year, which is three times more than they did last year. Yeah, it is wild, but even inquiries to their website have jumped 25% in the last two months of the trade war. A lot of CEOs are curious about Simple Closures services. And besties, if you are one of them, like, we feel for you. There is no stress like payroll stress. That would be awful.

to go through. So it turns out Simple Closure is part of a new industry. We actually found three other companies doing this. Yeah, we call it STAS, S-D-A-S, Shutting Down as a Service. And the most ironic part of it all? What is it, Jack? Founder of Simple Closure started Simple Closure after their dating app startup failed.

And they wish they had helped shutting down that failed startup. Yeah, this guy started a startup shutdown app after his first startup shutdown. So Jack, what's the takeaway for our tongue-twisting buddies over at Simple Closure? The perception divide is a business opportunity. Yetis, the reality of social media is that it's not real. People, they post and they publish purely positive updates. Even on LinkedIn, you see posts about fundraisers, launches, and hires online.

But if there's bad news, the startup simply doesn't post anything. But here's what Jack and I want to share with you. While LinkedIn business updates are 90% positive, the reality is they should be 90% negative. According to the Bureau of Labor Statistics, half of businesses formed in the United States fail within three years. According to Forbes, 90% of venture-backed startups eventually fail. So the vast majority of startups are failing.

And yet the vast majority of what they're posting is that they're thriving. Yeah, so don't get bothered when you see those posts. Instead, hey, there's an opportunity here. The difference between the online perception and the offline reality is an opportunity. The perception reality divide. It's an opportunity in any industry.

Jack, could you whip up the takeaways for us for T-Boy Tuesday? Sesame Street is leaving Max. It's coming to Netflix sometime later this year. Because when you're in the lead in business, you need to press on the pedal faster. For our second story, after 126 years of a AAA rating, Moody's has downgraded the United States to AA+. The only thing that could get America's debt addiction under control is if the world actually starts charging us a higher interest rate. For our third and final story,

Simple Closure is a startup that helps other startups shut down, and it just raised VC money. The perception divide on LinkedIn, that was their opportunity. But yetis, this pod's not over yet. Here's what else you need to know today. First, it's official. Mark Cuban is retiring from his greatest hit, Shark Tank. Friday's season finale on the VC reality show will be his last episode of Shark Tank. Marky Mark Cuban put in 14 seasons, all of them...

We can only use the word wonderful. He's going to spend more time with his children and start a $700 million PE firm to invest in pro sports teams. And Mark, yes, will take 15% equity at a $6 million valuation. And second, 70% of advertisers on Instagram and Facebook are promoting scams, illicit goods, or low-quality products to you. That's according to Wall Street Journal reporting of a 2020 meta-internal study. Yeah, the wildest part?

Meta doesn't even seem to care. As long as they're getting paid for the ads, they'll post the ads. The report says that Meta allows 32 strikes before banning an account. I haven't played baseball in a while, Jack.

But Nick, 32 strikes and you're out. It's a lot of strikes. And finally, Touchland, the antibacterial spray we covered on this show that went viral with Gen Z. They just got acquired for $700 million by Church and Dwight, the company that owns Arm & Hammer. Oh, and Daily Harvest, the smoothie delivery startup that introduced Jack to chia seeds. That's factually accurate. Okay.

Well, Daily Harvest just got acquired by Chobani, the yogurt company, for $600 million. Now time for the best fact yet. This one sent in by John Kloss down in Atlanta over at SurfScape. We've gotten a lot of rain in Vermont this month. The flowers are absolutely blossoming. But Jack, I got to ask, what is the best time to plant flowers?

A flower. Not right now. That's right. According to John, the best time to plant that flowering bud isn't when a flower is showing off. It's actually when no one's paying attention. So if you see a bunch of hydrangeas right now that look fantastic, don't plant hydrangeas right now. You're too late. Yeah. The best time to actually plant a flowering spring bud would be in October. You got to be patient. You got to plant in the fall, wait till the spring. Which honestly is kind of disappointing, Jack.

Yetis, you look fantastic today. Jack, can I interest you in a basil bellini or maybe a hint of hummus, if you will? A hint of hummus sounds horrible. But it pairs well with hummus. That's the whole point, Jack. That's why you drink a LaCroix hint of hummus. Wait, you wash down your LaCroix with hummus? Is that what

you're saying? It's called double fisting, Jack. I can't even believe I have to explain this to you. Besties, to hear the untold origin story of LaCroix, check out our weekly show, The Best Idea Yet. We put a link in the episode description. It's a wild story. Oh, and if you've got the best fact yet, send it our way. Jack and I, if you know, you know, we'll see you tomorrow. And before we go away...

a happy birthday to George Dwyer over in Charlottesville, Virginia. Apparently, he's already getting drafted to the UVA lacrosse team, Jack. And happy birthday to Marine Captain John Demo of Holly Springs, North Carolina. This man has been listening since the beginning. OG Mark

Love you, Captain John. Oh, and Oliver Suggs down in Cincinnati is the best dog dad with a birthday. Cincinnati, the Rome on the river. Who's a good boy? Oliver is. And happy birthday to Lynette Lee, who's turning 28 in Xi'an, China. And to Death You Ever Gov in Las Gadas, California, happy birthday for the big day. Oh, and thanks for getting your wife to convert to a Yeti. And a big shout out to longtime listener Lloyd Brotman.

of Philadelphia who just saw the synchronized fireflies of South Carolina. Lloyd got off the wait list, accomplished the life goal. Lloyd, can't wait to hear about these flies or see about them. And congratulations to Logan Miller of St. Petersburg, Florida, who took the CFA exam and is now starting a new job at Ring Power. This is Jack Islandstock of Disney and Netflix.

If you like the best one yet, you can listen ad-free right now by joining Wondery Plus in the Wondery app or on Apple Podcasts. Prime members can listen ad-free on Amazon Music. And before you go, tell us a little bit about yourself by filling out a short survey at wondery.com slash survey. We want to get to know you. Today my bank made a big mistake, but I forgave them. My server spilled water on me, but I forgave him. My toddler drew lipstick on the wall. Was I ever mad?

It got me thinking, I can forgive my bank and my server, but I'm upset with my own kid? I mean, what's most important here? So tonight, the two of us are doing lipstick art. On paper. Forgiveness is in you. From PassItOn.com.