FedEX Falters, Tesla Centers, Uber Gets Hacked

September 16, 2022
Welcome to Friday! Today we’re covering the drop in retail packages being shipped and what that means for the broader retail economy. We also talk about Tesla's move to larger facilities, as well as the 18 year old that hacked Uber…completely.
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FedEX is closing locations and parking aircraft after volumes of packages drops significantly, sounding the alarm on reduced retail spending

  • Revenue at FedEx Ground, which mostly handles e-commerce deliveries in the U.S., was about $300 million below company forecasts.
  • Shares are down 19% in off hours trading this morning as CEO Raj Subramaniam, announced actions to reduce costs by freezing hiring, closing 90 FedEx Office locations, parking some cargo aircraft, reducing Sunday ground operations and closing five corporate offices. No layoffs were announced

“People are buying less. They are paying more for air travel and other experiences,” said Satish Jindel, president of research firm SJ Consulting Group.

  • Tesla has been showing signs of moving away from small retail boutiques and toward “Tesla Centers” which look and feel a lot more like the Dealership experience.
  • Last year they announced the closing of multiple high-rent spaces but continued hiring sales associates as they looked for lower rent areas to put focus on larger facilities that house service and deliveries to support remote management of the test drive fleet
  • Sources familiar with the matter say there has been success with this strategy and the company is now moving the “Tesla Center” strategy to it’s Chinese market
  • Investments in the service experience have been increasing as CEO Elon Musk has made improvements to service a primary goal for the company who is delivering record numbers of vehicles

Uber suffered a systemic hack by a teen. Employees thought it was a joke.

  • The alleged hacker, who claims to be an 18-year old, says they have administrator access to company tools including Amazon Web Services and Google Cloud Platform. The New York Times reports that the ride-hailing business has taken multiple internal systems, including Slack, offline while it investigates the breach.
  • The hacker who goes by the Telegram handle “Teapot” posted the message, “I announce I am a hacker and Uber has suffered a data breach,” on slack and was responded to by employees with popcorn emojis, the “It’s happening” gif, and was accompanied by multiple interactions with other employees
  • An employee was social engineered an employee, was able to login to their VPN and scan the network resulting in From there, they found PowerShell scripts on Uber’s intranet containing access management credentials that allowed them to allegedly breach Uber’s AWS and G Suite accounts. It is a total breach

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Kyle Mountsier, Paul Daly

Kyle Mountsier  00:00

Oh hey, Kyle, it's Friday already

Paul Daly  00:28

feels like a short weekend along with all the same time. But today we're gonna talk about a few things. FedEx package is going down Tesla service centers and Uber got a go back when they stopped. Oh, he's singing today. Yo, I don't know if anybody noticed if you're watching Kyle has decided to take up MMA in the evenings. He took me right crossed,

Kyle Mountsier  00:53

full cracked. That's not actually what happened. But it's wrong. But

Paul Daly  00:57

I liked that story better. I like that story better.

Kyle Mountsier  01:01

Man, I'm telling you what, this morning we got the pleasure of hanging out on on clubhouse with some of our investors and people that attended a soda con and just like, all the feelings welled up again, like what, what went well and how people perceive the conference and did my heart good. Here and

Paul Daly  01:21

the perspectives. Here's the thing. So let's give you a little inside baseball here. So we got back from a soda con on Tuesday, right? Everyone flew home drove home, we all collapse. I've never ever left it on the field like I did for this one, I can tell you that 100%. Right. And then Wednesday, we all kind of like the team, you had a group call came in new one o'clock, right? We'd like let's do a little talk about all the things like our individual experiences, because there's like a lot of high fives between our team. But we didn't spend a ton of time together. Because we were running. And we just talked about all the amazing experiences and the deep conversations and like the the growth we saw in one another. And it was amazing. It was like amazing to do that. And yesterday, we were like, Let's talk about all that stuff. And yesterday, we had 20 minute ish debrief meetings with one on ones or two on ones Kyle and I had these everybody on the team. And we started talking about all the things that went wrong, right? Because it's important to debrief, like let's talk about, let's talk about what didn't work out, right, what we want to do better next time, you know, personality conflicts, all the things that happened when you're actually doing something meaningful, right? Friction happens when there's movement. And we were driving home yesterday, and I said the car was like, you know, I didn't see today comment. And that really is for anybody who like leads anything or is trying to move anything forward, you realize, like, hey, it's the parallel rails, like you do a lot of good things. And then there's like a lot of a lot of friction, that you have to figure out how to how to work with and work through. So like it is this roller coaster of being an entrepreneur. And again, the conversation yesterday, were all great and positive and productive. Really great.

Kyle Mountsier  02:58

Yeah, no, I think you know, from like, you know, we're managing people, first of all, and anytime you're working with people, you there are always going to be things that come up, that are not the easiest things. And so just, I was appreciative that, like that you stepped in with me that our team stepped in. And like we dealt with some stuff, also, to look back and look at the little things that like, quote unquote, went wrong. Right? That nobody else noticed that one, nobody else noticed. And two, it's like, you know what, that's an extremely solvable thing for next time. Like, we can take a couple little ticks, we needed a sign right there. Yeah, we need a sign. Great solve for next time, put it on the spreadsheet, we'll order the sign, you know, later, it was really cool to just think, Okay, our team saw those little things, was aware enough in the moment to write it down or to put a placeholder so that next time we can make the adjustments that are next necessary. And I think what that's going to do is it's also going to heighten our awareness for the little things that we might not miss next time. Oh, that are in the same vein. And so, you know, for for our team, like we're just super proud of our team for beaming leaning in in that way. And this was the constant theme for us. And this is what I think when if you're leaving any sort of company, if you get to this point, where you're like, I think everybody on the team took so much ownership, they took it personally. Yeah. You're like, holy cow. This is like there's a transfer of ownership there. And so I'm using wood

Paul Daly  04:35

retailed for that mentality. Yeah, right, has its own thing. Well, we are excited. We jumped in clubhouse this morning. And there are a few 100 people in there. And a lot of the attendees and our investors when they're talking about the things that they enjoyed most about it, and it was like the contradictory opinions, right? You do it this way. You do it this way, and how that was accepted and how people were taking away best practices from that. though somebody said like, Hey, I didn't know who was a dealer and who was a vendor, which actually helped a lot, because I was having more meaningful conversations more easily right, which is the point of the collaboration. And so again, we want to thank our presenting sponsor, all of the other collaborators that were willing to step into a new format, and get in the scrum with us because they also believe that collaboration is the way forward we have a few new stories. But first want to talk about we are going to be bouncing from this live stream into the all things use car, clubhouse room. So if you go on clubhouse, search, all things used cars, it'll pop up right away. We're going in there in just 11 minutes from now, which will be 9am. Eastern Standard Time. We're going to recap what went on in the live all things use cars. And if you are an industry dealer, industry partner, or just an entrepreneur, I think you have a lot of takeaways from that. We have to talk about some news. Speaking of taking things away.

Kyle Mountsier  05:57

That's a segue on this first one. Well,

Paul Daly  06:00

it is it is but it's real. It's real red X announced yesterday it's closing locations and parking aircraft after volumes of packages have dropped significantly sounding the alarm on reduced retail spending. So revenue at FedEx Ground which is handles mostly ecommerce deliveries, right? You buy stuff online, and they ship via FedEx or it's a big, big part of FedEx as business deliveries are down about $300 million below what the forecasts were because of the new shares are down 19% pre market training this morning CEO Raj Subramaniam I practice that last name that isn't mass you name not that I did literally set it out loud like five times he announced actions to reduce costs by freezing hiring closing 90 FedEx Office locations, parking cargo aircraft, reducing Sunday ground ops and closing five corporate offices. You know how many corporate offices do you have if you keep a close five corporate office?

Kyle Mountsier  06:58

Cow Yeah, well okay, so this is my question. So the quote here is people are buying less they're paying more for air travel and other other experiences which was said by Satish Jindal president of a research firm SJ Consulting Group my here's my here's my unpopular opinion in the stock market crowd is well and we can look at the broader retail numbers but I do think that there are more people like when I when I drove past malls and strip malls and Walmart and Target and that type of stuff. Those parking lots are slammed right now like you can't find a parking spot so I'm wondering how many people are are actually moving back away from E commerce I would love to start to see some trends on like is is is retail is brick and mortar over coming back into that E commerce push that was a balancing happening is there a balancing act happening? And that's that's

Paul Daly  07:57

you know what else change there's there's also I mean, you know what else I've noticed is that like it seems like the the the the what's it called clicking brick brick can click I don't know where you order click the brick click to brick yes man when I walk in like Target Walmart like that store shelves are full like they have staff running stuff out to people picking stuff off the lot Yeah, right so that also eliminates the need for shipping because for me personally if I can get it we did it for the PlayStation we gave away at at a soda con right I would rather buy it online and then like drive six miles to pick it up versus waiting for it to ship to my house forgot to wait a few days yeah, the dogs are gonna bark at the FedEx guy like it just is more of a hassle to me and you know my dogs made it I have three dogs and come at you right crazy pack every time that Amazon truck comes down we put a box at the end of our driveway we're like Do yourself a favor just put it in the box okay, we gotta go on to the next story just because keep rolling. Keep rolling. Okay, no segue but listen to this this one really got me interested I had to like dive back a few articles you know like going back to last year but check this out. Tesla has been showing signs of moving away from small retail boutiques and truer word Tesla centers which when I looked at it I was like that look and looks and feels a lot more like one than before. Absolutely different logo on it look like a dealership to me. Well, last year apparently I went back and they announced that they were closing a lot of their high rent retail spaces but continued hiring sales associates. So they closed the retail spaces kept hiring sales associates as they looked for lower rent areas to put larger facilities and really started to go and lean into this online ordering with support teams. Sources familiar with the matter said there has been success with that strategy in North America. And now they're rolling out the Tesla center strategy more in China. So investments in the service experience have also been increasing. Elon Musk has said like they know there's struggling in service. It's a topic we've talked about here. You know, Tesla's service is rough, Todd Caputo, our friend was telling us like, he's got a Tesla. He's like, Yeah, it's rough. So I don't know, is this a shift to a world where it's like, maybe there is something to have in something in person that people have really well.

Kyle Mountsier  10:18

Then Hadley also said yesterday, so this is interesting is that is that many Tesla owners are finding the majority of their communication through communities on social media, like that's where they're finding their source of news about what's next, what's happening. And because the retail dealer network is not a part of that, you don't get those localized personalized communication messages about service or updates about the next thing coming anything like that, or charging or all of the education that the retail dealer network provides, currently in internal combustion engine resourcing. And so, you know, I

Paul Daly  10:55

think there's something happening.

Kyle Mountsier  10:58

And I think I think we might be onto something here.

Paul Daly  11:02

You've heard it here. First, Ben, just put in the chat, we are reverting to the mean, on EECOM growth, and there's actually if you're in the LinkedIn chat, you can see he posted a link to an article, or to a post that kind of goes in a little more depth in the thinking. So it is kind of one of those. I feel like it's an energizing motor for retail automotive, right, because now all of a sudden, that means like, advantage shift, right? Retail autos, figuring out the digital landscape, you know, being flexible with BDCs and call center reps and like we're figuring all that out. I'm still figuring out EVs. However, there's one thing that I think that we have figured out far above is that in person experience, the in person service experience like like, yeah, it's kind of an energizing feeling. Honestly, operators,

Kyle Mountsier  11:46

the best operators, their communities love them for it. So

Paul Daly  11:51

yeah, no doubt. So we'll see where that goes. But I think it opens a world of opportunity. One last story speaking of taking advantage of an opportunity. Segway Uber, has suffered a systemic hack by an alleged 18 year old team employees thought it was a joke. The legend hacker, who goes by the handle teapot on Telegram, he was able to social engineer, an Uber employee to gain access to their intranet, which opened up Amazon Web Services, Google Cloud Platform G Suite, literally everything is exposed. So basically, what he did is he went on the Uber slack. And he said, Here, what is it? He said, I announced, I have a hacker and Uber has suffered a data breach. He literally pokes posted that in the team slack. And then people thought it was a joke, right? Yeah, posting like popcorn emojis that it's happening. GIF, right? And then they realized, oh, oh, shoot this real

Kyle Mountsier  12:55

real. Yeah. I mean, the fact that it's really interesting, it's like he got in, and what has come out is the basically he's like, Hey, I have it all. i There's no real end result here. It's just the fact that I'm here. And I and I did it. So congratulations to you not being aware of what's going on that like literally breaching 100% of their consumer data. But it doesn't appear that he's actually doing anything with it. I think, like the takeaway from me on this is you have to be communicating with your people at all times, the opportunity that your data has to be completely ambushed without anybody really recognizing what's going on before it's too late. So being hyper aware of phishing scams, being hyper aware of logins, where you're passing passwords, group logins, hopefully hoping that's not happened, secure data, all of that type of stuff. It's like you have to be hyper aware as a company, especially as we approach some of these like FTC guidelines for dealerships.

Paul Daly  14:08

You know, like, it seems like this hack was like he was really able to, number one, get access through a social means not through a technical means. And also, when he scammed the system he found like logins and stuff where they shouldn't have been communicated in ways they shouldn't have been. So it's almost like this was an avoidable thing he got into the system, but it seems like it was avoidable, with best practices. I hope he's like, you know, like the Joker. You know, I'm like a dog chasing the car. I wouldn't know what to do it if I caught it. I think he caught the car. I hope we just steps back. I hope Uber can fix it. My data is in there. Right? So I hope that stay safe. Right? There. My driver's license numbers in there with That's the news today. We hope you make the most of this Friday. Go out there serve somebody serve each other get incrementally better. We have a lot of opportunities.

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